Advisory #17 - Sales vs Strategy - The Missed Opportunity

Are you a small to medium-sized business relying on sales tactics for growth because you haven't been able to put together a strategic plan?

Thought so.

But it's likely that this focus on short-term sales means you're missing out on the opportunity to grow your business significantly and sustainably for the long term.

Don't worry.

You're not alone.

80% of all the meetings we conducted in 2015 were with clients who did not have a clear strategy on how to grow their business.  More generally, of those that have a plan, according to Harvard Business Review, 86% fail to implement it effectively.

Let's be clear, when we talk about your strategic plan, we're not talking about a multi-page spreadsheet filled with comprehensive analytics and the ROI on market entry, nor are we talking about the extensive corporate presentation designed to appease the board and shareholders ... you know, the one that you work on for days, trying to work out what they want to hear and then never refer to it again after the presentation.

It doesn't have to be so hard to reach the next stage of your growth vision.

When we talk about strategy we are talking about an understanding of what your business stands for today, what you want it to achieve in the long-term and building a series of clear practical steps towards achieving that vision within your own capabilities.

Simple.

Our clients have no shortage of vision, there is always a clear idea of what success represents:

• to become market leader
• to expand into new markets
• to double the size of the business
• to take advantage of market conditions by developing new products & services
• to become leaner and more profitable

But, in most cases,  there is no straightforward step by step strategic plan to achieve that vision.

Our experience has revealed a consistent issue especially with our clients in creative services and broadcast media; that they have a tendency to adopt a short term focus on tactics to achieve revenue with little strategic or operational plan to support their long term business goals.

This is fine for us as it represents the starting point in assisting our clients to grow.  We help them understand their potential, assess any limitations or blockages to growth and provide practical steps to take their business forward to new levels of success.

In all cases, we assist our clients to develop a strategic approach that still delivers on their short term needs but introduces a framework that allows them to develop their potential for the long-term.

Here's an example:

We met a client that was seeking to enter a $30M per annum market with a disruptive product.  By looking at their business, we could see that they were fully equipped to successfully address this market immediately with their existing product set.  There was very little risk.  However, they had not fully understood the size of the opportunity in front of them and did not want to invest in additional resource.  So instead, they set their focus on a "safe and easy" $200k per annum subset of that market.   To address this, they took a tactical approach aiming to win a series of accounts through the networking skills of their existing sales team.

They will be successful in this but look at the missed opportunity; a lack of strategy and planning is sacrificing the multi-million dollar opportunity in favour of a best attempt at a share of $200k.

Which would you rather have?

Vision without strategy is just fantasy.  Your business vision can't be achieved solely by a tactical sales approach.

Of course, it's easy to be distracted by the day-to-day demands of our operations and lose focus on the long term strategy of the business.  This is exactly where it's possible to develop a 'blind spot' that limits the ability to see the opportunities in front of us.

So, where do you start to shift the focus from tactical to strategic without it all being too hard?

Answer this ...

• What is the true state of the growth opportunities in front of your business?
• What is the current operational health of your business? 
• What level of profitability do you need to maintain?
• What adjustments need to be made to your operations to support your growth plans?
• How will you bridge the gap between the capabilities of your business and the unique needs of your clients?

Once you can answer these questions, you are immediately focused on the long term health of your organisation and your short term goals will take care of themselves, packaged neatly within a sustainable strategic framework.

So, just as you don't become famous by making more friends, you don't make your business grow exponentially by focusing solely on short-term account wins.

We help our clients build a strategy for continents not just countries and provide practical steps towards long-term strategic growth so that success for you is not just about struggling to reach a quarterly budget.

Don't sell yourself short.

Once you can support your business vision with the substance of a strategic plan and know the steps you need to take to achieve it, you are no longer short sighted... the result is scalable, sustainable growth, achieved faster.

The Advisory Partnership assists its broadcast and creative services clients with operational strategy, delivering outputs that are scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by 
The Advisory Partnership

Sales vs Ops - Whatever happened to the operational review?
International Growth Cheatsheet
Case Notes: APAC Centre of Excellence

Advisory #16 - Sales vs Ops - Whatever happened to the operational review?

Bring in the sales and the business will look after itself. 

Because it's all about the top line. Right?

But ... are you properly equipped to grow in line with your business plan? 

Are you confident you're creating the best operational environment to retain the business you've already won?  

Certainly in a fixed cost business, once your overheads are covered, then a sales focus will ensure that the bulk of revenue moves straight to the bottom line.  

But that's only half the story.  

Are your costs really fixed?  Can your operation be structured differently, delivering a better overall result?

Most managers, whatever their role, spend countless hours in sales meetings.  The year is punctuated with sales budgets, forecasts, re-forecasts and customer trends analyses. 

Every week there is a forensic review of sales performance.  

But the actions from these meetings are often tactical and rarely address the fact that the business is an ecosystem that needs its operation to function effectively to realise these sales targets.

We find our clients spend significantly less time spent on operational strategy than they spend reviewing sales results but it's vital to remember that any growth is dependent on a functional and effective operation to support it.

We believe that fine-tuning your operation will often be the smartest contribution you can make towards your overall business performance.  There is little point in winning business if you can't retain it through a stable and sustainable service operation.

So, below are the areas we believe you should review regularly to ensure that you create the optimum environment to support continued sales success.

Strategy vs Operations

Are you regularly testing your strategy against the practical realities of the market place to ensure that your focus is in the right place?

Do your projects and revenue initiatives align with your long term strategy or have you developed them organically?

We often see businesses polarised by those who have developed the strategy and don't know how to implement it and those who have an intimate understanding of the operation but aren't briefed on the company vision.  

The result is inconsistency on where to apply the most effort and a disparity across the business on what can be achieved and how.  

The solution is working with both sides to illuminate each of the contrasting viewpoints. 

Realigning the focus here can be liberating.  The solution is often to remove time-consuming projects that are proving difficult to implement which, in turn, frees up resource to concentrate on projects that will align with the strategy and deliver a greater benefit for the business as a whole.

Reporting

How do you measure your operational efficiency and effectiveness? 

Is your reporting relevant to what you want to achieve and are you sure that it is accurate?  

Reports can be interesting but not relevant.  They can be creative but not instructive.  

We once attended a 'party' that celebrated significant sales growth but their reporting had neglected to account for an earlier price rise.  In reality, their market share was falling, their drop in volume was hidden. They would only have discovered this once they'd had the full year effect of the price rise.  Perhaps too late.

If your business development plans include interstate and international markets, beware of transferring reporting data from one operational model to the next.  Even within the same industry, operational requirements are likely to be different from market to market and it may take more resources and costs to handle the same type of customer.

We always recommend a dynamic reporting model that takes into account any variables that may impact the performance of the business and the operational support it will require.   These reports both support and substantiate the ability to be nimble when changing market conditions require fast action and they make the best job of creating an environment where there are no surprises.

Structure

Is your structure working for you?  Have you ever completed an assessment of your departments to determine their effectiveness? Are you wasting money on staff that are no longer required?  Importantly, are you undermining your strategic goals with a lack of staff in critical operational roles?

A successful business can outgrow its structure at least every six months and a successful structure can expire and become limiting for a business very quickly.  

No one needs frequent upheaval but fine tuning of your structure is necessary on a regular basis.  

The team and structure that got you where you are today, is unlikely to get you through to the next ten market share points.  You need to be careful that your structure can scale to match your ambitions and doesn't simply meet this year's budget.  

A regular structural review, if handled well, will future-proof your business in the face of rapid market change, motivate your team and give you good news stories to communicate to the market.

Resellers & Partners

You may have a network of resellers to represent your brand in regional or international markets but are they representing your brand appropriately and most effectively?  

They may be meeting your minimum budget expectations but can they do better? 

We find that the remoteness of some resellers can lead to our clients underestimating the full opportunity that they represent. 

Most businesses do not visit their partners regularly enough to test their performance and ensure that they are taking full advantage of every opportunity.  

It's vital to check regularly that the deal that you originally struck is still valid. Perhaps market conditions have changed and you need to reassess the best partner for your business in remote markets.  Furthermore, it's in your own interest to monitor your partners, ensuring that they adopt approaches that are consistent with your own operational best practice. 

Products and Services

Do you consult regularly with your customers to find out what they think about your products and services?  Do you do this formally and independently ... or anecdotally? 

If you invite feedback, how do you retain this information and process it into your operational plans and product development strategies?

Never be complacent that your products and services are still relevant to the market requirements today however unique they were when you launched.   Wherever you are on your growth curve, you need to continually build on that success and ensure that you remain relevant.  

We find that uncovering small pieces of customer feedback and implementing practical remedies can remove some of the limitations a business is experiencing in performance and can often deliver significant change for the business on the revenue side.  

Sometimes the solution is as simple as ensuring that the delivery matches the 'pitch' and that everyone in the organisation is aware of the business strategy and that the whole organisation is communicating consistently with the market.

Competitive Review

A confident business will have a clear strategy that is focused on the future development of the business. You lose focus if you spend too much time looking over your shoulder at the competition but remember your competition exists because it's doing something interesting in the market place; things that may challenge you in time. 

You need to be aware of the strengths and weaknesses of your competition and compare it honestly against your own business to be able to compete effectively. 

This means at least an annual review of your competitors is essential.  The review requires you to to be brutally honest with yourself, developing an external perspective on your business and focusing on what's genuinely good about your competition.  Why do their clients buy from them in preference to you?  It's not always about price.  Often an independent review will help you develop these insights with most clarity.

Conclusion

In an established operation, it's important to challenge thoroughly all your existing operational processes to ensure you remain competitive and relevant.  It's equally necessary during periods of change that you continually fine-tune your operation to ensure that it will fully support your organisation as it develops. 

Operations should never be defined as separate from sales, it is simply the other side of the same coin. Your business is a single ecosystem.

So whilst it's right to be focused on revenue, it's vital to understand that it's only through a well managed and effective operation that you can hope to achieve sustainable sales growth.

The Advisory Partnership assists its broadcast and creative services clients with operational strategy and review, delivering outputs that are sustainable and scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

More from us:

International Growth Cheat-sheet
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 4 - Latin America Operational Review

Client               A Global Advertising Technology Business
Service            Operational Review & Remediation
Result              300% Revenue Growth

Background

The client was a technology business that supports the advertising industry with distribution and asset management services.  The centre of their Latin American operations was in Miami with sales driven from their satellite offices in São Paulo, Brazil and Buenos Aires, Argentina.   

The Miami regional office had been a successful start-up, managing international TV delivery throughout Latin America and servicing the Hispanic market in the USA.  

Our client's strategy had been to roll out local distribution operations progressively to each of the countries in South America each of which were emerging markets for their services.  However, after a strong start, the business had faltered and lacked sustained growth and profitability.

Challenge

The client's head office in London sought our advice on their geographic expansion and our recommendations into why performance had slowed.  They wanted to know whether the business should be expanded, maintained or wound down. 

The Miami office had not delivered on its target of 25% year-on-year growth. The P&L was showing a loss of $200k per month and operationally the office was failing in its service commitments.  The business needed a plan to secure continued geographic expansion whilst containing the costs of any new operations.  

Approach

Our approach was to place ourselves on site to develop insights into the day-to-day operations in Miami and how it was serving the existing satellite offices in Brazil and Argentina.  We exposed ourselves to every aspect of the sales, customer service and support processes and analysed team productivity.  

We discovered that the problem was partly the operational structure and partly that the business was still effectively operating in start-up mode and had not been equipped to service the business it had delivered.  

Our solution was to review and revise the processes and operational structure with only a moderate increase in investment.  Our recommendation was to fully equip the business for the next stage in its growth and indeed to expand it as a regional 'Centre of Excellence' for the Americas.

Result

Our review of the P&L solved a discrepancy where the costs associated with the South American sales offices were being applied to Miami but the revenue was reported locally.  This resolved the reporting discrepancy proving that the business was much healthier than the client had assumed.

We uncovered 10% in annual revenue leakage which we solved by developing new processes to ensure that all services and products were billed accurately. Our implementation of these processes revealed that Miami could operate at 20% EBITDA. 

Our strategic review revealed that the client had failed to tailor an implementation strategy for the individual markets within South America.  

We outlined cultural and operational differences across the region and built a roll out plan that prioritised each market by value.  This provided our client with a framework to invest in their South American business development appropriately and to minimize risk by linking new expenses with secured sales. This 'secure' revenue would be sourced from pan-regional clients already held by the business.

Our structural review revealed a need to revise the operational structure.  The business was still being managed as a start-up and needed the processes of a more mature business. We proposed a new structure within an expanded business that would act as a regional 'centre of excellence' for the Americas. This met the client's growth objectives while negating the need to set up costly operations in each country state.

The Miami office now operates as our client's model for their regional operations globally.  Miami now services all their requirements within the USA, Canada and Latin America.  It has doubled its staff and tripled its revenue with planned growth to support an ambitious new USA business case of $30M per annum by 2016.

Post by James Douglas

www.theadvisorypartnership.com

What we have learned developing global operations in India, SE Asia and Europe are captured in more detail the following articles:

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

Advisory #14 - International Growth Cheatsheet

As every business matures it seeks to extend its reach, seeking new territories for its products and services. 

You may be interested in opening your business in another state or you may be interested in expanding internationally or to emerging markets.  However, if 86% of businesses fail to achieve their strategic plans (Harvard Business Review), what are the skills that you are missing or need to be aware of to ensure that you can grow your business successfully into new and emerging markets. Just as importantly, what are the dangers you need to avoid?

Based on our experience in LATAM, Asia and the US, The Advisory Partnership has prepared a list of skills, essential to your interstate or international expansion.

Project Management

You need to be efficient.  You need to have a tight project team with clear roles so that you can make decisions quickly and change course if operational realities reveal that you need to head in a direction other than you anticipated.  

Your project needs clear leadership and a decision-making hierarchy but be careful not to over-manage; too many layers of management will stifle decision-making. Your start-up needs to be able to act dynamically and respond nimbly to situations as they develop.

Research Skills

Find out everything you can about your target market. Make no assumptions.  There are no short cuts here.  Working in isolation from your desk at head office will not be enough to get the feel of an international market and to understand how it works on the ground.  You have to get on a plane and spend some time there. Don’t spend a day; spend a week or a month if you can.  It will pay you back with speed to market; delivering faster revenues and fewer expensive mistakes.

Networking Skills

You need to find businesses and individuals that have entered similar markets and learn about their experiences.  You need friends who’ll tell you how it really is.  What worked for them and what didn’t? 

How a market presents itself externally will be very different to how it operates internally.  You need to know the difference.   Find a local consultant who can partner with your own project manager to help you understand the market intimately and be sure that your consultant has the credentials and contacts to deliver the connections that you don’t have on your own.

People Skills

Your business will rise or fall on the success of your people so you need to have the right team before launch. A key appointment to your new market should be an HR manager or agent and they need to be a key part of your start-up leadership team.

Hire people who have done what you do before; people who are already credible and trusted in your area of operation and who’ll be able to hit the ground running with your product and service. Hire the best people you can within the available budget and don't make any false economies.  Low cost labour with limited experience will slow you down, they will require induction and training.  Start-up is not the time to be moving slowly.  


When you start to make appointments, hire a mix of local employees and trusted experts from your business.  This way you’ll have the best combination of skills to deliver not only your company’s expertise but you’ll also have local credibility and a built-in understanding of cultural sensitivities.  

Structure your operation in this way to help you successfully navigate sales and operational issues in the local markets. 

Multi-Tasking.  

As you expand, it's very likely that you’ll be performing a local and international role at the same time.  This means you’ll be working on your new markets at the same time as your home operation, probably across different time zones. This is exhausting so you need to be highly organised for it to be sustainable.  Structure your meetings formally to a tight, action-based agenda and allow for separate informal catch ups to understand any day-to-day personal challenges. 

Culture

There’s no such thing as a unilateral 'global' approach because you need to adjust your behaviour for different types of interaction with different locations and work to overcome language and cultural barriers.  Employment expectations, language capability, education and culture may all be markedly different to how you normally operate and you will have to make some allowances in your process to ensure that you get the best from your team.  

There is your way of operating and the local way, the right way for each new market will be somewhere in the middle and you need to find that sweet spot. Your success is dependent on working out which is the right approach and managing accordingly. 

Operational Excellence 

Once you’ve hired your local talent, you must now surround them with everything that is great about your organisation.  Send in an "SWAT Team" from your own business and surround your new team with all the skill, passion and enthusiasm that has made your business great at home.  Avoid a fly-in-fly-out approach.  Give them some time to bond and to really share the essence of what your business is all about. The time and energy you put into helping your new team out now will save you in the long run. 

Product Management

You may have a product or service that has been hugely successful in your own market but you still need to be sure that there aren’t regional variations that may completely negate the effectiveness of that product in a new environment. Be prepared that your product or service may need to be adapted to cater for the requirements of the new market.  Do your research and test the market in advance before committing to a costly launch of an inappropriate product. 

Technology 

Make no assumptions about technology; particularly if your product is within the digital or online sector.  Public internet and business connectivity are not a level playing field worldwide. If you are entering emerging markets particularly with a new technology product, be mindful that traditional processes can still dominate due to poor Internet performance in some countries.

Growing your business into new markets can be one of the most rewarding things you can do in your career but keep in mind that whatever new market you enter, it’s is not your home territory. You need to continually compare your strategy against operational reality to ensure you have the best set up for success.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scalable to meet the challenges of technological change and International growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by The Advisory Partnership

Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography