strategic

Strategy: It’s About Making Choices

I find most people over-think strategy.  They feel it’s complex, full of buzzwords, too theoretical. For smaller businesses, some think strategy is something for large corporations who can afford to have strategic planning departments.
Some companies spend their time crafting mission statements.  It’s not that mission statements are a bad idea. A good mission statement will be a way of expressing the company’s underlying strategy. When the mission statement is developed without being founded on a strategy, it usually comes out vague, wishy-washy and meaningless to most employees and customers.

Strategy is really all about making choices and it’s not as complex as people think. In truth, there are only 3 basic strategies to choose from.  

Where most people go wrong is not sticking to a single strategy or not aligning the other elements of their business plan around a single strategic principle. Another trap is focusing on tactics rather than strategy. Your tactics may be sending mixed messages to your customers because they are drawn from multiple types of strategy instead of consistently following a single strategic direction.

3 Basic Strategies, Strategy is about choicesMichael Porter has an interesting way of phrasing it: “Strategy is what allows you to say “no” to the things you shouldn’t do.”
We’re going to discuss the basics of strategy over the course of the next few weeks.  What we promise is to keep it simple. No buzzwords. No charts or diagrams.
 
A colleague of mine recently did a presentation on strategy for a business networking group and I liked the way he structured it.  He used the analogy of a triathlon: three different sports – cycling, swimming and running. Winning triathletes don’t win because they’re the best at all three sports.  They win because they’re tops in one sport and just good at the other two.
In a similar way,  business can be broken down into 3 strategic elements: Product (or Service), Operations and Customer Focus.

A concept I learned from some of the sales people who worked for me –  the 3-legged stool – shows how simple it can be to apply strategic principles. They offer the customer a choice of three things: Product, Price and Service.  The customer can only have two of those three things, and the third they have to concede to the sales person.  For example, if a customer wants great products and excellent service, he will have to accept that he will have to pay a premium for these.  If it’s price and service, the customer will have to make some concessions product quality or features.

 At the overall business level, the three strategic directions a company can take are:
  1. Product Leadership – sometimes known as innovation
  2. Operational Excellence – sometimes referred to as “low-cost producer”
  3. Customer Intimacy
Next week, we’ll discuss what Product Leadership means and how it can be applied in your business.  Don’t feel disappointed if you don’t think Product Leadership is right for your company. It’s OK to not follow that path. It just means you will have to make a choice between the other two types of strategy.

“I Want to Hire My Competitor’s Top Sales Person …”

When a client who doesn’t know us asks us to help them find a sales person, we’ll ask the client what they think they’re looking for.

Hiring, Sales, Competitor, Competition,

Copyright: ra2studio / 123RF Stock Photohttp://www.123rf.com

A typical first response is “I Want to Hire My Competitor’s Top Sales Person.” And it’s often accompanied by, “And I want them to bring me their book of business with them.”

On the surface, this sounds like a perfect formula for creating an outstanding sales team. Find the best available people and bring them on board. Their loyal customers will follow them and revenue will skyrocket. Plus you will have weakened your competitor by taking away a key asset.

However, here is the reality.

If you have really good people working for you, you’ll do anything you can to have them stay with you. Having an employment contract or agreement is one way to document the responsibilities of both employer and employee.

In the case of sales personnel, you want to prevent them from leaving your company and harming your business.

One option is a non-compete clause. This basically says that, when an employee leaves your company, they cannot work for a company that is a competitor of yours. It sounds good in principle but the courts are not upholding these non-compete clauses because they can limit an employee’s ability to find alternate employment.

The preferred option is called a non-solicit clause. This type of clause does not prevent an employee from going to work for one of your competitors but, if he/she does go to a competitor, he/she cannot call on companies that are clients or customers of your company. This type of clause IS enforceable.

To get back to the original response to our question about what a client might be looking for in a sales rep, it IS possible to hire such a person.  However, if they have a non-solicit clause in their employment agreement, you cannot have them call on customers they had at their previous employer, let alone bring along a book of business.

Were you to attempt this, one possible outcome is that your competitor could sue your company. Another possibility is that they could sue your new sales rep and restrict his or her ability to approach customers through an injunction. This could render your new hire essentially ineffective while they’re tied up with lawyers.

Another reality is that customers tend to be loyal to reliable vendors, not the vendor’s sales person.  Companies have moved from having a single person making buying decisions to having procurement teams to reduce the personal influence a sales person can have on a buyer. Unless a vendor puts a totally inept person in charge of an account, the account will stay with the vendor as long as product quality and service are kept at consistently high levels and pricing is competitive. It actually costs companies money to change vendors – to put the business up for bid, to assess bids, to qualify a new vendor, among other factors – so companies avoid making changes unless it makes economic sense to do so.

Here are three things you should be doing.

1. Protect your sales team. Review your employment agreements with all your sales staff and add in a non-solicit clause to each one. This can make your top performers less attractive to your competitors to hire away.

2. Hire strategically. Hiring a top performer from a competitor can and does make a lot of sense in some instances. But you need to bear in mind that you will have to focus them on markets where they won’t have to call on customers from their previous employer – perhaps in a business development role. Or, if they are senior enough, you might consider assigning them to key accounts who are not customers of the competitor you hired them away from.

3. Consider New Talent Pools. While hiring from within your industry can save on training and capitalize on existing contacts, it may not be your best strategy for improving the overall caliber of your sales team. Industry studies suggest that only about 25% of ALL sales people are rated very good to excellent so, is your industry likely to yield the best quality candidates? Often what happens is that marginal performers make the circuit of employers within an industry, never really contributing much to any given employer.

Excellent sales people are excellent sales people because they have the discipline to consistently follow a process.  The process is independent of industry, product or company. Excellent sales people can be taught the technical attributes of a product and the benefits that make each product different from a rival product. Excellent sales people know how to research an industry to find the right companies and contacts.  They don’t rely on a Rolodex alone.

Bringing in an excellent sales person from outside the industry has other benefits. They bring fresh thinking, which could lead to new applications for an existing product, better ways of selling the product.  They’ll ask insightful questions that could help you become aware of attributes that resonate with customers that perhaps your staff had consistently overlooked or undervalued.

So, hiring from a competitor can be a good move.  But don’t expect sales people to have their customers follow them to you.