Bain Capital and 1980s-vintage Management Consulting

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The discussion of Bain Capital provides an interesting backdrop to the first topic for this course. Bain Capital (2012) began in 1984 as the investment arm of management consulting firm Bain & Company. In 1984, I completed my MBA studies at Rutgers University’s Graduate School of Management and joined a management consulting firm to help that firm, not Bain, transition from their traditional expertise of scientific management and productivity improvement to process and quality improvement based on the principles of Deming, Juran, and numerous disciples. Consulting firms and their clients interested in improving operational and financial performance had one primary tool in their toolkit, productivity improvement leading to staff layoffs of, typically, 20-30%.

It seems easy to complain about companies buying companies or parts of companies and then reducing costs, often through labor reductions, in order to realize a profit on their investments.  Investment firms have an obligation to their investors to produce a positive return on their investments.  For many of the firms that Bain and others purchased, the alternative was closure; companies like Bain may not have been able to save every job but some organizations were able to survive as the result of significant changes in operations.  In some cases, however, the seller to the investment firm made out much better than the investment firm or the purchased company’s employees.

Productivity improvement from the 1950s through at least the middle of the 1980s had scientific management based on the work of Taylor, the Gilbreths, Emerson, and Henry Ford, among others. Work measurement and work management were common. Colleagues of mine from my early years of consulting would tell of consulting firms that would, as crude as it sounds, essentially take a list of people and simply mark every fifth one for termination. The consulting world still includes firms who offer little other than work measurement-based productivity improvement and resulting staff reductions. I knew the techniques, but my clients seemed to only need me to use them to optimize the use of staff without staff reductions.

Scientific management principles applied to manufacturing firms initially, most likely because manufacturing was the basis of the economy in the United States and Western Europe for much of the 1900s. I was director of operations for a productivity consulting firm that worked primarily for government and service organizations. We helped then-growing telecommunications companies determine how best to staff and organize hardware installation teams and customer service organizations. We helped government entities figure out how to handle rapidly-increasing work volumes without expanding staff, since tax revenues were not keeping pace with demand for services.

In the 27 years since I began my consulting career, automation has changed most work processes. The automation of processes relies significantly on the principles and practices of scientific management. Improvement of operational and financial performance, of efficiency and effectiveness and quality, and the reduction of waste in its many forms continue to keep the attention of managers and to be central to the conversation about improving business and government performance. It is easy to forget that scientific management is at the root, even today, of how organizations get better, including enhancing the value of shareholder equity.

Today’s tools often seem more sophisticated than those my colleagues and I had available in the 1980s.  However, a goal of investors continues to be a positive return on investment. Managers and executives, among their many and conflicting objectives, have an obligation to shareholders to improve performance and assure investors that investment in certain companies and industries is good and not utter folly.

References
Bain Capital (2012). About Bain Capital. Retrieved from http://www.baincapital.com/AboutBainCapital/Default.aspx

Telecommunications Sales Force Reorganization

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The Context

The client was, and is, a major global telecommunications company who had recently received a new strategic plan from a major global strategic planning consulting firm.

The Problem

Internal efforts to implement a new organizational structure and strategy failed. Adoption by dozens of domestic field offices had no traction and did not produce the increased focus on acquisition and retention of customers. The fundamental strategy called for the client to shift from a geographical orientation to a customer-centered focus, resulting in acceleration of new account acquisition (‘new logos’) and retention and growth within established accounts. Improving customer service relied on changing mindsets of the sales organization and the field service team with enhanced alignment of the sales and service elements in each branch.

Simply having a new strategy did not yield increased sales productivity and revenue or service level gains desired by the client and anticipated by the strategy consulting firm.

The Solution

The consulting team used representative locations to identify existing technology, sales and service processes and organizaation, and management techniques. The team developed consensus on best practice business processes among the representative locations, created and  implemented new management techniques and reward andrecognition tools, and developed training materials to support standardized processes and terminology and the new business model.

The Results

Across two years following the initiation of the strategic plan implementation, the client reported the following results:

  • Initial meetings with prospective new accounts, 36% increase;
  • Total sales meetings held, 45% increase;
  • New client proposal presentations, 30+% increase;
  • Annualized labor productivity (measured in initial four offices only), $2.1 million;
  • Combined average activity (sales and service), 45% increase;
  • National sales channel productivity, 45% increase;
  • National sales channel per-representative sales, 32% increase valued at $1,500,000 in added sales per month.

What and What if? The start of a typical eProcesses client relationship

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eProcesses Consulting helps clients implement strategic change. Since my start as a consultant in 1983, and full time since 1985, I have seen a range of approaches used by consulting firms to begin a client relationship. I have seen firms that basically had one tool or solution set and sold that tool as the appropriate solution for a client, even when it was not. As a Certified Management Consultant (CMC), I comply with the Code of Ethics of the Institute of Management Consultants (USA), which states that I will only recommend solutions appropriate to the needs of my clients. So, how does eProcesses Consulting determine a client’s needs?

The simple way for eProcesses Consulting to determine a client’s needs is for the client to tell us. Client disclosure has risks and benefits. The benefit is the saving of time and the client has emotional ownership of the scope of a potential consulting project. The risk is that the client’s perceived need may not address the root problems and opportunities.

Generically, an eProcesses consulting relationship, strategic change implementation, begins with what many firms call the analysis, assessment, or discovery phase. Having participated in many of these, the deliverable most firms leave with the client is a list of findings with a proposal to fix some of the identified deficiencies. The eProcesses approach is different from most. Because eProcesses wants to leave the client with something of enduring value that, candidly, we hope will set the stage for a longer term client relationship, we call the initial phase the Preparation phase and we expect to leave you with three valuable deliverables beyond a “to do” list and a proposal. 

Prepare

The Prepare phase deliverables are up-to-date process documentation, a high-level, balanced scorecard-like dashboard, and aligned organizational goals. Goal alignment and a scorecard are foundational to any sustainable operational and financial performance improvement. Aligned goals tell the organization where it is going. The organization’s processes are how it will reach those goals. The dashboard allows the organization to keep score and know when you reach or fall short of the goals. The combination reveals improvement opportunities. As part of the Prepare phase, eProcesses also analyzes historic operational and financial performance to identify performance gaps and bottlenecks that inform the goals and the dashboard and emerge from the process documentation and analysis. A plan to close the gaps and bottlenecks associated with the goals forms the basis for the next, the Provide, phase.

Provide

This is the Provide phase because it provides tools for sustainable change and improvement. These tools include process change and deployment of techniques under the headings of Lean, Six Sigma, and Reengineering. The Provide phase would normally include an expansion of the dashboard deployed in the Prepare phase; the expansion provides drill-down and additional analytical capability that will be useful in tracking progress on reaching the aligned goals and objectives, toward the closing of performance gaps, and for the identification of new performance gaps.

Produce

For the changes that begin in the Provide phase to be sustainable, the new tools, processes, and behaviors need to begin to be part of the organizational culture. During this phase, the culture observed at the beginning of the Prepare phase starts to change. True cultural change in organizations may take several years, but eProcesses can help the client team develop new habits and disciplines and shed old habits during this phase of continued, but less intense, involvement by the eProcesses team. This involvement includes working with the client’s technical team to support the dashboard application, working with the management team to increase the value of the new tools introduced in the Provide phase, and preparing the organization to sustain the cycle of change internally.

Selling in Business Markets and Sales Force Improvement

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It was not too long ago that the sales force had the information advantage over the customer or prospect. In today’s marketplace, business or consumer, the information advantage has largely disappeared. Fueled by the explosion of the Internet, today’s information-affluent would-be customers demand ready answers. They expect your sales professional to have answers to ever-more-detailed questions. And they have access to information prior to, after, and even during the sales call to verify many of the answers they receive.

Today’s customer is increasingly expecting today’s sales professional to have done their homework to a degree that allows the sales professional to have some increasingly specific reasons for the sales call. And, if your sales professionals haven’t done their homework, their counterparts with the competition have.

selling businessCompetitors are invading every market from every angle. Technology has made starting a company to compete with yours a virtual overnight reality. Bricks and mortar and inventory are no longer required to enter your marketplace. As a result, the face of your marketplace is changing quickly, dramatically for competitors as well as customers. Increasingly, your sales professional needs ready access to information, about your products and your customers to meet the needs, the demands of the marketplace.

Customers and competitors are not the only forces putting increased pressure on your sales force. Investors have growth expectations that are also conditioned by the boom in technology and the near instantaneous access to information about how your organization compares to others in the marketplace.

In response to increased availability of information by the customers and expectations that flow from that information to have goods and services meet specific needs of the customer, sales offerings are increasingly complex. “One size fits all” no longer does. Configuration and customization issues now must be addressed, frequently by your sales professional in the field. Your sales professional needs the tools to address these issues.

Customer Requirements

Across the full spectrum of industries, we see an increasingly information-intensive sales process. Customers, prospective and current, are demanding more and more information on which to base their buying decisions. The amount of customer information required for your Customer Service organization to properly serve and support your customers is comparably expanding. The amount of information required to complete the sales process grows with the complexity of the products and services you are offering and this information not only must be communicated to many individuals, but also often requires separate input to many systems within your organization. Finally, the information requirements of the beginning of the sales process may be growing faster than any of these others. Your sales force must be better equipped with more information about prospective customers in order to get their foot in the door, in order to find the right door, in order to differentiate themselves from everybody else vying for the time and resources of your prospective customers.

A consequence of the explosion of information required to sell and serve your marketplace is the increasing likelihood that your limited sales and support resources will make inefficient use of its time, energy and other resources – resources that cost your organization dearly.
Assessment of Current Sales and Service Processes

When eProcesses looks at the current sales and service process (there admittedly is rarely what one could call a sales process or a service process, but rather a set of processes) in the typical organization, we often see a wide array of sales strategies employing multiple communication methods.

In order to provide the efficiency and predictability, of both method and message, that most senior management teams would like to see within their sales and service organizations, you need to develop and implement consistent sales strategies that will provide a cohesive plan and common vocabulary for account management. It is only at this point that automation of your sales and service processes proves effective. Automation is rarely effective when the underlying processes are not themselves effective.

Current Status – How Do We Stack Up?
eProcesses begins an engagement by documenting your current sales and service processes. This step provides us with an understanding of your current methodologies. It also gives us insight into the points in the processes that are broken, or unclear, or undefined, or subject to debate.

eProcesses firmly believes that you must know where you are before you can develop an appropriate strategy to help get you to where you want to be.

As part of the assessment of current sales and service processes, eProcesses would want to look several areas, including:

  • Plans – how does the strategic plan that you have compare to the strategic direction of other organizations in your industry? When considering your strategic plan, how do the plans of your departments align with that plan and with the plans of the other departments?
  • Expectations – what are the expectations that senior management has for each department and for key members of the management team? In what way are those expectations communicated? How effectively are those expectations communicated?
  • Benchmarks – how does your organization compare to industry performance benchmarks?
  • Competitors – how do your competitors compare to industry performance benchmarks?
  • Customers – how do you compare to your customers’ expectations?

This examination step provides insight to the various gaps that exist within your organization between perception and reality and between today and tomorrow. And, in some cases, these answers provide insight into the other areas in which your organization needs to improve in order to reach its stated definition of success.
Attributes for Success

Your company must be faster, smarter and stronger than competitors. Technology and your competitors are making it increasingly critical that you information-enable the sales force so that your company and sales force succeed. This information includes: Products and Promotions; Resources, Tools, and Training; and clarified expectations in the form of leads, activity guidelines, and behavioral best practices. Access to integrated sales information is the key to unlocking the success of your sales and customer service force.

One indication that your organization is competing more effectively in the market-driven economy today will be that your sales force is reaching deeper into customer organizations. The sales force is able both to strengthen existing relationships and to forge new ones because new tools can help your organization focus on managing those critical relationships within your customer organization. To accomplish this, you will need to streamline your sales processes, thereby improving effectiveness, reporting, and coordination across geographic regions that are decentralized and autonomous and between internal departments.

You need to reinforce a consistent sales process worldwide. Using contact and opportunity management, individuals must be able to sell and manage relationships more effectively. Individuals must be better able to coordinate multiple opportunities and related activities with each customer. And, senior management can forecast and plan more accurately, and respond to changing conditions more quickly.

The company must speak to each customer with a unified voice, receiving clear, consistent messages about your products and services.

Your company must leverage its corporate knowledge to better serve customers. Electronic access to corporate information that is constantly updated will allow your sales and customer service organization to provide timely and accurate information to your customers.

Everyone in your organization who touches a customer must have access to the latest information anywhere, at any time. Data replication and synchronization allows people on the go to get what they need when they need it.

Sales Information Management Tool

Sales Force Automation and Customer Relationship Management software products are among the fastest growing sectors of the computer software market. Despite this, the sales process is least automated, least information-enabled corporate frontier, and one area in most organizations that remains ripe for strategic process improvement, for implementation of consistency, and for improvement of overall effectiveness.

eProcesses can help you save time and increase efficiency. Some of this improvement may require change in organizational structure, in core processes within and outside the Sales and Customer Service organization, and in better tools (improved capabilities) that will take the form of new hardware and software tools. eProcesses will not simply emphasize hardware and software tools because a tool won’t make a weak rep strong, but it can make a strong rep great. But, an informed sales force can quickly respond to the marketplace and ever-changing customer demands and eliminate wasted time and effort.

Among the Objectives you may expect from an eProcesses engagement are:

  • To provide a platform for informed sales force
  • To deliver enterprise-wide, integrated information management; NOT a series of non-associated tools

At eProcesses, we believe that an eSolution must encompass

  • Process
  • Strategy
  • Automation tool

Sales Force Automation Tools

The eSolution in the area of Sales Force Automation and Customer Relationship Management is based on principles and strategies of selling, not only on technology. eProcesses believes that a Sales Force Automation Tool should be built to support the sales process, not dictate it, to assist in real selling, not merely recording data. In accordance with this, eProcesses seeks to not simply get individuals to use a new set of tools, but to perceive and realize personal as well as corporate benefit to the use of the new tools. Our experience is that your sales force, just like the customers and prospects with whom they interact, must see personal benefit before they are likely to change their hard-earned habits. And your organization must see corporate benefit in order to justify change to those who have invested in the organization.

Management Information Needs

Sales Force Automation and Customer Relationship Management are certainly about gathering customer information that is relevant to specific customers and specific sales. But, it is about much more than that.

The implementation and proper use of SFA/CRM methodologies provide a vehicle to

  • Manage account data, activity management, scheduling and forecasting
  • Provide automated, quick-reference account management and assessment tools
  • House key account strategy tools
  • Facilitate team selling and executive-level positioning
  • Encourage coaching by first-line management

One of the major challenges to all firms with sales organizations is how to capture data that can be shared across multiple organizations within the firm. The sales and customer service organizations are in an unusual position to gather data on prospect and customer organizations. This data can be distributed to and processed by more than the sales organizations. This data needs an intentional conduit.

This collected, distributed, and processed data can be invaluable to the formation of strategies for identifying and penetrating key accounts and markets. It can also provide the impetus to pursue new markets and products.

Data collected by a sales and service organization can help all levels of management understand the extent to which current customers and markets are being penetrated. This data, if available, can also be used to develop and encourage strategies for broader use of corporate resources in efforts to capture specific target companies and markets.

Finally, information captured by Sales Force Automation and Customer Relationship Management tools can be used to provide coaching and counseling within the organization and to monitor the extent to which appropriate activity levels, schedules, and forecasts are maintained by the sales and service organizations.
Sales Organization Needs

Regardless of the automation tools selected (including the choice to not automate), effective sales and service organizations need both a proven sales methodology and a proven service methodology. Effective sales and service are not random occurrences. EProcesses, with or without Sales Force Automation and Customer Relationship Management software, can assist your organization in the selection of appropriate sales and service methodologies.

The choice of an appropriate methodology will assure efficiency across the entire sales or service team, provide an appropriate risk/opportunity assessment model, and facilitate the utilization of a consistent, efficient approach to sales and service with a common language.
eProcesses’ Role

eProcesses Consulting recognizes also that implementation is not truly complete until the “New Ways” become habit. While one of the major challenges of implementation is breaking old habits, the second major challenge is establishing the new ones. Some organizations require more follow up than others, but it is during this follow up stage that the new habits are solidified. eProcesses usually assumes a diminished role during this follow up stage. One way we do this is by providing tools and techniques for your management team that can be used in reinforcing the “New Ways” and in assessing the degree of new habit formation. These tools and techniques that the client organization will use will be reinforced by periodic audits by eProcesses consultants.

Leading in the Economic Recovery

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An ongoing study of leadership roles, practices, and behaviors explores distinctions between individuals who disclose that they personally or their companies were financially harmed in the recent economic downturn and those who indicate that they or their companies experienced no financial harm. The responses vary by country.

Economic harm seems more likely among residents of Europe and North America than in Africa, Asia, Australia, or South America. Respondents from North America to date see 70% of 280 reporting financial harm while residents of Europe to date see 58% of 36 reporting a negative financial impact from the economic downturn. Africa, Asia, Australia, and South America reported 43%, 47%, 42%, and 71% respectively. If leading during economic recovery is different from leading at other times, and residents of Europe and the Americas are more likely to have experienced economic trauma than residents in the rest of the world, then we might expect leadership in Europe and the Americas to look differently than leadership elsewhere as the economic recovery proceeds.

Two somewhat universal themes emerge from research and experience. The first theme is that leaders rise to the surface. People display leadership that is disconnected to the position that they hold. When looking for leaders in organizations, we should not limit our search to people in somewhat traditional positions of leadership. It may be that future holders of positions of leadership come out of the ranks of leaders whose leadership is unrelated to their position. At the moment, these leaders have followers and these followers, rather than organizations or communities, give them power or authority based on the value that they bring.

The second theme is related to this added value. One value that leaders consistently add is a vision for the future that followers find compelling, attractive, and attainable at some level. As much as so many people promote the idea that people are afraid of change, the reality may be that the fear is of specific changes and that certain change is not only tolerable but desired at a visceral level. Leaders communicate a vision for a changed workplace or community or world that a critical mass of followers crave, or at least find positively exciting.

To find the leaders, look for the followers. To understand why they are leaders rather than somebody else, look for the vision.