The answer to this question, not surprisingly, is no. Few theories – if any – can legitimately claim to be valid in all circumstances.

However, before we offer-up our organization’s uniqueness as a get-out-of-jail-free card, it’s worth recognizing that, when we speak of SPE, we should be referring to the four key principles (Chapter 2) and not just to the standard model described in Chapters 1 and 3.

This is because the standard model is just one application of the four key principles. There are others. This chapter will describe three alternate applications and – I hope – inspire you to create others.

When SPE doesn’t make sense

Because the essence of SPE is division of labor, SPE doesn’t make sense in those environments where division of labor delivers no benefit.

This may occur because no organization-wide benefit is derived from increasing the productivity of the sales function, or because the efficiency gains from specialization are offset by a significant escalation of costs. Consider these three fictitious scenarios.

1. Alpha Corp’s new-product-development team has scored a home-run with its latest data projector. The projector’s combination of small size, low cost and super-high-intensity beam have resulted in the device becoming a must-have item for executives and salespeople. Since this new projector hit the market, orders have eclipsed Alpha’s manufacturing capacity – meaning that crowd-control has, for the indefinite future, become the sole responsibility of the Alpha sales team.
2. When Beta International inked its deal with the US military, it committed to provide representatives in eight European countries. These representatives’ primary responsibility is customer service and, for this reason, Beta was careful to employ locals (who speak the local languages). In each country there is a small number of additional sales opportunities that Beta is keen to exploit, however, the potential is not significant enough to justify the addition of sales coordinators (let alone specialist salespeople), especially when you consider that multiple individuals would be required in order to cover the range of languages spoken on this continent.
3. Charlie Inc. has a neat product, but no sales function. The product is internet security – delivered as a web service, rather than as an application. The problem is that Charlie Inc. has no idea how it should distribute this product. Should it sell direct to small businesses or through resellers (electronics retailers and telcos, perhaps)? Charlie Inc. is not even sure if the small-business or residential market is likely to be more responsive. At this point, Charlie Inc. is less interested in efficiency and more interested in agility. It makes no sense to build sales infrastructure until it has a distribution strategy.

It’s clear that there is no case for division-of-labor in these three scenarios. But it should also be clear that each of these situations is more the exception than the rule.

It’s time, then, to consider more common situations – where the case for division-of-labor is strong but where our standard model doesn’t make sense.

Technical product: simple transaction

Nexus sells replacement parts to heavy industry.

The average value of a sale is $50,000 but, each transaction is relatively simple – clients are purchasing replacement parts, after all.

Nexus has a team of account managers servicing territories that span North America. These account managers spend most of their time delivering technical support to clients. Management expects account managers to find time to sell but, inevitably, not a lot of selling gets done. Account managers seem always to be occupied with post-sale activities.

Management has tried – on a number of occasions – to resolve this problem by adding account managers. They’ve discovered, however, that technical support and business development appear to be mutually exclusive. Once account managers become involved in technical tasks, they lose either the ability or the will to sell.

There are many situations where field representation is required – but field sales isn’t.

Inevitably, in these situations, we find that sales is the responsibility of field representatives (who are typically called account managers).

It’s likely that the rationale is that:

1. A salesperson is more persuasive face-to-face than they are on the phone
2. Because there’s a requirement for field representation, it makes sense for the field rep to sell

There are two problems with this rationale:

1. If transactions are simple, it’s unlikely that persuasion is critical – what’s more likely is that the key to selling more is simply to ask for the order more often
2. Because field representatives have the capacity to perform only four to five appointments a day – and because technical tasks are likely to consume most of this capacity – a typical account manager will spend very little time asking for orders

In situations where transactions are simple – where persuasion is not a critical ingredient in the sale – it’s important that we stop to consider if selling should be performed in the field in the first place.

In Nexus’s case (another of our silent revolutionaries), their answer to this question was no.

This conclusion wasn’t an obvious one. Account managers argued that face-to-face representation was critical – that the existing deal flow was a consequence of their strong customer relationships.

However, a simple study revealed the following:

While account managers visited some customers quite frequently, the average contact frequency (across all accounts) was scarily low

Most face-to-face visits were stimulated by technical issues and, in actuality, account managers were taking the greater majority of orders from their home offices: on the phone!

If it is not critical that sales are made in the field, it makes a lot of sense to centralize salesmanship and to make inside sales the sales front line.

In this case, division of labor still makes sense; it’s just that the ideal model looks a little different from our standard model.

Technical products: simple transactions (TPST model)

In this model, sales is the responsibility of the inside-sales team, not the field representative. In fact, the field rep – and all other resources, for that matter – will subordinate to the inside sales team.

Specifically:

1. Promotions ensures that there are sufficient sales opportunities to enable inside sales to operate at full utilization
2. On the occasions that inside sales cannot close a sales opportunity without a field meeting, they will pass a meeting request to the sales coordinator who plans it into the field rep’s calendar (a field visit may be required to survey a site or to perform a live demonstration, for example)
3. Customer service performs the non-telephone tasks associated with the prosecution of sales opportunities (quoting and other paperwork), as well as providing technical support, post-sale
4. On the occasions that a field visit is required to resolve a customer support case, customer service will also pass a meeting request to the sales coordinator
5. The sales coordinator’s job is to manage the field-reps schedule – to ensure that both sales and support tasks are performed as efficiently as possible

This new model was surprisingly easy to sell to Nexus’s account managers. They quickly realized that it would result in them performing the type of activities with which they had become most comfortable, without the pressure to win new accounts.

Today, Nexus has a team of eight inside salespeople who each perform an average of 40 outbound contacts a day. This is at least ten-times the volume of sales activity that occurred previously. The inside-sales team is supported by eight customer-support people, who are responsible for the generation of quotes and order processing.

The necessary field visits are comfortably handled by two field representatives – one for the Eastern half of the continent and another for the West. Each field representative is scheduled by a dedicated sales coordinator.

The new model has enabled Nexus to reduce sales-related payroll costs (although headcount has increased). But, more importantly, the new model has resulted in a dramatic increase in sales activity (as well as sales, of course) and a notable improvement in customer service quality.

Indirect sales

Specialist Workwear is a US manufacturer (and importer) of specialty work-wear.

Many years ago, Specialist’s salespeople sold direct to end users – their clients are manufacturers, distributors, mining companies and similar.

In recent times, however, it has made sense for their clients to rationalize their procurement – buying clothing, along with other safety products, from intermediaries.

Specialist Workwear had to choose between remaining work-wear specialists (and distributing through intermediaries) and becoming general distributers of safety products. They chose the former – and continue to embrace this direction by maintaining a healthy pipeline of innovative new products.

Predictably, the switch to indirect distribution resulted in a dramatic increase in volume, along with a reduction in margin. But the change also created a complex environment for Specialist’s sales team.

Specialist’s salespeople were used to selling direct – and derived greater satisfaction from direct sales because of the higher margins those sales generated. However, they understood the importance of maintaining sound relationships with resellers – who were responsible for large sales volumes – and who were, understandably, a little touchy about direct sales!

Specialist Workwear recognized that a change was required when sales plateaued and when numerous attempts to scale their existing model failed.

If you sell via intermediaries (resellers, manufacturers’ representatives, agents or distributors) it’s important to recognize that our standard model is not appropriate for your situation.

The standard model involves the conversion of salespeople from autonomous agents into team members. By definition, intermediaries are not part of your team (in the strict sense of the word), and are unlikely to relish the thought of having their calendars planned from your head office!

If you distribute through intermediaries, then, you have two considerations:

1. Continue with intermediaries or sell direct
2. Identify a way to improve sales that doesn’t challenge intermediaries’ autonomy

Should you sell direct?

As you’ve no doubt realized, the standard model tends to weaken the argument for intermediaries.

Because this model multiplies the efficiency of salespeople, it becomes possible – actually, it becomes necessary – for them to cover absolutely huge territories. Of course, this does result in an increase in travel costs but, this increase will, in most cases, be more than offset by an overall reduction in payroll cost and by the elimination of intermediaries’ commissions.

However, as Specialist’s case suggests, there are situations where it still makes good sense to distribute via intermediaries. The two most common reasons are that:

1. Existing intermediaries already possess relationships with potential customers which will be very costly to displace
2. Intermediaries represent a range of complementary products which means that, either:
   1. It is more economical for the customer to deal with the intermediary than it is to deal with you direct
   2. They can justify a presence in their particular region which could not be justified with your smaller offering

How to engage productively with intermediaries (reps)

Because the word intermediary is a little cumbersome, let’s substitute the word rep for the balance of this discussion, bearing in mind that a rep might be a reseller, distributor, retailer, agent or similar.

If it does make sense to distribute through reps, it’s import to take stock of the areas in which they add value (and those where they don’t).

In most cases the obvious advantage reps bring to the table is their physical proximity to (existing and potential) clients. They can jump in their cars and visit clients’ sites at the drop of a hat. Reps are less likely to have a structural advantage when it comes to other activities (e.g. telephone contact with accounts, order processing, etc).

The trick, then, is to structure your relationship with reps so that they spend almost 100% of their time performing those activities that add the greatest value (in the context of the value-chain as a whole).

A possible division of responsibilities might look something like this:

Obviously, in this situation, we’d like our reps (or their salespeople) to spend the greater majority of their time in the field with existing and potential customers.

However, because our reps are not employees, we do not have the right to demand this division of responsibilities. And even if we could, how would we go about ensuring that the additional time we made available in our reps’ calendars is dedicated to:

1. The specific tasks we have nominated as their responsibility?
2. Representing our products – as opposed to those of other principals?

These two concerns are exactly the reason why we need a sound channel-management approach.

Channel management

The objective of channel management is to:

1. Maintain a positive working relationship between the rep and your organization
2. Ensure that reps dedicate a favorable percentage of their time to your lines (as opposed to those of other principals)
3. Ensure that reps engage in a sufficient volume of (field-based) business-development activity

A positive working relationship (all or nothing)

Obviously a positive working relationship is a precondition for the transition to the division of responsibilities we have in mind. But this step will also enable us to find the resources (people) we need to do channel management properly.

If you are going to distribute via reps – and if you have taken the time to confirm that this genuinely makes sense – then you should make an all-or-nothing commitment to your channel.

Specifically, you should promise your reps that:

1. They will receive full commission on all transactions that are processed by your customer-service team (from their accounts, of course)
2. All new-account enquiries in their territory will be routed to them

It should go without saying that, except in isolated cases*, it is impossible to develop the close working relationship you need with your reps if you are simultaneously competing with them for accounts and transactions.

Now, there’s another sense in which channel management should be an all-or-nothing proposition. If you lack representation in a particular region, you should find representation, either by adding a rep or convincing an existing rep to expand their territory.

The fact is, channel management and direct sales are two different cultures that tend not to comfortably coexist. If you attempt to maintain both, direct sales will likely triumph in the short-run, at the expense of your channel relationships. Of course, any drop in channel performance will be interpreted as validation of the direct sales school of thought. If you are genuinely committed to indirect distribution, you need to bite the bullet and purge that direct sales culture.

The decision to put all the wood behind the channel-management arrow was not an easy one for Specialist Workwear. It was difficult to resist the siren song of direct transactions.

But the commitment had to be made. The primary concern was not the impact that these transactions would have on distributors – rather it was the impact that it would have on Specialist internally. Their new strategy was a delicate thing. Any signal that it was not being executed consistently would have relegated it to graveyard of clever ideas.

Yesterday salesperson; today, channel manager

If you turn your back on direct sales, you no longer need salespeople.

However, you desperately need channel managers. Indirect distribution is a risky strategy: you must be prepared to invest significant energy to ensure that both parties remain indispensible to one another. If you allow your reps to become truly independent, there is a very real likelihood that you will find yourself working for them at some point in the future!

So, you convert your salespeople to channel managers. And, you are clear on the objective of the channel-management function. What exactly should your channel managers do?

The answer is surprisingly simple: you want your channel managers to spend 100% of their time in the field, with reps (or their salespeople), engaged only in those activities that you would like your reps to be performing.

If you were to close your eyes, right now, and image what your reps are doing – you would visualize them calling on potential (and existing) clients, selling. The idea, then, is to deploy your channel managers to sell, in the field, side-by-side with reps.

In practice, this can be achieved by planning field trips for channel managers. In a field trip, your channel manager visits a rep and spends a number of days in the rep’s car visiting that rep’s existing and potential customers.

For the same reasons it makes sense for salespeople to spend all their time in the field selling, it also makes sense for your channel managers to spend 100% of their time performing field trips.

In place of a sales coordinator, we now have a channel coordinator.

The channel coordinator’s job is to:

1. Organize these field trips (ensuring that each day is filled with at least 4 customer visits)
2. Maintain an ongoing dialogue with the rep and track the status of opportunities initiated in each field trip through to closure (it’s true that the opportunities belong to the rep – but it’s quite reasonable for the principal to take an interest in opportunities to which they have applied resources)

The channel-management model

Priming the pump

Of course, the critical question is: how do we gain the leverage required to compel reps to work closely with us like this?

In an ideal world, your product itself would be appealing (and differentiated) enough to provide this leverage. However, in practice, this may not be the case.

The solution is to give before you take. You can (and should) give in three areas:

1. Provide reps with sales opportunities (either by routing enquiries to them — rather than processing them internally — or by running the promotional campaigns and originating opportunities from scratch)
2. Provide reps with greater access to your channel managers — and a direct line to a channel coordinator
3. Provide reps and their clients with access to customer service resources (transaction processing, technical support, etc)

Transitioning existing reps to this new working relationship is rarely easy. It’s part art, part science; and it will really test the sales skills of your channel managers (and your senior executives). However, if you are committed to indirect distribution, this is a battle that you really need to win.

Where promotion (the origination of sales opportunities) is concerned, you may have spotted an apparent contradiction. I mentioned that it may make sense to use reps when it is uneconomical to acquire customer relationships via other means. Then, above, I suggest that you should, in fact, be running promotional campaigns.

This is not a contraction. In such a situation, you will expect reps to be your primary source of accounts. However you can still justify limited promotional expenditure on the following grounds:

1. The sales opportunities you originate provide you with additional leverage to plan field trips — and to gradually gain (noncompetitive) access to reps’ opportunities and clients
2. These opportunities prime reps’ business-development pumps. In other words, a handful of sales opportunities can be used to get reps out of their offices and into the field — where, of course, they are likely to uncover additional sales opportunities
3. Similarly, a handful of opportunities will shift reps’ focus to your product lines — causing your products to become (and hopefully remain) top-of-mind

While it is beneficial to generate some opportunities, you do need to be careful here. It needs to remain clear to your reps (and your channel managers) that the origination of sales opportunities is the primary responsibility of the rep – not the principal. It’s beneficial for your sales coordinator to volunteer one or two sales opportunities each time they schedule a field trip but the rest of the visit should be populated with opportunities originated by the rep.

When Specialist Workwear started to schedule field trips, these were a foreign concept for both channel managers and distributors.

Channel managers suspected that distributors would be unwilling to commit their time to field trips – let alone to the phone work required to line-up days’ worth of client meetings. And many distributors were a little uncomfortable with the proposition – even though its merits were pretty obvious.

The proof, as they say, is in the tasting. The first round of field trips was sufficient to turn both channel managers and their distributors into believers. Channel managers felt empowered by the pure focus on business development and distributors acknowledged that this initiative was set to multiply their volume of true sales activity – and grow their businesses as a consequence.

This new approach has enabled Specialist Workwear to vastly increase their geographical coverage – without increasing payroll costs. In newer territories, field trips caused an immediate (and significant) increase in sales volumes. And the centralization of customer service has reduced errors and issue-resolution time.

Small business

Influx had just dismissed its third salesperson in as many years.

The story, in each case, had been the same. Matthew, the founder and CEO, had recognized that competing priorities made it impossible for him to continue to drive the growth of the firm single-handed. After combing through resumes, Matthew chose the best (or least-worst) candidate and permitted himself to get inspired by that candidate’s enthusiasm (and their promise of new accounts).

In each case, the new recruit would busy themselves with critical sales preparations: creating a new set of sales aids, online market research, list building and direct mail campaigns and so on.

Days would turn into months, field visits would be occasional and the only new accounts to come on board would be the ones that Matthew stumbled across (when he wasn’t busy solving production problems)!

Influx is an online marketing firm. In exchange for a monthly retainer, it manages its clients’ online activities (websites, pay-per-click advertising, search-engine optimization, lead management, etc).

After three years of false starts at the development of a sales function, Matthew was open to new ideas.

I’m always saddened to hear that small business owners have concluded that SPE doesn’t make sense for them because they can’t afford to employ a handful of additional sales-support personnel.

It’s true that our standard model often does not make sense for a small business. However, there is frequently a tremendous opportunity to apply our four key principles to the business as a whole.

In most cases, if a business has 20 or fewer employees, it neither needs, nor can it afford, a full-time salesperson.

Here’s the line of reasoning:

1. It doesn’t make sense to have a salesperson, unless that person is fully utilized (it’s hard to argue – with a straight face – that you can afford a salesperson but that you can’t afford to keep them busy selling!)
2. As should be apparent from our standard model, a significant commitment of head-office resources is required to keep a salesperson busy in the field
3. Even if a small business was to build the necessary head-office infrastructure, it’s unlikely that it could grow at the rate necessary to keep up with a single (productively-deployed) salesperson

The fundamental dilemma faced by every small business is that, on the one hand, division of labor is required to exploit efficiencies and drive growth; but on the other hand, a lack of funds makes it impossible to recruit enough team members to allow each to specialize.

The only way to navigate a path out of this Catch-22 is to be ruthless when it comes to rationing the limited resources at the organization’s disposal.

On contemplation, Matthew recognized that rationing was his unofficial job description. As Influx had grown, it had become increasingly chaotic.

The lack of consistent sales activity had led to a boom-and-bust demand cycle. When production was quiet, Matthew would find a way to drag in some work. But then as soon as production became busy again, sales activity would stop (ignoring, of course, salespeople’s online research activities!).

This boom-and-bust cycle ensured that Influx was always under-resourced when production was busy. After all, Matthew could only afford to resource for average – not peak – sales.

As you’d expect, this environment had resulted in some sub-optimal production behaviors. There was a production schedule but no one paid any attention to it. Instead, each team member attempted to work simultaneously on a long list of tasks, re-sorting them daily, according to who screamed the loudest.

And, on many occasions, it was Matthew doing the screaming!

If you reflect on our discussion of the standard model in Chapter 3, we acknowledged that, as we push towards division of labor, the very first specialist must be the scheduler.

The same rule applies here but, because of the size of the organization, we must apply it to the environment as a whole – not just to sales.

When Matthew recruited Influx’s first salesperson he had attempted to leapfrog this critical step.

When Matthew’s epiphany came, it came in two parts.

He realized he needed a consistent volume of sales activity (to eliminate the boom-and-bust problem). And he realized that discipline was needed in both production and sales (the schedule had to be sacrosanct, multitasking had to be eliminated and commitments could only be made if they could be honored without all-night vigils).

Matthew’s first step was to resign his rationing responsibilities and employ a dedicated master scheduler. In exchange, Matthew agreed to volunteer just 30% of his capacity to be used for business-development meetings.

In recognition of the fact that his business didn’t have – and couldn’t afford – discrete sales and production functions, Matthew resolved to maintain one schedule for the business as a whole.

Influx’s new master scheduler (a smart, young graduate) was responsible for planning both sales and production activities onto an enormous whiteboard, occupying pride-of-place in Influx’s foyer!

From day-one, the master scheduler was schooled in one critical condition: regardless of production demands – come hell or high water – Matthew must be scheduled to perform six business-development meetings a week. And, if the opportunities from which to schedule those activities were not in existence, the scheduler must schedule the necessary activities required to manifest those opportunities.

Additionally, every person (including Matthew) at Influx was schooled in one other critical condition: the schedule was final. Each person performed only the tasks assigned to them and only in the assigned sequence. And only the scheduler had the authority to change the schedule. (All team members reserved the right to question the scheduling logic but only the scheduler could touch the schedule.)

Influx’s situation is all too common for small business.

The chaotic situation described above is the rule, not the exception; and this counter-productive environment cannibalizes resources that could otherwise be used to sell more and to deliver stuff on time.

When money is tight, it can be tough to concede that what’s required is not a sales or production person, but a scheduler – a person who neither sells, nor produces!

But, in situations like these, a master scheduler truly is the critical requirement. The addition of a master scheduler enables a small business to solve its two most pressing problems by:

1. Ensuring a consistent volume of sales activity – which, in time, will lead to a steady order flow
2. Applying some discipline to production scheduling (which also includes the promises that are made to clients) – which will eliminate chaos and effectively increase the organization’s production capacity

The small-business model

An obvious benefit of this model is that it puts the chief executive in the field selling – rather than a salesperson. Aside from saving money, this is a good idea because the chief executive is likely to be a better salesperson than an employee and because it will be relatively easy for the master scheduler to book appointments for the chief executive.

Once this model is in place, it is quite easy to transition to the standard model as the organization grows. A typical growth path looks like this:

1. As sales increase, add production capacity to cope with the growing order queue
2. Split the master scheduler into two roles (sales coordinator and production scheduler)
3. Develop a set of promotional campaigns and add a promotions coordinator to execute them
4. Add a dedicated salesperson (when – and only when – the organization is convinced that this person will be fully utilized)

When the time is right, the addition of a dedicated salesperson is easy (and low-risk) because this person is being slotted-into an existing machine. Opportunities are already being originated and appointments generated. A standard opportunity-management workflow is already in place – along with procedures for the conduct of each activity. And the organization already has baseline numbers against which the performance of the new salesperson can be compared.

Matthew cannot see Influx adding a dedicated salesperson anytime in the foreseeable future.

The changes he made had little immediate effect. After a little grumbling, the production team members got used to working on discrete tasks as they were allocated to them. Matthew certainly appreciated the six sales appointments that appeared in his calendar each week – although he did notice that the increase in volume was offset, somewhat, by a reduction in quality.

The benefits of these changes became apparent in two waves. First, the team noticed that the chaos had disappeared. Team members began to work normal hours. And conflict was eliminated, along with rework – previously, the bane of everyone’s existence! With on-time-delivery performance improving, Matthew found himself in a position to make more aggressive promises to potential clients – with greater conviction.

Matthew didn’t really appreciate the increase in sales (the second wave) until, one day; his bank balance caught his eye! Historically, even a slight sales increase had been accompanied by increasing chaos and conflict. But, in the last few months, production had been calm and issue-free. In fact, Matthew’s only involvement with production had been sitting-in on daily (20-minute) work-in-progress meetings and briefing the team on new jobs he had won. The impressive number at the bottom of Matthew’s bank statement was a consequence of the steady trickle of new accounts that Matthew had won, in conjunction with a slight uplift in existing accounts’ repeat purchasing activity.

It’s now clear to Matthew that Influx will have to grow significantly before the addition of a dedicated salesperson can be justified. In fact, Matthew has pushed that date further into the future by fine-tuning Influx’s engagement model and substituting web conferences for appointments that don’t absolutely need to occur in the field.

* * * *

It should be clear that each of these models is a derivation of our four key principles.

In Nexus’s case, when the sales front-line moved from the field to the phone, scheduling was performed on two levels. The inside-sales team assumed responsibility for the over-all schedule and then sales coordinators handled the complexity associated with dispatching field reps to perform sales and customer service tasks.

The shift in focus from direct sales to channel management caused Specialist Workwear to adopt a resourcing model that is very similar to our standard model but, the changes to the workflow were significant.

Influx had no choice but to take only cautious steps towards division of labor. However, the implications of making a scheduler – as opposed to a salesperson – the first specialist have been profound.

In all cases, these organizations have applied incredible discipline to the standardization of workflows and to the formalization of management. In each case, a tightly-choreographed, daily work-in-progress meeting is now an institution.

We’re almost ready to launch into part two of this book, where we’ll explore the practical implications of SPE.

However, before we do, we have one more sacred cow to confront. It’s time to declare war on sales commissions, targets and other artificial management stimulants!

The work we do in these non-traditional (for us) environments is very gratifying and, often times, generates enormous payback for our clients.

So that just started me thinking.  Can I generalize from our approach to the sales environment — and from the work we do in other environments — to come up with a general approach to process improvement?  My plan is not to write the book on process engineering (others have done that); rather, it’s to provide a step-by-step method that you can implement with your notebook computer in one hand, a coffee in the other, and look of gleeful masterly in your eye!

Here’s that method; in five simple steps.

1. Define the goal and necessary conditions

What is the goal of this environment?  And what are the conditions that must be met in order for your achievement of that goal to be valid?

Sadly, answering these questions does not really power you forward.  However, they must be answered because the answers provide the context required to answer all the other questions you’ll encounter as we work through this process.

So, if you’re building a customer service team, your goal might be to: resolve customer issues rapidly.

Necessary conditions might include: the maintenance of sufficient protective capacity to ensure resolution times are within customer tolerances and the avoidance of unnecessary expenditure.

Nothing too fancy here!  Just the basics.

2. Map it

This is the fun bit.

You’ll need a copy of Microsoft Visio (Google: Visio free trial) or a sheet of graph paper and writing implements.

The trick here is knowing what to chart.  You want to map a high-level workflow only.  You’ll know if it’s high-level because:

1. You’ll only need three symbols (an activity box, a state (input/output) circle and a connector (line)
2. The workflow will be linear: no loops or recursions
3. Everyone involved will complain that it’s too simple

Here’s an example of what the finished result will look like.

[click image to view full size]

2. Division of labor

You saw this one coming!

As part of creating the workflow, you should consider division of labor (who does what?).  You can see in the image above, that each role as been assigned a swim-lane.

Generally speaking, you’ll multiply productivity by:

1. Eliminating multitasking
2. Having specialists perform work that corresponds with their expertise

However, you need to balance the theoretical productivity improvements with some practical concerns:

1. The possible cost of additional personnel
2. The multiplication in process complexity as the number of hand-offs increases

Here are the general guidelines I use:

1. Split activities that are obviously dissimilar (technical drawings and booking flights, for example)
2. Split activities that are performed in the field from those that are performed in the office
3. Split pure telephone work from clerical work (for example, rather than having clerks chase the pre-requisites required for their work, have a dedicated phone person who manages pre-requisites)
4. Split work that requires high-level decision-making from pure-vanilla work

More importantly, you should consider which resource in your team is likely to become the constraint (bottleneck) as volume increases.  You should focus your attention here first.  For example, if you are processing mortgage applications and you have a person with specialist knowledge who has the potential to be a bottleneck, consider routing all plain-vanilla work (and phone work, etc) around this person.

Also, bear in mind that some people are specialist generalists.   In other words, they add value by being across a lot of stuff!  Managers fit into this category — as do customer-service representatives.  So be careful not to kill the goose that lays the golden egg.

4. Centralize scheduling

It’s here that you earn your keep!  If there’s one defining characteristic of EVERY process we build at Ballistix, it’s that we always have a dedicated process coordinator.  A person whose sole responsibility is to coordinate the workflow — but who is not actively involved in any of the core activities within the workflow.

I would go so far as to suggest that you don’t have a process until you have a person who’s sole responsibility is to keep the wheels turning day after day.

In our traditional (field) sales environments, this person is the sales coordinator.  A person who sits behind each salesperson and who operates essentially as that person’s Executive Assistant.  In an inside environment (customer service, inside sales, pre-production, etc), we’re more likely to have one person coordinating a larger team.  In many cases, this person will also take responsibility for pre-requisite management (see earlier discussion).

Here are the activities a coordinator would typically perform:

1. Chair daily (or twice-daily) work-in-process (WIP) meetings
2. Determine case (job) and task priorities
3. Overview the general operation (flow) of the environment
4. Ensure data integrity (accuracy and currency) in your CRM and/or ERP
5. Manage management-information system (see next section)

In most cases we recruit young, smart, sassy graduates to fill coordinator roles.  Generally, you don’t want an engineer in this role.  In fact, it’s better to retain an engineer to design the environment so as to ensure that you don’t need an engineer to coordinate it!  Of course the design of a robust environment is exactly the subject of this article.

5. Management-information system (MIS)

You know what they say: if you can’t measure it, you can’t manage it.

Well, I wish they wouldn’t say that.  This maxim is often interpreted as an exhortation to measure everything.  And if you measure everything, you’re measuring nothing.

What I mean is that no data is bad, but too much data is just as bad.  What we need is information.

Eli Goldratt defines information as the answer to the question asked … and I like that!  It means that rather than starting with measurements, we should start with questions.

Here are some questions that I think should be answered in every environment:

1. When should I release work to the team (if you release work as it appears, the team will certainly multitask itself into a total logjam within days!)?
2. What completion date should I quote for this case (and be confident that it will be delivered on time)?
3. When must I expedite a case to ensure its on-time completion?
4. When should I avoid the temptation to tamper and leave well alone?
5. What is the load on all team members?
6. When the flow is disrupted, what is the most common cause of that disruption?

Now, obviously, this list is not exhaustive but these answers are, to my mind, the critical ones.  So, do you think the standard reports in your ERP or CRM are designed to answer these questions for you?  Of course not!  Those reports are designed to satiate the noisy measure everything brigade.

So, you need to build your own MIS.  Two ways to do it:

1. A physical, production-style buffer board
2. A fancy, electronic business-intelligence system that generates real-time reports from the data sitting in your CRM/ERP’s data-store

Let’s talk about the first option.

You want a board that represents time and capacity (we’ll just work with two dimensions for now!)  We’ll track time on the horizontal access with TODAY on the far left and X-DAYS on the far right (where x is the maximum lead-time of a healthy case).  So time moves from right to left — just like you’re on a train, looking out the window. The vertical axis is designed to limit the number of cases that can occupy any one time-slot.

The coordinator creates a magnetic card for each job.  Each card contains the list of tasks within the workflow.  Cards also have stickers attached — where each sticker indicates a pre-requisite.  At regular intervals the coordinator moves all jobs one time-slot to the left — to indicate the passage of time.  Additionally, stickers are removed as pre-requisites are collected and tasks are checked as they are completed.

We would generally complement the buffer board with an Excel workbook that auto-generates the cards — and that enables the coordinator to track the completion dates of key milestones so that we retain a rudimentary history of jobs once they leave the board.

Here’s an example of a client’s buffer board.  Pretty? No.  Effective? Definitely!

[click image to view full size]

So how about the second option?, I can hear you asking.  Can’t it be electronic?  We so like electronic.

Well, yes it can and, in some environments (high volume, high complexity) it has to be.  But electronic costs real money.  And another disadvantage of electronic is that it tends to be less visible — less accessible.  We resolve this in some environments by displaying key metrics on plasma screens … but now we’re talking even more money!

To create an electronic MIS, you build the reports in Excel (our drug of choice), Crystal Reports, Cognos or similar.  You then integrate the reports with the data from your CRM or ERP (or often both).

Of course, with electronic, if you can dream it, you can do it … but this tends to create as many problems as it solves.

Following are some samples of some of the prettier reports that our clients’ MIS’s contain.

[click images to view full size] 

The best advice I can give you with respect to the design of the MIS, I’ve left until last.

Don’t start by designing the reports, start by designing the WIP meeting.  That’s right, determine the questions that you must answer, in what sequence to have a fast, productive, daily (or twice-daily) WIP meeting and then design your MIS to deliver the necessary data in exactly that sequence.

These five steps cover a lot of ground, but I think they’ll provide a valuable framework for your next process-improvement initiative.  If you’d like me to fill in some gaps, use the comments link at the start of this article to ask questions.

If that team member has a Blackberry and a company car; if they call on customers and help resolve their problems; then they must be a salesperson, right?

Well, maybe not!

Sure, that’s the way things have traditionally been done: the person in the field is automatically the salesperson. But, in many cases, today, this assumption needs to be challenged.

To understand why, let’s walk in our customer’s shoes for a moment.

Historically, a salesperson would come calling (in person). They’d develop an understanding of your situation. They’d diagnose your problems and propose solutions. And they’d be your single point of contact with the firm they represented.

Today, however, it’s unlikely that your needs are adequately served by the traditional salesperson (in spite of the nostalgic appeal of that concept).

Two things have changed:

1. The market has become more efficient — which means that:

   1. stuff happens faster, and

   2. most of the products you purchase are (essentially) commodities

2. Technology has provided numerous alternatives to face-to-face communication

In today’s environment, then, the traditional salesperson relationship may be less than ideal for a few reasons:

1. The salesperson visits infrequently — meaning that you, either need to carry more inventory, or purchase from multiple vendors

2. Because of the faster pace of enterprise, the salesperson is ill-equipped to serve as your single point of contact with the vendor (they simply don’t know what’s become of the item missing from this morning’s shipment!)

3. It often takes more time to transact with the salesperson face-to-face than it does to communicate via alternate channels

It’s for these reasons, then, that I’d like to propose that, in many environments, the salesperson should not be the person in the field — rather it should be a person on the phone.

Inside Sales becomes the new front line

That’s right; I’m suggesting that the front-line (to use a military metaphor) should move from the field to the phone, meaning that, in future, the salesperson is not the person with the Blackberry and company car.

Tomorrow’s salesperson is office based (situated close to operations). They can be recognized by their casual clothing and their ever-present wireless headset. They earn less than a field representative but they have comparable product knowledge and communication skills. Where a field representative can, at best, perform four to five meetings a day with customers, tomorrow’s salesperson can perform 30 to 40!

Now, at this point, I’ll forgive you for being a little skeptical. After all, isn’t it true that I’m describing Inside Sales — a function you likely already have installed in your firm.

Actually, I’m not. My vision of Inside Sales differs from standard practice in a few critical areas:

1. Inside Sales owns ALL sales opportunities. They do not help field reps prosecute sales opportunities (in fact, the opposite is true but we’ll get to that shortly)

2. Inside Sales owns ALL accounts. Your customers no longer have a single point of contact but they do have a primary contact — and this is a person in Inside Sales, not a field representative

3. Inside Sales makes outbound calls to both existing and potential accounts

Before we discuss what is to become of your field representatives (and yes, there’s a cunning plan!), let’s consider how our customer benefits from their relationship transitioning from the field representative to a person in Inside Sales.

1. The contact frequency increases. If it makes sense to interact twice daily with the vendor (as is the case in pharmaceutical retail, for example), this is possible.

2. The inside salesperson is a more capable primary point of contact. Because they are plugged-in to the ERP (your operations technology), they can answer most questions and process most transactions on the spot. On the occasion that an issue arises that the inside salesperson can’t personally resolve, they will route a task to the appropriate party, while still maintaining ownership of (and responsibility for) the issue.

3. Because the inside salesperson is office-based, your customer is not forced to choose a single communications channel. In fact, within the course of a single transaction, it’s possible for your inside salesperson and your customer to communicate using a mixture of telephone, e-mail, and instant messaging.

Field representatives subordinate to Inside Sales

So, what is to become of field representatives?

In most situations, you will still have a requirement for field representation:

1. Some sales may be significant enough to warrant face-to-face customer contact. For example, a client of ours in Kentucky sells packaging supplies. Individual transactions do not require face-to-face contact. However, this company is migrating its customers from a standard supply relationship to vendor-managed inventory. The transition is a large and complex transaction and definitely does benefit from face-to-face visitation.

2. Field representation may be required for technical reasons. In order to diagnose a problem and propose a solution (for either potential or existing accounts) it may be necessary that a vendor’s representative performs one or more site visits.

My argument, then, is not that field representatives aren’t required. They clearly are.

I’m proposing that, in many (certainly not all) environments, field representatives should not be regarded as the salesperson.

In such environments, it makes more sense for field representatives to subordinate to Inside Sales. What this means is that:

1. Sales opportunities are originated and prosecuted by Inside Sales

2. On those occasions that field representation is necessary, field representatives are dispatched to perform a discrete activity

The words discrete activity are important here because they suggest that field representatives do not take ownership of the workflows (sales or customer service) that contain the activities they are dispatched to perform. For example, if a field representative visits a customer to perform a needs analysis as part of the prosecution of a sales opportunity, the field representative will perform the site survey and report the results to the inside salesperson. It will be clear to all parties (including the customer) that the inside salesperson is running the show.

While this is counter-intuitive, there are many parallels in other fields. Consider an operating (surgical) theatre. The surgeon may well be the most valuable team member but it does not follow that the surgeon runs the operation. This is generally the responsibility of a senior nurse. In fact, in most cases, the surgeon is not even present for the entire operation!

A practical example

We are currently implementing this model for a client of ours, headquartered in Washington DC. They manufacture consumable parts for big industry. An average transaction is somewhere in the five-figure range.

Here’s how the model operates in practice:

1. Marketing (promotions) generates sales opportunities for Inside Sales

2. Where possible, Inside Sales attempts to prosecute those opportunities without the assistance of field representatives

3. Inside sales also fields customer service issues

4. Inside salespeople have clerical and technical support resources — enabling them to spend all of their available time on the telephone

5. Field representatives’ calendars are managed by a small team of sales coordinators

6. When Inside Sales has a requirement for a field visit (of either a customer-service or sales nature) they liaise with the sales coordinator responsible for the appropriate region to schedule this visit

7. Field representatives’ travel is determined primarily by these visit requests from Inside Sales. However, if field representatives have spare (not protective) capacity, sales coordinator will work with promotions to fill this capacity with opportunistic sales or support field activities

This model benefits all parties because:

1. It enables a high contact frequency (which improves customer service and shortens opportunity cycle time)

2. It reduces the effective distance between the customer and operations (improving the quality of both sales and customer service processes)

3. It enables field representation when (and only when) it is actually required

4. It reduces costs (and, of course, some of those cost savings can be passed — directly or indirectly — back to customers)