Sales are up, more employees every month, profits are growing, my bank likes me – how can things get any better?  This is the business equivalent of being 22 years old, feeling great, being able to eat or drink anything, looking trim, feeling healthy, having a great job and a full social life.

We all know classmates who were on top of the world at 22, but at the 20 year reunion have physical challenges and are hoping to find that job to get them back on their feet.

The business version of that 22 year old is that company who was making money and growing during a great economy.  Lots of companies have the good luck to grow because they are in the right place at the right time with the right product or service.

These companies make a lot of money and are the envy of their peers, loved by their investment advisors and living the good life.

What these people or companies are not doing is building a strong foundation that prospers without the good luck of “right place at the right time.”  When everything is going great, it is hard to stop and apply strategy, best practices, and discipline.

Just like looking around at the reunion, the business world gets a daily rush of news about mortgage companies going out of business, banks closing, Pontiac and Saturn Motors have ceased production, 100 year old newspapers no longer publishing, and our favorite restaurant is  gone just to name a few.

How is it that those companies, who were in the right place at the right time, can be so fragile that a good competitor or a bad economy can put out their flame?

Research is clear that more great companies come from depression and recession than from the good times (right place, the right time).  Those companies that last decades, start with no luck, no money and storm clouds everywhere.  What makes the long-term difference?

All that good luck, cash, success and revenue leads CEOs and founders to hold a wrong set of assumptions that they seldom test or validate.  The voices of the world yell the good luck is the evidence that this is a great company doing the right things based on the right results.  Even one of my two  favorite authors Geoffrey Moore talks in “Crossing the Chasm” about how a company that crosses the chasm should abandon quality, traditional best practices and just go get all the market share possible.  When Geoffrey published this book in 1991, I just could not accept that assumption as valid, because my other favorite author Eliyahu Goldratt who wrote “The Goal “in 1984 had convinced me that there was a science to the practice of business that will always  dominate over the long term.

When “Crossing the Chasm” was written, the high tech world was in the right place at the right time, and the bubble was a long way from bursting.  The first burst of the tech bubble was 10 years later, and it was followed by another period of growth based on the luck of right place and right time that will run for the rest of this decade.

To transition a right place, right time company to a long-term winner, the company should manage costs and apply these 3 “Revenue Generation” best practices:

First - Hold the company and every offer the company makes to the market to the standard of having a “Revenue Generation” strategy based on these 5 questions.

1. What is our brand promise?
2. What’s the customer “problem” that we solve for the customer NO ONE else Solves?
3. What niche/s do or will we dominate?
4. Who is our ideal customer?
5. Which Offers result in domination?

If you can’t answer the questions and / or the answers don’t prove to be compelling in the market, there is risk on the horizon.  So create a compelling strategy or sell that part of the business while the luck is with you.

Second – Build a visual portfolio of the offers you have based on the Bell Curve from the diffusion of innovation.  If your offers have all moved to the right side of the curve, you can plot your end.  If the offers can’t be placed on the curve, the business is without any revenue strategy and deep in chaos and at high risk to any competitor or slowdown.

Third – Develop an assumption testing culture where every person, in every planning session, no matter what their role or position must ask the question of team members if what they are talking about is based in fact or assumption.  If it is based on assumption, the next question is “if the assumption is wrong, what is the level of risk?”  If the answer is high, the assumption must be validated now, and if the risk level is low, the planning can proceed while the assumption is validated.

Good luck plays to the ego and false assumptions.  Go beyond this enemy and apply the science of “Revenue Generation” and bring compelling value to the market for the long term.

Related posts:

1. Accurately Forecasting in 2012
2. You know the saying about assumptions. Why are you still making them?
3. How to Survive an Investor’s Due Diligence
4. 8 Ways to Listen to Your Market
5. Your sales team shouldn’t be doing road repair!

Does $525,000.00 per month seem high for 8 hours of selling per day?

Who knows what their attorney costs per hour — or their accountant, or plumber, or their receptionist? Almost everyone knows what these services cost per hour.

How about products? Does anyone know what a gallon of gas costs? A cup of coffee at Starbucks? Those in business who manufacture goods almost always know what it costs to produce the goods, so they can price them and improve their profits. So please tell me what it costs for a company to generate 40 hours of selling to get someone to buy those products.

If I said that to get eight hours a day of selling was going to cost $525,000.00 per month, would that seem high? It may seem high, but that is what many SME (small and medium enterprise) companies pay — and large companies pay much more. So why do companies pay $525,000.00 per month for a 40-hour-per-week sales effort?

Where does this ridiculous $525,000.00 come from? Let’s look at the numbers in order to determine the cost for 40 hours of sales. The best way to do that is to determine what one hour costs, and then multiply by 40.

Of course, we need to know the definition of sales before we can measure it. Having asked more than 10,000 CEOs for a measurable definition of sales, we’ve discovered that there is no single measurable or actionable answer. As a cost accountant, however, there is a clear, measurable, and actionable definition: We hire salespeople to move a deal forward when no one else in the organization can do it better or cheaper.

Salespeople are doing other peoples’ job when they are not working to move a deal to closure. If someone else can do part of moving a deal forward better or cheaper, then let them, so your sales staff can focus on what it does best. This approach results in the highest and best use of all resources. We don’t want attorneys making copies or doctors taking our insurance information. So why do we have salespeople spending most of their time on expense forms, entering data, looking for someone to call on, doing customer service, etc.?

So step one is done – “sales is moving a deal forward when no one can do it better or cheaper.” Now we need to know how many hours per week they move deals forward.

After 25 years of studying this question, I’ve discovered that an inbound call center is capable of the greatest percentage of time selling, which can average about 35 percent or 14 hours in a 40-hour week. And if you let people actually leave their desk and the building … well, the best we have ever seen was with one of our World Class Clients (WWC), where the sales staff worked 50 hours per week to actually sell 20 percent of the time (10 hours).

In most studies, the average is closer to one hour per week than 10 hours. Based on this range of one hour per week to 10 hours per week, let’s look at the ramifications in a typical SME business situation.

The goal is to hire a new salesperson who will achieve a $1,000,000.00 quota. We will have to offer a base salary of $75,000.00 with a bonus at quota of half of the base or $37,500.00, plus miscellaneous costs of $37,500.00 to total $150,000.00 total selling cost to reach the quota.

Using this quota and required costs, we can now look at the hours a salesperson sells at the WCC level, and at the normal level. We see that an hour of selling at the WCC level is $312.50, and an hour at the normal level is $3,125.00.

If we multiply the cost for each hour of selling by 40 to arrive at one week of selling, we find the weekly amounts to be $12,500.00 and $125,000.00, respectively. Lastly, multiply these numbers by the average 4.2 weeks in a month to find out a full-time selling cost per month. The range is between $52,500.00 and $525,000.00, and you get to decide.

Once someone measures the "Cost per Sales Hour," you can see lots of ways to make different decisions to be sure your salespeople get as close to 10 hours of selling as possible. When that happens, you actually will be able to recruit better salespeople, you will need less salespeople to reach your targets, and other organization costs will also decrease.

Here are the first three things to do to reduce your "Cost Per Sales Hour":

1. Reduce or eliminate cold calling (not a selling activity).
2. Review what else sales people are doing that is not their job and have a less expensive resource pick up that work.
3. Establish the metrics to track "Cost per Sales Hour," and, based on these metrics, keep improving the process.

Many of us have been blessed in the past. Things were so good, we could afford $525,000.00 per month for a full-time sales position. Those times are gone, though, and now there is a better use for the money — either in the business or in your pocket.

Related posts:

1. The Cost of Chaos – Part II
2. The Cost of Chaos – Part III
3. “I have people who handle marketing and sales. What’s a Chief Revenue Officer and do I really need one?”
4. The Opportunity Cost of that Special Deal
5. The Cost of Chaos

A strong brand promise (or what your company stands for) makes it clear what to say NO to – saying YES to everything means you stand for nothing, with high costs.

You just presented your prospect with a proposal. Now they have read it, asked you some questions and seem to be ready to decide. The first words out of their mouth are, “Well your price is too high,” and, “We need to change the start to next Monday and be done in 3 weeks not 5.”

Now is the time to say NO! The prospect just tried to change the engagement and the price. If your proposal was based on a specific Scope of Work created jointly with the client and value priced, the only way to prove your brand integrity and that of your proposal is to say NO!

Say NO to any change to a reasonable price or a jointly developed Scope of Work or the timeframe or any other key elements. Saying NO is part of dominating niches, managing margins, controlling cost, proving you know what you are doing and demonstrating you’re a person and company of integrity.

The other side of this is when you say YES to any deal just to grow, you will have a random cost structure vs. one aligned to your brand promise. With an unaligned random cost structure, a bad economy or good competitor will put you at risk. Your business cost structure must align to your revenue strategy and brand promise for profitability as well as to prove to the market who you are and avoid being a causality.

A company’s integrity never shows more clearly than when their team is being considered for a contract and says, "NO, I may not be the right partner for you," or when you hold steady on a value-based price.

Saying YES to every deal, price, and customer demand is not creditable and screams “I am a commodity – we will do anything for a sale.” Always saying YES forces the buyer to question everything you say. It is only when you say NO that the buyer understands who you are and what your brand promise really stands for.

Three things likely happen when you say NO:

1. The buyer wants you more because they have found someone of integrity who wants to partner with them for the long-term, not just complete a transaction and get a check.
2. When a buyer can’t buy from you because there is not a good match, they know who you are and can refer you to their friends and peers since they are now clear about what you really do, and they often know someone who needs exactly that.
3. Your brand gains clarity with every NO by showing your market the focus and bounds of your brand promise.

Saying NO gets you leverage because it erases the buyer’s confusion, mistrust and lowers the risk of not really knowing what they can count on you for.

As important as it is to say NO to demonstrate your integrity and establish a cost structure supporting your buyers, it is just as important to demonstrate integrity to your staff and partners. The only way for staff and partners to align with you is for them to know your true strategy and execution plan. Saying NO makes these clear. Every time you say NO (with integrity) your whole team gets a better idea about when to say YES.

That buyer will pay more, sign faster and be more likely to buy from you when you run a business based on integrity. The only way people can know the difference between BS and integrity is when and why you say NO -- so say it purposefully!

The market will know who you are by your actions. When you say YES to everything or say NO without integrity, you lose control of who the market thinks you are. So take control and prepare to say NO by:

1. Getting really clear about your company strategy.
2. Building a clear and executable revenue strategy to support your company strategy.
3. Being very specific about what niches you will dominate.
4. Knowing the exact problem you solve for your buyer that no one else solves.
5. Building a culture that delivers your brand promise 100 percent of the time and saying NO to everything else.

Start saying NO and liking it!

Related posts:

1. Sales Is a Relationship Business – Right???
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
3. Have the Courage to Create a Brand!
4. Thought Leadership is a Business Strategy
5. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 3

So which is it?   Forecasting revenue is always tough, but since 2008 it has been the most taxing in over 50 years.  To get it right in 2012 you need to “Change the way you look at things and the things you look at will change”  

Try a new set of glasses to look at 2012 and get a view of revenue growth you can predict and control.  The glasses are new, produced by using the science of "Revenue Generation" giving you a clear look at the path to revenue success in this decade.

The old glasses designed just after WWII and were based on a fulfillment strategy.  Those glasses showed clearly that no other place in the world could produce products, technology, education, leadership and services like North America.

North America had a solid political structure, effective banking, lots of raw material, energy, and an educated work force that had just supplied products and services to winning armies worldwide.  The rest of the world was bombed out, broke, in political turmoil and just starting to put their business and personal lives back together.

Anyone in the world who had a need for goods or services turned to North America and their needs were satisfied by a highly productive community building more capacity every day.  The glasses that North America used to view the revenue path showed success as more capacity!  Virtually everything that North America could build, someone, somewhere in the world would consume.  As long as the quality was good enough, there was a growing worldwide middle and upper class to pay for it.

Sometime in the 70’s the glasses started to fog when Japan and Europe starting building GREAT cars, TVs, computers, appliances, etc.  Not only were they building great stuff, it cost less than the North American version.  Still, the glasses showed the roadmap to be more capacity, but this time, with workers making less per hour.

At the time of the dot bomb, a new set of glasses hit the market and those glasses “changed the way we looked at things” and “those things we looked at changed”.

This is what we saw:  The world had way too much capacity, the world had new middle and upper classes everywhere, and everyone was outsourcing, off-shoring, using the same software, technology and production best practices.  So after 50 years the playing field was level and in North America we had expensive labor, outdated business models and high cost structures.

However, the new glasses clearly showed North America the road to success and it still required all the skills developed in the middle of the 20th century, plus the lessons learned from the global community at the end of the 20^th century as well as a new science and discipline called "Revenue Generation."

This new science of "Revenue Generation" rewards those B2C companies that practice the science, with a return of up to 10 net margin points and rewards the B2B companies with 20 or more net margin points.  Those with the new set of glasses were observing the Science of "Revenue Generation" and the power it has to dominate markets and predictably deliver profitable revenue.  That level of success in 2012, starts with continuing to execute world class manufacturing, logistics, supply chain, and financial practices combined with great leadership just to get in the game.

Once in the game, the winners master "Revenue Generation" and go-to-market.  For a lot of products the largest expense is the combination of sales, marketing, advertising, customer service, product development, and other forms of revenue support.  Often, this cost for "Revenue Generation” is larger than all the rest of the expenses.  Going forward this must be mastered.

Today, not only is the cost of go-to-market high, but the efficiency is low, and the real variable for proving revenue success is not science based, but luck.  Two critical metrics to remove the need for luck are the "Cost of Chaos" for producing revenue and the “Cost Per Sales Hour.”   Those two combined with the 10 key process metrics from the revenue roadmap, give you control over both cost, and top line growth.  These metrics allow predictably and forecasting the future as well as measuring the past.

If small and midsize business get new glasses and focus on:

1. Going beyond the 20^th century definition of a good company;
2. The science of "Revenue Generation" to win the go-to-market war;
3. Driving out the costs built in to support aimless capacity:
4. Developing a revenue strategy
5. Getting serious about removing the "Cost of Chaos", managing the “Cost Per Sales Hour” and the 10 KPIs of the Revenue Roadmap, and for the next decade they will be accurate in their forecasts while those with the old glasses will live in fear, and slowly slip away.

Related posts:

1. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 2
3. The Cost of Chaos – Part II
4. When Do You Say NO in Order to Sell More?
5. The Opportunity Cost of that Special Deal

This post was first developed for the CEO membership of VistageConnect.com, Vistage International revolutionary new online community built for the express purpose of developing executives using virtual peer advisory sessions.

TV’s hottest show is Mad Men. “Viewers see Mad Men as a polished reflection of their own -- and their parents' -- life and times.”

I grew up in that world of the ‘50s and ‘60s where “a relationship” was born from and measured by  booze, lunches, expensive Christmas gifts, trips and other benefits. My grandfather was a purchasing agent for General Motors, and Christmas at his house looked like the loading dock at Macy’s with multiple Silver Tea sets, more than one color TV (rare items then), many bottles labeled “Johnny Walker,” large boxes of fruit, mixed nuts, and those cards with tickets to the Kentucky Derby, Florida and Europe showed up each and every year.

That was how to build relationships back in the day of Mad Men -- you picked the person who could do you the most good and buy -- or I mean, build a one-to-one relationship.

The Mad Men definition of creating relationships with goodwill and gifts may still persist in a few places in the world. In all but those rarest of places, the Mad Men definition of relationships has changed.

Today, all significant purchases are touched by a number of individuals, systems, metrics, reviews and laws. With all that oversight on a deal, it is hard to conceive of a sales person creating that many Mad Men relationships to cover all those players throughout the buying process to win against those competitors who deliver real value.

For many reasons, good sales people abandoned the Mad Men relationship model 30 to 40 years ago, but the myth persists for those salesmen who may not know better and for management that watches too much TV.

For these two groups, the myth of the Mad Men relationship just keeps on going -- they think a one-to-one Mad Men relationship will carry the day. Mad Men and Jurassic Park make great entertainment, but both are about things that are extinct -- dinosaurs and the Mad Men relationship.

So move on!

Today, not only has the definition of the relationship changed, but so has who the relationship is between.

In 2012, the relationship is not about gifts (lunch, trips, golf, etc.). It is about value shared between the buyer and seller. The relationship is between your customer and your “brand promise.”

If there is a gift today, it is the gift of your brand promise, which creates the relationship. Sales or any other member of your team may develop a personal relationship with members of the buyer team. These relationships are a result of delivering your brand promise and helping solve your customer’s business problems, but today it is brand promise first and personal relationship second.

The biggest change wasn’t the definition of the relationship but the forms of the relationship. A relationship can still be person to person or it can be person to brand or brand to brand or brand to person. In this virtual, transparent world, even a trusted adviser relationship does not have to be with a person.

Many of us trust and rely on the brand promise from Apple, Facebook, Mayo Clinic, IBM, Amazon, Expedia, Coca Cola, Google, McDonalds, Southwest Airlines and many other relationships that don’t require a golf game, a drink, a gift or even another human.

Steps to take if you want to build the right 21^st-century sales relationships:

1. Build a brand promise that your customers, staff and partners can count on.
2. Solve a problem for your customers that no one else solves -- be sure the problem you solve will compel customers to engage with you.
3. Declare a niche to dominate so your customers see you as a necessary part of their business model where you provide high value as well as being easy to acquire and consume.
4. Make sure you stay in integrity with your brand promise -- that relationship with your brand promise is what your customer wants in this new transparent economy.

Finally, hire people who don't watch too much TV. (It drives them maaaaad, wink, wink.)

Related posts:

1. Thought Leadership is a Business Strategy
2. How To Fix A BOTW Business Model
3. Your business model, strategy, organization & execution: A year of CEO Challenges!
4. “Why can’t we hire a VP Sales who can deliver?”
5. “I’m lying awake worrying about sales!”

Alignment (Revenue Strategy + Execution) x (Structure)

Variable 4 - Structure:

Every organization has applied structure intentionally or unintentionally.  Companies create process, brands, messages, literature, training, software tools, etc. to help the execution deliver more results.  The variable of structure needs to be measured for its impact on the ability for execution to deliver results.

The structure investment can come in the almost unlimited forms and always needs to be recognized and measured against the change in execution.  If the resulting change in execution creates a positive ROI – great!  If it is not positive decide if it can be modified to become positive and most importantly compare each structure investment to every other structure option (in every part of the organization) to determine the combination that gives the greatest overall return when plugged into the formula.

There is ONLY ONE PURPOSE for structure and that is to improve execution.  NEVER invest in structure without knowing the organization's current assumptions about the benefits the new structure will provide for the improvement in the execution of “Revenue Generation.” After investing in the structure measure what really happens at the point of execution and compare that to the investment to determine if you can make changes to further improve execution to secure the best possible return on resources.

Alignment (Revenue Strategy + Execution) x (Leverage x Structure)

Variable 5  - Leverage:

We all want leverage and since the purpose of structure is to leverage an organizations ability to improve execution related to growth and profitability.  Leverage is either positive or negative.  The impact of the leverage shows up in the ultimate metric of more profitable revenue for the dollars invested short-term and long-term.

If there is a powerful brand that draws customers or if aligned execution creates repeat business and referrals then the leverage is positive.  Conversely if the whole organization goes to product training to learn how to pitch the product in detailed PowerPoint’s, how to deliver specification heavy demos and to create web videos that talk about company history the buyers will be convinced that the company’s goals aren’t about solving the buyers problems, but are about creating a transaction for the buyer, then the leverage is negative.

Strategy, Execution, Alignment and Structure individually and as a group control both the nature (positive or negative) and the amount of leverage, which changes the results from execution.

Summary:

Alignment (Revenue Strategy + Execution) x (Leverage x Structure)

Most organizations only focus on two things (execution and structure) and they both require budget.  Execution and structure are the two things a leader can buy with the expectation that things will get better, which may or may not be true.

In truth large amounts of money are misspent on these two parts of the formula.  CRM, training, advertising, trade shows, and websites are far too often large investments with little or no alignment and large negative leverage.  That means not only don’t they help get more profitable revenue but they actually increase the Cost of Chaos, while holding down topline growth.

As the Cost of Chaos increases any additional growth requires spending more and more money (on execution and structure) to get smaller and smaller returns (both topline and profit).

This is why an organization can be operationally excellent, win all kinds of awards for excellent structure (training programs, websites and super bowl ads) while their problems get bigger and bigger.

Everything a team does, every dollar spend is either aligned to the revenue strategy (assuming there is one with the 5 answers) or it isn’t.  Each action and every resource invested creates either positive or negative leverage and has a corresponding impact on growth and profits.

The choice is to apply this formula in an intentional way which requires the organization to apply the discipline of revenue science focusing on all five variables or let the world decide how to apply the formula to the organization.

Any organization that wants help applying this formula to win The Revenue Game should join those of us thinking like a CRO to implement the formula as part of the science of “Revenue Generation.”

Related posts:

1. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 2
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
3. “I have people who handle marketing and sales. What’s a Chief Revenue Officer and do I really need one?”
4. Uuuuuuuuuh, So WHAT’S My Job Again? The CEO’s Top Concern Is …
5. The Cost of Chaos – Part II

Revenue Strategy + Execution

Variable 2 - Execution:

Execution is what separates survival and success from frustration and failure.  Great execution is a variable that leaders have control over.  Leaders have control over how their teams engage, how many hours are worked, the level of training, who is hired and the words that are spoken.

As important as the ability to execute is remember that what is being executed should be spelled out in the revenue strategy so the combination of the first two variables looks like this:

(Revenue Strategy + Execution)

It is the combination that creates profitable results in the market.  The better these two are done the greater the result.  If one is strong the other gets stronger and if one is weak the other is weakened.  That is why they are placed in the formula together and multiplied by the degree of alignment.

Alignment (Revenue Strategy + Execution)

Variable 3 - Alignment:

The alignment variable is always between 0 and 1 with 1 being perfect alignment.  So if the revenue strategy is great and the execution is great and they are aligned with each other the result is the largest return possible for the revenue resources investment.  Whatever the value the strategy offers plus the results from perfectly aligned execution defines a maximum return on investment.  Anything less than perfect alignment decreases the overall return on invested resources accordingly.

When strategy and execution are not fully aligned then the alignment variable is less than 1 and when you multiple the alignment variable times the total possible from strategy and execution the actual return (topline and profit) is decreased by the same percent that alignment is less than 1.

Lack of alignment is one of the major causes for the Cost of Chaos, so focus on aligning revenue strategy and execution.

Related posts:

1. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 3
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
3. “I have people who handle marketing and sales. What’s a Chief Revenue Officer and do I really need one?”
4. The Cost of Chaos – Part II
5. Uuuuuuuuuh, So WHAT’S My Job Again? The CEO’s Top Concern Is …

The science of “Revenue Generation” has uncovered a formula for CEOs and CROs (Chief Revenue Officers) to use to successfully manage the growth of profitable revenue.

This formula has 5 variables that determine the revenue outcome.  The 5 variables aren’t optional the only question is how are they managed - intentionally or unintentionally? If you influence the variables then you have control over the revenue outcomes, which is how to exercise control over the growth and profitability of the business.

The CEO’s Formula:

Alignment (Revenue Strategy + Execution) x (Leverage x Structure)

Variable 1 - Revenue Strategy

Everyone understands that winning The Revenue Game is about success in the market.  Revenue leaders need clarity about what needs to be accomplished and the value accomplishing that brings to the market.  Telling that story to the leadership team and customers is critical.  The Revenue Strategy variable and the clarity it creates is a key way to assist in the execution of the dream as opposed to no clarity where each situation is treated as one of a kind.

The quality of the strategy determines the maximum value of the offer, what can be charged and ultimately the profitably of the offer and the business.  If the strategy has no value on its face the seller can’t ask a lot of money for it from the buyer and the seller will receive even less.

Intentionally developing value and clarity make the engagement safer for the customer and more profitable for both the buyer and the seller.  To have a strategy that safely delivers high value requires answering these 5 questions:

1. What is the brand promise (the experience the customer, partners and staff can count on every time)?
2. What’s the customer “problem” that that is solved that no one else solves?
3. What niches are dominated or will be dominated in the near term?
4. How is the ideal customer defined?
5. What are the key offer(s) to dominate the niche?

When these 5 questions are successfully answered there is a framework to link the next variable in the formula which we will discuss next week in the second part of this 3 part series.

Related posts:

1. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 2
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 3
3. “I have people who handle marketing and sales. What’s a Chief Revenue Officer and do I really need one?”
4. Uuuuuuuuuh, So WHAT’S My Job Again? The CEO’s Top Concern Is …
5. The Cost of Chaos – Part II

This post was first developed for the CEO membership of VistageConnect.com, Vistage International's revolutionary new online community built for the express purpose of developing executives using virtual peer advisory sessions.

What is the one job the CEO must be accountable for?

Imagine you just got the right people on the bus, and they are in the right seats.

Imagine that, in addition, you have successfully implemented 360 feedback, nailed down a good health insurance program that’s affordable, successfully tested a cross-generational leadership model, your team developed an offshore strategy, started receiving great customer service metrics from the CRM, and (finally!) you have a way to address capital requirements.

You have listened to all the experts and applied their thinking, backed up with reporting systems and process like ERP, CRM and ISO -- but when you go home at night and sit down at your desk with a glass of wine, your stomach is in knots from the fear that you can’t predictably grow profitable revenue.

So the question to you and every CEO who is trying to build that great customer service company culture is: “What is the one job the CEO must be accountable for?”

If I were a member of a Vistage group processing your issue of “What is the one job the CEO must be accountable for,” my feedback to you would be:

In this ”new economy,” you are accountable for only one thing – continually growing PROFITABLE REVENUE.  STOP focusing on all those other things that sound nice and focus only on predictably growing profitable revenue.  Align your company to anything that ethically supports growing more profitable revenue.  If it aligns and creates execution leverage, it deserves attention and resources.

Anything that cannot be shown to support growing profitable revenue is a distraction, creates chaos in your business, confuses the market and puts you at risk.  Remember you can do everything else right, but if you don’t keep growing profitable revenue, you will first become irrelevant and then go out of business.

The right people on the bus, Green business, high customer satisfaction levels, CRM, ERP, ISO or a great culture are only really great when they align with your revenue strategy and leverage revenue execution. Any program, process, tool or methodology that is not aligned to a very specific revenue strategy, while at the same time providing leverage to help the field execute profitable revenue growth, is a threat to your existence no matter how well intentioned, implemented or operated. Anything not aligned to your revenue strategy is an anchor holding down growth while reducing cash flow and profits.

Steps to take if you want to challenge what you THINK you know:

1. Focus on your revenue strategy and structure in order to leverage aligned execution, which virtually guarantees your success in the 21^st Century. Everything else either supports profitable revenue or gets in the way.
2. Ask your team to help.
   • Have them write down a one- or two-sentence description that defines your current revenue strategy. Now you review the results for alignment and clarity.
   • Then have them answer the question: “Do they believe the total organization’s primary focus and commitment is to align around this revenue strategy: Yes or No?”
   • Next ask, “Will this strategy produce long-term profitable revenue growth: Yes or No?” (You need a “yes” to both.)
   • Make a list of the Top 5 areas that you commit resources to today, by function: Finance, HR, Operations, Supply Chain, R&D, Sales, Marketing, Senior Leadership, Planning, Business Development, etc. Then ask your team to put a “+” or “–“ next to each to reflect that function’s alignment and contribution to profitable revenue. A “+” requires both alignment and positive contribution --  and everything else is a minus.
3. Summarize your results and decide what you think the next steps to an aligned revenue strategy are – once you have them, present them to your coach in your next one-on-one session.
4. After your one-to-one, take your plan for an aligned revenue strategy into an issue-processing group to have your answer questioned.
5. After the feedback from your Vistage group, field test your answer with at least 5 prospects, 5 customers and 5 past customers.

Adjust your plan, be flexible, don’t cling on to old-school ideas that no longer work, get out there and make sure you win The Revenue Game!

Related posts:

1. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 1
2. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 2
3. Your business model, strategy, organization & execution: A year of CEO Challenges!
4. The CEO’s Formula for Applying the Science of “Revenue Generation” – Part 3
5. Growth through Focus: It’s Clear as a Bell

That perfect set of circumstances that you’re waiting for is simply not going to happen. And you know that the longer you wait, the worse things get and the more difficult the issue becomes to address. So instead of procrastinating and suffering, have the conversation!  The key is to prepare in 3 separate steps.

1.  Prepare yourself emotionally.

• Draw on your emotional intelligence to become self aware of how you’re feeling.  Understanding your tendencies, what pushes your buttons and why, will help keep you from doing and saying things you’ll later regret. Don’t have the conversation when you’re rushed, upset, or unprepared for it.
• Ignore the assumptions you’re making and stories you’re telling yourself about WHY the person is behaving the way they are. People make up scenarios from their own perspective and that frequently leads  to false conclusions before the meeting has even started. Those pre-conceived ideas rarely lead to a good outcome.  After all, if the person you’re talking to  is a reasonable, rational, well-meaning person in general, than there must be something causing them take the actions they’ve taken. A common error is to assume people do what they do because of a flawed personality as opposed to the situation they’re in (she gets angry at people because she has a bad temper).
• Make a conscious decision to control body language because the body will convey more than 50% of the message. The employee will read the body language at the very beginning of the conversation, so decide in advance what you want to convey and how best to demonstrate that message with your body.  Without advance planning, body language is reflective and can torpedo the discussion without warning.

2. Gather data.

One of the biggest mistakes executives make is to go into a difficult conversation with an employee armed with either too little data or incorrect data. This leads to defensiveness, emotional arguments, and a loss of credibility. Do the homework that can make a difference between an explosive and damaging conversation, and one that is effective and builds the relationship.

3. Prepare for the conversation itself.

Once you know the key things that need to be said and have a format for organizing them, things become easier. Don’t fall for the myths that bad news needs to be coupled with good news, or that small talk is a good lead-in, or that the employee need a host of examples to “prove” your  point.

Susan Scott, an internationally recognized leader in skillful dialog and author of the book Fierce Conversations, recommends the following 7 steps to open the conversation:

Summary

Once the conversation has been opened in this clear and concise manner, keep it focused on the specific named issue and the path to resolution. The goal is to help the other person want to take appropriate action. Help them  understand what needs to be done and why it’s important, then decide together what the next step and ultimate solution will be. Always make sure that follow-up is part of the plan so that the conversation does not have to take place again.

A results-focused organization must possess the skills and the courage to execute on difficult and uncomfortable conversations.  Otherwise, problems grow and the organization stagnates.

Use these three steps to stay on track and keep the forward momentum going.

Related posts:

1. What are your odds?
2. The Accountability Conundrum
3. Your business model, strategy, organization & execution: A year of CEO Challenges!