Tags

, , , , , , , , , ,

Image

Foundational thinkers are often politely dismissed on the excuse that “abstract” insights are difficult to apply to concrete situations. I will make use of Drucker’s paramount distinction between “doing things right and doing the right thing” to counter that popular belief using a concrete example: sales. But before tackling the sales example, let me make use of another foundational thinker of similar caliber, Russell Ackoff, to reinforce Drucker’s distinction. In Ackoff parlance, “doing things right” results in more efficiency, or improving a certain solution, while “doing the right thing” is a matter of effectiveness, or questioning the problem statement.

Now let’s move on to the sales example. In sales we are taught that the customer is king. And as long as the customer knows what he wants and what his problem is, this is great. But in many cases, particularly in today’s increasingly complex world, the customer doesn’t know what his problem is and may not even know what he wants. The more likely situation is that the customer has been struggling with some issue for quite some time and working hard by various means to fix it. Even with inconclusive results the customer is likely to have a strong opinion about the solution – a result of human ego and the brain being a problem solving device in constant search for patterns. Since paying customers are anything but shy, the envisioned solution is more often than not communicated to the vendor.

Here’s where Drucker’s and Ackoff’s insights come into play. The vendor has two alternatives: support the customer’s (potentially erroneous) view of the problem, or educate the customer. Since customers are human and likely risk adverse, it’s also likely that the envisioned solution is closely related to what has been tried before. This corresponds to “doing things right”, a focus on efficiency, same as before but better or more of. On the other hand, educating the customer may uncover that he has been working on the wrong problem all along, i.e. tackling the “wrong thing”, which is ineffective no matter how efficient the specific approach.

Pressures on short term financial targets along with the “customer is king” philosophy usually results in selling “efficiency” solutions. Pushing back on the customer’s understanding of the problem is seen as risky, and so the question of “is this the right problem in the first place” is seen as bad for sales. The prevailing vendor thinking is “if the customer says this is the right problem, then who are we to question that, especially if he is willing to pay?”. I propose that is a very detrimental business philosophy that compromises long term financial revenue potential for the vendor. Unfortunately very few vendors are immune to it.

I contend that educating the customer is much more financially profitable in the long run. Shifting the problem type has the potential for generating “step functions” in terms of revenue. That is because efficiency is quantitative in nature and therefore amenable to linear growth (there is a limit to “how much”), while effectiveness is a qualitative function that can generate non-linear growth. The risk for not challenging the customer on “the right thing” to be working on is that “doing things right” may not  generate results, and ultimately lead to a loss of the contract.

Gene Hackman’s outstanding rendition of Lex Luthor, the super-villain character of the classic Superman II movie, comes to mind as the ultimate “effectiveness” salesman, pushing back at every turn against the limited “efficiency” solutions of his omnipotent “customer” Zod. Luthor’s effectiveness sales strategy, though risky, ultimately pays off: he obtains an exclusive consulting arrangement and keeps his life.

Finally, jumping from Hollywood to Wall Street, what is Steve Jobs’ and Apple’s exponential success if not an example of a sales step function starting from a question of effectiveness, not efficiency?

Advertisements