SAM THE MAGNIFICENT – How I learned innovative sales practices from an old dog

2014 January 26
by Francis Gouillart

BUDDHISTS 10

 

I thought I was a great salesman. I was a young partner in good standing in my global consulting firm, selling enough business to senior executives in large corporations to be among the top ten producers in the firm. I thought I was a sales thought leader, and I was going to teach everybody about insight selling and next generation techniques. But when I met SAM the Magnificent, an old-school strategic account manager at my firm, I discovered he was way ahead of me. Here are five things I leaned from watching him.

1. Create a chain of empathy

I did not like SAM at first. He was an older guy, known for being the top salesman of the firm year after year. A strange twist of fate had made us partners charged with developing a large global chemical company account headquartered on the East Coast of the United States. He was as emotional as I was rational. He laughed loud, wanted to know everything about everybody, and always remembered something personal about his customers. I viewed this as an old-fashioned salesman’s trick and thought it was manipulative. “How about those Bruins?” he would always ask me, knowing my interest for Boston hockey, which irritated me no end. Over time, I realized he did not work at remembering those things: he just was that way.  He loved people and told stories. He had lots of them, and some of them were, shall we say, mildly revisionist. One of his favorite sayings was: “the best stories are made up,” which to this day makes me cringe. “People buy things from people they like” was his other mantra. “And I’m quite lovable”, he often added.

He was astonishingly intuitive about people. He was naturally curious about them, and would instinctively focus on their hot buttons, or their “red issues”, as we called them at the time. He immediately knew what people cared about, quickly figuring out something deeply personal and emotional to them. He knew they cared about rational business stuff as well, but did not particularly focus on that because to him, this was a given. I of course thought business was the only thing that mattered. He had the empathy of your average Saint Bernard and wanted to help people solve problems or advance their careers. Perhaps because he was approaching retirement himself, he loved “legacy clients”, i.e., senior people reasonably close to the end of their career who wanted to do a transformational project as their last hurrah. He would unavoidably sell large projects to those legacy clients. Like a good Frenchman, I could see his stuff worked in practice, but wanted to know if it worked in theory.

He talked a lot about himself, which I found distasteful. I thought of sales as an altruistic pursuit where we work on the other person’s problem, not our own. He spoke unabashedly about his life, previous projects, other sales he had made, personal family habits his wife would probably not have wanted him to spread around. He could connect any issue to something he had personally been involved with. He even boasted to clients that the project he was about to sell them would propel him to the top of the sales charts in his firm, and how much he was going to enjoy the all-expenses-paid week-end in New York awarded to top producers in the firm. I was hiding red-faced under the table during those exchanges. Not until much later did I understand the method behind his madness. Clients wanted him to win because he was focused on making them win. He believed the buyer’s and the seller’s experiences were inextricably linked. It was more than a win-win, more like a sense of shared destiny.

None of this emotional stuff was intuitive to me. Watching SAM the Magnificent, I learned to think of the customer experience as a small collection of highly emotional issues that made the customer’s life either painful (and therefore needed to be removed or alleviated), or aspirational (and therefore needed to be nurtured or created). SAM was amused by my attempts at conceptualizing in the form of an “experience curve” what he did so intuitively, but later joined me in innumerable training programs, using the experience curve as a foundation to teach what he knew to younger sales people. Much to his surprise, he discovered that even highly rational people can get better at experience once they learn to conceptualize it (although intuitive people will always be better at it).

2. Organize Problem-Solving Communities Who Sell for You

SAM the Magnificent used some strange tools. One of them was an oversized piece of paper he carried with him at all times. It was a full-sized flip chart page folded sixteen times over that listed in tiny hand-drawn letters the names of all the people he and his team thought were needed to make the sale on a given account. There must have been several hundred names on that list, from the CEO on down to maintenance managers in far-away plants. It took him a good two minutes to unfold the chart every time, carefully moving the beer mugs aside in the bar when we celebrated a successful sales call, or taping the giant chart to the car windshield when no bar was available. He lived and died by that chart. Next to each name was a smiley, neutral or sad face capturing the customer’s attitude toward the project we were trying to sell.

When people had a smiley next to their name, he made sure they stayed that way by having someone call on them regularly. When someone had a neutral or negative face, he started looking for people who could influence the reluctant individual.  Before becoming an account manager for a large consulting firm, SAM the Magnificent had sold large turbines for US utilities and loved electrical metaphors. He viewed influence networks as electrical circuits that needed to be closed. He thought of non-cooperating customers as “resistors on the line.” He brought on new firm resources “to introduce more amps into the sales grid.” He referred to the moment where negative customers flipped positive toward our projects as “turning on like a 1000 watt bulb”. With SAM, I learned to electrify the sales process by designing high-voltage circuitry.

SAM thought of selling as problem-solving, and he believed each sales problem called for a cross-company group to work on it. “Customers will sell themselves if you organize them properly,” he loved to say. SAM the Magnificent used his giant influence chart to mobilize the people required to solve the various aspects of the selling and buying conundrum.  And it worked like magic.

Over time, we learned that the mini-communities we had learned to set up for sales and project design purposes often wished to continue working together on their problems during the delivery phase of the project. This produced an intimacy of relationship that generated follow-on projects and new forms of long-term relationship between our consulting firm and our clients, eventually leading to new business models such as gain-sharing arrangements on operational consulting projects, or joint marketing of services to third parties. Our sales skyrocketed.

Today, when I find myself teaching sales groups about the possibilities offered by the new social enterprise tools available to sales people, I always think of SAM the Magnificent’s giant influence chart and how he would have loved to electrify it. Had he been born twenty years later, he would have been prodding his team to look up customer people on LinkedIn and would have encouraged the use of social selling tools to increase sales. Somewhere out there, he must be smiling.

3. Tell stories from data

SAM the Magnificent was far from an analytical type, but my relationship with him improved noticeably when he discovered I could do numbers. He himself hated numbers. All he could ever remember at any time were his team sales, his team sales quota and how much of a lead his team had over the next best sales team. But he loved being given the analytical fodder for a great sales pitch. He had a way of taking a complex issue and making everybody understand what was at stake.

He once stormed into the team room in the back office of the chemical plant trailer where we all worked and asked how we were doing in the development of the business case for the project. He needed something for a fifteen minute meeting we both had with the divisional head in a few hours. I told him we had some partial elements, including an analysis of which orders on the plant were profitable and which were not. We spent close to an hour going over the hundred pages of analysis my team and I had developed with the help of the plant controller, and showed SAM the company was taking several orders that were highly unprofitable once you allocated all the hidden costs to it.

“What’s the worst order they’ve ever taken?” he asked me. The “worst I’ve ever seen” line was a standard part of SAM’s sales approach. I showed him the ugliest order I could find, a marginal sale that that had required creating a complex production run on a high-volume machine, thereby destroying the productivity of the plant for three days because of the special material and quality control it required. “Let’s tell the story of this order”, he asked. This order became the stuff of legend. Although anecdotal, this piece of data did more to sell the project than any exhaustive analysis of financial opportunities in the plant. SAM had me develop a giant colored chart (for some reason, these charts were called “horse blankets”) and we took our horse blanket to the firm’s plants on five continents. I can still remember waiting anxiously at the Kuala Lumpur airport for our horse blanket to appear on the oversized item carrousel.

SAM did not ever develop data himself, but he knew the power of interpreted data. He had two data principles. He wanted the data to tell a story, and he wanted the data to be the client’s data as much as the consultant’s data. “Better have the data be a little wrong and the client strongly committed, than have the data be 100% accurate and the client uncommitted.” We all learned to fear the “is it your data or the client’s data?” question from SAM. Another more cynical quote from SAM: “if the client believes the data, it is data”. I learned to “co-create” data with the client.

Today, powerful analytic platforms allow the generation in real time of data that used to require large teams of consultants working in batch mode. Even with the advent of such sophisticated tools, the best sales people I work with remain in the SAM the Magnificent mold: they rarely do the analytical work themselves, but they know how to manufacture great stories from the insights supplied to them by the experts on their teams. Somehow, it is still about telling stories from data. I also learned that there are many more good data people than there are good story tellers. I still miss SAM the Magnificent.

4. Invent new ways to interact

Way back in time, long before the sales process had become global, SAM the Magnificent had pioneered the development of a new live communication medium. He hated PowerPoint so much that he had talked the company into hiring people whose sole job was to devise large hand-drawn, PowerPoint-like charts that would fit in an oversized suitcase. We would solemnly open the case for each presentation, thereby bringing a unique artistry to each meeting. This generated a Cirque du Soleil-like buzz, even in the firms with the most deeply-engrained engineering cultures. SAM would sit in the back of the group, gently prodding senior clients to react, while members of the team would expose the findings through those large drawings. We were often asked to sign our presentations. Client members would ask to borrow the charts to make the same presentation to other people in the firm. Client members wanted to jump in the ring and become artists themselves. They wanted to do the show. SAM had invented viral networking.

These hand-drawn interactive presentations were part of a larger SWAT team approach to clients’ problems called Analysis, which SAM had also been a pioneer of. Analysis was, to put it mildly, a euphemism. “The purpose of Analysis”, SAM told me when I first met him, “is to sell large global projects” (just in case I thought analysis was about analyzing). During an Analysis, SAM was the battle field general and the Analysis team was the Marines. A typical Analysis project would last six to eight weeks for complex multi-location transformation programs, and the team would literally move into the client’s location from Monday noon till Friday noon (we did go home for the week-end). The war room where the team worked and where early results were displayed became the hub of all transformational activities at each location, with the Analysis team inviting clients to come and engage in continuous fashion with the consultants. “If there isn’t at least one crisis a day”, SAM told me, “the Analysis team is not doing its job.”

Most clients had never seen anything resembling this level of engagement, and the sheer novelty of the approach became part of the franchise. Other plants in the client’s network would ask “to be analyzed”, generating new leads for SAM the Magnificent. The process was highly collaborative, but we controlled the mode of engagement. Analysis team would set up a joint team with the relevant functional people at the client, and before we knew it, the size of the sales team would double or triple through the addition of client people eager to sell their management on the project. By today’s standards, the tools of engagement we used were crude, relying mostly on 1950s group facilitation and team-building techniques. But the power of engagement was so strong that we were unstoppable. Our conversion rate ran consistently around 95% for years, with the average size of projects roughly doubling every year, producing 40% growth for our firm for a good twelve years in a row.

From SAM, I learned to think of each meeting as an opportunity to engage on the basis of some facts or data. “The question you will ask them from the chart is as important as the facts on the chart” he once told me. “Hardly any sales folks ever think of asking questions. That’s what I do.” He had a little note book where he wrote down quotes for later use. I directed him to one of Picasso’s famous quotes: “Computers are useless. They can only give you answers.” Many years later, he kept quoting Picasso to me, as if I had never heard it before.

5. Let new sources of value emerge from the engagement process

When I first met SAM, I believed in determinism and Cartesian logic. I thought I knew what problems our clients were facing, and having seen them many times before, I knew what solutions they called for. For example, inventories were nearly always too high and I knew how to organize a fire sale for obsolete inventory, reduce the number of storage locations, and teach the inventory management folks how to use the reordering algorithm we developed for them. I wanted to sell inventory reduction services as a packaged solution. SAM thought this was the worst idea he’d ever heard. He hated “solutions”.

The Magnificent approached every problem as if he’d never seen it before. He thought the very framing of the problem should come from the customer, not from us. I first thought this was a gimmick (after all, inventories were often too high indeed), but discovered over time that his seat-of-the-pants, make-stuff-up-as-you-go salesman’s demeanor was hiding a true brilliance. “If you keep selling the same thing over and over, you’ll keep doing the same thing and never find new sources of business value.” He thought of the sales function as the rudder of the corporate ship. Later on, when I became charged with the innovation function at my firm, he gave me the best advice I ever received. “You are what you sell” he told me. At first, I did not understand what he meant. A few years later, I realized he was right. What you decide your source of value to your customers ought to be is theory. What you sales people make up on the fly with their account teams and the firm’s resources is reality: the sum of the projects they sell is what defines your company’s offering, your business value and your business model. We are indeed what we sell. This is why sales forces are one of the best sources of innovation and organic growth for companies.

The world has changed much since the days when I worked with SAM the Magnificent. I have tried to track him down without success. The world of sales has changed dramatically with the globalization of strategic account management, the advent of new CRM and social selling technologies and the rise of Big Data. More and more sales forces accept that account management is no longer a staged process, more like a global dance that requires live engagement with customers and the use of analytics. The five basic lessons learned from SAM outlined in this article have become the foundation for the approach now known as co-creation and we have developed frameworks and tools that companies can tap into the power of these innovative sales capabilities. Behind all the conceptual razzle-dazzle though, I know all I have been doing is channeling SAM the Magnificent.

Personal business

2014 January 2
by Francis Gouillart

ML_Logo_Final_Blue_small

I can’t help it. Some projects get me excited and others don’t. I like teaching or consulting in the agriculture, food, chemicals, manufacturing, and hospital industries. I’ve never been comfortable with automotive, construction, pharmaceuticals, publishing or telecommunication. Sorry for my late admission to all of you who have hired me to work in those industries over the years. My heart was never in it, although my mind was doing its best to hide it. I gave you all I had, but not being able to “feel” those industries made it hard.

I have often wondered why this is the case. Simply put, I have emotional ties to some industries and this makes all the difference. Agriculture reminds me of the wonderful summers of my childhood  I spent on the small family farm in the Vosges Mountains of France, raking hay all day in the summer sun with my brother and sisters for a glass of grenadine and lemonade offered by the tenant farmer in exchange for our labor services. In the evening, we would drink the milk of cows we had shepherded back to their stalls at dusk. I can still remember the taste of this fresh unpasteurized milk and probably owe it the iron stomach which allows me to this day to travel around the world without ever getting sick.

My love of food comes from my French mother who cooked wonderful meals for her husband and four children every day, on top of being a most admired high school teacher. One of my greatest regrets is that I never asked her to teach me how to prepare her boeuf bourguignon or her blanquette de veau. My father did most of the grocery shopping and I often tagged along, asking my dad to add a bag of cookies in the hope it might contain a photograph of the last soccer player still missing in my collection. I love going to Whole Foods and rummage through fruit and vegetables because it reminds me of him. At Christmas, we would go to my grandfather’s house in Northern France and have a réveillon, complete with champagne, oysters, turkey and bûche de Noël. There was not much going on in this austere house in coal-mining country, but food was a feast and the glass of champagne and red wine I was allowed to have made the world into a magnificent place.

At the risk of mixing genres, I also like chemicals because as a German teacher, my father had a friend in Ludwigshafen, home of BASF, now the largest chemical company in the world. He’d periodically visit this teacher colleague of his, and come back with stories of spectacular industrial growth in Ludwigshafen which created envy on the part of his French children to learn about Germany’s economic miracle (the German word for it is the alliterative Wirtschaftswunder, which I repeated to myself like a mantra). I still work with BASF and know my father out there is proud of me. To this date, I love watching economic growth of any kind and have a high tolerance for the environmental cost of this growth, because I have seen how it can take a ravaged country like Germany after World War II and make it whole again.

I like manufacturing because I grew up watching proud textile and paper mills shut down one after the other around me. I remember seeing the hardship those shutdowns created for my high school friends. These plants were unconnected to my school-centric world, but I was curious from an early age on to discover what the dark tall buildings with their smokestacks were hiding. My father was always curious to know where each truck driving by our house was going, so I remember trying to put together an integrated picture of manufacturing in my town. When I finally set foot in my first paper mill much later in life, it was like a revelation, a sense of deep calling, having finally figured out what my life was going to be about.

My interest for hospitals is more recent, the product of having had family members struggle with various ailments. Advocating for patients in life and death situation triggers powerful emotions and I cannot help but feel frustrated in seeing the dominance of left-brained thinking (“the answer is electronic medical records”) when a properly organized group of nurses and doctors in any given hospital could solve immediate patient issues without requiring the large institutional investments currently being made. I will not rest until I have helped transform at least one hospital somewhere in the world.

Like most business people, I masquerade as an analytical, rational person trying to share practices and methodologies that I hope will be of help to others. Deep inside, my energy comes from a secret garden that is uniquely mine. I suspect all of us are like that. One day we will collectively face up to the reality that all business is personal.

Invest in me: the Malden experiment

2013 October 13

Invest-in-me

If diversity is valuable, why aren’t we seeing millions of dollars directed toward it?

For many of us, a strong philosophical belief in the value of diversity translates into a trickle of charity contributions and perhaps some support for diversity-oriented government programs. But if we believed in diversity the way we believe in, say, new technologies, we should see massive amount of private capital finding its way into businesses that rely on diversity for their markets, their work force or their suppliers. And we’re not seeing that. Not even close.

What gives? Either people controlling financial resources do not believe in diversity as a competitive weapon, or there is some inefficiency in the resource allocation system. There’s arguably a bit of both. Many investors are skeptical that diversity matters economically and in all fairness, nobody has yet made a compelling data-driven case for the return on investment (ROI) of diversity.  And for those who believe in diversity, there are few investment vehicles that leverage diversity as a strategy.

And so diversity devolves into this oatmeal of bland corporate statements about the merits of a diverse work force as the firm’s most valuable asset, mandated corporate diversity programs attended by yawning managers eager to return to their daily operational tasks, or minimalist corporate charity programs aimed at diversity-owned businesses.  And so, at the end of the day, business people relieve their guilt by contributing some personal money to causes that may include diversity.

After many years of advocating for co-creation as an economic model from the comfortable perch of my teaching, consulting and public speaking platform, I’ve finally decided to put some of my money where my mouth is (literally, the project is about food). I have become a small-scale venture capitalist. I’ve rallied a few similarly-minded friends and together, we’ve decided to invest a bit of our money in the development of a diversity project. My tougher capitalist colleagues still marvel at being called angel investors. As the place for our proof-of-concept, we have picked Malden, MA, a suburb of Boston with a rainbow of ethnic groups comprising its population and strong business and political leadership. Because there is a budding food tradition there, we have decided to start an industrial kitchen that will house food trucks serving the greater Boston area, an event space that we hope will attract both local youth and foodies from downtown Boston, and we are starting a kitchen incubator that helps local youth become food entrepreneurs through education and financing. This is not a charity, mind you. We want to prove that we can earn an above-market rate of return while helping employment locally and fostering greater sustainability of the local food chain.

This has brought a new joy to my life. In some ways, it is a project like any other, with its cohort of cash-flow statements and competitive analysis, with a new layer of personal financial anxiety. The primary difference, though, is that the people I work with are real, from young high-school immigrant kids applying for the incubator, to heavily tattooed food truck drivers working 14 hours a day, to middle-aged cooks who view us as an opportunity to finally create their own business. I dream of convincing some of the owners of long-established Malden businesses, often with a strong Italian or Irish heritage, to invest with us in the latest generation of Haitian, Moroccan or Jamaican immigrants because they remember how they or their parents did it. I dream of giving local Republicans a platform to demonstrate they can be both good business people and have a social sensitivity, and of allowing Democrats to demonstrate that they also know a thing or two about business development. I want Malden to become the prototype of new economic development for the nation, with business as the primary driver of success, in the great American tradition that attracted me to this country in the first place.

The problems we face are equally real. We’re struggling to find both women and ethnic representatives for our angel investment group. It is not easy to find a suitable building that meets zoning and environmental requirements. Finding financing of the scale we require has its challenges. And bringing together a team of such eclectic background into a common vision for the business is a daily grind.

Perhaps the most gratifying part of the Malden project is that I feel whole again. As Stuart Kauffman describes it, I now feel at home in the universe. It does not get much better than that.

The miracle of Harlesden

2013 July 16
by Francis Gouillart

job-centreWhen you arrive at the Harlesden branch of the UK unemployment office – called Jobs Centre Plus – the first thing you have to do is convince a giant of a man nicknamed Tiny that you have legitimate business there. When I arrived the first time, Tiny looked amused at the sight of my suit and tie, a little rumpled from my Boston flight that morning, and waved me in. A side-glance at the unbreakable glass partitions reserved for particularly “at risk” interactions between job advisors and job applicants further hinted at the grittiness of the place.

By the time I’d reached the top of the back stairway to our temporary office, I had learned that our mission was to help the local staff engage with the various Harlesden ethnic groups, particularly the Somali and Afro-Caribbean communities, including young black males who occasionally have, in the euphemistic language of the government, “law enforcement issues”. (I later learned that partnering with probation officers is a key part of the solution for job advisors assigned to those populations). I had touched tough neighborhoods before, particularly in our work with the French Post Office and with a difficult Boston neighborhood called Malden, but we’d never explicitly tried to engage those populations. I resisted the urge to jump on the first flight back to Boston.

The first sign of hope came from a conversation with my consulting colleagues who had already interviewed a lot of the Job Centre personnel the previous week. The team on the ground was young and enthusiastic. There was a twinkle in their eyes, a “what do we do now, chief” look that shamed me into rising out of my jet lag. Some advisors had told them about communities they wanted to engage. All we had to do was partner with their local management to set them free and ride the wave of their passion.

One of the advisors wanted to go to local schools and help organize a “work week” program that would allow young students to discover what working in local businesses is like, with the hope of giving them the desire to become productive later on, rather than passively gliding into unemployment. He told the touching story of his own kid who had learned through such a program that he was good at transcribing music into a music score, which had given him a lot of self-confidence. There was a quiet eloquence about him. There was one challenge, however: the program was supposed to be short-term focused (putting people back to work quickly) while his idea was to prevent people from ever coming to the unemployment office in the first place. With great pragmatism, the new head of the Harlesden office endorsed the idea and gave him a team. He was off to the races.

There were to be many other magic moments involving the Harlesden staff. Two women advisors took on the task of organizing the Somali community, from claimant and staff to employer and volunteer agencies. They painstakingly convinced young Somali males to come participate in workshops run by them (the women in the Harlesden office display a wonderful mix of compassion and toughness, which proved able to overcome even deep culturally engrained gender bias), then proceeded to invite  to the party small Somali shop-keepers who could give job applicants a first work experience. They also convinced several local Somali agencies to work together in partnership with Jobs Centre Plus (strangely, these agencies had never worked together before). From September on, these Somali agencies will run a Somali desk inside the Harlesden office, a first in the history of the UK unemployment administration.

Perhaps the simplest, most brilliant idea, was generated by the new head of the office: let the advisors co-create the mode of engagement they wish to have with their job applicants. Experienced advisors instinctively know who is truly looking for a job and wish they could spend more time helping them. Conversely, they also know who is trying to exploit the system and collect unemployment money while pretending to look for a job, and wish they could stop meeting as frequently with those people. Until now, administrative rules required that all advisors follow the same process with all claimants. In the system piloted by the new office head, each advisor gets to pick two claimants and can invest whatever time they desire to get them a job. This has liberated a massive amount of energy on the part of both advisors and job applicants who can now jointly define their unique path to success, thereby producing a quicker path back to employment for deserving applicants and generating faster off-benefit results for the office.

I am writing this from my hotel room in London, awaiting my flight back to Boston tomorrow. Today was the final presentation by the Harlesden team to the top management of Jobs Centre Plus in a posh downtown office in central London. These are the best moments in the life of the teacher that I try to be (in those moments, I always wonder who is teaching whom). The management of Jobs Centre Plus was impressed and praised the team, consultants and advisors alike. Watching the smile on the face of the Harlesden advisors proudly presenting their work to their management was the most gratifying thing in the world. I just wish Tiny had been there.

The scientist and the nurse

2013 April 21
by Francis Gouillart

Tortoise_and_the_Hare_by_o_kemonoOnce upon a time, a scientist and a nurse decided to tackle sepsis, the hospital-acquired infection that often results in death for hospital patients.

The scientist reviewed the existing scientific literature on the topic, consulted with world-class experts on the problem, and concluded that what the issue needed was a $100MM grant proposal to build a genetic data base of all sepsis patients. He went to the National Institutes for Health and talked its management into endorsing his study. He recruited three leading pharmaceutical and medical equipment powerhouses to fund the proposal. The Obama administration financed the rest of the effort and the scientist became a poster child for government-funded research, next to clean energy and electronic health records. He launched a peer-reviewed, double-blind, 20 year longitudinal effort to identify the genetic markers that put patients at risk of developing sepsis. “It is time to eradicate this killer off the face of the earth”, he told the New York Times.

The nurse went to her hospital. She recruited her colleague floor nurses and took them to the lab in the hospital’s basement. They started talking with technicians and infectious disease leaders on how they could reduce the incidence of sepsis. The hospital’s infectious disease specialist explained to nurses and technicians how the risk of death increases by 8% with every hour that passes before treatment. The nurses learned to identify early signs of sepsis on a patient’s chart and draw blood earlier. They were taught to calibrate the amount of blood required by the various tests. The technicians were permitted to walk up to the floors, and nurses came to the lab. The lab manager was convinced by the technicians to buy better equipment to test for a wider set of pathogens and produce results faster. They made sure the test results did not end up in a mail basket, even on week-ends. They hounded the doctors to look at the results of the tests and act upon them promptly. They told the patient’s family when results were available, urging them to have a conversation with doctors on the test’s outcome. “We won’t solve sepsis,” she told her colleagues, “but maybe we’ll save a few lives along the way.”

The scientist received fame and glory. He appeared at scientific conferences in Cancun and Ibiza. The pharmaceutical firms flew him to colloquia and symposia where he vowed audiences with his protocols. The Sepsis Foundation featured him on their web site. The Journal of Sepsis and Sepsis Daily wrote columns about his seminal work.

Meanwhile, the nurse continued to fight for the right to hold sepsis sessions in the basement of her hospital. The hospital’s Chief Medical Officer told his doctors he had reluctantly agreed to the effort: “they seem so motivated”, he said. The Chief Nursing Officer cajoled the truth a bit and told her nurse colleagues: “the CMO is fully on-board”. The Quality people started tracking infection results from the nurses’ data and showed sepsis going down at the hospital. Together, they went to the CFO and showed evidence of the improvement. Intrigued, the CFO agreed to go talk to the CEO.

“Of course, we can improve some medical outcomes through practices of this type”, the hospital CEO conceded. “But this sort of stuff is incremental and people-dependent. But our resources are so scarce with the new healthcare regulation coming on and we’re already on projects overload.  I can’t very well generalize grass-roots initiatives of this type to the rest of our network, can I? What we need is an authoritative study with a peer=reviewed, double-blind protocol. I think there is a national study on sepsis, and we should join in and contribute our patient data to it.”

The nurses and technicians stopped meeting in the basement. The scientist continued to triumph on the lecture circuit. One day, the great genetic predictive algorithm for sepsis may emerge. Meanwhile, patients will continue to die.

Editing seasons

2013 March 19

Working with a good editor involves a disturbing intimacy. The ostensibly professional relationship unavoidably grows into an invasive friendship when the editor gets inside your head. While massively grateful for the creation of order out of their synaptic chaos, most authors I know feel violated when someone rummages inside their head in this fashion (my wife expresses similar feelings when a cleaning crew shows up at our door).

I‘ve been working with the same Harvard Business Review editor for close to thirty years now (Steve Prokesch, senior editor), and we just completed our third article together. While an article every ten years does not exactly make me into Balzac (or Peter Drucker, for that matter), our relationship has gone through the same cycle every time, something I await, dread and ultimately love. I‘ve found there are editing seasons, each with a distinct experience of the interaction with him. Only upon completion of the full seasonal cycle does the beauty of our co-creation reveal itself.

When I approach Steve with a new idea, it feels like fall. We may have enjoyed sunny beaches together, but the leaves are long gone. I’m getting wet at the HBR door, he’s dealing with publication deadlines on more developed articles, and his mental space is limited. He points to the overlap between what I’m advocating and material already published by others. It feels like I’m being coached into oblivion, with an occasional ray of hope. I imagine Steve at editorial meetings, wondering whether to throw his weight behind my concept, in what I imagine to be a free-for-all of passionate editors each with their pet projects. Our experiences are inextricably linked: I’m looking for business immortality and I hope he’s looking at my proposal from an equally selfish standpoint, evaluating whether I’ll be fun to work with. He knows most authors to be arrogant and mercurial (Harvard professors are trained in condescension, particularly toward editors), allowing me to offer myself as a French pussy cat who’s modestly trying to express thoughts in a second language. Paraphrasing Victor Borge, I remind Steve periodically that English is his language and I’m just trying to use it.

Paradoxically, getting accepted for publication marks the beginning of winter in our relationship. After the Christmas party anticipating the literary birth a few months down the road, comes a season of barren landscapes and tall shadows. What I thought was a masterpiece in search of a few punctuation marks turns out to be a scarecrow with a carrot for a nose and sticks for limbs. Steve moves into his patient, but unrelenting mode. I‘ve learned over the years that an HBR article (at least in my field) needs a core framework, an anchor narrative showing a company applying the framework in some detail (ideally with live characters), a smattering of vignettes confirming others also use the approach, and a process sidebar for readers adventurous enough to who want to try it at home. Steve’s role at this stage is to poke at crevasses in the snowy landscape, exposing content holes and logic flows. When I start shivering in total nakedness in the bleak mid-winter, wondering why HBR accepted such a flawed project in the first place, he starts mentally rebuilding the piece and its author bit by bit, convincing me this is what I had in mind all along. When I hear “let’s work on the introduction first”, I know the snow blizzard is over and the slow march out of the winter woods has started.

Spring is now in the air. Steve is now like Edward Scissorhands, clipping leaves and carving out branches in our bushy manuscript, hacking at the Track Changes-induced multi-color foliage. Every paragraph that survives his cuts is a new bud. Corrections are the easy part, because I’m just asked to agree or comment. Queries are to be feared, because their Socratic framing often hides a “you don’t really know what you’re talking about” implication. Most anguishing is the laconic “huh?” that unavoidably conjures up the Niels Bohr-like comment that “this theory does not even rise to the level of being wrong”. The word count is still too high, the exhibits too numerous and the sentences too long. Steve’s favorite author is William Faulkner, mine is Marcel Proust, and while both are noted for their very long sentences, Steve keeps chopping up my paragraph-long lyrical sentences into small factual bits. Stress level grows higher at this time, as publication deadlines become more proximate. (HBR deadlines are still roughly patterned on the Gutenberg printing press process, the advent of digital printing notwithstanding).

It’s time for summer and fun in the sun. Publication time is close, bringing with it the anticipation of the finished product. Steve moves back into the shadow, his deed done, leaving me in the hands of other types of editors. It feels like being dropped at the beach with kids you don’t know, hoping your parents will come get you at the end of the day, though you’re not really sure. Executive editors come in with different views of what the piece should be about (no editing adventure is complete without at least one major thunderstorm late in the process). I‘ve learned to say “head” and “deck” instead of “title” and “introductory paragraph” to look good in publishing circles (Steinbeck-like cargo pants are my next move). HBR’s editor-in-chief makes the ultimate call when it comes to head and deck, giving him the right to call co-creation schmo-creation if he’s so inclined. Other types of editors become involved in nitty-gritty aspects (there are as many types of editors at HBR as there are pages in an average Dostoyevsky novel).

My first thought when I see the finished article for the first time is always for Steve. Of course, other people play a key role in the development of business articles: my co-author who’s framed the core argument with me, or the managers who’ve been the true actors of the stories we tell. When it comes to the quality of writing, though, the world may never know the extent of his contribution, but I do. I often think of E.B. White’s Charlotte’s Web’s last line: “It is not often that someone comes along who is a true friend and a good writer. Charlotte was both.” So is Steve.

PS: Steve has not edited this blog entry, which is why it contains mixed metaphors, split infinitives, Gallicisms and assorted grammatical and vocabulary errors.

 

When I’m 90

2013 February 26

I will always remember an old professor colleague of mine. I had not seen him in twenty years. He was the last person coming off the plane in Boston at midnight and looked quite old. He was disheveled, slowly dragging his oversized suitcase up the jet way, holding a half-open shoulder bag full of flip charts. He was still wearing the same patched-at-the-elbows rumpled suit, and his shirt was stained by markers ink. He saw me waiting for him, and a large smile illuminated his face.

“I’m just back from the West Coast”, he shouted at me from twenty feet away. “Three-day-workshop with a bunch of kids managing a high-tech start-up. Not so bad for a ninety-year old guy who does not even use Facebook”.

This image of my old friend’s triumphant smile has stayed with me all these years. The ancestral anxiety of any educator is irrelevance. This is particularly true those of us who teach innovation. I want to look like my old friend when I’m 90. I want to come off the plane, physically exhausted, but exhilarated at the thought of having just learned about a new industry. When my consciousness starts waning on my hospital bed, I want someone to whisper in my ear how neural networks and 3D reservoir modeling algorithms are built.

I’m not quite 90 yet, so I’ve got a bit of a head start. The front-end discovery part of any new business is by far where I have the most fun (I feel like I’m being paid to go to school). Writing-up success stories based on consulting work I have done and teaching them on the lecture circuit is the second best part. Everything in-between is just hard work.

I’m learning about six industries right now and feel like a butterfly in the orchard of knowledge. Three of them are fairly easy to grasp at the beginner’s level: we can all visualize how a grocery store, a hotel or a movie theater chain work. Three others have a higher educational bar: few of us have an a priori knowledge of flow cytometry, software-designed networks, or smart grid optimization tools. And even the “simpler” industries become complex beyond the basic level: there’s nothing trivial about figuring out how to manage the supply chain of a grocery store, optimize the occupancy rate of a hotel chain, or improve the average spending per spectator in a movie theater chain. As my synapses fire at decreasing speed, I pray that the wisdom of my years and the presence of younger brains around me cover for my reduced mental agility.

This is where the power of a cross-industry framework helps. In the co-creation business, one sees opportunities for new connections everywhere. Some people’s experiences can be connected together to form “chains of empathy” (for example, suppliers, employees and customers can all help a grocery store figure out what its strategy ought to be). One can fairly easily visualize data flowing across previously disconnected individuals and companies, and new insights being generated between them (in the medical, telecommunication or energy worlds, for example). I am like the Haley Joel Osment character in the movie the Sixth Sense: I see dead people.  Unlike him, though, I arrogantly think I can make them come alive.

If you one day see an old disheveled guy dragging heavy luggage and coming last off an airplane at midnight, do not feel sorry for me. My dream is being fulfilled.

 

 

Customers want to know how businesses make money

2013 February 3

 

Strange things grow in the darkness of many businesses’ economic models. If you think that businesses serve the needs of customers and make money by earning their trust, think again. Businesses are platforms balancing the needs of multiple constituencies, and their economic model is rarely what you think. More importantly, businesses don’t want you to understand how they earn their profits, because if you found out, you’d know many are not telling you the truth.

When you go to a grocery store, you assume the products being offered are those that the consumers want. You envision a customer democracy driving shelf space. But the grocery store is responding as much to the spiffing from suppliers as to the needs of customers. Customers matter some (the grocery store cannot really do without the brands that people love), but shelf allocation is really driven by the rebate terms granted by suppliers to the store, not by what you want.

If you’re an investor who’s placed money with a large bank (or even more so a private bank), you may naively believe your advisor has your best interest at heart. But in many cases, your advisor is investing into assets managed by the asset management division of the bank, with the asset management division “retroceding” a good chunk of its profit to the banking division. How can you trust your agent when you have no idea what incentives he responds to?

Why are investment bankers so despised? Because nobody understands how they generate their money. Given the darkness in which they operate, we assume they’re making tons of money (which is largely true), using reprehensible schemes (which is sometimes true). The inability to identify the real costs and risks involved drives a general suspicion. If we were to understand costs and risks, corporate CFOs and treasurers (and the public at large) could start trusting investment bankers again.

At Google.com, you may think the search results you’re provided are the result of some objective assessment of the relevance to the question you posed. But Google makes money from its advertisers, not from you, so whom do you think they cater to when you ask your question? They have resisted any probe from regulators on how their search algorithm works (most recently in Europe), which would be the only way to figure out whether the search is indeed honest, or whether it tilts results to Google-biased suggestions? As a result, many of us may use Google as the dominant option, but few of us trust them.

At Internet sites like Lending Tree, TV advertising urges you to come to them because they will get lenders to compete to lend you money. But what they really do is “source” you as a customer and bring you tied and gagged to one of their chosen (often second-tier) suppliers based on some pre-arrangement they’ve struck with them.

All of that is as old as business. Newspapers, radio and television have always been financed by advertisers, while pretending to be accountable to their readers, listeners, or viewers. Large cultural institutions like symphonies, ballets, and museums routinely raise more money from grants and donations than from people paying for performances or visits at those institutions. As a result, the editorial or content integrity of those institutions is constantly in question, since the economic model does not match the purported consumer-oriented intent.

So what’s wrong with that? The lack of transparency is what’s wrong. Customers should have the right to know the economics of the businesses they patronize. They should understand the motivation of the store being spiffed by suppliers, or how much money the asset management division earns from their business with the retail banking division. If they did, they might decide to not buy from those businesses, go to more transparent suppliers who do the same thing but make it transparent, or choose to engage directly with the other members of the ecosystem. After all, grocery stores increasingly invite customers to talk to their suppliers on issues of sustainability for example, so why not do it on price or profit issues? They might help small suppliers struggling to break into the store shelves’ line up without paying a ransom, or punish spiffing suppliers who over-buy space.

I have repeatedly found that people, when confronted with the economic reality of business, make intelligent choices. Customers want their businesses (and their businesses’ suppliers) to be successful. They’re often eager to participate in the co-creation of the business’ economic model. The only time where they want to punish businesses is when they’re not honest with them, as has happened with car dealers playing back-room pricing games: consumers have deservedly pushed the industry close to zero profit on the sale of new cars through the power of Internet transparency.

In the future, economic models will be increasingly the result of a co-creation between customers and suppliers, with businesses earning their profit through the intermediation they create between them. Making your business model transparent is the first rule in the new economic order.

At long last, I’m a tour guide!

2013 January 19
by Francis Gouillart

I always wanted to be a tour guide and last week, I got my chance. As a favor to a group of French retailers visiting the US, I took them on a tour of Wegmans, WalMart and Costco. Not too many international visitors pile up on a bus to visit New Jersey in mid-January, but we did. I had set it up as a Compare and Contrast exercise – teachers can’t ever organize anything without some pedagogical purpose– but one of my visitors suggested the trip should have an entertainment theme instead. “Like in Club Med” he suggested.  We toyed with a Soprano or Bruce Springsteen motif, but agreed the trip should be called The Good, the Bad and the Efficient (sorry, WalMart!).

At Wegmans, the quality of the food display earned great respect from my French colleagues, although I sensed some contempt for a culture that would deem food so unimportant as to be consumed inside a grocery store. When I suggested we should have lunch at Wegmans’ restaurant upstairs, I was told we needed “a proper place” instead. That place turned out to be the Bahama Breeze in Woodside, New Jersey. I learned this choice had resulted from a close call with the Olive Garden next door. We went for the not-so-tropical hamburger and fries, which everybody ate with exquisite fork-and-knife manners.

One of the greatest joys of being a guide for professional retailers, I found out, is to learn how to reverse-engineer anything you see into the store’s profit model. After a few minutes at Wegmans’, they concluded Wegmans could not earn investor-grade returns with such a high-quality, low-turnover food, particularly when served by such knowledgeable employees (they correctly inferred employees had to be trained and well-paid to answer customer service questions as competently as they did). Interestingly, few of the visitors spoke English, but watching employees answer my questions was enough for them to assess their competency. “I’d love to be a customer there” one of the French visitors concluded (although apparently not to the point of wanting to have lunch there), “but I would not invest in this store.” When they discovered the chain is private and only opens two or three stores a year (officially to control quality), they looked at each other with a knowing smile.

WalMart was deemed uninspiring, but cheap. “We used to have stores like that 20 years ago”, was the most favorable comment I heard. They pointed out everything that could be improved, from cleanliness to the spacing between screws on the hanging racks. There was an Apple table with a few iPhones on it, trying its best to look like a mini-Apple store, but there seemed to be few geniuses around, and even fewer customers.  We asked a friendly-looking clerk how big the store was. Her response was emphatic: “I have no ideaaaaaa!” I guess we were not at Wegmans anymore. My visitors were back in the bus within 30 minutes (Wegmans kept them interested for close to an hour).

Costco turned out to be the hands-down winner. “They must have about 4000 SKUs in here, probably about one thirtieth the number of WalMart” one of them estimated. We later found out they were right on the money. They estimated total sales for the store, sales per square foot, average ticket price for the store by looking at a few cards at the cash register, average demographics of the crowd, and split of brands vs. store brand sales. They even assessed the frequency of visits by building a quick model of yogurt and cereal consumption by an average American family buying two giant packages of each at every trip.  Beyond that, they concluded, an average American woman would no longer be able to push her cart all the way to the parking lot.

I hope I never have to teach or consult for those guys. Being a tour guide is a much safer profession.

I dream of Malden

2012 December 8

Lately, Malden, Massachusetts has entered my consciousness. I’m not sure why. Maybe it’s because a few of my Yelp friends from Boston have told me this is the “in” place for Ethiopian, Sri Lankan or Moroccan food. Maybe it’s because Business Week has made noise about Malden being a great place for kids to grow because of its diversity. Maybe it’s because a member of my family has some political responsibilities there? Or perhaps I’m just tired or organizing business communities in India, Latin America and Europe and want to come home in the evening?

I don’t yet know how to fit all the pieces in the co-creation puzzle, but I’m eager to figure it out. My typical gig involves finding a central business player eager to orchestrate the development of a mini-economy around itself: a large business, a bank, sometimes a public entity (although a profit-seeking business with a community bent provides the best anchor). Maybe Eastern Bank or one of the local savings banks could play that role? Banks – community banks in particular – can become great community co-creators since they make money by attracting local savings and lending that money back to mortgage customers and businesses. By connecting all the parties with each other around local growth and utilizing the physical branch as a local meeting place, one can drain a lot more savings and generate a lot more loans, often at below market rates, simply because people are passionate about making their community a better place. I have done that in Saint-Etienne, France and Guadalajara, Mexico, for example. Why not Malden? Eastern Bank, you look like a supersized community bank with a great community bent. I’ll bet we could significantly increase the income of your savings and your lending business in your Malden branch if we could make you the center of Malden’s renewal.

On the business front, Malden does not have a lot of manufacturing businesses, but has great ethnic food restaurants that could grow and become anchor points for local employment. Could Malden become the food capital of New England? Could it engender the development of an ethnic food supply chain with ethnic grocery stores and perhaps some local manufacturing or distribution centers from the mother countries? I dream of Malden as a mini-Ethiopia, mini-Sri Lanka, and mini-Morocco, a diversity showcase attracting hard-core Bostonians to eat and shop there. (Malden has the advantage of having the Orange line connecting it directly to the heart of Boston).

Maybe we could get the young foodies from downtown Boston who already come to Malden for food to help us orchestrate the growth of these communities? Many of them are idealistic Generation X and Millennials generating good incomes from financial services, healthcare or service firms.  Maybe we can have a “Food for Thought” program (one of them suggested that name to me), where these idealistic foodies become business activists who help Habesha scale its outstanding Ethiopian restaurant business, or supports Moroccan Hospitality Restaurant in attracting more passionate people to its tagines?

Beyond the business imperative lies a social one: Malden needs help because the poverty rate there is quite high at 12%.  It’s a  neighborhood not far from where some of Ben Affleck’s and Clint Eastwood’s tough movies take place (the Town, Gone, Baby, Gone, Mystic River). Maybe we could get local boys Ben Affleck or Matt Damon to sponsor our Malden business community program?

I dream of this program as a business proposition, however, not a bleeding heart volunteer activity. There is business to be made at the bottom of the pyramid, and it happens to have positive social outcomes. I want the core business that anchors this program to double its profits, the owners of the Malden restaurants to become affluent and the employees who work there to derive good incomes from the new jobs created. I want the politicians associated with this program to become stars and sell the program as a model for other Massachusetts, New England or US towns. Personally, I want my wife and kids to discover what I do for a living and get to sleep in my bed at night.

Malden is the modern version of the American melting pot. It is a microcosm of our future economy, with its huge problems and the opportunity created by its diversity. The future of America does not lie in setting up the right tax rates in Washington, DC. It lies in weaving vibrant business communities at the local level. With politicians, bankers, restaurants, downtown foodies and citizens, let’s go co-create Malden.