Fast, right, cheap, and easy.

That's what customers expect today. And if you expect to deliver value, you'd better plan to make big changes. At a recent forum, re-engineering godfather Michael Hammer argued that to stay ahead of the curve, CEO's must adopt a radically different sales culture.

"The time has really,come to do something about sales, Michael Hammer told chief executives at a recent CE event in Boston. And he should know; as the godfather of re-engineering and process-centering, Hammer has been watching the clock more closely than anyone.

At the CE forum, sponsored by Deloitte & Touche Consulting Group, Hammer explained that success in the next generation of sales will mean a significant shift in strategy - away from individual acts of heroism performed by sales reps and toward an organization that views sales holistically, as an end-to-end process involving every department, from marketing to finance to logistics. By approaching sales - or "order acquisition" - as a process rather than an event, says Hammer, companies will begin to see things from their customers' point of view - arguably the best vantage point from which to win their loyalty, respect, and purchasing dollars.

- C. J. Prince

DEATH OF A SALES PROCESS 

Michael Hammer (Hammer and Co.): We need a different kind of selling environment. We have much more complicated products than ever before, and these complex products come at a much greater rate and greater frequency. It used to be you took the rep aside for an afternoon and that was all you needed. Now you spend more time being trained than actually selling. The traditional sales-rep-as-warrior-hero isn't going to make it any more. We need a new way of thinking; we need to look at sales as a process, not as an event.

Process means an organized series of activities that together get a result done. Traditionally, we thought of sales as an individual activity performed by individual sales rep heroes; that turned out to be a very naive view. Sales involves marketing, manufacturing, finance, and logistics. In fact, sales is the wrong word. The word we increasingly use is order acquisition. That's what it's about - getting that order. And by thinking about it end-to-end, holistically, as a process, you can get some dramatic improvements.

The problem is very few organizations have done that. They got involved in one of the great computer scams of the '90s: sales force automation. You give a laptop to the sales rep and hope he does something clever with it. But I travel quite a bit, and I've sat next to sales reps on planes; I can tell you what they're doing with it - they're playing solitaire. That's the No. 1 application of the sales force automation system. And the thing that's impeding sales reps from increasing sales is not that they spend too much time filling out expense forms. That's what you'd think from looking at the sales automation system. But that's not the difference between success and failure. What's required is to find better ways to deliver value to the customer.

Take, for example, Progressive Insurance, the fifth largest auto insurer in the country. They had a strategic imperative about a year or two ago: Some of the big established companies were coming after them in their niche market. And when a big deep-pockets guy like Allstate comes after you and you're Progressive, you've got a big problem. But Progressive is a gutsy company. In the early '80s, it had $100 million in premium revenue. It's now about $4 billion, and their plan is to be $10 billion by 2000. And you don't get that kind of growth without being gutsy.

Research showed them that a typical consumer looking for "auto insurance" will call three companies, and one of them will not be Progressive. So Progressive took out ads that said, "If you call us and spend 15 minutes with us on the phone, we'll give you a quote as to how much we'll charge for auto insurance. Not only that, we'll also quote competitors' rates, even if they're lower." That's quite dramatic. And it's the theme of making it easier for the customer. This develops a real sense of trust with the customer. You're helping the customer and they haven't even paid you yet. They like that. So it's not about sales reps carrying laptops; it's about thinking about the process of getting an order, seeing it from the customer's point of view, and rethinking it.

Another example is Haworth, a manufacturer of office furniture. Traditionally, if you wanted an office system, you'd go to an architect and have them design it for you. But it would typically take a couple of weeks until they even figured out what you wanted. So Haworth put in a computer system where the customer does more of the work. The customer and dealer sit in front of a screen and design the office system in real time. Instead of taking weeks, it takes an hour to get closure. Then, when it shows up, you don't send it back, because it's what you expected.

This means thinking about sales as something that actually adds value to the customer. We really have to be involved in a collaborative effort with the customer to identify the customer's requirements, configure a solution to meet their needs, and deliver it. And if we're working at cross purposes either internally or with the customer it isn't going to work.

Re-engineering was long misunderstood as something having to do with shrinking and downsizing and head-count reduction. It has nothing at all to do with that. It has to do with improving process performance as an enabler of growth. And the front end revenue generating processes are the next wave. The people who get to it first are going to leave the rest in the dust.

Arnie Pollard (CE): What would a future leading competitor look like?

Hammer: Obviously, that will vary across industries. One way to describe it is that the sales rep is no longer an order taker. Increasingly, orders are going to be automatically generated and transmitted. That's where the Net will come into its own. The sales rep increasingly is going to be the front person for a collaborative consultative problem-solving effort, rather than a solo.

Not all reps will adjust. One company estimates that 50 percent of the reps will have what it takes to make this transition, to learn the new skills, let go of the old model, and adjust. Not only does it require different skill sets, but it demands a different mindset. The traditional rep views himself or herself as a hero - a solo warrior. But there's no room for Master of the Universe types; it's about team players. And some companies are finding a lot of their reps are incapable of making that transition.

Henry Bertolon (NECX): We're instituting a team-based selling model ourselves. One of the pitfalls is that we know we're going to be faced with changing our compensation packages fairly often - more often than most. How do we make that transition rapidly but not too rapidly - and not too slow, so as to retain the good people?

Hammer: The catch is during the transition. It's possible to envision that if you make this work downstream you've got a very different profile of sales people with different backgrounds, at a different compensation level, delivering a better net to you when you take off cost of sales. But obviously you don't want that to happen too soon.

J.P. Donlon (CE): Sales is often associated with a certain personality type or profile. Does what you're describing call for a different kind of individual?

Hammer: The short answer is "yes." We find that sometimes existing sales people have to learn to change their style. I call it a personality transplant. Some organizations are actually putting very non-traditional people into sales roles and find they're doing very well. They're taking people who have interpersonal skills out of operations roles and, by coming out of an operations role, they're more accustomed to a team process kind of operation.

Fred Pratt (Boston Financial): There's a lot of thought going into how companies deal with customers. Would you differentiate what you're advocating from the customer intimacy so many are promoting?

Hammer: [Customer intimacy] is a goal that in some cases makes sense. But there are some environments where that's not what you want. When you're dealing with a commodity business - low margin/high volume - you can't afford that. What you have to do is decide in a particular market what relationship you want to have with a customer and then structure a sales process to deliver the right kind of value to the customer in that market at a competitive price. In certain high value-added kinds of situations, you want a very intimate relationship with customers, while in others, the costs of providing that intimacy are probably prohibitive. Increasingly we're seeing people creating the illusion of intimacy. That's where information systems come in.

There are four things the customer wants: Fast, right, cheap, and easy. In interacting with you, the customer wants you to do it fast. He wants you to get it right. He wants it to not cost a lot. And he wants you to be easy to do business with. And it's depressing how infrequently we meet those four requirements.

Ed Kangas (Deloitte Touche Tohmatsu): We believe now that selling is one of the most important value-added pieces of the entire client engagement. You're scoping the project; you're determining what the problem really is, what kind of talent has to be brought to bear. That early-on interacting process is some of the most important consulting that goes on with a client.

GETTING STARTED

Donlon: What are the preparatory things you must do before you try to get this sales process right?

Hammer: There are two or three things you need. One is, you need to create a new generation of people. They can be the same people, but they need to be resocialized. New training, new style, new skills. The other thing you need is new infrastructure. We're talking about integrating a process that's fragmented across the organization; without information you can't really have an integrated system that gives you availability and pricing and commissions configuration. We're going to see incredible growth in that area.

Bo Manning (Deloitte & Touche Consulting Group): A lot of companies are investing in getting sales reps more prepared. But what's happening is it's actually benefitting the strategies more than the sales reps in the sense that if I now have a system that allows a sales rep to do a price quote very quickly, my marketing people can change the price every week, instead of every six months. And they're extending that to, if I can tune my prices to markets, I want to tune my sales reps to market-changing conditions.

Hammer: One of the characteristics of the new kind of organizations taking shape is an amazing commitment to measurement. The truth is, measurement is one of the most embarrassing parts of most organizations. There are too many measures, not enough measures, very few that make sense, and none of them are used for anything. And the reason for this pathetic state of affairs is based on a rather arrogant assumption that execution is easy, that if you have the right idea, you can just send people out to do it, and they'll do it. In fact, execution is extremely hard, and you need very careful metrics and instrumentation to know what you're about.

When you move to this kind of stuff, there are three areas where you have to expect to spend a lot more money. One is systems technology, to provide that integrated platform. The second is training. And third is measurement, to have really careful calibration, careful instrumentation so you know you're performing - in real time, and not at the end of the year. That's a big shift for most organizations.

Manning: People are starting to realize that it's different from sales force automation in the past, where you counted activities and at the end of the day, you knew you did a lot of them, but you didn't know whether that was a good thing or a bad thing. There are systems and instructions now where you can count the mid-term outcome for the sales process. And who cares whether it took you 10 activities or five activities to get there. You can count the outcome. And we're starting to do some stuff where for the first time, sales managers aren't relying on a sales person's forecast, but on some pretty process-specific benchmarks in terms of how fast opportunities are moving. So I think there's a ray of hope on the sales process now, given the ability to track outcomes as you move through.

Bryan Batson (The China Business Group): For what we're doing in China, we don't have a re-engineering problem. We have the advantage of being able to build these things from scratch. We can take these lessons and apply them directly. So we don't have the turnaround problems you're all facing.

FOR THE LOVE OF IT 

Richard J. Labrecque (ITT Fluid Technology): The technology is tough. There's a lot of training required. For example, these enterprise systems are very good in the back room; but until very recently, they've had very weak front ends. We had to introduce them to other software developers who had good front-end modules. And, in some cases, we actually promoted a merger of the two to integrate the systems. Because when you sit down with a customer and design a pumping system and you want to convert that into a logical number stream you can download to your factory and have your computer spit out the manufacturing paperwork, you better know what you're doing.

As far as incentive training, we found that our old timers tended to have wonderful industry and process knowledge but didn't know which keys to punch on the computer. The young guys coming out of college were very good on computers but had to learn the industry and the process, So we set up a school in our major factories with state of the art computational equipment in there for our older folks. And we take young guys out of college and teach them the industry and the processes and the modeling skills. And we've also had to train clients because we basically generate the software and give it to them either on CD or they can download it on the Net. It's been a huge training exercise.

Hammer: A mistake that's often made with technology is to think that it substitutes for something else. Many people thought that video conferencing would be a substitute for face-to-face and that it would reduce travel costs and things like that. It almost never works. Video conferencing is a capability of its own which has certain virtues. Primarily it allows you to do things that you wouldn't have done before, but it's almost never a substitute for something you were already trying to do.

For example, companies are finding that video conferencing is good not to substitute for face-to-face meetings, but to add additional interactions you wouldn't have otherwise done for a different kind of thing. So not for negotiation and problem-solving, but for information exchange.

One of the virtues of electronic communication is that it can be done at non-traditional times. So rather than trying to take the broker's time during his producing hours, you create a situation where he can dial up your system off hours to get information, at no cost to him.

Kangas: The most important thing, if you really want to get serious about team selling, is to make sure the customer wants team selling. Too many people are always looking for the new idea, the new trend, the new way to sell. But if you can satisfy yourself that there's enough value added to the customer by the team-selling process, it will work well.

A Who's Who Of Forum Participants

Bryan Batson is president of The China Business Group, a consulting and investment advisory firm with offices in Boston, Beijing, and Shanghai.

Henry Bertolon is president and CEO of Peabody, MA-based NECX, a $500 million centralized exchange for the buying and selling of electronic components and computer products.

Andrew M. Carter is president of Boston-based Andrew M. Carter & Co., a $500 million fixed-income investment advisory company.

Stephen E. Gibson is president and CEO of The Colonial Group, Inc., Boston-based group of mutual funds with $17 billion in assets under management.

Michael Hammer is president of Cambridge, MA-based Hammer and Co., Inc., a business-education organization.

Edward A. Kamgas is chairman and CEO of New York-based Deloitte Touche Tohmatsu, an accounting, auditing, management consulting, and tax firm with group turnpover of $7.4 billion.

Richard J. Labrecque is president and CEO of Midland, NJ-based ITT Fluid Technology Corp., a $2.1 billion pump company and a subsidiary of $8 billion ITT Industries, Inc.

Bo Manning is a partner in New York-based Deloitte & Touche Consulting Group, a division of DTT.

Fred N. Pratt, Jr., is chairman and CEO of Boston-based Boston Financial, a diversified real estate investment advisory firm with $5.6 billion in assets under management.