I engage with manufacturers and sales organizations from a variety of industries. When we meet, management shares their vision and challenges. Invariably, their challenges generally lead to three common conditions. They are,

1. Unpredictable sales revenue
2. Failure to achieve objectives
3. Profitability

What is interesting is that these conditions are symptoms, not a source. Symptoms mask the source. When management solves for the symptoms, they also create dysfunction and chaos.

Most companies solve for symptoms, not the source of challenges.

History tends to repeat itself. Often these same repetitive conditions occur over years with the same repetitive approaches by management. A cycle is established.

The reality is customers, employees, suppliers, and shareholders expect 100%. In the end brands improve or become irrelevant.  

Bedrock and Leadership

We’ve all watched the demise of buildings slowly sliding down hills because they were not anchored to bedrock. Leadership is the bedrock of a successful business. All other components of the business foundation is anchored to the bedrock of leadership. Successful companies realize leadership is a critical and evolving role.   

Management from C-suite to line management are facilitators. They,

• Facilitate the success of their organization and teams
• Provide consistent guidance
• Are stewards of their culture
• Identify opportunities, then develop strategies to achieve them
• Hold employees equally accountable

Without effective leadership, culture is vague and assumed. Without a healthy culture there is inconsistent strategy and achievement. Dysfunction and chaos management is routine.   

#1- Unpredictable Sales Revenue

Customer attrition is the greatest contributor to unpredictable sales revenue growth. Even the world’s greatest salesperson can’t sell poor quality, service, and value for long.

Customers expect quality, service, and value to be 100% compliant. They expect innovation and new value creation from suppliers.

Customer attrition is often self-inflicted. And generally, it’s not about price, it’s about business practices. That’s where inconsistent quality, service, and value implodes the customer relationship.

“Customer satisfaction is transactional. Every satisfied order does matter.”

Consider this real time example. Management tasks sales with an annual growth number of 6%. Additionally, the company is experiencing a customer attrition rate of 5%.

Sales is responsible for overcoming the attrition percentage rate plus the sales growth rate. So, if the expected growth rate is 6% and the customer attrition rate is 5%. The true sales objective is 11%.

11% sales revenue growth is difficult to achieve in a challenged economy. And these conditions make it even more difficult to gain competitive advantage. If management had satisfied customer expectations, the attrition rate would be a moderate 2-3 percent.

Sure, every sales teams need professional sales training along with product knowledge and applications. But when poor business practices fails customer expectations, companies set the stage for unpredictable sales revenue.

#2- Failure to Achieve Objectives

Who is at fault when the organization fails to achieve its objectives? Is the burden of responsibility on employees or management? In my experience its generally managements responsibility.

The old acronym of SMART objectives comes to mind. That is (SMART-strategic, measured, actionable, realistic, timely). The concept is timeless.

I’m witness to many objectives that are not SMART. They are not SMART because the initial goal and strategy were flawed. SMART objectives then pursue a defective goal and strategy.

Poorly designed strategies plague even the largest companies. Larger companies generally have the financial resources to overcome or recover from poor decisions. Smaller companies do not have the luxury of financial resources to recover from poor decisions.

“Most company planning is focused on how to do something, rather than should they be doing it at all.”

Flying blind, assumption, or management by the seat of one pants is probably more accurate in describing dysfunctional strategic planning. In this case strategic planning is often focused on how to achieve a goal. Rather than, through careful vetting, should the company pursue and invest its resources in a more realistic goal and strategy.

Organizations utilizing a strategic planning model are more likely to make better strategy decisions. The level of success is parallel to the effectiveness of the plan. By doing so, more objectives are achieved.

#3- Profitability

Profit allows business to exist. Without profit, business ceases or struggles to exist. Without profit, innovation ceases.

There is a balance between product or service price and the customers expectation of what the price should be. Undervalued, the company and its employees become a commodity. Overvalued, sales stall.

Consider this, suppliers gain maximum profit margins when they are consistently delivering quality, service and value. Reality is quality; customers understand there is increased operational costs associated with operating a high-quality business.

“What costs the customer more, a higher price, or flawed quality, service and value from their last order?”

While competitors may offer lower prices, are they delivering total value? Quality organizations have learned through customer satisfaction scores they gain competitive advantage by delivering quality at 100% all the time.

Summary

Tacticware Business Systems is a provider of management systems, cultural systems, and strategic systems. Tacticware empowers organizations to reach new heights through training, communication, measurement, and actionable change. Each supports critical thinking and the processes necessary to develop high-capacity organizations.

Article Author

Paul R. Fournier is President of Tacticware Business Systems. He provides and supports business systems in Management, Culture, and Strategy.

Our systems allow organizations to go faster and further. Systems training, cultural assessments, and consistent support allow us to help achieve your vision.

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Read our valued book, Anonymous Cultures, Strategies in Culture Management and Leadership. Available from Amazon in paperback, hardback, Audible, and Kindle. Also available from Barnes and Noble, Apple Books, and other fine bookstores.

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