Sales risk - need for depth and documented process

Our firm worked on a diagnostic project for a generations-old company. The company has to modernize in many ways, including the documentation of the company’s processes.

To understand sustainable and profitable revenue generation, we took a close look at Sales. Two product divisions sell wholesale to distributors who will sell to the public, one division sells a
product for business use (B to B), and two divisions sell products retail
directly to consumers. In every division, there is little depth behind
the primary salespeople.

In no division is the sales process documented. All the information is in the salespeople’s heads. They could be making the same mistakes over and over. If a sales person leaves or gets
hit by a bus, any replacement will have to learn from scratch and the company
will lose both relationships and months of valuable selling time.

Many sales people (and old school sales managers) do not consider the time needed to invest in documenting the selling process as a worthwhile use of resources. However, the ROI on
such an exercise is indisputable in terms of future payback for the
company. The next step for this company, whether we help them or not, is
to analyze and document the sales process for each division, then focus on
improving each sales process (and marketing to support sales) for 2011 and
beyond.

Even this limited focus on structural capital will increase value and performance while reducing risk.

0 members like this

Replies to This Discussion

Permalink Reply by Peter Spence on December 1, 2010 at 6:22pm

Hello Michael,

Would it be reasonable to assume the work you had conducted was built into the company's risk management system - from the risk management perspective the IC risks associated with succession planning, identification and loss of key staff, hoarding and no scaling) of knowledge, loss of key relationships etc, should be built into the organisation's risk assessment and management process - and from what you have described this did not occur prior to your engagement. It appears this risk assessment focus should drive IC development, organisational performance adn value.

I note that you have recognised the role of risk management in your recent book with Mary Adams (Intangible Capital: Putting Knowledge to Work in the 21st Century:pp.115-117) and it appears the IC rating you describe would be ideal to categorise these risks. However, I wonder how strongly the risk assessment/management focus features in our current approach to promoting and also measuring IC.

Peter

Permalink Reply by Michael Oleksak on December 7, 2010 at 2:59pm

Peter -

You make a very good point about risk assessment and management. However, as you know, not all companies are sophisticated enough to have such a function. Your suggestion is excellent, and if the company had this type of awareness, the risks that I pointed out around the thin ranks of the sales staff would be of obvious concern.

Oftentimes with smaller companies, the suggestions to improve intangible capital and the infrastructure of a company have to be presented within the bounds of budget limitations and management vision. In this case, I presented my recommendations to enhance the documentation of the selling processes and transfer knowledge from the most senior sales people to others in the most tangible forms possible: tools to use, benefits to be gained, and risks of inaction. Maybe down the road the company will develop more sophisticated risk management processes (with the help of a good risk consultant!).

Thanks for your feedback, Peter.

Permalink Reply by Mary Adams on February 21, 2012 at 11:40am