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Letter from the Editor
Terry is on vacation and will resume his letter from the editor in August.
In the meantime, please enjoy these two lengthy, but packed articles.
Customized Training – Sales and Interviewing
Recently a prospect asked if Entelechy had any training on helping software sales professionals increase their success in finding employment. Talk about your “one-of-a-kind requests!” Of course, we said yes! The fact is that with our portfolio of over 40 modules and our capability in customizing training, we really DO have something that addressed the client’s specific and unique needs.
As part of the bid process, we wrote up an article on the subject that I’d like to share with you. If you’re a software engineer looking for a job, this article was written for you. However, if you’re a trainer or HR professional or manager, look for the threads of selling and interviewing skills that were gleaned from Entelechy’s modules and see how our unique twist of intangible
software sales skill cements the content to create a truly unique course – I mean, article.
Effective software sales professionals know the importance of communicating value. Selling software has always been challenging since the “cost” of the application –
the disc, the manual, and the packaging – amounts to mere pennies. Of course we can speak to the cost of research, development, testing, and so forth but the customer often turns a deaf ear to these arguments. Positioning the value of a product based on the relative cost of the product is a loser’s game. Unless you position the value of the product to the customer’s needs – to THEIR pinch points or to THEIR dreams – you will be unsuccessful in your sales.
In a lot of ways, selling yourself is a lot like selling software: The product – as nicely packaged as it is, with tantalizing promises emanating from its marketing (your resume) – often isn’t enough to make the sale. Those who get hired provide something others don’t. Those who are successful in the hiring process know how to communicate the value of their experience, their skills, their potential, their education, their energy, their creativity, their attention to detail, their ability to work independently, their ability to work with others, ….
In this article, we’ll use the skills that you’re already familiar with – software sales – and apply them to interviewing and hiring.
As you know, customers buy for their reasons, not yours. The product or service you sell has a cost and a perceived value in the customer’s eyes. When the cost of a product is $100 and the customer perceives the value to be less than $100, one of two things must happen: you must either reduce the cost to be in line with the perceived value OR you must increase the perceived value to justify the cost.
Perceived value is the customer’s perception of the total solution’s worth, excellence, usefulness, or importance with respect to them or their business. Value addresses the customer’s question, “What can this solution do for me?”
Similarly, when you’re interviewing for a job, interviewers are comparing cost (salary, benefits, training) with perceived value (the speed with which you can ramp up, your ability to contribute, your ability to get along with others, your potential, etc.). The greater the perceived value versus cost (as compared to all other candidates), the greater your chance of landing the job.
The key to success with sales – selling software or selling yourself – therefore, is increasing perceived value. You can increase perceived value in the interview process by following these steps:
- Identify what this company needs from a person in this position. Is it creativity? Ability to work independently? Knowledge of specific technology or markets? Ability to work as a team member? Sales volume? Profitability? You can usually get this information straight from the job posting, the company’s website, and
recent articles about the company.
Explanation: Knowing what the company wants will help you position those skills and traits that are meaningful to them. While you may be a team player, if the company is looking for someone who can work independently, being a team player may be considered low value or even negative value.
- Rank in order of importance the knowledge, skills, and traits that you’ve listed in the first step.
Explanation: Knowing what’s MOST important is key when positioning your skills, knowledge, and traits.
- Prepare value statements that match your skills, knowledge, and traits with the most important needs identified in the second step. How does your experience and training relate to THEIR needs? What does your award as top sales producer at XYZ Company mean to THIS company and this position? Unless you explain what you did to BECOME top producer, the interviewer might just assume that you got lucky! Also be prepared to describe HOW WHAT YOU DID can be valuable to this company. You may say, “To become top producer, I focused my prospect list and followed a well-planned campaign over the period of six weeks. It’s this type of focus, planning, and execution that seems to be important for success here at XYZ company because you’ve gone beyond the start-up phase…”
Explanation: Don’t assume that someone reading your resume can translate your skills, education, and experience into what it means for them or the company. What’s obvious to you is not obvious to others. Be prepared to cite your experiences, skills, and knowledge in value terms to the interviewer.
- Ask questions. Good sales people ask questions. Good interviewees ask questions as well. When positioning value statements, ask, “Am I correct in assuming that this skill/experience is important in this position?” If the answer is “no”, you now have the opportunity to ask, “What IS the most important skill/experience required for this position?” and then position a new value statement.
In fact, you may even start the interview by gathering some critical information. I’ve found the following beginning to be effective: “I’m fully prepared to present my skills, experience, and capabilities that are relevant to this job, but it might help focus the conversation if I knew the top three things you’re looking for in this candidate….”
Explanation: There are three types of people who go to interviews: those who are less than fully prepared; those who are fully prepared but sit and wait for questions and the opportunity to present; and those who get the job by asking questions that uncover information that they can leverage.
- Close the interview. How many interviews have ended with a handshake, a smile, and a “we’ll be in touch…”? Good sales people know how to close and ask for the business. Good interviewees know how to ask for the job. Of course, you have to use finesse.
Most interviews end with the interviewer asking, “Are there any more questions that you have for me?” Instead of saying, “no”, ask, “Sure. How did I do? Do I seem like a fit for this job? How do I measure up with others you’ve interviewed?”
Explanation: Two VERY important things happen with this closing. First, you find out if you’ve missed the opportunity to position something that was of importance to the interviewer; you can do your positioning NOW (better late than never!). Second, if the interviewer THINKS that you’re a strong candidate but doesn’t say it out loud, those thoughts are easily changed; you’re number one until the next candidate comes in for an interview. Thoughts are fleeting because they’re private. Words are less fleeting; they’re public. THOUGHTS are theories to be disproved; WORDS are stands to be defended! Use questions to get the interviewer to say the words, “You’re a good fit for this job; you’re the top contender for this position.” (And if you’re NOT a good fit for the job and the interviewer tells you why not, you have an opportunity NOW to learn from the interview and make the next one even better.)
Apply your selling skills when selling yourself. Position the value that you would bring to this company and to this position.
This information comes from Forming Business Relationships, a module in Entelechy’s
High Performance Sales training and Superior Selection and
Interviewing, a module in Entelechy’s High Performance Management
training. Check out these modules as well as our 40 other modules, training tools, and eGuides at
www.unlockit.com.
Sustaining and Disruptive Innovation – An Interview with Dr. Clayton Christensen
Recently Entelechy had the chance to work with Dr. Clayton Christensen, the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School and author of three best-selling books on innovation:
The Innovator's Dilemma, The Innovator's Solution, and
Seeing What's Next. His research provides some rather disturbing insights into innovation. In fact, if you're a company that listens closely to its customers, you may be doomed to failure! Read on....
According to Dr. Clayton Christensen, there are two types of innovation, sustaining innovation and disruptive innovation.
Sustaining innovation is what happens to good products at good companies: they are enhanced and improved; features are added and functionality is increased. Customer input is valued and actively sought. Profit margins increase as the products are improved.
Disruptive innovation, on the other hand, creates new markets or significantly alters the definition of the traditional market, often to a point where incumbent companies don’t want to “play” in this new market. For example, Xerox, the acknowledged leader in high-volume photocopying, ignored the desktop photocopier market – a disruptive innovation in that it redefined the market as one of individuals in homes and small offices and NOT as one of copy centers at large companies – and today is only a minor player in that lucrative market.
Note that the distinction between sustaining innovation and disruptive innovation is NOT whether the innovation is incremental or radical. For example, the technological differences between high volume and desktop photocopiers are relatively insignificant. Also note that innovation doesn’t mean “better”; in fact disruptive innovation typically begins with inferior products. In their infancy, desktop photocopiers were unreliable and resulted in poor quality photocopies. In its infancy, cellular phone reception was significantly inferior to land-line phone reception. Personal computers were little more than expensive toys.
However, these disruptive innovations appealed to markets unrecognized or consciously ignored by incumbent companies. Who would want a desktop photocopier with such poor reliability and quality? (Answer: small businesses, a growing work-at-home industry, etc.) Who would want to carry a bulky cellular phone and deal with such poor reception at such high cost? (Answer: increasingly mobile professionals, sales professionals, etc.) Who would want a toy/computer that could only perform functions slightly more advanced than a good typewriter and calculator? (Answer: as it turns out over time, EVERYONE!)
In his book, The Innovator’s Dilemma (p xii), Christensen states:
The list of leading companies that failed when confronted with disruptive changes in technology and market structure is a long one. At first glance, there seems to be no pattern in the changes that overtook them. In some cases the new technologies swept through quickly; in others, the transition took decades. In some, the new technologies were complex and expensive to develop. In others, the deadly technologies were simple extensions of what the leading companies already did better than anyone else. One theme common to all of these failures, however, is that the decisions that led to failure were made when the leaders in question were widely regarded as among the best companies in the world.
Disruptive innovations often cannot be leveraged within the existing corporate walls because the very things that make the current product successful and profitable – the company’s resources, the company’s processes, the company’s values and priorities – all favor the “old game” and work against the “new game.”
While examples of disruptive innovation bringing incumbent companies to their knees abound in all industries, many of us are familiar with the collapse of mini-computer and small-mainframe computer giants in the late 1980s and early 1990s. Companies like Wang, Digital Equipment Corporation, Prime, Data General, Nixdorf, and Hewlett-Packard collapsed in unison.
Using Digital as an example of an incumbent company facing a disruptive innovation is useful in illustrating Christensen’s theories. In the business press of the 1980’s, Digital’s success was invariably attributed to its brilliant management team. Its products and services were brilliantly conceived and executed; its employees were efficient and capable. Its mission clear: Continue providing customers with leading edge technological innovations.
And then, about 1988, Digital collapsed. The business press was quick to attribute its failure to the ineptitude of the same – formerly brilliant – management team. How could those good managers get that bad overnight? The standard “bad-things-happen-to-good-companies” explanation is that Digital suddenly found itself in a new league, one in which they simply couldn’t play. But that explanation never quite resonated with Dr. Christensen because every small-mainframe computer manufacturer in the world collapsed in unison. Christensen believed that something more fundamental than bad management was involved. That something was, of course, the advent of the personal computer, a classic disruptive technology. But it wasn’t the personal computer per se that caused the collapse; it was good, sound management practice.
The mini-computer and small-mainframe manufacturers had a cost structure that allowed them to succeed in the mini-computer and small-mainframe business. They had to sell their increasingly complex machines direct to their customers. Direct sales required a lot of training, support, and service. To cover that overhead, Digital had to sell their machines for $200,000 to $500,000, and at a gross profit margin of 45-60%. Competition in this space was fierce, fueling the flames of features and functionality.
At the same time, others were touting the personal computer as the wave of the future. Business plans for these products, in the most optimistic of times, promised margins of just 40 percent and more often 20 percent or less. Back then, PCs sold for about $2000 and the performance was so abysmal, they could only be sold as toys or crude word processors.
None of the customers of the mini-computer or small-mainframe manufacturers would think of using a PC, given the way computers were used at the time. The more closely the manufacturers listened to their customers, the more adamantly their customers told them, “The PC is not important to us.” And it wasn’t. At that time. For these customers…
At the same time, the financial community, seeing the mini-computer and small-mainframe manufacturers wrestling with the PC decision, naturally encouraged them to go where the margins are most attractive. Fiduciary decision-making was simple: should we develop products that we could sell to our best customers and that would improve our profit margins? Or should we develop products that none of our customers would buy and that we’d have to sell at non-existent profit margins?
Christensen’s theory of disruptive innovation is played out in Digital’s own press releases. Digital’s customers, while shrinking in number, remain steadfast in their conviction that Digital was on the right path in creating increasingly complex technologies. As reported in an April 1998 press release (after the company had been sold to Compaq), Chairman and CEO Robert B. Palmer held steadfastly to his company’s philosophy about complex and expensive technology, the Alpha 64-bit chip, a technological breakthrough for its time:
“Our competitors who lack true 64-bit solutions would like people to believe that the future of Alpha is in question,” Palmer said. “Nothing is further from the truth and it is clear that customers see the benefit of deploying the highest performing platform in the industry.”
And later in the release, a high-margin, large (and probably vocal) customer was referenced:
A prime example of customer confidence is a $100 million contract awarded by the Dealer Services Group of Automatic Data Processing Inc. to Digital. ADP has selected Digital’s 64-bit AlphaServer UNIX-based systems to support its new Millennia3 Series computing platform. The system will enable 18,000 dealers nationwide to manage mission-critical applications, large databases and multimedia data with unmatched speed, capacity and reliability.
It seems clear even in the rhetoric of the above statements that the company was over-serving its customers; for every one vocal supporter such as ADP, hundreds of other customers and potential customers quietly voted with their feet – and headed for PC-Land.
Yet, even as the company was in its death throes, it continued its attempt to convince those in the financial community of the soundness of Digital’s future by pointing to gross margins:
Product gross margin was 36.2 percent compared with 35.3 percent in the third quarter of fiscal 1997. “Our gross margin improvement has been a corporate success story,” said Chief Financial Officer Vincent J. Mullarkey. “We have shown consistent improvement year-over-year. Our aggressiveness in refreshing product lines has provided customers greater performance and functionality while utilizing more cost effective product designs and manufacturing processes.”
Christensen’s theories explain that margins continue to increase because the lower-margin products and services are being taken over by attacking companies, sometimes with the blessing of the incumbent company. Further locking the company in a death spiral is the refinement of its processes to eke the last penny of efficiency in building products that fewer and fewer people want. Companies become so adept at doing the wrong things well, that they would need to incur ruinous costs to change their manufacturing, production, and sales/distribution processes to accommodate new innovations.
So why didn’t Digital simply cede the technological victory to the PC, bite the bullet, and switch to manufacturing and selling PCs? According to Christensen’s theories, it is impossible for a company to simultaneously continue sustaining its current product innovations while investing in disruptive innovation. Not only are the resources (people, equipment) and processes (infrastructure, manufacturing) geared completely wrong, the competing priorities – invest in the old game or invest in the new game – would paralyze the company.
Only two major computer manufacturers from the age of mini-computers and small-mainframes have successfully migrated to selling PCs: IBM and HP. In both cases, these companies set up autonomous business units with the freedom to go about the new business in a way that worked for PC market, from design and manufacturing to pricing, marketing, sales, and distribution, even to the detriment of the parent company.
As Christensen concludes in The Innovator’s Dilemma (p 207):
In their straightforward search for profit and growth, some very capable executives in some extraordinarily successful companies, using the best managerial techniques, have led their firms toward failure. Yet companies must not throw out the capabilities, organizational structures, and decision-making processes that have made them successful in their mainstream markets just because they don’t work in the face of disruptive technological change. The vast majority of the innovation challenges they will face are sustaining in character, and these are just the sorts of innovations that these capabilities are designed to tackle. Managers of these companies simply need to recognize that these capabilities, cultures, and practices are valuable only in certain conditions.
As managers and leaders, we must sustain innovation to succeed today; we must anticipate (or create) and leverage disruptive innovation to succeed tomorrow.
This information comes from our work with Linkage, Inc. in creating training materials to support their distance broadcasts. For more information about Linkage, please check out
http://www.linkageinc.com. For support with YOUR training, please contact Entelechy at
info@unlockit.com.
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