Sales & Marketing Management - May/June 2008 - (Page 31)

It’s not hard to be blinded by the current business model—even when that model is for a brand new product category. Questions every business needs to answer To re-examine the false assumptions that seem to have governed business for so long, we will have to look carefully at some very basic issues. You can’t come up with a new mental model for how to run your business today unless you can answer several questions: How do companies create value? Start with the simple and undeniable fact that every minute of every day, your company is going up or down in value. We’re not talking about your stock value here, but about your company’s actual economic value as a business (i.e., how a perfectly efficient stock market would value your business if it really did know everything there was to know about it). Your business creates or destroys value with every decision it makes, every action it takes, every customer contact or interaction it has. The kind of value logged in your financial statements has to do with sales made, or revenue received, or costs incurred. But more often, value is created or destroyed when, as a result of some decision or action you take, the overall value of your company as a financial asset goes up or down. For instance, when a customer’s complaint is not handled well, your actual value as a company declines just a bit, because the expected future cash flow from that customer declines. Until recently, it just hasn’t been technologically feasible to track or project these small changes in the value of a company, and from our experience the financial metrics are still pretty difficult. But it’s no longer impossible, and the point is that even as a purely mental construct this idea has some extremely important implications for how you manage your business. Why do customers have more power? People around the world are talking, blogging, texting, e-mailing, posting and networking more than ever before, and in the future everyone will become even more connected to everyone else. One small aspect of this technologically-enabled social development is that your customers now find it much easier to connect with other customers and share their opinions about your firm. You have to think about the customer’s friends, co-workers, family members and anyone the customer has on speeddial—the customer’s social network. But guess what? Networks aren’t as rational as people are, and are prone to highly unpredictable behavior. www.salesandmarketingmanagement.com How can you use the network and your corporate culture to make better decisions? As the entire world has become more cost-efficiently interconnected, most businesses (probably including yours) have begun relying on interactivity to run their operations more smoothly. Employees e-mailing other employees, rather than phoning; invoices delivered electronically; orders submitted on the Web; business travel booked online; meetings held in self-service, password-protected conference calls; proposals, business plans and other lengthy documents composed in sections and assembled effortlessly, without so much as a shuffled file folder. Many businesses have thinned out and flattened their organization charts, automating or outsourcing the vast majority of more routine business tasks that used to be handled by full-time employees. But while companies for the most part have used interactivity as a mechanism for streamlining and cost-cutting, the cleverer ones have also begun using it as a way to improve management decision-making, as well. Sociologists have long known that a group of people organized toward a common goal (like a company’s employees) are capable of making decisions better than any single group member could have made—better even than the sum of all the members’ individual efforts. Employees electronically networked together can leverage this decision-making advantage, and People around the world are talking, blogging, texting, e-mailing, posting and networking more than ever before, and in the future everyone will become even more connected to everyone else. can easily come up with smarter decisions than all the “experts” at the top of the hierarchy. But it’s tricky, because while networked employees may be capable of making better decisions, it’s still the managers at the top of the hierarchy who have all the authority. How do you stimulate more and better innovation? It’s not your imagination. The pace of change itself is accelerating, which means that creativity and innovation are more critical to your company’s survival than ever before. Your organization must not only exploit its current opportunities fully, but constantly explore for more, as well. No matter how innovative or interesting your product or service is today, tomorrow it will be a commodity. And tomorrow comes faster now than it used to. MAY/JUNE 2008 SALES&MARKETING MANAGEMENT 31 http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - May/June 2008

Sales & Marketing Management - May/June 2008 Contents Editor's Letter Brian Tracy University Smart Sales Sales Strategy Smart Marketing Marketing Strategy Smart Management Management Strategy The Minister of Culture Become a Value Merchant Incentives/Motivation Streamlining Business Travel Book Excerpt The Way I See It

Sales & Marketing Management - May/June 2008

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