Why you should run your business process like a refinery

Regardless of your position on fossil fuels, the sheer scale, complexity, and ferocity of a refinery will strike you with awe. At a refinery, as with any other process manufacturing facility, the best days are the boring days–ideally without any “unplanned pressure releases” similar to those experienced in the rocket industry. The cost of mistakes, in terms of operating income without considering the employee or environmental risk, can easily reach millions of dollars per day.

So, as we examine our own careers in search of fresh ideas and inspiration, an important performance metric from the process manufacturing industry called OEE can help.

OEE stands for Overall Equipment Effectiveness and is measured on a scale from 0% to 100%. While I will avoid an extended discussion of how to establish the 100% level, understand that OEE is the product of three terms: availability, utilization, and yield. Let’s explore how any business process owner can benefit from getting these three terms as close to 100% as possible, typically in that order.

Availability: when I push the green button, does it go?

Availability measures what percentage of total time a process or asset is ready to run when called upon. Avoiding the nuances of this calculation, let’s look at why availability matters in a business setting. Perhaps you are responsible for an email marketing system, or a database, or even human assets like a sales team. How much downtime does this asset experience? How often do the emails fail to send? How often is the database offline? How often does a sales rep call out sick or no-show for meetings? Clearly to make any significant improvement in overall performance, the availability of an asset or process needs to reach a moderately high and sustained level. Furthermore, the people responsible for the asset or process won’t gain the trust of the rest of the organization or have the credibility to advise on more complex issues until they get their availability in order. So, for most leaders, improving availability is a critical first step.

Utilization: when it’s available, is it running?

Utilization measures the percent of available time that a process or asset is operating. Any time spent idle, either waiting for inputs from an upstream process or waiting for a downstream process to take away its outputs will penalize both utilization and OEE. If availability is about solving maintenance and reliability issues, then utilization is about planning, scheduling, and load balancing across assets and between departments. Your database job schedule might need a closer look, or your lead flow process might need tweaks to keep a steady pace of calls and meetings in front of your sales team. Step back from an individual asset or process to look for gains in utilization at your “bottleneck” in order to reap the largest overall results.

Yield: when it’s running, is there zero waste?

Disciples of the Lean movement will readily rattle off the seven flavors of muda, or waste. Generally, yield losses occur when running at less than 100% speed and/or producing less than 100% first level quality output. Whether comparing the results of your asset/process to an external benchmark, an internal best, or a design capability, you will likely find yield opportunities easily. Typically yield optimization is the most interesting type of problem to solve because it requires delving into the unknown. For high availability systems, it is also the most frequent problem to solve–if it ain’t running, you can’t work on yield! So whether you are looking for a higher email conversion rate, lower error rates on database jobs, or higher win rates on sales opportunities, yield optimization is likely a well-trodden path for your team, and the harder you look, the more you will find.

Where to start? Follow the money

An optimist will see a low OEE system as a playground full of valuable and interesting opportunities. When looking across the areas of availability, utilization, and yield, it’s likely that different people will have different opinions on where to start. A straightforward and non-confrontational approach is to value each opportunity with a common metric, like $. With a straightforward spreadsheet you will be able to value what a 1% improvement in availability, utilization, and yield–above the current baseline values and holding the other two constant–will be worth on a per day or per year basis. This should not prevent your team from making improvements in all areas, instead it should inform prioritization in a resource-restricted world.

So whether you are a database administrator, marketer, or sales manager, take a page from the refining world and think about how to maximize your OEE. And you won’t even have to put on fireproof coveralls to do it.

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Key Concepts: Sales EQ by Jeb Blount

Key Concepts from the book Sales EQ by Jeb Blount

51kGfoyWJJLRecently I published a Quick Take on the book Sales EQ by Jeb Blount. Below is a table listing the key concepts that Blount introduces in the book.

Many of these concepts will be familiar to readers of other books on the subjects of personal development and effective communication. What makes Sales EQ such a compelling read is the way Blount introduces these potentially complex or intimidating concepts in a concise manner, all within the context of the unique relationship between a seller and his or her stakeholders.

Concept What it means Why it matters
Emotional scripts Patterns of communication between two people in familiar situations, reinforced by subconscious signals Buyers and sellers will repeat previous experiences, even when the individuals have never met, unless the seller can disrupt the conversation by using language that forces conscious engagement instead of reflexive response
Cognitive dissonance Discomfort felt when a person’s words and actions don’t align Reversing the micro-commitments made throughout the buying process is emotionally uncomfortable
UHP ultra-high-performance Blount’s term for the successful group of sales professionals who apply the book’s techniques
Heuristics Mental shortcuts that reduce the cognitive load in decision making Buyers make irrational choices, and instead use logic in hindsight to justify their emotional decisions
Cognitive bias Thought patterns that support people’s irrational choices Understanding how patterns like hindsight bias, attribution bias, and egocentric bias work can help sellers avoid direct challenges and increase engagement with buyers
Sales Intelligence Blount’s framework to describe what enables UHPs to outperform their peers Helps sellers identify areas of personal development for themselves and their sales teams
Innate intelligence (IQ) Raw cognitive capacity (“mental horsepower”), as determined by genetics, not trainable Behavioral traits common in sellers with high IQ can also make forming relationships difficult
Acquired intelligence (AQ) Knowledge acquired through training, study, and learning experiences Whether applied to the seller’s own capabilities, the deal, or the industry, working hard to increase AQ provides a competitive advantage
Technological Intelligence (TQ) The extent to which sellers use “adopt, adapt, adept” toward new technology in their roles Remaining open to the role of technology in sales, and learning how to use it effectively will give sellers an advantage over their peers who label themselves as “not savvy”
Emotional intelligence (EQ) Adapted from Goleman’s research; Blount’s definition includes empathy, self-awareness, self-control, and sales drive Sellers will positively differentiate themselves and gain a competitive advantage when they invest in developing high EQ
Locus of control Belief as to whether a person’s success or failure in life is his/her own hands (internal) or determined by outside factors (external) Internal locus of control often enables people to achieve high EQ
Win probability Likelihood that a seller will successfully close a deal Headline metric that UHPs focus on, which motivates their behaviors when prospecting, qualifying, and developing opportunities
Dual process Balancing relationship building with sales outcomes (i.e., winning deals) Sales-specific EQ means making equal investments in these objectives
Murder boarding Objectively evaluating win probability of opportunities in a seller’s pipeline by a peer or manager By removing biases caused by overconfidence or desperation, a seller can focus on the right deals
Micro-commitments Small steps forward in a deal, demonstrated by investing time, emotion, or action A buyer’s small agreements throughout a deal create positive psychological patterns and reduce the effort to close in the final stage
Take-away Seller makes a sincere offer to stop deal discussions based on a perceived lack of buyer engagement Stops wasting effort when the buyer is truly unengaged; creates scarcity effect in a buyer who is bluffing or following subconscious scripts
Next step Mutually agreed action or scheduled follow-up meeting Absolutely essential for a seller to secure a commitment to a next step in each buyer interaction, otherwise the win probability plummets
Self-disclosure loop The act of sharing personal information releases dopamine in the brain, causing pleasurable feelings and lowering inhibitions, which continues the cycle By asking open questions, using active listening techniques, and becoming comfortable with silence, the seller can gain control over the conversation and learn about the true needs and intentions of the buyer
Dual process discovery Questioning technique that builds empathy while revealing important details about the deal UHPs develop their own repertoire of questions that move from broad open-ended, to probing, to clarifying questions, while maintaining positive intent and empathy
Bridging Messaging technique that links the buyer’s stated (or implied) problem, to a personalized recommendation, to a planned result Avoids “pitch slapping” and increases buyer’s affinity for the seller, which positively influences decision making

Next up on leadertainment.com will be a downloadable summary of the major sections of the book Sales EQ by Jeb Blount. Looking for more great books? Check out the essential reading list.

image: amazon.com

Quick Take: Sales EQ by Jeb Blount

Quick Take on the book Sales EQ by Jeb Blount

Yes, this is a psychology book: it helps you understand human emotions, cognitive patterns, and communication styles in order to build more effective relationships. Jeb Blount’s book, Sales EQ, explains these concepts in the context of the very specific relationships that exist between a seller and his or her stakeholders.

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Most popular sales books focus on the sales process, qualification techniques, and the mechanics of closing (Sales EQ adds a few of its own, also). Let’s call these “the what” of selling. Other sales books define common personas, found in either buyers or sellers, exploring the attributes of each persona and how they lead to higher or lower win rates (Sales EQ also contributes to this category. Let’s call these “the who” of selling.

What sets Sales EQ apart, and what makes this such a unique and profound work when compared to other sales books, is how concisely and comprehensively it covers “the how” that sits behind both the what and the who of sales effectiveness. Blount takes the framework from Daniel Goleman’s research on Emotionally Intelligent Leadership (HBR, 1998-2001), and expands it to include concepts on decision making and communication introduced by authors spanning Cialdini, Pink, Heath, Carter, Ekman & the Dalai Lama, and more.

  • Has your team burned through a stack of sales methodology books and acronyms, from SPIN Selling, to The Challenger Sale, BANT, DISCOVER, MEDDIC, WOLFE, and everything in between, yet still struggles with low quota attainment and high turnover?
  • Have you sat in the room with a top-notch seller–either as a peer or a buyer–and been mystified with how effortlessly they get to “yes”?
  • Even more acutely, have you listened to a recording of yourself on a sales call and wondered “who is that monster and why in the world did he/she say that?”

For anyone who nodded to the questions above, or would simply like the convenience of finding 12 books on human emotion and communication condensed down in one volume, Sales EQ is a must-read.

Interested? Review my list of the key concepts from the book Sales EQ by Jeb Blount. Look for a downloadable book summary soon, here on leadertainment.com. In the meantime, check out other highly recommended books on the essential reading list.

image: amazon.com

If you can’t answer these three questions, you won’t increase revenue

In the words of Peter Drucker, patron saint of business leaders everywhere, “there is only one valid definition of business purpose: to create a customer.” Many professionals in private practice, such as designers, health care providers, architects, etc., rely on the quality of their work to sustain the growth of their business. At some point, repeat business and word-of-mouth referrals become insufficient to supply revenue required to grow (or sustain) a business. Larger companies often face the same challenge, but this post is directed more towards small businesses run by professional service providers.


Whether you have just set up your own professional service business, or are looking for more “tech savvy” ways to grow revenue, invest time in understanding the answers to the three questions below and you will see the payback very quickly.

  1. Who are my contacts, leads, and customers? Customer Relationship Management (CRM) has evolved several generations since the Rolodex. A web-based CRM database gives you secure, fast, permanent access to the contact details and history of interactions with everyone who’s paid you, and everyone who hasn’t – yet. Ideally, your CRM system will be integrated with marketing and content management tools (see below) to work more efficiently.
  2. Is my most engaging content reaching my most valuable customers? Brand reputation is maintained by the quality of the products and services their companies provide. But at any given moment, a very small percentage of the customers who are aware of a brand is actually purchasing from the company. The rest are either recent buyers (potential repeat customers at risk of buyer’s remorse) and future buyers looking to learn more about a company’s capabilities and form an emotional connection (because all commitments, financial and otherwise, are made with the head and the heart). To establish and maintain this connection, a firm first needs to generate great content, and then ensure it reaches key audiences through the channels they use most. This requires content management across multiple channels: web, email, blog, social media, and advertising. A structured approach can prevent spinning wheels and slipping down rabbit holes: here’s a very pragmatic checklist for creating a blog from Build.
    • Which tools? Squarespace and Jetstrap are powerful and intuitive website building tools, WordPress is a leading blog management site that can easily add more functionality, Verticalresponse makes managing email marketing with analytics very straightforward, and a presence on LinkedIn, Twitter and Facebook are table stakes for any business these days.
  3. Which lead channels are producing the most profitable sales? Don’t forget, you’re doing all this to make more money…so the last step is to check that all your contacts are reading all your content and actually buying more of your stuff. To do this, make sure the tools you choose provide the data–or even better, a button to click that gives you the answer–about which lead channels are producing the most profitable revenue streams. Should you increase your advertising budget, block out more time for in-person events, encourage more personal referrals, or nurture more repeat business?
    • Which tools? The CRM tools referenced in #1 above will all provide a sales funnel and lead analysis package. Of course this can be done with good old fashioned spreadsheets, too: feel free to contact me if you need help getting started.

Use these metrics to rev your Talent Engine: Intake stage

Now that we’ve defined the four stages of the talent cycle as Intake, Development, Delivery, and Transition, it’s time to define the key metrics that will help you manage the first phase. Without getting lost in the philosophical nuances between Drucker’s Management by Objectives and Deming’s systems view, let me try to instill some passion for metrics that spark change with two fortune cookie management quotes:

hiring-funnelSo what are the outcomes you are trying to achieve from the Intake phase of the talent cycle? Anomalies in these metrics will point you to the parts of the system that must change in order to achieve different results.

  • Time to fill open requisition
  • Percent vacancies (open positions divided by total positions)
  • Activity rate and yield for each step in the funnel (see diagram)
  • Yield by channel (i.e., sourcing, agency, referral, inbound application), job function, hiring manager
  • Percent of early exits (involuntary and voluntary terminations before 90 days of employment)
  • Satisfaction: hiring manager, candidate, new hire, recruiter
  • Percent of opt outs (i.e., number of candidates who withdraw at each step in the funnel divided by number of candidates who started that step)
  • Average candidate quality (based on assessments by hiring managers based on required qualifications for each role)

if your applicant tracking system doesn’t generate a dashboard of metrics similar to these, you may have to build your own. Start with a white board and upgrade to Excel or an easily configured database (like Quickbase) once you know what you want to measure, when, and how.

Next up: key metrics for the Development phase of the talent cycle.

What metrics have you used to measure talent intake? which of these are useless? Leave a comment!
image: http://www.sourcecon.com

Get your Talent Engine Revving: the Four Stages

Most leaders would agree that having the right talent on their teams is essential for success, and recently Build Network has confirmed this hunch in a leadership survey. The goal of this post is to provide some structure to the talent cycle and help leaders get the most from their talent by segmenting the tenure of any employee into four phases: Intake, Development, Delivery, and Transition. While similar to the four stroke engine cycle, we’ll try to limit the amount of compression and ignition we put our employees through.


Except for the stereotypical Japanese salarymen, very few employers expect to need more than one hand to count the average tenure of staff. And while the US Department of Labor’s 2012 data showed average tenure across all industries has increased to 4.6 years from 4.4 in 2010, data compiled earlier in 2013 by Payscale showed employers in retail and IT companies should expect closer to 2, as reported by Business Insider. And based on the bankrupt and bailed out companies at the other end of the Payscale list, and the bankrupt and bailed out countries in the OECD data set from 2011, seeing tenure rise above 10 years should be a warning sign (especially when long tenure comes along with unsustainable pension obligations).

So let’s make the math easy and propose you’ll get 2 years of contribution, on average, from your employees. I’m defining the Intake phase as the period from the first touch during recruiting through the first 90 days of employment. Take off the last month before exit for Transition, and we are left with 20 months. So if the goal is to maximize the contribution to the business from each employee, it’s important to “compress” the Development period, which I’m defining as the length of time required for an employee to become fully competent in role.

  1. Intake: starts with first contact with a prospect during recruiting, ends at day 90 of employment. Recruiting, onboarding, and orientation are key processes. Coordination between HR, Facilities, IT, Finance, and hiring managers is essential to establish new employees with high engagement and reduce early exits.
  2. Development: from day 91 through the point at which an employee is fully competent in role. Coaching, training, and peer support will help ensure employees can contribute high quality work, independently, as quickly as possible.
  3. Delivery: could be as short as a few months for organizations with low overall tenure and long intake and development periods.
  4. Transition: allowing for knowledge transfer from an outgoing staffer to the incoming hire. Internal promotions will allow for longer transition periods, but most US employment agreements expect only 2 weeks notice.

An upcoming series of posts (linked in the list above) will look at the key metrics to track in each of these phases of the talent cycle, along with the most important processes to streamline in your organization to ensure your team is happy, developing, and delivering at each phase of the cycle.

Setting goals only works if it’s personal. Four steps to do it effectively

Adapting Tolstoy’s famous opening line about families to business: “every unsuccessful business is unsuccessful in different ways.” One way that I’ve encountered in numerous settings is the disconnect between corporate goals and the work that people do every day. As we’ve come to understand employee motivation more completely over the years through the work of authors like Daniel Pink, being able to tie daily tasks to larger objectives or a shared sense of purpose improves retention and performance.
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But setting corporate goals is a difficult process because, by necessity, they are big. How can we phrase them in a way that is actionable — so that regular Joe and Jane can come to work each morning, do their best, and make a measurable difference? It’s a tough challenge, but surely the most profitable company in the world has this figured out…let’s see what we can learn from ExxonMobil’s goals!

Here are some excerpts taken from the 2011 Corporate Citizenship Report, which highlights performance and goals in six areas. Below are the first statements under “what we plan to do” for each of those areas:

  • Environmental Performance: “Continue to implement recommendations on improving oil spill response capabilities”
  • Managing Climate Change Risks: “Continue to improve energy efficiency by at least 10 percent between 2002 and 2012 across our worldwide refining and chemical operations”
  • Safety, Health, and the Workplace: “Continue to learn from personnel and process safety performance metrics to help achieve our goal that Nobody Gets Hurt”
  • Corporate Governance: “Continue to recruit highly qualified non-employee directors”
  • Economic Development: “Partner with the United Nations Foundation to develop a report examining the most effective investments to advance women’s economic empowerment”
  • Human Rights and Managing Community Impact: “Continue to review existing practices toward making appropriate adjustments relative to expectations under the U.N. Framework and Guiding Principles on Business and Human Rights”

Those are some high level, long term goals, and as the largest company in the world, they should be. But coming to work every day, how many of the 82,000 employees can make a direct contribution to these? The answer is none — not when the individual’s goals are worded this way. The critical step that leaders at all levels, in companies large or small, must take is to translate high-level business goals into aligned, measurable goals within an individual’s span of control.

How to do this? Just like you’d knock down a wasps nest: very carefully and with plenty of preparation. I’ll oversimplify in to these four steps; if you’re interested in a more complete set of instructions, please reach out to some of the folks in my network listed below who do this for a living.

  1. Set your overall organizational goals in specific measurable terms. For example, grow free cash flow at 20% CAGR for the next 3 years.
  2. Decompose the high-level goals into the measurable sub-goals based on how the system works. In the example above, the major levers on free cash flow are profit, net capital expenditure, and net change in working capital. At the next level of detail, the major drivers of profit are revenue and operating expenses; the major drivers of CAPEX are the number of capital projects and the size/schedule of each. Continue to expand out these measurable sub-goals until you reach tangible metrics that can be influenced by leadership teams and individual contributors (things like revenue from specific customers, OEE, and expenses by category).
  3. Measure the gaps and set targets for the detailed goals so that they add up to meet the overall goals. It’s math. This is the easy part compared to the next step.
  4. Have a series of conversations with your leadership teams and individual contributors to agree the targets, improvement projects, and timelines so that people understand the numbers, how they are mutually dependent, and take ownership of the outcome. These conversations can be truly defining moments for organizations.

But don’t take my word for it – seek out the advice of some talented folks who have made goal setting and translation a focus of their careers.