When

Sales Became a Mass Production Process By Andrs Hurtado Pimienta There is a common consensus between business people about the concept of sales as a process. It means sales are a set of components interacting on a sequence of tasks executed between provider and customer looking for the value interchange customer wants satisfaction of some specific needs and provider wants the recognition of the value generated: incomes and reputation. The sales system to capitalize on a decisive competitive edge is composed of several components. We can define each one of them through the answer to the following questions: 1) To Whom? It implies the Target Market Definition, 2) What to? It means Detailed Offer Design and 3) How to? It means Sales Execution Process and Expand Client Base.1 Sales execution system component includes a process that could be defined in general terms; for example: initial contact, interest development and closing deal and you will find specific details of each step from business to business. The sales opportunities flow through this process. Inside sales teams very often you will find that an excellent sales person one who maintains the bests results for the organization - is able to generate and maintain a significant flow of opportunities inside the sales process, guiding customers through the specific steps required to move them from the ignorance (about the company value offer) to closing deal. For some reason the established notion of sales as a process is missed when we ask for the details to execute each one of the required steps. We can find different sales people executing in a different way, different tasks, inside the same organizational sales process. Some curious managers could find themselves asking something like: What kind of effects could be generated for the organization as a whole? Is that phenomena something good (or bad) for the performance of the organization as a whole? Every company needs to achieve results. Results beyond boss expectations are better for all the employees. When time passes expectation increases, when time passes and results are achieved (or not) expectations increase even more. The sales system, which is under the Sales Directors responsibility, must turn into the engine that produces good profitable sales in a full synchronization with all the other functions inside the company. The Sales Director has the responsibility to generate expected sales results. To do it he/she must to ensure the short-term results and at the same time he/she needs to prepare his/her people to be successful by themselves. Otherwise when results expectations increase sooner or later results could be constrained maybe by him/her.2
See the standard RRR S&T from Goldratt Consulting. On this S&T you will find the detailed description of the sales system structure. This paper presents some experiences and learning obtained through RRR S&T adaptation on some companys reality. 2 There are some cases when Sales Director is a good sales person that was promoted somewhere in the past. Now the sales person has a better position inside the company, and also has the responsibility to achieve the aggregate results of all the people he/she has under responsibility. However, are the abilities required to sell the same abilities required to guide a sales team?
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Managers will unavoidable be thinking about questions like: How much time did I require to develop my own sales abilities? Which should be the required lead-time to develop a new good sales person? Do we have the training process to do it? Does the company have the required time to train sales people? In this context from the Sales Director perspective a real challenge starts to appear: The main objective is prepare company for continuous growing A Prepare company for continuous growing In order to prepare the Company for continuous growing Sales Director must develop a sales system. B A Develop a Sales Prepare company for Machine Sales continuous g rowing system At the same time, in order to prepare the Company for continuous growing the Sales Director must ALSO work to ensure the short-term results achievement. C A Ensure the short- Prepare c ompany f or term results continuous growing

 The challenge arises when in order to develop a sales system the Sales Director must focus his attention and the sales team attention on the SALES SYSTEM DEVELOPMENT It means to train people, improve the processes, and ADOPT A NEW SET OF ACTIONS ON REALITY. While at the same time In order to ensure the short term results the Sales Director must focus his attention and the sales team attention on the SALES SYSTEM FLOW It means act to keep things moving; MAINTAIN THE CONVENTIONAL ACTIONS ON REALITY. D B Focus attention on sales system Develop a Sales development - (Adopt a new set of actions Machine on reality) D C Focus attention on Sales System Flow Ensure the short- (Maintain conventional actions on reality) term results This presents a dilemma: If the sales team MAINTAINS THE CONVENTIONAL ACTIONS ON REALITY they will be jeopardizing the sales system development. At the same time, if sales people ADOPT A NEW SET OF ACTIONS on reality they will be jeopardizing the short-term results development. The Sales Director Dilemma: D Focus attention on sales system B development - (Adopt a new set of Develop a Sales actions on reality) Machine A company for Prepare continuous growing D C Focus attention on Sales System Flow Ensure t he s hort- (Maintain conventional actions on term results reality) 3

Direction of the Solution How to overcome the previous dilemma? First we need to define the criteria that an effective solution must satisfy. In this case the solutions MUST: 1. Be Simple and Practical This should be the criterion for all the improvement initiatives. It does not mean easy to implement (maybe we might need practice to use it) 2. Ensure the short term results 3. Ensure the development of a sales system 4. And finally be a clear element to prepare the company for continuously growing in the future. Second we need to define how to solve the previously defined dilemma. To solve it we start by the fact that the dilemma exists because of some erroneous assumptions we are making about reality. To develop the solution we need to discover those assumptions and then define the new set of assumptions we will be using to approach reality. Inside the dilemma we think: Focus attention on sales system development (Adopt new set of actions on reality) is in conflict with Focus attention on Sales System Flow (Maintain conventional actions on reality) because: 1. New actions inside a previously defined process means uncertainty 2. The actions required to develop are different than the actions that ensure the flow. 3. Focusing on development requires time and space that is in conflict with focusing on the flow. 4. Changing the sales process will generate uncertainty on the short-term results. 5. We cannot ensure the short-term results and build the sales system at the same time. If we can offer sales people a framework that ensures that: 1. We can reduce the uncertainty that exists when we take new actions inside a predefined process. 2. Actions that ensure the flow can also develop the system 3. Time used to ensure the flow is the same to develop the system 4. The new actions required to improve the system will not jeopardize the current positive aspects If we can find the way to achieve the sales system development doing it through the short-term results achievement then we could significantly improve the current reality. We will overcome the dilemma. (And maybe we could find additional benefits: A better understanding of the training process to prepare salespersons, a better understanding about the lead time required to do it, as well as a better understanding of the required profile for each role inside the sales system). In this article you will find some ideas about the initial suggested version of the framework in which the ales execution system could be designed and continuously improved. 4

How to overcoming the dilemma part I Basic Definitions Lets start with the following concept: Which is the role of a manager?3 The role of a professional manager is to ever improve the performance of the system under their responsibility. When you are a sales person inside a company this means that your role is to ever improve the performance of your level and quality of sales. This is applicable on each organizational level, from the sales director to each sales team member. Director results are the aggregation of each sales team members specific results. Very often every sales person has a budget to achieve. Annual or month-by-month sales people need to achieve some number. Ever improve the performance of the system under their responsibility means to understand that the actions to be implemented should always go beyond expectations. The numerical meaning of improvement is to continuously overcome the budget. The logical meaning of improvement is to be able to cause the desired effects inside the sales process, which will cause the numerical impact. So the objective is to develop a mechanism to allow us to focus on causing effects always that go beyond the numerical expectations. In the standard RRR S&T on entity 4.12.3 Sales Execution, we find the sufficiency assumption: To ensure that a complicated, large task can be performed on mass production scale, art should be turned into robust processes4 The Sales Directors main function is to offer to his/her people a simple and practical process to stimulate the flow inside the sales system, some mechanism that allow them to convert sales in a mass production process. How to do it?

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See Ever Improve - A guide to managing production the TOC way. Oded Cohen. See RRR S&T entity 4.12.3 Sales Execution.

How to overcome the dilemma part II How to make it operational Starting a sales flow5 and continuously improving it. 1. Process Structure6 a. Steps - Not having a detailed sales process may lead to suggesting the wrong next step or, even worse, trying to push a prospect to close the deal too soon, which typically results in losing the deal. Due to this assumption we need to ensure that the sales process is effectively executed and the way to ensure it is defining what the company must do, at which stage, how, with whom and by whom in order to bring an identified prospect from ignorance to closing a deal. This is a generic sales process example defined through the S&T guide:
Step Initial Contact Requirements identification Samples development Objective? Raise interest on the company offer Establish the platform for the value based relationship Confidence development about the capabilities to deliver what required Present evidence about the cost and benefits Obtaining a frame work to work in the future (More opportunities) How to do it? Develop and prepare a raise interest presentation Develop and obtain consensus around the action plan to build the relationship Assume commitments along the process and effectively deliver what promised Prepare the financial analysis of the solution (Why is win-win?) Develop and obtain consensus around future potential common business Tools RRR S&T step 5.123.2 Mastering the core Prerequisites Tree With whom? Buyer Buyer Marketing Buyer Marketing By whom? Sales person, Sales Director Sales person

Quotation negotiation Closing deal

Design, Production, Quotation or other functions inside the organization Financial Throughput Accountings Prerequisites Tree

Sales person, Production people Sales person

Buyer

Buyer

Sales person, Sales Director

b. Flow Measurements Now we have the steps and the sequence between them. What should be next? If we are looking for a framework to be able to continuously improve the flow through the sales system then we should define how to measure the status of the process. If we measure the status of the process then we can focus our efforts in order to understand the GAP and then define how to close it. How to do it? Lets go back to the basics:

See RRR S&T entity 5.123.3 Sales Process Execution and also see RRR S&T entity 5.124.1 Pipeline Management. The objective with this paper is to share some learning about the experience obtained trying to persuade companies to implement the logic described in this S&T steps. 6 See RRR S&T 5.123.3 Sales Process Execution to deeper level.
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Each sales step7: 1. Is part of a bigger process 2. Can be deeply detailed. 3. Requires incomes, executes changes in the sales opportunities that flows through them and generates outputs 4. We can estimate the required time to execute it 5. We can focus our attention on deciphering how to execute it in a better form. It means we can decipher the required logic to accelerate the flow through it.

BIGGER PROCESS
Sales System

Inputs From previous steps

DETAILED STEPS DETAILED STEPS

Outputs Deliverables Actions that will cause an expected effect on the sales process

DETAILED STEPS

DETAILED STEPS

What do we need to understand in order to improve the flow through the sales system? What would happen if we knew8: 1. Income rate At which speed are opportunities arriving to the system? 2. Hit Rate At which speed are we making things effectively flowing through the sales system? 3. Loss Rate At which speed are we loosing opportunities?
See Dr. Holt Operations materials. Intro to Theory of Constraints.ppt Special reference to Cartmont Mauricio Herman, Sergio Valencia and company sales team. All these concepts and measurements have been rigorously worked inside this Viable Vision implementation. More detail on Less is More article by Mauricio Herman and Rami Goldratt.
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4. Process of Ongoing Improvement (POOGI) Why cant we have more speed or more effectiveness inside the sales process? Causes for Disruption to the Sales flow (Paretto analysis). 5. Average time and standard deviation How is the histogram of the permanence of each sales opportunity on the system? 6. Current opportunities status We have an estimate of the expected required time to ensure the flow of the opportunity inside the system, so we can measure the status of each opportunity compared with the standard. We can build the priority system using the buffer penetration and the colors code. We can see how much opportunities are consuming less than 33% of the buffer (Green status) or between 33% and 66% (Yellow status), or between 100% and 66% (Red status), or more than 100% (black status) to decide how to prioritize the effort of the sales people in the day-by-day activities. Each one of these variables can be included in the sales information system with almost no profound changes in the sales system architecture or in the sales system ways of operation. Causes of Flow Disruption:
Events
Incomes Rate How many opportunities are you generating? (Per unit time) Loss Rate How many opportunities are you missing? (Per unit time) Hit Rate How many opportunities are flowing? (Per unit time)

Inputs From previous steps

Sales Process Actions that will cause an expected effect on the sales process GREEN YELLOW RED and BLACK signals

Outputs Deliverables

Cause 1 GREEN Cause 2 Cause 3

G

Causes of Flow Disruption

Quantity and Speed: main variables in a sales system What do we need to create a sales flow? Sales are a process. Through this process we will see flowing opportunities. In order to create an opportunities flow we need to have quantity9 It means events waiting for the flow - and speed it means movement through the process.10 If we can ensure the required QUANTITY on good sales opportunities and we can ensure that these opportunities will flow at the expected SPEED, then the sales system will flow quickly and we will increase the probabilities of consistently going beyond the expectations. The objective of the mechanism is to ensure both QUANTITY and SPEED on the sales opportunities along the sales system. Neccesary Condition 1: Necessary Condition 2: SPEED QUANTITY Events to Movement inside the system flow through the system Controlling chaos inside: the main measurements of the sales system11 One common fact in the sales execution measurement is the budget accomplishment. Did you achieve what we tell you? Are your sales going up compared with the previous period of time? If the answer is yes, you can relax somewhat. If the answer is no, you will need a very good (convincing) explanation. This mode of operation causes the sales people to work within a binary mode. I am good or I am not good. Sales people focus their efforts on the budget accomplishment and understanding the process will be in second place. Before you can improve any system you must listen to the voice of the system (The voice of the Process). Then you must understand how the inputs affect the outputs of the system. Finally you must be able to change the inputs (and possibly the system) in order to achieve the desired results. This will require sustained effort, constancy of purpose, and an environment where continual improvement is the operating philosophy.
Read the Viable Vision Reliable Rapid Response S&T Goldratt Consulting. You will find how to answer three main questions inside a sales system to generate sales opportunities 1) Sell to whom? Target Market Definition. 2) What to sell? URO Offer design. 3) How to sell? Sales execution. 10 Read Less Is More article by Mauricio Herman and Rami Goldratt. You will find a clear description of how to implement the four basic flow concepts inside the sales system. 11 This part of the proposal is based on Understandig Variation The Key to Managing Chaos by Donald J Wheeler. I highly recommend the techniques described in this book. These are a simple and practical alternative.
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Comparing numbers to specifications will not lead to the improvement of the process. Specifications are the Voice of the Customer, not the Voice of the Process. The specification approach does not reveal any insight into how the process works. In order to understand and differentiate which data is noise and which is a real signal from the system we can use simple and practical techniques to register, present and read the data collected inside the sales process. In order to understand the Voice of the Sales Process you need: 1. 2. 3. 4. Collect a series time data Put data in a Process Behavior Chart Build the Natural Process Limits Make the logical interpretation of the current status of your system a. Is the system under statistical control?

You can find detailed information about how to understand the behavior of the process in Understanding Variation The Key to Managing Chaos by Donald J. Wheeler. Here you will see some examples of how these techniques could be used in the sales system. Summary What do we have until now? 1. We defined the concept of a manager inside the sales system 2. We defined sales process structure and flow measurements 3. We defined the QUANTITY AND SPEED as the main variables to control inside the sales system execution. 4. We defined how to read the sales system signals what is noise, what a real signal is and what to do in both cases. The next challenge: How can we organize all these tools in a coherent, simple and practical process?

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How to overcome the dilemma part III - Developing the habit of being working inside a new sales framework Step One: Maintaining the global perspective of sales results Which is the current GAP between the expected and real results? Tendency of results. Required Data generated from the information system Example: Budget vs Real Results July January February March April May June 300 Budget 100 200 220 300 300 400 Real 150 100 150 200 150 Avrg 150 150 150 150 150 150 208 LSC 208 208 208 208 208 208 92 LIC 92 92 92 92 92 92 100 mR 10 2 8 0 10 22 mRavrg 22 22 22 22 22 71 LSmR 71 71 71 71 71 Current status of the sales system - Incomes behavior:
500 400 300 200 100 0 January February March April May June July

Variability:
100 50 0 1 2 3 4 5

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 Step 2: Which the nature of the GAP? Why does the GAP exist? 1. Do you need QUANTITY? 2. Do you need SPEED? 3. Do you need both of them? Each one of the variables will require a different set of actions to be solved. Lets assume that we found that we have problems on both the variables of QUANTITY and SPEED. Step three: Once we can identify the nature of the GAP (quantity or speed problems), the next question is, How to close it? The answer suggests actions. Something to do with the idea of improves the short-term results. At the same time this analysis can show the root things that should be solved in order to ensure the generation long-term results. This is especially important because it allows us to establish that the final deliverable of all this work should be a list of things to do. Which is the tool we can use in order to register all these actions? Our schedules! The first step to build a sales person schedule is to CHOKE THE RELEASE. It means avoid the effects of bad multitasking. This is a contra intuitive initiative but once analyzed and implemented the results are tremendous.12 Once we have taken action to avoid the negative effect of bad multitasking, we can suggest that our sales people schedules should ALWAYS be oriented to ensure the quantity and speed (movement) of the sales opportunities inside to the sales system to the extent that each one of the sales people can achieve (overcome) the expected results. Ensuring the Quantity and Speed inside the sales system, is this enough? No. We can obtain another benefit. In the schedule we can include the POOGI for sales. We can ensure that the sales people are constantly devoting time and attention to how to improve the variables in the sales process that are causing disruptions to the sales flow. With this system we can identify the main causes of disruption that are provoking the loss of opportunities. Once these causes are identified, it should be relatively easily to find alternatives to correct them. So the final deliverable is a schedule that simply and practically defines the actions that will ensure the quantity, speed (movement) and continuous improvement for the sales system.
See Less is More Article. Mauricio Herman and Rami Goldratt. There you will find details about choke the release inside sales system.
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What should it look like?13 Monday Quantity action 1 Quantity Action 2 Speed Action 1 Speed Action 2 Tuesday Quantity action 3 Quantity Action 4 Wednesday Thursday Quantity action 5 Speed Action Quantity 3 Action 6 Friday POOGI POOGI Quantity action 7 Quantity Action 8 Saturday POOGI

This should be the schedule of a sales person for one specific week. On it you should read the estimate of the effects that will be caused by the actions executed by the sales people. Remember that for speed actions the sales people will need the collaboration of all the staff in the company. In these terms the schedule not only will be useful for the sales people but also for the rest of the company. This schedule completes the framework we are looking for. The simple and practical framework is: We need to understand the GAP magnitude between current and expected results, then we need to understand the reason that explain these results behaviors it means deciphering the nature of the GAP; so that can determine what to do in order to close it. Finally lets see some suggestions to use this framework it in the day-by-day of a sales system How to implement the process in reality? (One alternative) Managers must work together. In business we use meetings as a way to analyze and define actions to intervene in the system. At the same time meetings can become in a great tactic to miss the managerial capacity. In order to avoid that loss of managerial capacity we can use the Full kit for meetings14 concept. It means we can define some policies to conduct the meetings between the management team. The main components are: 1. Meeting objective 2. Meeting deliverable to evaluate if the meeting was successful or not 3. Estimate of the time required 4. Time to start and time to finish. 5. The process that will be used in order to conduct the meeting. Step by step definition. 6. Required preparation that must be done by the attendees BEFORE the meeting.
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Here I recommend the 7 Habits of Highly Effective People by Stephen Covey. I accessed to this Full Kit for the Meetings concept through Alejandro Fernandez from Goldratt Schools.

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We can use this Full Kit concept in sales meetings to ensure the effectiveness of the managers interaction. Here is a proposal of how to do it: 1. Weekly Sales Meeting: Objective: Define the required actions to synchronize the effort from the each sales team member and the other company functions to cause the biggest possible short-term result. Deliverable: A common schedule to cause all the required desired effects inside the company. Duration: 30 minutes for each sales person. Time: Defined case by case. Process: We will be answering the following questions: 1. Do we have a GAP? 2. Why do we have it? 3. How can we close the GAP? The result will be a sales person list of tasks that should be implemented to ensure Quantity and speed of the opportunities. Remember: To implement these tasks sales person WILL require help from other entities inside the organization. This is the base to synchronize Sales with all functions inside the company. 2. Weekly Sales and Logistic Meeting: Objective: Define the required actions from other company functions to synchronize the efforts to achieve the movement of the critical opportunities. Deliverable: Specific commitments from other functions in the company. Duration: 1: 30 minutes. Time: Defined case by case. Process: We will be answering the following questions: 1. Which opportunities are significantly penetrated along the sales system? 2. What is the Logistical commitment to move them?15 The result will be specific commitments from other areas to move the critical opportunities along the sales system.
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See Ever Improve by Oded Cohen Recovery Actions theme.

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Practical Exercise: This is the sequence of questions to schedule the work of sales people during the week: 1. Which is your GAP? This moth (July) we need us$80k. We already have us$25k on hand. Today: July 10 20 days left January February March April May June July
Budget Real Avrg LSC LIC $ 30.000 $ 35.000 $ 29.000 $ 52.053 $ 5.947 $ 20.000 $ 19.000 $ 29.000 $ 52.053 $ 5.947 $ 40.000 $ 37.000 $ 29.000 $ 52.053 $ 5.947 $ 30.000 $ 30.000 $ 29.000 $ 52.053 $ 5.947 $ 30.000 $ 27.000 $ 29.000 $ 52.053 $ 5.947 $ 40.000 $ 30.000 $ 29.000 $ 52.053 $ 5.947 $ 80.000 $ 25.000 $ 29.000 $ 52.053 $ 5.947

mRange Mrange Avr

LSC mR
90000 80000 70000 60000 50000 40000 30000 20000 10000 0

$ 16.000 $ 8.667 $ 28.340

$ 18.000 $ 8.667 $ 28.340

$ 7.000 $ 8.667 $ 28.340

$ 3.000 $ 8.667 $ 28.340

$ 3.000 $ 8.667 $ 28.340

$ 5.000 $ 8.667 $ 28.340

GAP

January February

March

April

May

June

July

20000 15000 10000 5000 0 1 2 3 4 5 6 7

Do you have something on transit inside Production? Yes I have us$30k. So the GAP is us$25k. 15

Do you have some opportunities inside the sales funnel? Yes I have us$40k more, but I do not have 100% Hite Rate. I have a 35% Hit Rate. 2. Have you identified the nature of your GAP? Yes, I have a quantity and speed problems. a. Quantity I do not have enough opportunities to ensure the short term results to July, August and so on. b. Speed There are some opportunities that are not flowing as fast as required. I am losing some of them because of several delays! 3. From this perspective we can develop actions from the sales process to a. Logistic process We need to be sure we will deliver what is inside the production system. i. Which opportunities are in Production? Are some of them jeopardized in deliveries?16 b. Support and approval Areas (As design) To ensure the movement of the sales opportunity along the sales steps. i. Which opportunities are inside the pipeline? What do you need to do in order to move them? c. Sales person activities Meetings scheduling looking for new sales opportunities. i. Which customer do you need to touch in order to find more opportunities? Are you prepared to do it? What kind of help or support do you need from Sales Manager? The end result is a group of tasks in which we are synchronizing the resources to stimulate the flow through the sales person system. Each action has a specific expected deliverable in terms of causing a specific effect on the speed and quantity variables. SALES SCHEDULE EXAMPLE Cause and Effect relationships between sales person (and company functions) actions and quantity and speed sales system variables.

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See Ever Improve Oded Cohen. Buffer Management and recovery actions.

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 This is a schedule example. Two comments: 1. As a consequence of this weekly exercise we can achieve that sales people start to predict the expected results. So all the week you will have the sales people focused on fulfill their initial expectative. 2. Please look that the main idea is not to ensure that sales people will be scheduled all that available time during the week. What we need to ensure is sales people efforts will be done in order to ensure quantity and speed of good opportunities on the sales system. This effort will be objective achievement focused.

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 Then we implement the actions, evaluate results and make the adjustments. This cycle can be executed again and again. Using this simple process in a daily base will help us to build the system. Analyzing the results and making adjustments will improve the sales process flow and at the same ensure the short-term expected results. Are the criteria previously defined completely satisfied? What will be the effects of having these sales system components available? Can we expect positive effects on the short-term results from this day-by-day sales management? Could this framework be useful to reduce the required lead-time to train new sales people? We are currently working on reality testing to validate if we can generate a clear cause and effect relationship between this mode of operation and the consistency on results. Criteria: 1. Be Simple and Practical This should be the criterion for all the improvement initiatives. It does not mean easy to implement (we might need practice to use it) 2. Ensure the short term results 3. Ensure the development of a sales system 4. And finally be a clear element to prepare the company for continuously growing in the future. In your eyes, following this guide, from your experience, could be these criteria be satisfied? Next steps Use this process in reality, evaluate the results and make the required adjustments to ever improve the approach sales team can address reality. What I have learned is that using the 4 universal flow concepts in sales systems represents a breakthrough to organizations. I firmly believe that we can find a mechanism to ensure the consistency of results in sales generation. I would like to use this opportunity to develop a communication channel with all of you. I hope we can interchange questions and thoughts about TOC. Please feel free to contact me on andres145@une.net.co We still have a lot to discover, learn and understand in order to apply and teach this to others. So lets do it! 18

 Acknowledge to: I cannot share with you this effort without acknowledge to all the people that have been helping me on my TOC journey: Eli Goldratt - You are constantly drawing the map Alejandro Fernandez & Luz Marina Schotborgh You teach me how to read it. Rami Goldratt - James Holt Oded Cohen Stewart Witt Javier Arevalo Michael Demere Rolando Di Silvio & Alan Barnard - You share with no limits. Mauricio Herman & Sergio Valencia You are sources of inspiration in real field. I really learnt A LOT from each one of you. Creatum S.A especially to Alfonso Velez & Esteban Xibille As part of my current team. Goldratt Group & TOC-ICO community Special thanks to my new good friend Samuel Edelstein - You helped me a lot to overcome the language barrier on a record time. For all of you thank you very much Andrs Hurtado

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