After walking the hallways of business for over 25+years what is it that strikes me? Nonsense. Specifically, I am struck by how much of what is accepted as the standard way to think about and do things, in business, strikes me as nonsense. It occurs to me, that some of the ‘best’ nonsense is labelled ‘best practice’.
The Nonsense of the Sales Pipeline and Sales Forecasting
There is a particularly delightful piece of nonsense, ‘best practice’, in the area of the sales pipeline and in particular sales forecasting. Let’s start with disclosing what the ‘best practice’ is. From what I have seen it occurs to me that the ‘best practice’ is:
- to break the sales pipeline process (some call it opportunity management) into stages and to associate a specific probability of success to each stage;
- each opportunity, at whatever stage of the opportunity management process, has a revenue figure , an expected close date, and an associated probability attached to it;
- the sales forecast (of how much revenue the sales force will close) is calculated from these opportunities – the revenue, the probability of successfully closing that opportunity, and the expected close date; and
- each sales person is held to account for delivering the expected sales forecast figure from his pipeline.
This all sounds sensible if looked at on its own divorced from the real world. What shows up when you expose this ‘best practice’ to the real world? Let’s imagine that five vendors are pursuing the same sales opportunity ($1m) with MegaCorp and they are all using the same six stages to track and forecast this sales opportunity within their organisations.
- Initial Contact – 0% (probability of successfully winning this opportunity)
- Qualification – 20%
- Proposal Submission – 50%
- Presentation to Decision Maker – 80%
- Contract Negotiation – 90%
- Close – 100%
Now let’s assume that three of the five vendors have made the final cut and thus been invited to make a presentation to the decision maker. What will show up in their sales forecasts? Each of the vendors will be forecasting revenue of $800k. And given that the probability is at 80% (so high) the unfortunate sales reps responsible for these opportunities are likely to find themselves committed (by the rules of their organisations ‘best practice’) to delivering this revenue.
Now let’s look at the situation. $1m is on the table. Three organisations are in the running for this prize. Each has an equal chance – 33.33% probability and so each should only be forecasting to win $333k. Yet, each is forecasting $0.8m and collectively they are forecasting to win 3 x $0.8m = $2.4m.
Let’s assume, that two of the three vendors are invited to submit a contract for negotiation. What will be contained in the sales forecasts? Each vendor will forecast $1m x 90% = $0.9m and collectively they will forecast $1.8m in revenues. What is the money on the table? It still remains at $1m.
It occurs to me that in the absence of having fixed the game in advance, the probability attached to an opportunity, at whatever stage, is (or should be) works out as follows (if one stays firmly in touch with the real world):
- Probability of winning sales opportunity <= Deal size / No of vendors still in the running
It also occurs to me that if this way of accounting for opportunities was embraced then more sales people would record and track their opportunities rather than waiting to win/lose the opportunity and then going back and filling in the requite fields in the CRM system or Excel spreadsheet.
The Nonsense of Process
If there is a God in the world of business then it occurs to me that it is ‘Process’. The taken for granted assumption is that there has to be a process for every piece of work that has to be done in an organisation. Why this insistence on process? It occurs to me that folks in business have collapsed effectiveness/performance (generating the desired outcomes) with process (doing work through a prescribed set of steps and methods):
- following process = generating the desired outcomes.
This is clearly not the case. And I say, it is especially not the case when it comes to effectiveness in the domain of sales and selling. Yes, it is quite likely that training a green / novice / incompetent sales rep in process will result in an increase in his sales performance: he will close more deals. No, it does not follow that process turns an average sales rep into a great one. It is quite possible, even likely, the need to follow prescribed process creates unnecessary work, and gets in the way, of good sales people working sales opportunities and closing them.
Let me put it differently, if success in sales is so highly dependent on following a prescribed sales process then we should be able to take people who are great at following process and turning them into able sales folks. Which folks in business are treating at following process? How about the folks in Customer Services, or Field Services, or Finance, or Logistics, or Operations, or IT? Having second thoughts?
It occurs to me that success in sales requires a certain way of being-in-the world. In part this way of being in the world involves how one relates to and is involved with people and the challenges/risks/anxiety involved in the world of selling. If this is not your way of being-in-the-world then it is highly unlikely that you will excel at selling no matter how versed you are in the process or how skilled you are in the tools of selling.
Above and beyond this familiarity with people and ease with the anxiety of selling is attunement. What attunement? An attunement to the situation – the context – at hand: the economic environment, the company you are selling to, the people you are dealing with in chasing opportunities, the product/s you are selling, the organisation you work for, the competitors etc…
No amount of process, method, templates and tools can generate this attunement in and of themselves. This attunement has to be earned through lived success and lived failure, through learning by doing. This kind of attunement arrives only after one is scarred through real world experience on the ‘battlefield of life’. Still wondering what I am talking about? I invite you to read the following passage:
I think it was in Argentina that I turned professional. I had been on the road for a year; I had been very high and very low, and everywhere in between. The world no longer threatened me as it had; I felt I had the measure of it.
…. Riding the bike was as natural as sitting on a chair. It scarcely tired me at all. I could pack and unpack the bike with the automatic familiarity of shaving, and I did not allow the prospect of it to annoy me. The same was true for minor maintenance problems: a puncture, cleaning a chain, aligning the wheels, whatever it was. I did it without giving a thought to the inconvenience. The things were facts of life. I slept on the ground more often, and my bones began to arrange themselves accordingly…
I felt very much tried and seasoned, and no longer expected to make silly mistakes or confront unexpected hazards. I had also developed a battery of useful instincts. I knew when there were thieves around, when the bike had to be protected and when it was safe ….. I knew when to expect trouble from strangers, and how to defuse it. I knew what drivers of cars and lorries were going to do before they knew it themselves. At times I think I could even read the minds of stray dogs, though it was a rarity to see one on the highway that was not already a pulped carcass at the roadside…
I leave you with my assertion: a lot of that which is sacred in business is nonsense. What it takes to see this nonsense is to empty oneself of the theory, of ‘best practice’, of the taken for granted way of thinking about and doing things, and to look at the situation with fresh eyes:
“The real voyage of discovery consists not in seeking new landscapes, but in having new eyes.”
– Marcel Proust