Practical Eloquence Blog |

How to Pack When Doing Business Internationally

By Jack Malcolm / 2.19.2014 / 1 Comment

You might want to leave some baggage behind

I am currently on a two-week trip to five cities in Asia teaching two of my favorite courses: Precision Questioning and Answering, and Executive Presentation Skills.

I pride myself on traveling light, and in fact was able to get everything I need into a briefcase and one carry-on. But to accomplish that, I had to think very carefully about what to bring and what to leave behind.

Actually deciding what to physically bring is the easy part. Deciding what to bring and what to leave behind mentally is harder, and far more important.

Although the scenery in Asia is certainly different, there is so much that is the same as in the US—from familiar brands to what’s on TV in hotel—that it’s easy to assume that communication is just the same, and that what works at home will work just as well here. But people here think differently, and express themselves differently, and that has important implications for anyone wanting to conduct business successfully as well as to simply make the most of the experience.

Mental Baggage You Should Bring

An open mind. The most important item of mental baggage you need to bring is an open mind. Be willing to try new foods[1], new ideas, and new ways of doing things. Don’t go to the extreme of those irritating folks I run across who are fond of criticizing everything back home and thinking every little thing is wonderful over here, but by all means withhold judgment, and try to understand things from the local point of view.

Curiosity. Bring a healthy dose of curiosity. Learn a few words in the local language and try them out. A book that I’ve found helpful is Kiss, Bow, or Shake Hands, which describes customs and business tips in over 60 different countries. It taught me the secret of how to keep from getting plastered when your Chinese hosts take turns proposing toasts to you—tell them you would be honored if everyone would join in.

Situational and cultural awareness. I remember one time in Japan when my host asked what I would like to in my free time, and I suggested attending a sumo match. Rather than respond directly, he suggested something else. I insisted on sumo, and he got more and more uncomfortable as he made other suggestions, because he was mortified to tell me that it was impossible because it was not the right time of year for it.

What to Leave Behind

The assumption that our way is the only way or the best way. Sure, the scientific study of management began in America, and we lead the world in business schools, but other countries are catching up and in some areas surpassing our best practices. You can learn from anyone.

Excessively direct way of speaking. There are a few countries that are more direct in their manner of speaking than the US, but very few, and certainly none in Asia. What you take as merely clarity and directness can seem excessively rude or unsophisticated in other countries. It’s actually quite difficult for us to learn quickly how to express ourselves more indirectly, but at least we should be alert to what our hosts are trying to tell us between the lines.

Politics. Frequently when I travel I get a lot of people who want to question me on my views about American politics, and then inevitably try to turn it into an argument. I avoid it by saying I left my views at home. It hasn’t yet come up this trip, but only because it’s not election season; our elections have an oddly fascinating appeal to the rest of the world.

The world may be getting flat, as Tom Friedman says, but there are still enough lumps and bumps that you should be very careful what you pack when you go out in it.

[1] I’ve found that “don’t ask, don’t tell” is a sound policy when it comes to some foods.

Sales

The Anatomy of Willingness to Pay: Part 1

By Jack Malcolm / 2.18.2014 / No Comment

The previous article in this series introduced the concept of Willingness to Pay as an effective approach to quantify and justify a higher price for your products and services in complex B2B sales. It can never be determined precisely, but you can certainly impact the range of acceptable alternatives to put you in a better position to negotiate a mutually acceptable price. If your goal is to move the WTP number as high as possible (and sustainable), the more you know about the factors that determine it, the more tools you will have at your disposal to shift the range, ideally before you show up at the negotiating table.

Ironically, while WTP is “real”, the actual number arrived at is the result of a complex and shifting combination of many different factors. In general, these factors fall into two main categories, economic and psychological. I express them this way:

(ECONOMICS) x (PSYCHOLOGY)

Or, to put it another way: hard vs. soft, tangible vs. intangible, objective vs. subjective, even System 2 vs System 1, etc.

ECONOMIC CONSIDERATIONS

Although willingness to pay is elastic, it’s not unlimited. The broad limits of its range have to be based on some real economic considerations. There is a “hard” core of value that exists and is the basis for a fair market price. That hard core begins with understanding how the customer will use the product to improve their situation.

Utility: In business to business sales, utility is the unquestioned number one factor that determines willingness to pay, because it is the fundamental reason that customers spend and invest, and it is often the factor over which you have the most objective and tangible control.

In economic terms, an asset is worth the present value of its differential cash flows. In plain English, that means that business buyers pay dollars in the expectation of getting more dollars in return, or preventing a greater loss.

The expectation of future cash flows is based on how the buyer uses what you sell[1] to either increase cash inflows or reduce outflows[2]. They do this by being able to be more effective—through some combination of more production, sales or higher prices—or by being more efficient, through using fewer inputs of labor, physical inputs or time.

Your customer may know exactly how to use what you sell to increase cash flow, but often the buyer is not the best judge of how to use your product to help them improve how they do business. It may be an infrequent purchase, or an unfamiliar new technology, or the purchaser may not be the actual user, so they are not experts in the use of it. Sometimes they’re not even aware of what your product can do for them.

That’s why you have so much control over the customer’s utility; you can be the expert who helps them use your product in the most efficient and effective way to realize maximum value.

Other Economic Considerations

Besides utility, there are other economic considerations that may affect the customer’s WTP:

Economic/market conditions and expectations: Depending on whether the customer expects changes in supply and demand that will affect the trend of prices.
Purchasing power: The rich always expect to get richer by being able to pay lower prices.
Affordability: They may have real limits that affect their ability to purchase, regardless of their willingness.
Purchase terms: Timing and amount of payments can affect affordability.

If we leave it at that, then it’s clear that:

WTP = UTILITY

Available Alternatives

If utility is the main engine affecting WTP, available alternatives can be seen as the brakes. To illustrate, imagine that you sell a product that is absolutely essential to the customer’s business. Without it, they could not run their operations, or even maintain a livable work environment. Clearly, it has tremendous utility to your customer, but there’s a good reason that you can’t get any price you want for it, because that asset is water. If you jack up the price, your customer can easily find a substitute. The range of available alternatives subtracts from the utility value.

Since water is readily available almost everywhere, let’s use a more appropriate example. Consider the computer screen you may be reading this on. In some ways, it’s priceless, because you would not be able to do so many of the things you do in your work and personal life without it. It’s the tool that gives you access to the internet and allows you to communicate with customers and friends. But its price is limited by competition. If the vendor raised up the price too high, you could easily find an acceptable substitute.

So, available alternatives are also a critical factor in determining WTP, but you have no control over what your competitors offer.

Maybe not, but you do have a lot of control over the perception and even the choice of available alternatives. To the extent that you can convince the buyer that one of your unique features has special and valuable utility, you can constrict the number of alternatives that are available to them. The other point is that there is a cost to finding available alternatives: it takes time, effort, some expense, and information. You may be able to raise the cost or perceived cost of finding alternatives.

Even when other alternatives can be found, the customer might have to deal with switching costs. They may have to make modifications to existing systems and processes, train people, rearrange space, etc.

So at this point, let’s summarize the economic factors that affect willingness to pay:

WTP = UTILITY – ALTERNATIVES

We could stop right here, assume that buyers are completely rational in their purchasing decisions, and we would have a rich set of levers available to influence WTP. But wait, as the late night infomercials tell us, there’s more! In the next article of this series, we’ll start unpacking the fascinating and complex psychology that’s at play when buyers decide how much they are willing to pay to buy your solution.

[1] Using that term very broadly to mean your entire offering, including service.

[2] I purposely didn’t use the terms revenues and costs, because they don’t always represent actual cash flows.

Persuasive communication

Mismeasuring Influence?

By Jack Malcolm / 2.17.2014 / No Comment

The algorithm missed this one

Lee Iacocca once remarked that he wished he had learned earlier in life how important the ability to communicate is. That’s a sentiment that I encounter frequently among my executive communications coaching clients, especially those who rose through the ranks on the strength of their strong technical skills but reach a level where they find that their effectiveness now rests on their ability to get things done through others.

But you don’t have to rub shoulders with top management to benefit from the ability to influence others, a fact brought home by a recent article in the Wall Street Journal. The article says, “Armed with reams of new data, companies including giants such as Procter and Gamble Co. and Cisco Systems Inc. are seeking out ‘influencers,’ or those who are particularly well-connected and trusted by their peers.”

When they find them, they use them to help spread information, deal with change, and drive important projects, and the influencers receive more formal recognition and reward as a result.

So far, so good. It certainly aligns with the theme of this blog that persuasive communication skills are critical to personal success. So why was I bothered by reading the article?

Because I know how easy it is for companies to get carried away with the latest and greatest trend, and to base decisions on bad data just because it’s easy to collect.

How do they measure informal influence? The new data includes mining email or Salesforce.com Chatter to map webs of communication and identify top influencers. Salesforce.com uses “algorithms”[1] to analyze who has the most followers and most posts and so arrive at individual influence ranks, and invites the top 20 to their global senior management meeting.

Maybe those algorithms are telling them something useful, and maybe not. As any regular user of Facebook knows, there are some people who post stuff constantly, but my own personal algorithm (i.e. SWAG) tells me there is no correlation between how often they post and how influential they are. In fact, if I were to guess at a correlation, I would say that the people who are actually getting things done have less time to spend on their Chatter score.

Second, when you start rewarding people for their influence scores, do you think some of them might just game the system? As the quarter end approaches, do you focus on getting your project done, or do you spend time generating posts to gin up your score?

Third, good managers already know who the top influencers are. They know because they are walking around, talking, and listening—not because they are pulling up a score on their computers.

Certainly, influence is one of the most valuable personal assets you can cultivate within an organization, but don’t ever kid yourself that it can be developed and measured by social media algorithms. The best medium for influence is still an eye to eye conversation.

[1] “Algorithm” is becoming the new “studies show” term that can be used to shut down anyone who challenges your credibility.

Uncategorized

Tailor Your Presentation for a Perfect Fit

By Jack Malcolm / 2.14.2014 / 2 Comments

Nice suit. Now, about the fit…

Most effective business presentations have a clear structure in which the individual parts fit like pieces in a puzzle. Different structures may be more or less suitable for specific situations, but the benefit of any structure is that it presents information in ways that are familiar to how your listeners think, so that what you say is easy to follow and makes good sense. It provides a thorough answer to the main questions that they must have answered before they make a decision.

There are different structures for different situations, including Topical (three reasons to buy my product), Yesterday-Today-Tomorrow, and Problem-Solution.

Clear structure also helps you as a presenter to craft your presentation, and when you make the same basic presentation over and over, such as a sales presentation, you quickly develop a template that is easy to replicate, so with just a few changes to company name, change some numbers here and there, and you automagically have a customized presentation. What could be easier than that?

Here’s the problem: selecting the right structure is like choosing the right ensemble for someone to wear for an occasion. Pulling the right one off the rack is just the first step—no matter how appropriate it is, it still needs to be tailored for the individual wearer to be just right.

Let’s break down the Problem-Solution structure to illustrate. It comprises these elements:

Problem
- Description
- Root causes
- Consequences
Available alternative solutions
Recommended solution
- Description
- Implementation
- Benefit
Call to action

If your listeners are just finding out about the problem for the first time, you will probably have to give full weight to each of these elements in your presentation. But most audiences, or at least different people within the audience, have already thought about it and will have different questions.

If they already know they have a problem and are eager to solve it, you could easily lose their attention in the early going by spending too much time describing the problem. On the other hand, where a lot of sales presentations go off track is that they spend too much time describing the solutions without first convincing the decision maker that they have a problem that needs to be solved right now.

The point is that all of the elements probably need to be in your presentation, but some have to be longer or shorter depending on where the audience is in their thinking. Let your audience analysis be your guide, not the prescribed number of slides you have built into your template.

How do you know? It requires a deep understanding of the decision making process in the room, driven by the questions in your opportunity plan. An internal coach or champion can be invaluable, but they’re not likely to tell you unless you actually ask the questions. If you can’t find out before the presentation, you have to be completely alert to the body language of the decision makers and be prepared to make adjustments on the fly.

Also, keep in mind that the tailoring depends less on what the audience wants to hear than on what they need to hear, and you may need to challenge their thinking. They may think they fully understand the problem and just want to hear what you’re proposing to solve it, (especially if your competitor has shaped the terms of the discussion), but you might have to show them an aspect of the problem that they haven’t considered.