Practical Eloquence Blog |

Book Recommendation: Duty by Robert Gates

By Jack Malcolm / 1.30.2014 / No Comment

Why would a business-oriented blog write a recommendation for a political biography? Short answer: there are excellent leadership and persuasion lessons in here.

It’s a truism among businesspeople that if only government was run as efficiently as business,

we would not have the deficits we have or be in the mess we’re in. We read all the business books about great business leaders, and love to look down on government. (By the way, the finger I’m pointing is also directed at myself.) We like to think that the lessons all run in one direction.

But how many business titans could successfully run the world’s largest and most complex organization, leading high ego individuals with ironclad job security (most of whom carry guns), while surviving a complete turnover in the board of directors midway through their tenure? By the way, your job “interview” is with senators who have an ax to grind and can be seen on national TV. Oh, one more thing: mistakes have consequences in lives, not share price.

That’s what Bob Gates had to do running the Department of Defense, from late 2006 to 2011.

While his memoir, Duty: Memoirs of a Secretary at War, has garnered a lot of attention recently—at least in the Beltway—for some of the things it says about Obama and Biden, that’s all surface stuff, in my opinion. The entire book could be assigned reading in a management or leadership course for all the examples and case studies it provides in crucial management questions. Here are just a few examples to give a flavor for the issues covered in the book:

How do you manage a cause that you believe in, when top leadership does not? When Obama was running first for the nomination and then the presidency, he took a hawkish stance on the “good war” in Afghanistan and then was trapped by his own campaign rhetoric. While he courageously supported a surge beginning in 2009, he never got behind the strategy or supported his generals. Gates had to carefully tread the narrow path between the micromanagement from the White House and the operational and logistical needs of the combatants.

How do you handle the disconnect between strategy and execution? There’s a military saying that amateurs discuss strategy but professionals study logistics. It’s similar in business, where there’s an abundance of big-picture experts willing to throw good ideas out to the folks who have to figure out how to make them happen. When a crisis erupts, everyone has good ideas, such as imposing an immediate no-fly zone over Libya when rebellion breaks out. But finding the ships and planes, coordinating allies, getting funding, figuring out how to stop low-flying helicopters, and hundreds of critical but unseen details have to be managed just to make something so simple actually work.

How do you inject urgency into a vast organization? By the time Gates took over, the DoD had already been at war for longer than the US involvement in WWII, but there was curiously no sense of urgency. One amazing line from the book is that “The Department of Defense is structured to plan and prepare for war but not to win one.” While troops were fighting and dying, life in Washington seemed more intent on protecting turf and high dollar programs.

There’s a lot in here about persuasive communications also, especially about being a strategic persuader. Those of you who are challenged with getting resources for your projects from the CFO should imagine the difficulty of going to Congress to request funding! Gates learned that while you may feel good about saying what’s on your mind, it’s far more effective to be smart about it. He took Congressman Tom Lantos’ advice that, “It is the tone that makes the music,” and I especially like his own suggestion to “Never miss a good chance to shut up.”

While everyone loves to bash politicians and bureaucrats, and to lecture them on “how business does it”, it might be profitable to pay attention to what they can teach us once in a while, and Duty is a great start in that direction.

Sales

Beyond Value: What Are They Willing to Pay?

By Jack Malcolm / 1.29.2014 / 3 Comments

This is when value is decided

You know those infomercials that offer you a “value” for only .95? Who are they to tell you what the value is? How do sellers decide what to charge? They usually decide on that value in one of four ways:

Cost-plus
Me-too
Wishful thinking
Value-based pricing

The first two methods have the advantage of being reasonably easy to calculate, and are grounded in objective reality; the third method is not worth commenting on but all too common.

Value-based pricing is usually a major improvement over the first three “inside-out” approaches, because it forces the seller to think from the outside-in, and look at pricing from the customer’s point of view. Depending on what’s being sold, it can provide an excellent way to break out of the commodity trap and realize a premium for their product.

But when we get into the world of complex B2B sales, there are two serious flaws with VBP. First, it can be enormously difficult to precisely calculate the value a product brings to customers in general and even more so for specific individual situations. It requires a lot of knowledge of their business, their markets and their processes. Customers themselves, who know more about their own businesses than the salesperson ever will, often don’t know what something is worth to them until they buy it and apply it, and even then the question usually remains unasked and unanswered. What’s the value of a glass of cold water? It depends on whether you’re in a restaurant or on a desert island.

Second, VBP is not always realistic. There is a very loose connection between perceived value and the actual price someone will pay for something.

In B2B selling, VBP generally is better than cost-plus and me-too pricing, but it’s still not the complete answer to the question of what something should or could be sold for. There is another way, called Willingness to Pay (WTP). It combines the realism of cost-plus and me-too with the customer focus of value. It’s real because it’s proven in daily experiments called transactions. You can conduct focus groups or talk to customers all day long to find out what they value, and none of that information will amount to a hill of beans until you test it by having people put their money where their mouth is. Ask them to make a decision. The decision is simple: will they buy your product for the offered price?

WTP is customer focused because it resides solely in the mind of the customer. It is personal, situational, and psychological, which is the world that salespeople live in. As we’ve seen earlier, even a $20 bill can have a wide range of different values, depending on the customer’s situation or state of mind.

Value will tell you what something is worth, but not what someone will pay to get it. Buyers care less about what something is worth than about how little they can part with to get it. Sellers care less about what something is worth than about how much they can get for it.

Value is theory, but WTP is reality. The key word is pay. Pay implies an actual decision that carries consequences. The decision costs real dollars and may be subject to questioning by others. I may think something is “priceless” or extremely valuable to me, but would often balk at paying what something is worth to me. Someone may write a book whose advice can literally change your life and make you tons of money, but you would never pay thousands of dollars for it.

If you ask people what something is worth to them, their answers are essentially meaningless, because they may not know exactly how they feel about something until they have to make a decision—to put their money where their mouth is. It’s measured every day in the decisions that buyers make, the purchases they close or the deals they walk away from.

The greatest drawback of WTP is that it can be complicated and difficult to figure out for each individual buyer, because there are so many factors that can bend the number up or down. But that complexity also furnishes the best opportunity for a prepared, informed and ingenious seller to find myriad ways to structure an offer that provides the best win-win outcome for both parties. In the next article of this series, we will dissect that complexity and examine the anatomy of willingness to pay.

Uncategorized

Personal Professionalism

By Jack Malcolm / 1.28.2014 / 2 Comments

Steep but worth it

Many parents want to see their kids grow up to be doctors, engineers or accountants, because of the prestige that comes from being known as a professional. When you see the diploma and the certification on the wall you know that the person you’re relying on has met certain minimum standards set by a responsible organization, so you give them the benefit of the doubt for respect and trust.

So where does that leave the rest of us, the ordinary entrepreneurs, salespeople, managers, small business owners and such? Because we don’t have that built-in shortcut to trust, we may have to work a bit harder at it, but there is no reason that we can’t earn the same level of respect as the folks who have the certificates on their walls.

Professionalism is a way of acting. As I’ve written before, professional is as professional does. It’s also an identity, or an approach to life and to interactions with others that speaks loudly about who we are.

You don’t need a professional certifying body to be professional, but you do have to meet some rigorous standards:

Accountability for client outcomes. When my son was an infant, he had a seizure from a high fever that sent him to the hospital. Both his pediatricians showed up at the hospital—wearing tuxes, because they were at a wedding for the daughter of one of them. Yes, it was above and beyond the call of duty, but I still remember it 26 years later. Professionals always put the client first.

Fiduciary responsibility. Honesty and integrity are a given, so I won’t harp on them here. But if you want to be a professional, you have a fiduciary responsibility to your clients to act in their best interests, to never violate a trust, and to maintain absolute confidentiality.

Continuous learning and professional study. Professions never stand still, and clients would much rather work with someone who has ten years’ experience than one who has one year’s experience ten times. As a personal professional, you don’t have someone telling you what to learn; you have to take charge of your own education.

Affiliations. You may not have annual tax-deductible meetings in Hawaii, but you do have a choice of whom you choose to associate yourself with and the company you keep. When professionally-minded individuals get together the standards above become socially self-enforcing.

Pride in your work. I worked construction while in college, and once asked a master carpenter why he took so much care with some joints that no one would ever see. He told me that he would know. That kind of pride drives personal professionals to do their best work regardless of who is watching.

It may be too late for you to go to medical school, but if you want the respect that comes from being a professional, the path is wide open to you—every single day.

Uncategorized

Take Better Notes for More Productive Meetings

By Jack Malcolm / 1.27.2014 / 2 Comments

Today being Monday, let’s start with something simple and very old school: how to take notes. There is an old saying that the palest ink is better than the strongest memory, and I learned a long time ago that good notes are critical to memory, follow-up, and to encourage meaningful dialogue.

But it was only a few years ago that I learned about this note-taking hack called the Cornell note-taking system, which is one of the most deceptively simple yet powerful tools I’ve found to improve listening and learning. Although it was devised by an academic to be used in college lectures, you can use it during sales calls, meetings, and telephone conversations.

How it works

All you have to do is draw a vertical line about one-third of the way across your page, sovaldi dividing it into two sections. The wide section is the notes column and the narrow is the cue column. Take notes on what the speaker is saying in the wide section, and use the narrow section to jot down your thoughts and reactions, which they call “cues”. That’s all there is to it! (And if you’re too lazy or fastidious to draw a line, TOPS sells note pads designed exactly for the system, as you can see in the picture.)

Why it works

I’m not sure why it works, but I think it’s because it gives you a greater awareness of what’s happening during the dialogue. When you are listening to someone, you can process verbal information about four times as fast as they can speak. All this extra processing time leads to two conversations going on in your head at the same time. The first is taking in what the other person is saying, and the second is reacting and making judgments (or thinking about something else entirely). I believe that jotting down cues frees up your working memory to concentrate fully on what is being said in the moment.

While we often think about the post-meeting benefits of notes, I find that the greatest benefit of taking notes in this way is to squeeze more juice out of the conversation. In dialogue, people have the strangest habit of giving you more than you asked for when you ask a good question. This system allows you to quickly jot down a reminder to come back to something the other person said, without interrupting the main thread or trying to keep it in your mind. I remember a role play I coached once where the “customer” mentioned about five different needs in one sentence; the seller—who was not taking notes–pursued one need and forgot to come back to the other four.

Imagine the benefit if later in the meeting, he had said, “I’d like to come back to something you said about _____”. He would have taken the conversation into a deeper level while also showing how closely he had been listening.

The mere fact that you’re taking notes can send a strong signal that you care about what they’re saying, and when you refer to your notes to probe further on a topic, you prove that you’re not just going through the motions.

Of course, there’s a post-meeting benefit as well. After the meeting, when you try to recall the conversation, it helps you clarify in your own mind who said what. My own addition to the system is to draw a check box next to each follow-up item, which provides a quick visual reminder if anything remains to be done.