Some months ago, I was talking to a sales VP at a high-tech consulting firm. He mentioned that, at present, his company’s revenue comes from existing accounts and partner referrals, about a 50-50 split. Then, he mentioned that he wanted to develop a sales model where his revenue was coming from existing accounts, partner referrals and new accounts, about a 33-33-33 split.

As we kept talking, I could literally see the huge chasm between strategy & execution in his organization. This divide is especially wide in the sales domain where most personnel are heads-down-focused on making the next month’s numbers. Strategy just goes out the window.

Now, what makes up a sound sales strategy? Some key elements include:

• Where business comes from (channels / partners, farming / mining existing accounts, hunting for new accounts)
• Structure of the sales organization (industry, geography, size of business)
• Size of deals and typical sales cycle
• Type of deals (value-based, consultative, transactional)
• Length of sales cycle and deal closure rates

Ask any sales executive and s/he will mention that tuning any one of the above elements will take years of focused effort. How then is a sales organization to adjust its sales strategy while being focused on its current numbers? At the risk of this post looking like a thinly veiled sales attempt, I think that adjustments to sales strategies can best be done by independent, outside consultants that aren’t exclusively focused on near-term results.

The above example of the sales domain is particularly poignant and illustrates the deep divide between strategy and execution. However, this issue is also at the root of constant tussles in the board room where scarce resources have to be allocated to either tackling today’s competitors or being in a better position tomorrow. There are no easy answers. And I think, the Management Consulting industry has a sound future …

Cheers,

Sampath

Several of my friends have told me that my blog has a doomsday-ish ring to it. If you think I sound like an alarmist, you should read a book called The Elephant and the Dragon by Robyn Meredith. Robyn is a foreign correspondent for Forbes magazine and reports on China and India. And I must say that she has done a fantastic job of recapping the development of China and India as the next economic superpowers. And the fact that she is reporting from the field, based on first-hand observations, does add credence to her estimates and projections.

Robyn has a couple of very innovative concepts she pushes through in her book. First, she calls the development of China (as the factory of the world) and India (as the back-office of the world) as the Third Industrial Revolution, at par with the developments in Britain in the 1800s and the assembly line invented by Henry Ford in the early 1900s. Second, she introduces the concept of the Disassembly Line. With recent developments in supply chain management, technology and network connectivity, one of the drivers behind the growth of China and India is the ability to disaggregate the manufacturing and back-office processes into more and more granular levels.

Just to highlight a few quantitative and qualitative observations that Robyn makes in her book:

• China’s explosive growth is the result of decades-long planning & investment in infrastructure, shipping & port facilities. In 1989, China had 168 miles of expressways, but by 2004 had about 21,500 miles of expressways. This figure is expected to grow to 40K miles by 2010 and 55K miles by 2020 (comparable to the length of US Interstates)
• India’s strength, on the other hand, is its educated, English-speaking labor pool, that has a culture of working hard and long hours. By 2030, India is expected to have the largest labor pool in the world topping at about 986M personnel
• By 2030, the three largest economies in the world will be the US, China and India, according to the McKinsey Global Institute

• There are significant downsides to this growth spurt as well.

  • Chinese banks are estimated to be holding onto over $900B in bad-loans, six times the size of the America Savings & Loan crisis
  • Pollution in both China & India is rampant. Most of the cities in the list of the 20 most polluted in the world are from these two countries
  • China, in an effort to maintain its grip on manufacturing for the world, is developing relations with & making huge investments in resource-rich African countries. Not all of this is good, as can be seen by Steven Spielberg’s recent resignation as the Artistic Director for the opening & closing ceremonies of the 2008 Beijing Olympic games. China’s support for Sudan (oil purchases, weapon supplies) and the atrocities in Darfur were the issues here
• There are some upsides as well. China holds over $1 Trillion in US treasuries, which in turn has kept the interest rates here low. This in turn has kept credit card & mortgage payments low for US consumers, fueling the housing boom over the past few decades

What does all this mean for the US? I mentioned in an earlier post that the only way for the US to stay competitive is to keep innovating. Robyn articulates this point much better by emphasizing that:

• The US needs to get its act together in K-12 education. The university system in the US is exemplary but the public schools are not. All these years, I am sure you have seen reports in USA Today and the WSJ about how US students don’t compete well in the Math or Science Olympiads or that our 7th grade students read at the 4th grade level. Previously, we could afford to roll our eyes and turn the page. Not anymore. These comparisons are going to be the basis on which our kids will compete in the emerging global labor pool
• The US needs to increase investments in basic research, not just product development. This is the kind of research that resulted in the development of the Internet. The US Federal Agencies have been scaling back on R&D investments in the last few years and that is just the wrong way to go
• Given the surge in pollution and energy requirements in China & India, the immediate, tactical opportunities for US companies will be in the GreenTech and Energy markets

All in all, Robyn has done a phenomenal job of paraphrasing such complex issues as the emergence of China & India, projections for the next few decades and the implications for US companies & employees. Highly recommended reading.

Sampath

Every professional plays the role of a consultant at some point in his or her career. Some more than others. Large companies these days are training their employees on consulting skills because even within organizations, there are “customers” who need to be “sold” on ideas and solutions.

Having been a Management Consultant over the last decade or so, I have heard customers, both external and internal, ask me two questions over and over:

• What can you tell me that I don’t know?
• Why should I trust you?

This leads to my hypothesis that for a Management Consultant to be effective, s/he needs to be competent and independent. Competent enough to walk into the meeting with the customer well aware of the customer’s issues, pain-points, industry trends and articulate potential solutions. Independent enough to think primarily about what is best for the customer and not just offer solutions that are thinly-veiled attempts at cross or up-selling.

And over the last decade, I have seen blatant violations of both the above codes of conduct. I have seen consulting practices that have over-emphasized buzz-words, management fads and nebulous solutions that will never see the light of day. I have also seen consultants recommend solutions that they themselves are in a prime position to implement. But, I have also seen up-standing consultants who know what they are talking about and put the customer’s interests ahead of theirs. And needless to say, these are the types of consultants who are well regarded by their customers.

So, if you are in the business of dispensing advise, figure out how to score high in the competence and independence scales and the rest will follow.

Sampath