Having just been party to a situation (as an observer, I hasten to add!) whereby a vendor got it completely wrong, I’ve decided to reiterate the value of understanding your customer’s objective.
It sounds obvious……it is obvious – there’s very little chance that two organisations are going to form a lasting relationship if they do not understand what their counterparty wants from it. So why does it still go wrong – in some cases in £1 billion plus value deals?
I feel very strongly about objectives – both that they are expressed, and how they are expressed. To me it is unacceptable to make statements such as “well, of course we understand what the customer wants”. I want to see it written down – I want to see it expressed – and I want to see it expressed properly.
I am a big proponent of the SMART objective format. SMART has been interpreted in a multitude of ways, and those involved in people management have (quite sensibly in my opinion) extended the mnemonic to include ER. What does it stand for in my world? I teach the most junior members of my team the following:
S – Specific – it has to be. What EXACTLY is the customer trying to achieve? “Make sales”, “cut costs” – both valid, but get as specific as you possibly can: “the customer is looking to make sales by offering my complementary and disruptive service, on which they can make an 80% gross margin, as part of their wider solution sale”
M – Measureable – is it? When can you tick the box to say that the objective has been achieved? “I want to walk to the top of the hill” is specific; “make more money” is not specific, except in a binary sense
A – Achievable – the marketing director of the firm with four employees is not going to get 50,000 inbound leads in the first month of operation, nor will they achieve market dominance within three months. It’s nonsense and the management team needs to be able to take a look at itself and see that.
R – Resourced – oft overlooked, but so important. You are going to increase the company’s customer base by 400% by the end of the year – it takes 15 month to bring on an account manager – you need three – you haven’t recruited them. Again, it’s nonsense.
T – Time bound – exceptionally important. We must set our objectives against time lines in business, especially in growth stage companies. You want to grow a company through to listing on the market, but are not willing to say when you’ll achieve the first £1m of sales – what does that say? You have to achieve those sales within two years, otherwise you will be 95 by the time your revenues warrant a listing. What’s also important about being time bound is it creates hierarchy in your objectives – stepping stones to the ultimate goal. List in five years means you need to be half way there in two and a half years, so create an interim objective.
So once you’ve got your SMART objectives written down, what next? The reason you are doing this is to align with the customer – so you need to get them to confirm the objective. And at this stage, if you’ve got anything about you, you shouldn’t worry about being wrong – if you know anything about your customer you’ll be 60% of the way there, and you’ll find the customer’s willing to take you the final steps of the journey. Remember, you need them but equally they need you – and agreeing a set of SMART objectives gets everything both parties need out in the open.
Two other tools you may also wish to consider are the “in order to” and “so what?”. The “in order to” expresses why the objective is being set, creating a level of context. It may also identify the driver for the specific objective. So, as an example: “we are going to cut our technical staff headcount by 20%, whilst maintaining service levels, by the end of the year” – the “in order to” in this situation might be “in order to remain competitive in light of a new market entrant’s low cost delivery pricing strategy”.
The “so what?” tool is different – it is a methodology by which you identify the tasks and implications relating to a set of objectives. Staying with the 20% headcount, the “so what?” question might elicit the answer: “so we need to identify what headcount is inefficient, and where heads have the lowest impact of service levels”. This process starts dictating steps you need to take in order to achieve the objective.