"The purpose of a customer isn't to get a sale. The purpose of a sale is to get a customer." Bill Glazer What's the real meaning for this common metric?Our participants learn a great deal in our seminars and simulations. Often, they are confronted with incomplete or incorrect prior learning. One common example is that professionals think that gross margin is a metric most useful for evaluating cost. Or to put it into operational terms, that if we want to improve gross margins, our company should look to cut costs. Gross margin is calculated by dividing gross profit by sales. Gross profit is determined by subtracting cost of goods from sales. Typically, we express gross margin as a percentage. This focus on costs in understandable. Costs are visible. Costs are clear. Costs can be determined and they can be managed. However, gross margin improvement can best be achieved by focusing on sales instead. To quote Klas Mellander, gross margin answers the question, "Are we being paid enough?" We are much better served to focus on the reason customers pay us. They don't necessarily pay us because our costs are low. They pay us because they see value in the product or service we offer. We must focus on innovation, value, differentiation, and other factors that customers are willing to pay for. If we do this, our gross margins will improve, since customers show us their willingness to pay for our value. So, rather than focusing on costs, focus on value, and gross margins will improve.
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"The problem with too many MBA programs is that they assume the sale. Sales only happen if customers are Would a customer be willing to pay for your accomplishments?Frequently, I open my seminars with this question to the program attendees: "Would your customers be willing to pay for what you accomplished last week?" Almost as frequently, the question is met with awkward silence, and maybe a few snickers. To lighten the mood, I ask the attendees to check first with the people sitting near them. How would they answer this question? After a few more laughs and some sheepish looks, the attendees generally agree that "Yes" is the correct answer, but not necessarily an accurate one. If we're honest with ourselves, we often are focused on the wrong things at work. Therein is our challenge. Too often our work is mired in non-value added activity, busy work, and wasted effort. Too few of us are focused on the customer, what the customer wants/needs, and how the business happens as a result. No, we tend to focus on other things too often. By boiling down business acumen to its essential elements, we can learn how we can help. Business is a commercial exchange of value. Money for products. Money for services. Money for something. Unless we are focusing on providing something of value, our customers won't give us their money. So, focus on answering this question in the affirmative. Challenge your teams to focus on it. End team meetings with your version of it. In the end, your work will have more business impact. I'd pay for that! "Start with the learner and never lose focus." Harold Stolovitch Resistance is a Sign of LearningRecently, one of my program participants really pushed back on some of the points we were making. In short, he wasn't buying it. He didn't think that what we were offering as a model, solution, and process for his performance improvement squared with what he thought was needed. And, he let us know. In the past, I may have thought this resistance to learning would be a negative. "Oh my," I'd think, "I have to win this person over!" My response may well have been to revise my facilitation for next time in order to avoid this situation in the future. Oh, how wrong I was. You see, to encourage learning we awaken prior knowledge and combine it with the new knowledge. When we don't we cause cognitive dissonance, also known as "Whaaaa?" If we awaken prior knowledge, through compelling learning experiences, we may well see resistance The resistance isn't the problem, though. This is just an outward sign of our learners working through how the new knowledge fits in with the new knowledge. Through simulation and other engaging techniques, these reactions become very evident. It's only when we stop lecturing that we can actually see and respond as instructors to what our learners are trying to tell us. Engage your learners, awaken their prior knowledge, and more learning will occur. "Education is not the answer to the question. Education is the means to the answer of all questions." Bill Allin Business Acumen is the Missing PieceEarly in my career I learned that business acumen is the missing piece for many employees. When you consider that most often, we train our employees in job skills/procedures when they are newly hired, and we may train them in supervisory skills/processes when they get promoted. Later on, we may train them in the typical "development" topics, like time management, leadership, communication, team work, business writing, presentations and more. All of this is good work, don't get me wrong. These topics have shown to be tremendously valuable to employees, teams, and businesses. Yet, I have found that the missing piece in all of this is business acumen. Business acumen provides the "why." Why learn these skills? Why go to all the trouble to develop my work skills, leadership skills, human relations skills? Oh, yeah, we're a for-profit enterprise and we all are here to do good work for our stakeholders so they pay us. What's our business? Where do we get the profit? What drives cash flow? Who has an interest in our success? Answers to these questions drive the "why" and fill in the missing piece. There is nothing so practical as a good theory. Kurt Lewin The Foundations of Our PracticeMany times we're asked why we are in the business we're in. Usually, this question comes from a training professional who's early in her career. Right after the question, "How do you guys get work?" we get the question, "Why do you do it?" In short, it's because of the impact we have. CPT's in part are professionals who deliver real business value in their work. We choose to work in various areas of the field (elearning, consulting, delivery, design, etc.). For us, we chose to work in the leadership development space with an emphasis on business learning. We've found this work to be both rewarding and highly valuable for our clients. Beyond that, the use of business simulation as a learning method has a lot going for it. In addition to fun, we have a sound theoretical basis for these technologies. A quick review of Merrill's First Principles, in reference to well-designed and implemented simulations, will show you the how and why these techniques work so well. I encourage you to have a look. Finally, we do this work because we're passionate about it. Hey, just ask us. We'll go on and on! |
"The views expressed here do not necessarily represent the unanimous views of all parts of my mind."
- Malcolm McMahon AuthorDan Topf, CPT is Sr. Vice President at MDI, Inc. Business Learning by Dan: Primers for TrainersPDF versions of short articles on how to integrate business acumen into all training and development:
The Income Statement Cash Flow Price and Volume The Circulation of Capital The Cost of Capital Market Differentiation Industry-specific: Financial Services -- Life Insurance/Annuities Retailing Archives
January 2021
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