Reading Harvard Business Reviews book on communication explains how this is a typical problem faced by a number of companies still today, although others have cracked it at least in part.
So this blog is dedicated to that issue and some useful pointers at how to get out of the downward price and margin spiral.
This graphic highlights the common issue:
1. The customer wants a solution based service not "many providers" of different services.
2. The customer wants a business model based on optimising "their metrics" be they cost, service or value.
3. You as one of the suppliers want the highest margin possible, but rarely manage it.
4. The market has many competitors making margins of 5% or less.
5. Your company is a solutions provider, however its expertise is organised in silos
6. Your siloed teams resent any corporate solution sales approach that lacks the detailed knowledge required to understand the customer needs and deliver them.
7. Your customer does not want to devote time to meeting "area specialists" they just want to engage with one senior solution contact with the right "business model" and brain/motives.
For this particular blog we will use the Facilities Marketplace as JLL or Jones Lang LaSalle had exactly this dilemma in the recession of 2000/2001.
1. Do nothing
3. Re-organise & Refocus Teams
4. Re-organise & Refocus Teams and give them the tools to help them collaborate
The do nothing option we will discard as the facilities market is littered with some fairly high profile disasters.
The JLL answer that was well documented was to tackle the points 1-7 by:
a) Re-organising to establish a Senior Account Director who would manage property and facilities customer accounts.
- This removed the junior nature of the engagement between JLL and the customer.
- It also broadened the conversation from property only to property and facilities.
- That in turn required the next change, to establish a "Markets" team that delivered solutions for the customer.
b) Customer and Markets re-organisation
- The account director side we have covered however the markets change was radical, the end of myopic property only thinking, a huge cultural shift.
- Then the broadening of scope from property only to property and facilities.
- The supply chain management solution had to be reinvented to manage the facilities, cleaning, security soft services and the hard services Mechanical and Electrical, Air Conditioning etc.
c) The customer team simply focused and dealt with far bigger customer contracts at a much higher contact level within each customer, which generated strategic outcomes and revenues grew in the JLL Corporate Solutions team by 30% in revenue in the 1st year and margin 60%. Clients like Bank of America welcomed the methodology and JLL have never looked back.
d) Reward and recognition in both the Customer orientated Corporate Solutions and the Markets teams were realigned round the respective customer and solutions based KPI's.
However, that is not where the IMPACT stopped:
Firstly, competitors to JLL suddenly had a goliath in property enter their sector making the "disruption" situation far worse than it already was. And for the author this is the key, because if it hasn't happened yet in your sector disruption IS COMING.
The question really is are you ready?
And when disruption does come, are you going to react fast enough?
Secondly, changing the structures and reward and recognitions systems is going to get you so far, but what you have to do is Innovate BEFORE your customers ask you to OR before your competition do.
This is where True Collaboration compliments what JLL and others have achieved and then amplifies its impact.
JLL went part of the way:
- re-organising into Customer and Market teams & changing the reward and recognition systems and business processes.
- however, there are further steps starting with the diagram below:
Firstly you can ensuring all communication is face to face to get maximum message intake and comprehensions speeds as well as message retention
The key is communicating with images and body language and not email and audio conference/screen sharing.
The next is making sure you can communicate face to face without travelling to increase productivity.
And to do that you need to extend face to face communication from an internal collaboration and communication process to an external one you deploy with customers, partners, suppliers and contractors.
The blogs above will explain how.
Crucial though, is getting the leaders who understand the power of social intelligence otherwise you will not get the traction?
The Why, What and How is detailed in the diagram below.
The benefits to be gained are swift and actually make matters worse for those that take no action, why?
- Firstly, the lift in productivity through 5D communication and virtual meetings internally and externally increase the speed of change the organisation can muster, therefore accelerating its competitive edge.
- Secondly, there's a drop in travel budgets which means a margin gain, which can manifest itself either in profitability or be reinvested in innovation.
- Thirdly, the increase in teamwork has been shown to impact both team motivation and retention two very big wins.
- Fourthly, you make better business decisions with greater input from a wider team that you can access faster using face to face communication without the travel.
- No 5, you get the added bonus of the whole company "getting" that "faster together" feeling that builds/reinforces confidence in the likelihood of its future success.
JLL was the example featured in the Harvard Business Review "On Collaboration" book, which the author has no relationship with beyond the case study referred to above.
Virtual Meetings and the Virtual Meeting Rooms can great enable the face to face communication you need to drive collaboration and innovation and are worth exploring as part of your True Collaboration plan..