Theory of Constraints “Solutions for Sales” application has no equivalent in any other business performance improvement technology
The Buy-In procedures of the Theory of Constraints, both internal (buy-in of bosses, peers, subordinates, and outsiders with a vested interest, such as bank managers) and external (making sales to customers) have traditionally focused on a scenario where the goal is to remove headaches.
For example, getting a buy-in to a solution that will reduce lead times, improve on-time delivery, shrink inventory, eliminate most overtime … you get the point. Now, the ultimate outcome would of course be increased profit, but the buy-in mechanism focuses on a buy-in to the actions that will eliminate the obstacles to the profit.
More recently, in 2006 and since, a new buy-in technique has been developed, called Strategy and Tactics Trees. These trees represent an entirely different approach used to plan and gain a buy-in where the objective is the pursuit of a very aggressive “positive” goal.
This approach emerged from a Theory of Constraints initiative called the Viable Vision, where the goal was to have VERY aggressive profit growth, at a level where a simple elimination of negative performance issues wouldn’t come close to generating the target performance, so skepticism as to th practicality of the approach could be very high. For example, initially the target was to achieve profits, in 4 years, that matched or exceeded the company’s revenues at the start of the 4-year project. Most companies won’t get results like that just by improving Operations performance! More importantly, the scale of improvement is of a scale where it’s natural to doubt that it’s even possible.
Hence the need for a strong buy-in technique.
However, the internal buy-in and external (sales) buy-in still revolve around the traditional Theory of Constraints Buy-In logic, and that’s where I’m going to focus.
In Theory of Constraints, the Solution for Sales (getting a customer to Buy-In to your solution, via your product offering, to business problems that hurt them) and internal Buy-In (getting your bosses, peers or subordinates to buy-in to a plan of action, for example) are both very similar applications of the TOC’s Thinking Processes – and extremely powerful.Now, everyone’s familiar with the concept that a manufacturing business needs to make sales, of course.But in almost every business environment we encounter, managers have no formal approach whatsoever to gaining a buy-in to their ideas – and as a result, we see some great plans get shot down, and we can see some serious frustrations – especially where we make a recommendation that is snapped up, while a manager grits his teeth and tells us he’s made that same suggestion at least once a year for 5 years and been shot down on every occasion.
The Theory of Constraints Buy-In procedures are a highly effective solution to these day-to-day buy-in needs.
But there is at least one, and sometimes two, extraordinary internal buy-ins needed in a Theory of Constraints implementation.
The first of these, and sometimes the only one, is the internal buy-in of managers and employees to the Theory of Constraints concepts, in the early stages of an implementation (or earlier – during the decision processes to go ahead with an implementation).
The second of these is for use by sales people when either their standard sales approach is not winning sales at a good enough rate, or when the company is using the TOC marketing solution and has constructed a “Mafia Offer.”
In both cases, there is a need for a very formal and very effective process. It must be methodical, because it must be teach-able, and the process itself must be one that can be monitored and adjusted for maximum effectiveness.
In fact, the necessary buy-in process that is adapted for use internally and externally follows EXACTLY the sequence of the so-called “Thinking Processes” of the Theory of Constraints. These “Thinking Processes” are a set of tools developed by Eli Goldratt and his partners and associates in the early 90’s, and they remain the single most powerful set of tools for attacking a problem that I’ve encountered. We rarely teach them these days, but we use them ALL the time.
The Buy-In Procedures that emerged are more extensive than I present here, of course; but the link gives you the framework, which is simple – but rarely used by managers, in our experience.
Given that most managers pay so little attention to internal buy-in, the most appealing use of the buy-in processes at first glance is of course for increased sales.
But the internal application should not be under-estimated. In our experience very, very few managers actually have ANY formal approach to gaining buy-in whatsoever – buy-in from their boss or their peers or their direct reports for a new idea, for example. The consequences to a manager of failing to get a buy-in for a new idea or process are often company-wide and years in duration, and may cost a company millions of dollars over time.
So when a manager understands the Theory of Constraints buy-in steps, they make so much sense and explain so many buy-in problems in the past that some managers consider them almost as powerful as the TOC applications themselves.
Used internally, the techniques create both a logical and emotional buy-in to a solution, creating a force of ownership of the solution that glues a workforce together through its implementation.
We notice this most when we chat with colleagues, consultants in non-TOC but often competing fields who do not have our background of formal buy-in procedures used in every implementation.
The common lament from these people is just how resistant to change most companies are, how the people never seem to buy-in, and either simply carry-on doing what they were doing before or even seem to work to defy the consultants’ plans and ideas the split second their back is turned or the on-site visit is over.
We just never encounter this. In fact, sometimes we’ll conduct anonymous surveys following our education, and we typically get 98% to 100% consensus that a) the concepts make sense and b) they apply to the company in question.
Especially for TOC consultants of my generation, the buy-in processes are second nature, embedded in our psyche; after all, we worked with Eli Goldratt on the team that developed these techniques in the late 1980’s and early 1990’s.
Applying the Buy-In concepts to Sales
In terms of the application to external Sales, having a formal buy-in process is crucial when the company is selling a Mafia Offer to their prospects – and also extremely valuable when you’re just presenting the regular “offer” to prospects.
The development of the Mafia Offer as a tool to break market constraints created a major sales challenge.
In a Mafia Offer, a salesman is selling value, not the product or service; and despite the sales profession’s claims to teach salesmen to do just that, the combined experience of scores of Theory of Constraints consultants world-wide confirms that the majority of sales people simply do not understand the concept of selling value, or of selling a business solution (versus selling a product).
They are all firmly convinced that they do; but their actions confirm that they do not. If it wasn’t so damaging, it can be almost amusing to observe sometimes.
For example: At the close of a presentation showing a customer how a consulting client’s offer will save a customer hundreds of thousands of dollars of inventory investment, AND give them an unprecedented level of immediate component availability; and pointing out how that availability will give them a major competitive advantage towards winning millions of dollars of new opportunity business as a result of their flexibility, not to mention reduced obsolescence, less handling, free’d up floor space or shelf space, … and a long litany of smaller benefits … in the thoughtful silence that follows, the conventional salesman, quiet until then to watch and learn the new selling approach and presentation simply can’t help them self from jumping in with “and you know, we only use the best quality materials in our products and … all components have been through the magic box treatment twice instead of our competitors once, and …”
As I say, amusing if not so damaging. In the sale debriefing, he was convinced he WAS selling value. What he did was move the sale from a business solution arena where the product characteristics were going to be a simple matter of “does it meet specs,” to a me-too product feature and benefit comparison that had no interest for 90% of the people in the room and eliminated at a sweep the advantage of our business solution.
Moreover, even those sales people that DO have a good instinct towards selling a solution, selling value, have to rely on their natural ability because there are no tools to turn to for help. There are a lot of sales “techniques” out there … but very few sales processes.
So in the formulation of the Theory of Constraints Solution for Sales, the internal buy-in processes were examined to check exactly how we could use them to gain an external buy-in (i.e. make a sale).
The variation that has emerged is extraordinarily powerful. The TOC Sales Solution offers a genuine face-to-face selling process, one that can be taught, rehearsed, followed, and monitored, and most importantly – where process failures can provide a meaningful analysis for improvement.
In addition to its sheer effectiveness, the TOC Sales approach offers other advantages over traditional selling:
- First, there is a formal methodology so that even technical specialists reluctantly placed into a sales role (as is often the case with certain product environments) can literally, just follow documented procedures.
- Also, the procedure is such that an internal manager who has just been at the receiving end of a TOC-style sales presentation, is left well equipped to sell the offer internally to his or her peers or boss.
This is essential in almost any sale of consequence but more so when you’re selling a business solution with characteristics that might be best appreciated by someone not involved in the face-to-face purchase.
For example, if the Mafia Offer takes the shape of an annual-quantity buy price but with weekly deliveries that guarantee a 60% reduction in client on-site inventories of their product along with 99% availability (guaranteed at threat of payment of a voluntary penalty) … that’s an offer that needs to be understood by more people than just the buyer, in order to appreciate its full value. The buyer might see no real value in that. And while our sales process aims to reach all the key people face-to-face – decision-makers and influencers – there are always occasions where we cannot, and have to rely on an individual manager with the customer being able to sell internally. Our process supports this.
For an explanation of the steps involved in gaining a buy-in, internal or external, check out the buy-in procedures. Of course, the Solution for Sales goes way beyond these procedures, and applies them in special ways … but the principles are the same.
Or, return home: Fast, massive performance improvements