Optimized for Growth: Scaling a Sales Organization
Developing a strategic view of the value creation process
A highly successful company in the healthcare
industry is planning for dramatic and rapid growth. They already have a leading
market share in their existing market. However, they estimate that the overall
market penetration of their industry as a whole (including both the company and
its competitors) could be as low as 25%. Their feeling is that there is the potential
for the industry to triple or quadruple in size. Further, the company's parent
has an extensive product line that in the future could be channeled through the
It can be a challenge to
deliver this kind of growth in an established company. The management team felt
that it wasn't enough to just push the sales group to sell more. They needed to
think more holistically about how they sell and how to optimize that process.
The path the company took to the ultimate solutions can be explained as a
series of questions. The approach to answering the questions combined the
theories and techniques of the fields of Intangible Capital and Value Network
How do we get paid for our knowledge?
Traditional thinking about sales is that a company
sells a discrete product or a tightly packaged service. But with knowledge at
the center of today's economy, the distinction between a "product" and a
"service" is not that informative. It ignores the knowledge embedded in the
overall creation of value for the customer (which is the basis of revenue
generation). Knowledge is, therefore, embedded in both products and services,
as well as conveyed informally in the marketing and selling processes,
resulting in a process that is rarely linear.
This company is an especially clear example of this
dynamic as most of the "sales" staff does not actually sell anything, rather
they generate referrals by using data to show their institutional and referral
partners the benefits to patients and institutions of adopting their services. The
referral partners make recommendations to patients and/or their families as
they leave a hospital or nursing facility. The patients go home and may or may
not choose to contact the company. This figure illustrates this complex sales
Diagram of the complex sales process ecosystem.
This drawing broke
through the complexity of a model with multiple groups, thousands of partners
and literally a million referral sources. It helped management begin to develop
a strategic view of their value creation process.
What are the resources that support this value creation process?
The next step was to
identify the resources that the company used to support this process. These
were inventoried using an Intangible Capital framework:
Intangible Capital framework to inventory intangible resources.
Creating this inventory of intangible resources was
critical in this project because it highlighted the differing ways that each
category can be scaled:
- Human Capital is scaled by adding headcount.
This organization was willing to add headcount, yet make sure its people
were working as effectively as possible.
- Relationship Capital is scaled by increasing
the revenue from existing customers and adding new customers. This
organization already had program relationships in place across the
country. Growth would come through better penetration of these programs.
- Structural Capital scales in a different way
than people and relationships - once structural capital is developed, it
can be used over and over again by any number of people. This organization
had good structural capital in terms of training, tools, and marketing
materials. But there were clear gaps where there was room for improvement.
The management team came to the realization that
there would be a big pay-off from any improvement to its structural capital. It
would make existing employees more effective and speed the learning curve for
the new employees they would need to hire to meet their growth goals. So it
made sense to examine the sales group"s structural capital - and identify
potential gaps and areas for improvement.
At first, this felt a daunting task. How could one
undertake a review of all the systems, processes, databases, training
materials, and knowledge assets of this large organization? A detailed examination
of each one of these elements would take quite a lot of time at a considerable
cost to the company, probably resulting in a long report that might just get
filed away and not lead to any improvements. Instead, the project took a page
from the IC and VNA lesson books: it was structured as a bottom-up exercise to
actively engage people in the change process.
What is the work we do to support value creation?
Mapping the work of a group seems like an
unnecessary step. Surely an organization knows what it does every day?
Actually, the shift to a knowledge economy has complicated this simple
question. In the industrial economy, it was easy to see work processes - you
could go out onto the factory floor and visually follow the conversion of raw
materials into a finished product. While physical processes are still important
in some organizations, the real story is in the computers and systems that
control the "production" processes of the organization. These systems contain
human knowledge and decision criteria that have been converted into structural
capital and make up the organization's "knowledge factory." And that's the
issue: every business (whether it sells a product or a service) today has a
knowledge factory, an invisible production facility where knowledge is put to
In order to optimize the
Sales Group of this company, it was necessary to dig into its knowledge
factory. The first step was to identify the principal tasks of the Group:
Overlay identifying the four principal tasks of the group.
This figure adds an overlay to the Sales Ecosystem
shown above. It identifies four core tasks of the Sales Group:
- Developing relationships with program partners
- Developing relationships with healthcare
- Motivating referrals from referral sources
- Closing the sale with the ultimate subscriber
How well does our organization support these tasks with structural
This question was answered using a refinement of
the Value Network Analysis methodology in that it was specifically focused on
structural capital impact. The assumption underlying this approach is that
virtually every transaction has (or should have) structural capital associated
with it. Tangible exchanges are supported with clear structural capital
elements such as documentation, process steps, and/or systems. Intangible
exchanges, on the other hand, should be supported with training and knowledge
The VNA exercises were organized as follows:
Initial mapping: A group was gathered of
roughly 20 employees, including representatives of all the key functions
within the four core tasks. During a day-long session, they created four
sets of maps of how work is done in each of the four core tasks. All roles
and transactions related to that task were mapped.
Detailed mapping and structural capital
analysis: Smaller groups of eight to ten employees each were gathered to
review and refine each of the maps in more detail. The analysis was
focused on what worked well, what was missing, and how the network could
be improved. At the end of each session, the group prioritized the gaps between
current performance and what they considered ideal. This was the
foundation of the recommendations from the exercise.
Synthesis: The findings were reviewed with the
participants as well as with the management team of the Sales Group and corporate
management. This laid the groundwork for consensus on key initiatives.
It was important that the analysis was undertaken
with a diverse group of people from both inside and outside the Sales Group
including representatives of the Marketing, Finance, and Information Technology
Groups. This brought a broad view to the analysis. It also actually led to an
immediate resolution of some of the issues surfaced during the discussions. In
one case, the Marketing Group said, "We have a program we developed last year
to address this gap and never launched; we'll get it back on the calendar."
In another example, the IT department suggested a
quick fix to enable field service people to receive information via email to
their telephones that they previously received via fax (and only saw at the end
of the day when they returned to their offices). Participants were empowered - and
would offer comments such as, "We have the answer to that. We'll make sure it
gets fixed right away."
This is a sample of one of the VNA Maps developed
by the teams:
One of the value network maps developed in the three VNA exercises.
Ctrl+scroll to see larger.
The large number of transactions dominating the top
center of the map is between the Evaluator and the Seller. The Evaluator role
represents either the subscriber or a family member who is taking
responsibility for the purchase. All of the transactions in this exchange occur
in a single phone call. This high number of steps was itself something of a
revelation for many in the project. But the mapping also brought out a number
of critical weaknesses in the way that this call is managed and supported.
Concrete recommendations arose from this related to the way that data is loaded
into the call-support system, options that are offered through the system
during the call, and the training provided to the telephone sales staff.
This map and the three others developed for the
other key tasks made it clear that there were indeed significant opportunities
for creation and/or improvement of structural capital in the Sales Group.
Where to next?
The project led to a number of fundamental findings
and changes that included:
- Approving a 15% increase in headcount as a
first step to scaling the most undermanned territories
- Adding a focus on healthcare organizations
that were not program partners of the group
- Dividing the Territory Manager role into
Program Management and Referral Marketing roles.
- Improving the telephone sales closing process
(as described above)
- Developing and disseminating competitive
information via training and online resources. As the market leader, this
company had never gathered this information but the field personnel
emphasized their need to sell against the competition.
- Creating business cases and data to support
the organization's strategic business-to-business sale process
- Constructing a knowledge-sharing platform for
all sales personnel to share best practices. The company already had this
kind of system for sharing among its program partners and employees saw
the value of having an internal sharing platform as well.
The project also laid the groundwork for two
significant longer-term initiatives:
- Building the capability to map the company's
market from the bottom up to support organic growth in each territory.
This will involve changes to several of the company's core information
platforms as well as the acquisition of some new data.
- Rationalizing the company's many channels and
approaches to the market. This will involve creating new HCO partnership
models, simplifying the company's existing program partnerships, and
communicating with all partners for greater transparency and clarity.
Adapted from "Optimized for Growth: Case Study of a
Sales Organization," Mary Adams and Verna Allee, Paper presented in Hong Kong
November 12, 2010, at the International
Conference on Intellectual Capital and Knowledge Management.