82. Culture Eats Strategy for Breakfast

What’s your culture?

My title is a quote that had 83,000 Google hits. The quip – attributed to Peter Drucker – is business mainstream. Have you defined your culture? Have you tested your culture against present realities?

To help, search Google for “how to define your culture”. It’s tedious, but worthwhile. Uncovering what you already suspect you are guilty of is the first step towards a culture of innovation and being able to execute well. Like fish, we don’t know we are in water, and getting out of your own pond can lead to great things. As humans, our familiar pond includes cognitive biases like group-thinking and informational obeisance (Google “Emperor’s New Clothes” to learn more).

Smoke out your culture and strategy with hard facts  
To get straight to the hard facts, perform a thorough customer profitability analysis. What you’ll likely learn is that your historic strategy is where you make your biggest net profits. These core profits, in turn, pay for losing activities, prospective investments and residual operating profit. If you sell mostly commodities to repeat buyers, then your most profitable customers are your strategy.

But, what happens when you look at the biggest losing accounts? You’ll likely see big sales, margin dollars, commissions and service costs from many small-dollar picks and orders. When you look at your business from this perspective, what concerns emerge?

Write your concerns down and ask these questions:

  1. What are our beliefs and assumptions behind each concern? (Keep asking “why”, until you get to the root-cause behind the initial reactions)
  2. Where did this wisdom come from? Did it once work? What changes have occurred since then?
  3. Do we have credible information that supports our opposing, ingrained beliefs?
  4. How do the big losers clash with our current beliefs, sales tactics and incentives?
  5. Will keeping the status quo allow us to survive the exponential changes in B2B e-commerce?
  6. If we don’t innovate, will we be able to grow all stakeholder groups’ economics?

Nitpicking the cost-to-serve model for not being perfect (and none can be) is analysis paralysis and defense of the status quo. If you don’t act on these customer profitability insights, what then is your Plan B?

Helpful shortcuts 

I’ve compiled over 30 concerns from case studies that were uncovered using customer profitability analyses. You can get them, along with educational answers and guidelines for change at: http://merrifieldact2.com/e-book/chapter-five/1-39-objections/.

Upgrading your culture and strategy is as tough as getting fit. Tom Brady and Roger Federer have personal fitness trainers. Why not you and your business? I can help there too.

Thanks for reading!

bruce@merrifield.com 

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