MAY 18, 2005: Distribution Channel Commentary (DCC) # 77

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TOPICS:

  1. WORLD’S BEST WEBINAR VALUES FOR DISTRIBUTION SALES REPS 5-26, 5-31.
  2. EXCERPTS FROM JACK WELCH’S NEW BOOK "WINNING" WITH COMMENTS.
  3. REGISTRATIONS FOR NEW HSAs (health savings accounts) SOAR PAST FORECASTS.
  1. WORLD’S BEST WEBINAR VALUES FOR DISTRIBUTION SALES REPS 5-26, 5-31.

This commentary is short, because I’ve been working hard on slides for two upcoming webinars being produced by the Health Industry Distributors Association (HIDA). The webinars will be held from 2:00 –3:00 PM EST on Thursday, May 26th and Tuesday, May 31st. They are totally tuned for outside sales representatives of any type of distribution company, so HIDA would be delighted to let any non-member distributor register for a flat rate of $149 per line for each webinar ($298 for both). You are welcome to have as many people listen in as you might like. Both webinar presentations are designed to tee up the sales force for further discussion on how they can be part of solutions that involve enough new-thinking, skills and work that they normally don’t get done, even though every one agrees that they should be done.

These two webinars are on separate, but related, standalone topics. The May 26th session is entitled: "ACHIEVE NEXT LEVEL MOVES FOR KEY ACCOUNTS". This webinar will offer reps three new views on their same old challenges which will open new pathways for both the company and the reps together to sell 30 to 50% more volume to the same, old, very-best accounts. Because selling more old products to the same old customers on a larger order size basis has the highest flow through for incremental margin dollars to the operating profit line (about 50%!), the profitability of these accounts will double. For those of you who like to read, check out: Exhibit 25 (http://www.merrifield.com/exhibits/CASESTUDYRethinkProfitPower.asp) and, Article 2.22 (http://www.merrifield.com/articles/2_22.asp) for a lot of what will be covered in this webinar.

The second webinar on Tuesday, May 31st is entitled: ‘CONVERT BIG LOSING ACCOUNTS INTO WINNERS". This topic was inspired by our recent article with a similar title that can be found at the link below. The key to this presentation is that it takes a totally friendly, pro-rep approach to how reps and management can work together to turn losers into gold at more than an 80% conversion rate resulting in more compensation for reps and more profits for the company, which in turn supports all stakeholders. Read our article on this topic and think about how you are going to get your sales team to be part of a super solution for your biggest losing accounts. http://www.merrifield.com/articles/4_10.asp

For more information on Web seminar participation, contact Rhonda Claytor, Director of Curriculum Development, at (703) 838-6133 or at claytor@hida.org.

    2.    EXCERPTS FROM JACK WELCH’S NEW BOOK "WINNING" WITH COMMENTS.

I really like Jack Welch’s new book, WINNING, which was written and edited by his 3rd wife, "Suzy". Since retiring from GE, Jack has been on the speaking tour for three years, so he has found a simpler, more general speaking voice which comes through in the book. And, he and his co-author have used the questions from the audiences and Jack’s evolved answers to flesh out his advice. Any reader from management-wannabe to CEO can jump right into a topic/section that interests them the most and get a lot more meat and motivation in an accessible style than from the "One-Minute", "Where’s-My-Cheese" fare. Below, without permission, I have taken some excerpts that I liked from several of the chapters.

CANDOR (from Chapter 2, pp. 25-35)

"Lack of candor basically blocks smart ideas, fast action, and good people from contributing all of the stuff they’ve got. It’s a killer…Let’s look at how candor leads to winning..First, candor gets more people in the conversation…you get idea rich….second, condor generates speed…surface, debate, improve, decide…third, candor cuts costs…it eliminates meaningless meetings and b.s. reports…not being candid is actually about self-interest – making your own life easier..in the big picture..lack of candor is the ultimate form of alienation…when people avoid candor to curry favor with other people, they actually destroy trust, and in that way, they ultimately erode society….from the day I joined GE…I was labeled abrasive and consistently warned that my candor would soon get in the way of my career…candor works because candor unclutters."

Comment: Practicing open book management and making employees co-responsible for growing their productivity to finance their compensation expectations promotes candor. Doing customer ranking reports and pursuing next level moves to sell more to the core and turn the big losers into winners requires and promotes candor. We have a great video (High Performance Distribution Ideas for All) that pre-supposes candor. Candor is good!

DIFFERENTIATION (from Chapter 3, pp. 37 +)

"Companies win when their managers make a clear and meaningful distinction between top and bottom performing businesses and people, when the cultivate the strong and cull the weak…differentiation is just resource allocation, which what good leaders do…ultimately it makes winners out of everyone….differentiation receives the most questions I get from audiences around the world….people tend to love it or hate it…I didn’t invent differentiation! I learned it on the playground…the best players always got picked first…the least athletic ones had to watch from the sidelines. Everyone knew where they stood…and the kids who couldn’t make the cut usually found other pursuits that they enjoyed and excelled at…each one of us is good at something, and I just believe we are happiest and the most fulfilled when we’re doing that….bad news often hurts, but soon enough, like all knowledge, it’s power – in fact it’s liberating….Do you think getting grades was mean?…why should we stop getting grades at twenty-one? To prevent meanness? Please!…you are never ‘too nice’ to implement 20-70-10 (GE’s rank and yank the bottom 10% plan), only too cowardly.

(No comment except "right on")

STRATEGY (from Chapter 11, pp. 165 +)

"..in real life strategy is actually very straightforward. You pick a general direction and implement like hell…ponder less and do more…an approximate course of action that you frequently revisit and redefine, according to shifting market conditions..do strategy in three steps…first, come up with a big aha for you business - a smart, realistic, relatively fast way to gain sustainable competitive advantage…second, put the right people in the right jobs to drive the big aha forward…third, relentlessly seek out the best practices to achieve your big aha, whether inside or out, adapt them, and continually improve them…figuring out the big aha…debate…and finally answer five sets of questions (under the general sub-headings of)…What the playing field looks like now?…What the competition has been up too?…What you have been up to?…What’s around the corner?…What’s your winning move?

I’ve heard it said that best practices aren’t a sustainable competitive strategy, because they are easy to copy… the third step of strategy is all about finding best practices (to serve the big aha)..its fun because companies that make best practices a priority are thriving, thirsting, learning organizations.

…find the right aha and set the direction, put the right people in place, and work like crazy to execute…finding the best practices and improving every day.

Comment: Every management team should look at Jack’s five slides in this chapter and try to come up with answers to his questions that they can agree on. It would improve commitment and execution enormously. There is a lot more art to teasing out the best "Big Aha" than Jack’s book intimates for a given profit center going forward in the shifting market context. This is where careful study by people with a lot of strategic insight can really pay off for your worst performing profit centers. But, many companies keep trying harder in conventional ways year after fruitless year.

CHANGE (Chapter 9, p. 139)

"Real change agents comprise less than 10% of all businesspeople. They have courage – a certain fearlessness of the unknown."

Comment: In these super commodity, super-mature, consolidating industry days, every business needs at least a full-time, part-time VP for innovative business initiatives to drive real change within tradition bound profit centers.

Conclusions:

Check out the book at Amazon or your local book store, and ask yourself: do we have the candor to rank the key components of our business so that we can differentiate our resource allocations, by first rethinking our strategy to cultivate the best further with the right aha’s and turnaround, sell, or close down the losers?

Most distribution chains have chronically losing profit centers, and all profit centers have a few customers that generate huge, annual, transactional-cost losses. What are we, to be candid, doing about creatively solving those problems?

    3.    REGISTRATIONS FOR NEW HSAs (health savings accounts) SOAR PAST FORECASTS.

Regular readers know that I’m encouraging small business owners to stay on top of what’s going on with HSAs because they will be the only solution for health insurance - for many - by default over the next three years. At our site, we have added a tab with "HSAs/Wellness" on it as a collection spot for all of our commentary on these subjects. Because HSAs will give employees a big incentive to both be well and shop carefully when possible for medical services, we would be delighted to offer any advice we can on (re) starting your corporate wellness program. http://www.merrifield.com/articles/5_16.asp--see our article entitled the same!)

According to a newsletter, "Inside Consumer-Directed Care" there were 425,000 HSAs in existence through April 2005, up from zero when they became legal on 1-1-04. The monthly run rate for the first three months of 2005 was 50k new HSAs/month.

According to HSAfinder.com, the first 10 days of May saw one of the biggest jumps in HSAs to date. While most of the surge came from individuals and families seeking healthcare cost relief, many companies have started to put together efforts to reduce overall costs by adopting HSAs. This process is expected to peak in October and November when a majority of companies make changes. Some insurance companies are reporting backlogs on applications for HSAs and premium rates are dropping due to competition. "Industry expectations are that by September, rates for HSAs will settle 30% lower than rates in mid-summer 2004.

Forrester Research has upped their prediction for how many HSAs will be in effect by 2012 to 17.6MM with assets totaling $35B.

 

That’s it for this week!

 

Bruce Merrifield

bruce@merrifield.com 919/933-7474