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How Sales Teams Can Thrive in a Digital World

by Andris A. Zoltners, Prabhakant Sinha, and Sally E. Lorimer

Since the dawn of the internet era, experts have predicted that technology will replace salespeople, and it’s easy to find examples. From 2005 to 2017, U.S. pharmaceutical companies slashed one-third of their salespeople, while the use of digital information sources (email, podcasts, mobile apps, websites) grew. From 2009 to 2019, industrial supply distributor W.W. Grainger cut more than a quarter of its branch locations and numerous field sales jobs. Since the mid-1990s, Grainger had been investing in digital capabilities to supplement its network of branch stores and salespeople. By 2019, Grainger’s purely online “endless assortment” business was 15% of sales and growing. Grainger’s still dominant “high-touch solutions” business deployed a combination of field and inside sales forces, and digital channels against the largest customers. Meanwhile, Amazon’s industrial products distribution business, launched in 2015, was already half the size of Grainger’s in North America.

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Small Business Finance Tips For Managing Your Invoicing

by thefintechtimes

Despite being one of the most challenging and time-consuming tasks that every business owner has to deal with, invoicing is something that you should manage adequately. It can have a significant impact on the cash flow of your business. 

Thus, the importance of producing and delivering invoices that encourage customers to pay on time. The use of automation software and ready-made invoice templates can streamline the whole process. You can check out sites like Wave if you want to learn more about them.

Aside from taking advantage of invoicing software and design templates, coming up with an invoicing strategy can also do wonders for you. It will help you send invoices more efficiently and keep track of them better.

Find out how to strategically manage your invoicing with the following tips for small businesses.

Create A Checklist Of All The Information That The Document Should Contain

As a business owner, you have a lot of responsibilities, and you shouldn’t spend all your time dealing with your invoicing. For you to save time, it’s best to create a checklist of all the information that your invoice document should contain and collect them one by one. It also helps so that you won’t miss to include critical information.  

The essential information you need includes the name of the customer, contact numbers, address of your business, and that of your client, tax identification numbers, among others. You can add more details if you want to like the description for the product or service delivered and the corresponding price. Again, you skip the hassle of gathering all these things by downloading complete invoice templates from reliable sources over the internet.

What Type Of Invoice Should You Use?

It’s worth noting that invoice templates vary. It’s especially essential to understand the different choices you have if you plan to get ready-made ones online. The type of invoice to use will depend on the details of the transaction you made with a specific client and the agreements between the two parties.

One of your options is a recurring invoice. It’s useful if you’re under a contract with a client, and you’re going to deliver a product or service regularly for several months. The schedule can be set to weekly or monthly, depending on the agreement, as indicated in the contract. This invoicing document will make it easier for your client to send recurring payments.

Another option is an interim invoice. This invoicing document also requires a customer to send recurring payments but in smaller amounts. It works when you’re going to get paid for every milestone completed in a project. Please take note, though, that you have to send a final invoice before the project ends, which leads to the next type of invoice.

The next option is the final invoice. It serves as a wrap-up of the project completed. The total amount of payments made gets included in the document. The final invoice may also contain an outstanding balance if there are any.  

The most common type of invoicing document that a lot of people encounter every day is the standard invoice. It’s what most businesses issue for a product delivered or a one-time service rendered.

Automatic Payment Reminders

Small businesses aren’t always lucky. It’s normal to meet pain-in-the-ass customers or clients occasionally. Late payments can happen, and others would even try to escape their responsibilities of paying for products or services received. To solve such problems, you can utilize automatic payment reminders that most online invoicing platforms offer. 

Automatic payment reminders send alerts to clients once they go beyond the payment schedule indicated on the invoice. The good thing about such a system is that it will notify you of every receivable that gets delayed and for every payment received. It makes your life as a business owner more comfortable. It can also show how much the customer owes and what payment options are available for them.

Using A Numbering System

An effective way to organize your invoicing is to implement an invoice numbering system. It will help resolve common issues encountered in terms of tracking invoices by giving you the chance to organize everything by numerical value or pay period. 

The use of numbering systems becomes more comfortable if you use automated invoicing software or professional templates.

Sending Invoices On Time

The importance of sending invoices on time is a no brainer. However, many businesses still miss out on doing it, especially when other responsibilities take away your focus. It’s also a common scenario when business owners fail to prepare the invoicing document immediately.

When you send invoices on time, you tell your customers or clients that you’re reliable and worthy of their trust. It shows your professionalism, and most importantly, it helps you to get paid on time, avoiding any disruption to the cash flow of your business.

Conclusion

The tips mentioned and discussed above should help you avoid problems arising from billings and collections. Always remember that not doing invoicing right can result in lousy cash flow, and it’s the last thing you’d want to experience as a small business owner who’s still trying to work your way up.

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If You Want Your Digital Transformation to Succeed, Align Your Operating Model to Your Strategy

Leaders, revising their five-year plans every quarter, are constantly seeking ways to reinvent their companies and stay ahead of the pack, given competitors of varying capabilities and scale and customers who expect more for less. For many companies, the answer is large-scale global transformation. Eighty percent of CEOs in one study claim to have transformations in place to make their businesses more digital; 87 percent expect to see a change in their operating models within three years.

But leaders see establishing those operating models as their top challenge in achieving digital transformation. So how might they move forward? A review of transformations across industries reveals a common theme: Successful transformations realign the organization to a singular vision; failed endeavors typically do not.

An organization has a far better chance at succeeding when its operating model—or how the organization creates value—is aligned to its strategy. And this means that for transformations to succeed, leadership teams should examine and possibly revise their organizations’ operating models. Given the pace of change, executives may struggle to determine where to place bets, how much to invest, and when to do it. Wait too long, and they risk seeing market value quickly erode; invest inefficiently or ineffectively, and they could face a cash crunch or investor backlash.

The good news for companies born before the digital era is that they often quickly understand the value in transforming to agile, adaptive, and responsive enterprises because they already have the other intangibles in place: strong brands, an entrenched customer base, established sales methods, and partners—suppliers, distributors, and technology.

Successfully driving these changes, though, depends on executives addressing a range of organizational barriers and risks—particularly functional silos, incomplete enterprise data, and a product-out (versus a market-in) philosophy of value creation. A well-designed and purposefully executed enterprise operating model can help companies balance growth with risk and overcome organizational barriers.

Target Operating Model
Poll any number of executives, and you’ll likely find yourself with as many definitions of operating model. But most commonly, operating model transformations are associated with cost takeouts or organizational redesigns. While these can be byproducts of an operating model shift, the common associations are myopic and discount the full value.

Instead, leaders should think about their operating models as their unique set of capabilities aligned to the enterprise’s strategy, with skilled leadership teams, tailored metrics, unique investment profiles, and tight coordination across the value chain.

What Work Needs to Be Done?
In moving forward with a digital transformation, the first step is to identify the holistic set of capabilities required to meet the enterprise’s strategic ambitions. The capability set should include both existing capabilities and new ones (as needed) and address front-, mid-, and back-office functions across all product lines.

For example, product strategy is a capability that creates product road maps to realize customer requirements; campaign management is a capability that launches, measures, and reports on the success of marketing campaigns. When brought together, capabilities comprise a capability map, representing the collective set required to execute against the strategy and business model. A capability map provides a foundation on which organizations can build their target operating model. It can be used to determine skill set requirements, hire talent, set performance metrics, build teams, and identify partnership opportunities.

Where Does the Work Get Done?
Once leaders have established the capability map, the next step is sourcing capabilities. Several capabilities will likely already exist—some mature or fit-for-purpose, others recent arrivals. This step is often the most difficult to execute, as companies can be resistant to changing their existing ways of working when instead they can leverage the opportunity to untether themselves from legacy processes and technologies.

Enterprises typically have four sources for capabilities: They can develop, transform, or mature them internally (use as is); they can acquire capabilities through targeted hires or outright M&A; they can partner to access them; or they can outsource the capabilities and have them delivered as-a-service. The decision to develop, acquire, partner, or outsource is a critical one, since each lever provides organizations with unique advantages. Executives should consider the following in making decisions:

• Speed. How urgently do we need this capability?
• Control. How important is it that we control the outcomes?
• Specificity. To what degree do we need to tailor this capability to our business?
• Competitive advantage. To what extent does this capability provide us an edge over competitors?
• Operational leverage. How much do we want to take on in fixed/on-balance-sheet commitments?

Who Does the Work?
This step involves allocating work to the most efficient parts of the organization.

Capabilities typically provide one of two types of value: demand-side or supply-side. Demand-side advantages drive increased attention toward a company’s offering, driving up pricing, revenues, and margins. These include capabilities such as sales, product engineering, recruiting, branding, and corporate strategy, where processes and skill sets are less repeatable, and where talent is a significant driver of value. Supply-side advantages allow a company to operate more effectively and get the most out of resources. These usually include areas in which value is related to scale, such as sales-quote capabilities, self-service, accounting, and manufacturing.

Similarly, the relationship to the business is twofold. Capabilities significantly tethered to the line of business often rely on some expert ability such as localization, R&D, product marketing, or technical sales. Those with limited relationships to the business—for instance, M&A, e-commerce, and supply chain management—rely on generalist skill sets and play across the enterprise.

Each capability has a different place within the operating model, and companies can opt for different ways to deliver similar capabilities. Those decisions should be closely linked to the strategy.

How Can Organizations Drive Better Outcomes?
Operating models are ever-evolving, driven by feedback from employees and customers, the effectiveness of business processes, and evolving competitive landscapes. Leading organizations augment their capabilities through simple cross-functional processes, hyper-focused incentives, and best-in-class tools to drive simplicity, clarity, and speed in execution.

Our research points to at least six ways to potentially increase your chances of building a model that can help guide a successful digital transformation:

• Nominate and empower function and business leaders early on to drive the cultural change required across the organization.
• Define clear roles and responsibilities across businesses, regions, and functional support groups.
• Create complementary incentives and goals for businesses and functions to reduce conflict and optimize resource allocation.
• Establish cross-functional debriefs to keep relevant parties informed, and nominate an owner to manage the process early.
• Institute a governance model with clear KPIs for each leadership team—one that supports quick, independent decision-making.
• Standardize resource and knowledge exchange to ensure that skill sets are cultivated and proliferated.

Transformation demands that leaders develop a clear sense of their strategic ambitions—where to play and how to win—and the business models they wish to employ, including target customer segments, channels, pricing, and delivery models. There are many questions to be answered. Both the strategy and the business model directly influence the operating model design.

Organizations that try to short-cut their way to a new operating model may find the design ineffective and the implementation lacking employee traction—or worse, dilutive to value.

Most critically, an organization’s operating model must be inextricably linked to the corporate and business-unit strategy and varying business models. The operating model is the anchor for the enterprise and is critical to the strategy’s effectiveness and longevity. And understanding how your organization maps onto the model is key to an effective digital transformation.

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The Essential Clayton Christensen Articles

by The Editors

Editor’s note: Clayton Christensen died on Jan. 23, 2020. Here we present some of his seminal HBR pieces through an adaptation of the introduction to the book The Clayton M. Christensen Reader.

Clayton M. Christensen is best known for his theory of disruptive innovation, in which he warns large, established companies of the danger of becoming too good at what they do best. To grow profit margins and revenue, he observes, such companies tend to develop products to satisfy the demands of their most sophisticated customers. As successful as this strategy may be, it means that those companies also tend to ignore opportunities to meet the needs of less sophisticated customers — who may eventually form much larger markets. An upstart can therefore introduce a simpler product that is cheaper and thus becomes more widely adopted (a “disruptive innovation”). Through incremental innovation, that product is refined and moves upmarket, completing the disruption of the original company.

Christensen’s work on disruption is nuanced and often misunderstood. Not every hugely innovative technology is “disruptive” (though you wouldn’t know that from the way journalists and tech enthusiasts throw the word around). Not every start-up will beat the incumbent. Not every big company is going to be disrupted. Reading Christensen’s original Harvard Business Review articles on disruption yields a more accurate picture of his theory and how businesses can prepare for and overcome the threat he describes.

Much of that picture comes from the case studies embedded in each article. Christensen was a deliberate storyteller, and his business examples serve as parables; compelling and memorable, they give readers the context to apply his ideas to their own industries. Those who know Christensen’s work are familiar with the success of steel minimills (disrupters!) and the fate of Digital Equipment Corporation (disrupted!); they know what goes into the creation of the best milk shake (a product with a job to do) and why the iPod was the MP3 player that really took off (an innovative business model). In “How Will You Measure Your Life?” Christensen reflects on his use of storytelling to persuade one powerful CEO to change strategy and go to the bottom of the market. “If I’d been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I [told him the story of the minimills and] taught him how to think.” Christensen’s articles do the same for readers.

Here we’ve collected the most essential and influential of Christensen’s HBR articles. In them, Christensen examines many different pieces of the disruption puzzle. Understanding those pieces is critical for strategy teams, product development units, and organizational leaders. They include:

The threat of disruptive innovation: the core theory of why bad things happen to good companies. “Disruptive Technologies: Catching the Wave” is the big-picture “why is this a problem” article warning established companies that a seemingly rational concern with profit margins can have disastrous results. It outlines several classic examples — primarily disk drives, along with Apple and Digital Equipment Corporation — to show that there is a pattern big companies should pay attention to.

Organizational structure:Meeting the Challenge of Disruptive Change” describes how leaders can structure their organizations to allow the kinds of innovation that stave off disruption. Here Christensen runs Digital Equipment Corporation through his framework to show how it can be used to explain that company’s infamous reversal of fortune.

Product innovation:Marketing Malpractice: The Cause and the Cure” again asks why good managers struggle to innovate successfully, this time focusing on the discipline of product innovation itself, rather than on organizational and management structures. By understanding the tasks that customers look to a product for (the “job to be done”), a company can develop offerings — products, services, and whole brands — that customers truly value. Christensen uses the “milk shake” example to show how product developers should be considering their task.

The financial tools in the way: Established financial incentives often make it unattractive for companies to innovate. In “Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things,” Christensen and his coauthors target metrics such as discounted cash flow, net present value, and earnings per share, along with attitudes towards fixed and sunk costs. They suggest that leaders take up other methods for evaluating investments — ones that consider future value.

Business model innovation: Product innovations might be necessary, but to be truly disruptive, they often need to be delivered to the market through new business models. In “Reinventing Your Business Model,” Christensen and his coauthors describe how to determine if your company needs a new business model and what makes one successful, using examples ranging from Apple’s iTunes to CVS’s MinuteClinics.

The role of business models in M&A: To reinvent their business models, companies sometimes decide to merge with or acquire another firm. But the failure rate of M&A is somewhere between 70% and 90%. “The New M&A Playbook” explains that the failures often stem from a lack of clarity about why a merger or acquisition is being pursued. Companies need to consider whether they are really after business model reinvention or are simply looking to bolster their current model. These purposes demand very different implementations of a deal — from paying the right price to determining how employees and other resources will be handled.

Where your industry’s future growth lies: If disruption is predictable, we should be able to step back and look at markets as a whole to understand how disruption will change an industry over time. “Skate to Where the Money Will Be” describes a pattern of evolution of markets and industries that can help managers see where their next source of profits will be — so that they don’t find themselves outpaced by another company in that new sphere.

The extendable core: How do you know how big a particular threat to your business actually is? “Surviving Disruption” helps you calculate the strengths of your own potential disrupter’s business model along with your own relative advantages and determine what conditions could keep your disrupter from triumphing. Christensen and his coauthor build on the jobs-to-be-done theory and introduce the “extendable core” — the part of a disrupter’s business model that enables it to keep undercutting you as it creeps upmarket into your territory.

Disruptive innovation, revisited: The ideas summed up in the phase “disruptive innovation” have become a powerful part of business thinking in the 20 years since they were introduced — but they’re in danger of losing their usefulness, because they’ve been misunderstood and misapplied. In “What is Disruptive Innovation?” Christensen and his coauthors revisit the essential concepts, show the importance of using the term precisely, and share what they have learned from two decades’ application of the idea in the field.

What makes good management theory: By testing a business theory with the scientific method — by conducting a reality check — we can learn whether the theory will really help us predict the future. “Why Hard-Nosed Executives Should Care About Management Theory,” argues for a more rigorous testing of theories so that managers can gain a better sense of whether an idea is relevant to their specific situation.

A personal strategy: Christensen extends his examination to the personal realm, arguing that bad things sometimes happen to good people because those people lack a strategy for their lives. In “How Will You Measure Your Life?” he uses concepts from business to challenge readers to manage their careers and personal lives in a way that leads to lasting satisfaction.

To Christensen, the role of every general manager is to lay a foundation for future growth. To that end, managers need to understand disruptive innovation, the threat it poses, and how to lead their teams and organizations to create growth that can keep pace with ever-evolving technologies, industries, and customers.

This article is adapted from The Clayton M. Christensen Reader (Harvard Business Review Press, 2016)

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Don’t Mistake Execution for Strategy

by Graham Kenny

A business involved in conducting clinical trials for medical and pharmaceutical companies recently sent me a copy of their strategic plan for review in preparation for a forthcoming strategic planning workshop. I studied the nine pages carefully. But despite its promise to outline the company’s “Mission, Vision, Strategies, and Actions,” the document contained no real strategy.

This is not an unfamiliar experience for me.  I come across it all the time because a company’s managers often confuse a strategy’s design with its execution. Recognizing the difference between these two will have a major and positive impact on your organization’s performance.

Strategy design involves detailing positions to take on what I call strategic factors. These are the decision criteria used by key stakeholders, i.e., the criteria used by customers in deciding to buy from a business, or by employees in deciding to work for an organization, or by suppliers in deciding to supply to a company. Strategy design concerns the position that, for instance, Ford or Toyota as a company takes to woo customers on factors such as product range, price, retail locations, product quality and image.

Positioning can be quite subtle and can equate to the different brands of a business. Take, for example, the Accor hotels group. Accor carries a range of brands each catering for a different set of target customers with varying positions on customer service, price, and quality. It has a luxury end (Raffles, Fairmont, Sofitel), a premium space (MGallery, Pullman, Swissôtel), midscale (Novotel, Mercure, Adagio) and economy (ibis, hotelF1).

Strategy design must take place at the organization level because each business faces its competitors in the marketplace. They compete, company against company.

The reason executive teams struggle with strategy design is that they don’t adopt organization-level thinking at the start. They rush to execution at a strategy retreat, because they invariably arrive ready to address what they need to do. Unless the doing impulse is switched off, until design is ready, the cart gets put before the horse. This has clients leaving their retreat with a hodgepodge of actions but still no clear idea of where their organization is heading or how it differs from competitors in the marketplace.

I could see this in the clinical trial company’s strategic plan. It had pages of actions and they were fine – up to a point. The problem, as my pre-workshop interviews with members of the executive team exposed, was that the organization is “drowning in things to do” – the words of the CEO. Another executive suggested that the company needed “clarity about where we’re heading.” Yet another proposed that “we need a bigger picture around the strategic stuff” adding that “we get sucked into micro measurement.” Another executive described this abundance of activity as “leaving staff feeling quite lost.”

What the planned workshop had to achieve was clarity on the company’s positioning on the strategic factors for its key stakeholders and a stripping away of non-essential actions leaving only those which clearly drove these positions. To do that I needed to shift the executive team’s thinking away from individual action and up to organizational positioning.

What we concluded at the workshop was that there were two fundamentals that would drive the business’s success over its rivals – lower prices and superior client service. The CEO described the company’s larger competitors as “very expensive.” As work was won from clients on a tender basis, price would be positioned case by case. Where the company stood on service could be stated overall.

To lift the executive team’s thinking to the strategy design level I employed a technique which I’d used in the past to yield dividends. I asked, “As an organization what is your position on client service?” The wording and emphasis are deliberately chosen to shift thinking away from individual action.

The team crafted the following response: “A service tailored to each client’s specific needs involving a unique combination of pre-clinical planning with the avoidance of regulatory hurdles to streamline the product approval process.” Reduced lead times through the approval process allowed clients to commercialize their products sooner, giving them a first-mover advantage in their markets and delivering income flows from their products much earlier.

Lower prices and better service can be a killer combination, and this has proven to be the case. It has given the company a significant competitive edge over its rivals. From a base relatively small compared to its larger competitors, the CEO reports a “28 per cent year-on-year sales growth for the last three years.”

In preparation for your next strategy retreat recognize that underpinning the essential difference between strategy design and execution is level of analysis. While most participants may be unaware of it, it is one of the most important and useful concepts in social science. Strategy design operates at the organization level. Strategy execution operates at the individual level. If you don’t make this distinction, you’ll be committing the error I’ve seen in many clients. You’ll mistake individual action for strategy. And that can be disastrous.

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