Member Article

Musers, browsers and window shoppers of the corporateworld

I’ll be the first to say that in any sales process, there is a time of reflection and processing needed. Not everybody can make an instant purchasing decision. Indeed one looks at Barry Schwartz’s concept of the “paradox of choice”, it becomes very apparent that indecision is borne in many cases of too much choice in a modern customer oriented world.

It is a matter of record that I have insisted that, for example, people in the automotive trade should think a little more about the tyre kickers’ need for time to process and muse and simply not dispense these people out of hand.

Such people may be returning customers, or at least retain a positive view of the organisation from which they can subsequently purchase.

All of that said, there are situations, which I see increasingly in a post recessional world of buyer caution, of customers using the sales process as potential power.

I was having coffee the other day with a sales manager of a company that sells commercial products business to business. He often finds it hard to reconcile how managing directors and others will be in touch with him saying “we need you there soonest”, but when he responds and devotes a considerable amount of time to inspecting premises, drawing up quotations etc., he finds he is waiting for months for an answer on sale, if indeed that answer comes at all in the affirmative. He then describes the obfuscation and avoidance techniques that are used by people that only yesterday had a good idea and wanted to act on it.

Such measures show the immaturity of processes in many organisations and scant awareness of the impact of one’s business processes on others’. Indeed, those involved in procurement in public and other services seldom know what they want at the time they go to tender for it. So often in public service, the shape of a service is defined by what the provider brings to the table conceptually, which begs the question, just what is a commissioner’s role? In this respect, clearly there needs to be a purchaser-provider interchange, but so often this amounts to abdication to providers that one does have to wonder whether we may be getting value for money from providers, but not the commissioners themselves. All too often I have spoken to providers of public service who have radically shaped commissioner thinking, only to see a competitor get the work.

Returning to the private sector, the problem about immature strategies is they often lead to capricious lines of enquiry that have a direct and very real impact on other businesses. If this business is a small business, as is the case of my colleague over coffee and indeed many of the other smaller businesses I work with. When attempting to achieve larger markets with larger providers, there is a real disjuncture between the larger corporate provider seeking to make an enquiry with a smaller firm and that larger entity assuming that smaller firm can simply wait until they jolly well make a decision amongst other priorities.

I work across the North East of England with organisations such as the Institute of Directors and others in an attempt to encourage this interface between large and small business in the hope that the business to business interface can be improved for the benefit of all. Larger entities do have an opportunity to provide real opportunities for smaller businesses to grow and develop jobs and wealth within the economy and true long term relationships with a provider base.

Such practices are not conducive to this and often leave smaller businesses using up precious resource in the hope that they can grow their business.

For larger entities, whether it’s a procurement position or a single entity consideration for purchase, the lack of decisiveness and the fact that priorities for a larger entity are not the same as for a small, often creates attention and interface that with just a little thought and sensitivity, could be avoidable.

So here are my top tips for large entities dealing with small businesses:

Know what it is you want. Don’t do a fishing trip or feasibility study at the price of a smaller provider. You could well bankrupt them. That is not ethical;

Whether you buy direct or run procurement processes, those processes need to be clear and unequivocal with timescales that are maintained and a bureaucracy that is sensitive to the limitations of small business. This is why larger businesses get the business of larger businesses and smaller businesses struggle to tender;

Be clear on timescales, delivery arrangement and understand the idiosyncrasies in some firms that actually make the whole process work. So they may have to outsource some aspects of their service or provision, rather than have that in house, that’s simply a managed process. Clearly get contractual assurances and seek indemnities where appropriate but understand the need for necessary flexibility in the delivery mechanism;

Pay readily. I have known many smaller businesses virtually bankrupted by larger entities who have a cavalier approach to payment terms, despite the legislation. I still know of organisations that run 90 day payment cycles and if there is one error in the audit trail the 90 day period starts again! Great for financial directors managing cash flows and reporting cycles in larger entities, but a potential killer of the smaller concern;

Look towards longer term relationships. We are not talking about folksy collusion here, but we are talking about a system of interaction that allows the true customer service potential of the smaller company to come in and look after you as a larger entity. This can only be gained over time and a commitment to engage with the smaller provider;

Phone back when they contact you. Even if it is to say no, no is better than the uncertainty, it lets people get on with the next job;

Recognise your part in the world. Organisations are not free standing entities, they are part of communities and a global economy. The jobs they create, the ethical and environmental policies they espouse, the stimulation they bring to supply chains, are all part of a linked system wherein we actually have to co-exist on the planet after the bonuses of being paid! Vic Lessem in his book on “global” management identity formation, although in maturity, refers to the “metaphysical manager”, one who understands their role in the whole system globally. It really isn’t all about you and your organisation, however much you try to pretend you’re the good guy with a CSR policy;

Make your CSR policies reflect the above ethos;

Think particularly about your local economy and how sensible, well applied purchasing can actually stimulate jobs, well-being and other businesses within the economy.

It’s basically a call to a more sentient, more thoughtful way of doing business whilst maturing oneself as a manager. It takes more work, it takes more reflection but the benefits are there for all. It’s really an ethical divide between looking after everyone and looking after number one. It isn’t a straightforward line and it will vary from time to time but it needs to be considered and often traversed.

Otherwise, we may as well go back to survival of the fittest! And in post recessional worlds that will be people really questioning whether they want your goods and services at all, however much the market leader you may be.

David Cliff is Managing Director of Gedanken and Chairman of the Institute of Directors’ Northern Sector Group.

This was posted in Bdaily's Members' News section by Gedanken Ltd .