Improving Revenue – The Right Way:
As we continue to grapple with the impact of COVID-19 on business, many leaders are met with declining sales and revenue. Survival requires swift, focused and effective action from the executive suite. The reality is, when faced with declining or static revenue, leaders often focus on the wrong problems, try quick fixes that don’t work, or address the symptoms, not the root cause.
Here are three common revenue-fixing missteps and suggestions for what to do instead:
Cost Reduction. Cutting costs will slow the bleeding temporarily but you can’t cut your way to growth. Unless your cost structure was out of hand or your business model is now radically changed, it’s not a long-term solution. Remember, you can only eliminate a job or line item once. To see long-term relief, build a strategy for how you’ll provide greater value to your ideal client profile and invest in the capabilities that will drive your growth.
Discounting. I get it, you just want to make some sales and see the product go out the door. There is a time and place for reductions, but it often backfires. Sales people seem more desperate and it can actually reduce the perception of your value and competitive strength. What’s more, some customers may resent having previously paid more. Instead, get your sales organization focused on the issues that cause customers to buy from you and the outcomes your value provides.
Turning up the heat too high. Some stress is necessary for peak performance and a specific short-term goal can be aided by turning up the heat. But too much pressure leads to poor decision making and burnout. When too much pressure and unhealthy urgency become part of a culture, performance will ultimately decline. Your team will begin to see any sale as a good sale and begin to rely on discounts and aggressive sales tactics that could risk damaging client relationships. Create healthy tension and motivation by developing your team’s talent and working closely to ensure they are executing your strategy.
If you are serious about restoring growth to your business, eschew the shortcuts that can undermine long term change. Focus instead on your strategy, your capabilities, and the development of your sales organization. For more on this topic, check out my article on motivating your sales team.
A Culture of Innovation:
Leadership can look a lot like firefighting: as fires pop up, you react and put out the fire. But, the most effective leaders and organizations act less like firefighters and more like fire inspectors. They focus less on problems that already exist and more on proactively removing barriers and finding solutions for the organization. It’s a preventive versus contingent approach. How? It’s about creating a culture of innovation. Here’s the catch, a culture of innovation is very different from a leader who has innovative ideas. Innovative ideas fight fires, a culture of innovation prevents them. Here are three strategies to develop a culture of innovation.
- Focus on outcomes. Have you ever heard the phrase, “it’s about the journey, not the destination”? Not in this case. Leaders who foster a culture of innovation paint a clear picture of the desired outcome of a given scenario and put very little energy into dictating how to get there. Create a common vision and metrics, hold your team accountable for achieving that vision, and get out of the way.
- Be fearless. The leaders I’ve worked with who have created a culture of innovation aren’t rebels, but they aren’t afraid to challenge the status quo. They aren’t intimidated by hierarchy and are willing to address difficult issues, even if it means challenging people higher up the management chain. They separate people from issues and can disagree without being disagreeable. These leaders create space for their team to disagree with one another and they expect people to challenge their ideas as well. The best ideas are often born from healthy dialogue, difficult questions, and a willingness to take the best from every perspective. A culture of innovation integrates critical thinking and inquiry into everyday life at the company.
- Make it difficult. Have you ever watched a toddler on the cusp of walking? They are so creative with how they move from one place to another. In contrast, there is nothing innovative about how a 10-year-old moves from the kitchen to the living room. An easy task requires no innovation. Leaders of innovative teams set goals that are hard to achieve, and their teams believe in the power of achieving the stretch goals. This fundamentally improves the culture of an organization.
Instead of fighting fires as they pop up, invest in the development of a culture of innovation so you can prevent problems and proactively move your organization to the next level.
Want more on this topic? I wrote an article published in Forbes in 2012, and the five strategies for creating a culture of innovation still hold true today.
Do you manage your to-do list or does it manage you? This article gives tips on how to prioritize and conquer your list using a simple two by two matrix – the same way Dwight D. Eisenhower did.
Question to Ponder:
How do you manage your to-do list…and is it working?