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Russian Scientists & the B2B Sales Process

February 27, 2009

What Can a Tough Russian Scientist Teach Us About B2B Sales Process?

In his groundbreaking book “The Goal”, Dr. Eliyahu M. Goldratt tells the fictional story of Alex Roga who manages a metalworking plant that is at risk of being shut down because of its inability to efficiently drive products through the manufacturing process. Goldratt uses this story line to explain his Theory of Constraints (TOC) thinking process and how Alex could use it to dramatically improve the efficient flow of products.

For those who have not yet been exposed to Dr. Goldratt, he is a highly intelligent individual, with a heavy Russian accent and a direct communication style. He seems to bristle when asked how competing systems management theory - Total Quality Management (TQM) compares to TOC; “it’s a nice theory but unfortunately it does not work”.

 TOC postulates that ‘every organization has at least one binding constraint which limits the organization’s performance relative to its goal’. TQM’s major am is to reduce variation from every process so that greater consistency of effort is obtained. So we have one doctrine that basically says ‘realize optimal efficiency by relieving the single major constraint in the system’ the other doctrine says ‘maximize each component of the system for maximum efficiency’. Which makes more sense? In The Goal, Goldratt Advises Alex that any resources leveraged against a non constraint will be wasted since the system will just bottleneck once the product gets to machine that is the primary bottleneck.

B2B sales is very much like a plant that ‘manufactures’ closed revenue opportunities. Leads and new opportunities flow into the sales ‘system’, they hit different sales stages and produce a certain amount of closed deals. Each sales stage in the system can be analyzed for velocity, volume and conversion. And a primary constraint can be determined. Of course getting that information in an efficient manner can be painful, but that is a topic for another article.

Have you analyzed where your sales funnel constraint is? There are many companies whose sales strategy is to hire the best sales reps they can afford. Great field reps tend to shine at the bottom end of the funnel, but are not s great at prospecting. If the constraint is at top of the sales funnel then the company may be allocating resources inefficiently; it may be better to invest in the prospecting or marketing team until there are enough leads to make that expensive hire.

Randall Isaac is the CEO of Bluetide Management. Bluetide builds software products that support B2B sales people in their efforts to achieve quota. Sales Clarity is an AppExchange certified Sales Forecasting Software that helps B2B sales managers track, inspect and guide sales activity in real time. More information at www.bluetidemanagement.com

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Comments

3 Responses to “Russian Scientists & the B2B Sales Process”

  1. simon horev on February 27th, 2009 11:14 pm

    hi
    the best books about this issue is “the cash machine” by Richard Klapholz & Alex Klarman, it is about how to use the theory of constraints for sales management such as B2B, i worked with this book in my last 4 years in China, its work great…
    thanks
    simon
    simonhorev@gmail.com

  2. simon horev on February 27th, 2009 11:16 pm

    …. Dr. Goldratt is not a Russian, he is Israeli….

  3. Jason Stewart on March 5th, 2009 4:11 pm

    I couldn’t find a trackback, but referenced this really nice piece in my blog today…http://demandbase.typepad.com/demand/2009/03/theory-of-constraints-and-b2b-sales-and-marketing.html

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