B. Thirty-six Tools & Techniques from A for Ansoff to Z for Zebra, 1950 to 2010
DRAFT DRAFT DRAFT
Add comments that in general the analytical tools fall under the positional school. Discuss some of that school´s assumptions and weaknesses. REWRITE Q-Strategy to reflect Q-Methodology. Note that the selection and use of Tools should both be smart and . . .Bridges has developed two synthesis approaches, the Q-Strategy and the ZEBRA Acquistion Analysis. Both of these are based on the tools listed in Part II below
Before considering any of he tools or techniques below, one really should have read the subpage "Corporate Strategy: Six W's, Three Q's and One Consolidated C." This subpage discusses some of the weaknesses of tools and techniques in general. It also treats the importance -- and limitations -- of empricial evidence. There is a tendency to overestimate and over-intellectualize strategic issues, and to underestimate organizational ones. George Eliot really said it best. The quote made at III. Corporate Strategy is well worth repeating here:
"Fancy what a game of chess would be if all the chessmen had passions and intellects, more or less small and cunning; if you were not only uncertain about your adversary´s men, but a little uncertain also about your own; if your knight could shuffle himself on to a new square on the sly; if your bishop, in disgust at your castling, could wheedle your pawns out of their places; and if your pawns, hating you because they are pawns, could make away from their appointed posts so that you might get checkmated on a sudden. You might be the longest-headed of deductive reasoners, and yet you might be beaten by your own pawns. You would be especially likely to be beaten if you depended on your mathematical imagination, and regarded your passionate pieces with contempt." George Eliot (the pen name of Mary Anne Evans) (1819 - 1880), Felix Holt, The Radical, 1886.
In Part I we begin with a brief comment about our own synthesis, the Q3-Strategy. Part II discusses Assumptions and Caveats. Part III identifies 36 tools and techniques. (The last of these, ZEBRA, is another Bridges synthesis, in this case for analysing an acquisition.) Part IV gives brief explanations of the tools. In some cases these explanations are elaborated upon in a subpage.
I. The Q3-Strategy
The Q3 - Method
One devises a Q3 strategy with, naturally, a Q3 method. This method is based on iterative questioning reflecting a synthesis of four different schools of strategy. These are the Positioning (analytical), Entrepreneurial (the grand vision), Cultural (corporate tribes) and Power (negotiations) Schools.
The Q3-Strategy is, in effect, the subject of this website. The conceptual background is explained at II. Methodology at Services. It is elaborated upon in the other chapters of Services and their related subpages. Q3 seeks to improve upon standard singular approaches through creative interrogatory combinations based on "hard" tools. The right questions can lead to strategic shifts, new tactics and improved execution. In terms of practical coaching, the voyage to arrive at a strategy may include navigating uncharted -- and turbulent -- waters. However the outcome should be cogent, as easy to understand as, and with the impact of, a KISS:
Keep It Strategically Simple.
Psychology- based Methods
There are over a hundred other "soft" coaching tools. Christopher Raun presents in the German books Coaching Tools (2008) and Coaching Tools II (2009) in 700 pages some 113 tools such as "Lerntreppe" (the learning staircase) and "Ziel-Navigation" (goal navigation). The format is a series of articles (of widely differing quality) by over 60 authors, cf. www.amazon.de.
Under given circumstances tools from either approach may yield excellent results. The grounds for excluding a variety of tools and techniques here are admittedly arbitrary. The four reasons for exclusion are:
1) The tool or technique falls primarily into the psychology school, for instance 360o feedback. This kind of "soft" coaching is not the province of Bridges.
2) We are not familiar with the tool at all, have never even been exposed to it. Certainly Bridges is, per force, ignorant about several significant tools. Few indeed are those who have no gaps in their knowledge of strategy tools and techniques. (Even fewer are those who have made no lapses in their application!)
< 3) It is dated and/or considered of minor importance
4) The tool is incorporated in, or has been superceded by, a newer version.
This last point merits comment. Being new is not a sound criterion for the merits of a strategy concept, tool or technique. The three eminent professors who wrote Strategy Safari make a historical point well worth noting: "There is a terrible bias in today´s management literature towards the current, the latest, the "hottest." This does a disservice . . . especially to the readers who are all too frequently offered the trivial new instead of the significant old."2 An explicit, detailed example is given in Appendix I, Blue Ocean Strategy, Concept Etymology at V. Marketing Strategy - The Q3 - Strategy Ship: Sailing the Ocean Blue, Charting New Market Space. The ocean metaphor is powerful and compelling, indeed brillant. The associated concepts, however, are nothing new.
Bridges makes no pretence of being expert in each and every individual tool below. Some of them have spawned companies devoted entirely to their promulgation! Furthermore, one does not reach into one´s toolkit and randomly apply one tool or another. A framework for applying them is presented at the subpage "The CAPs." In Section III below the tools and techniques are briefly explained, and sources for further information are cited. In some instances a longer explanation is made, in which case one is directed to a subpage.
II. Assumptions and Caveats
ASAP is one of two acronyms popularized by the Seabees in World War II. (The Seabees were construction battalions of the United States Navy, famed for meeting impossible deadlines in extreme circumstances, such as building bridges under enemy fire.) The acronym stands for As Soon As Possible. Applying the right tools and techniques should, of course, be done ASAP.
Ask the questions to generate Alternatives
Seek superior, sustainable Solutions
Act with vigor to Achieve
Perform consistently to improve Profits.
2 Henry Mintzberg, Bruce Ahlstrand, Joseph Lampel, Strategy Safari, A Guided Tour Through the Wild of Strategic Management, Simon & Schuster, 1998, p. 8
II. Tools & Techniques
Thirty-six tools and techniques are listed in rough chronological order. (Ansoff, Porter, Gadiesch/Gilbert, Kaplan/Norton and Vasconcellos are each credited with two.)
1) JIT (Just in Time supply chain management) (1949/50 - 75) Taichii Ohno, Shiago Shingo (Toyota)
2) SWOT (1950s) (Strengths, Weaknesses, Opportunities, Threats) George Albert Smith Jr., C. Roland Christiensen, Kenneth Andrews, (Harvard); 3D update - "SWOT on steroids" - 2000 Brendan Kitts, Leif Edvinsson, Tord Beding; and the associated 2nd step SWAT, BridgeS E C, (2010)
3) MBO (1954) (Management by Objectives) Peter Drucker
4) PDCA (1950s, ´81) (Plan, Do, Check, Act cycle) W. Edwards Deming
5) Ansoff Matrix (1965, ´88) (depicting four product/market scenarios) H. Igor Ansoff
6) The Accordion Method for Managing Change (1965, ´88) H. Agor Ansoff
7) BCG cash cow/?/star/dog matrix (1966, ´69) (experience curves and relative market share, RMS) Bruce Hendersen (Boston Consulting Group) Note - independently treated on its own subpage at Marketing Strategy.
8) Z-score (1968) (bankruptcy likelihood ratio) Edward Altman (NYU) and the associated ZEBRA acquisition procedure, BridgeS EC (2010)
9) HOQ (1972) (House of Quality), Dr. Yoji Akao, a tool from his QFD (Quality Function Deployment), 1966; and the associated HOQ tutorial, Dr. A. J. Lowe (2000)
10) PIMS (1972,´87) (Profit Impact of Market Strategy) initiated at G.E. and Harvard, popularized by Robert Buzzell and Bradley Gale; independently treated on its own subpage at Marketing Strategy.
11) Five Forces (1979) (Bargaining Power of Customers, of Suppliers, Threat of New Entrants, of Substitute Products, Competitive Rivalry within an Industry) Michael Porter (Harvard Business School)
12) Six Sigma (1981,´86) (quality management process reflecting 3.4 defects per million, an integral part of TQM) Bill Smith (Motorola)
13) 3 C´s Model (1982) (Corporation, Customer, Competition) Kenichi Ohmae (McKinsey)
14) 7-S Model (1982) (Structure, Strategy, Systems, Shared Values, Skills, Style, Staff) Tom Peters, Robert Waterman (McKinsey)
15) Resource Based Management (1984) (Evaluate resources by 4 criteria and isolate weakest link in chain) Birger Wernerfelt (head of the PhD program at M.I.T.´s Sloan School of Management)
16) TOC (1984) (Theory of Constraints) Eliyahu Goldratt
17) Strategy Morphology (1980´s,´90s) (Ontogeny and Phylogeny) Werner Kirsch (LMU, Germany)
18) Value Chains (1985) (compete on low cost or high value; do not get caught in the middle) Michael Porter (Harvard Business School)
19) SPACE (1986) (Strategy Position and ACtion Evaluation) A.J. Rowe/K.E. Dickel/R.O. Mason/N.H. Synder (popularized by)
20) Balanced Scorecard (1987) (a summary of financial and non-financial measures) created by Art Schneiderman; popularized by Robert Kaplan (Havard Business School) and David Norton (Pallidium) in the 1990s.
21) SPIN (1988) (Situation, Problem, Impact, Need - a questioning technique for solution selling applicable to strategy) Neil Rackham
22) A Simple Shark Strategy (1988) Harvey McKay's iterative method (Swim with the Sharks)
23) VRIO (1991,´96) (Value, Rarity, Imitablity, Organization) Jay Barney (Ohio State University)
24) Profit Pools (1998) (extending Porter´s work on industry analysis and related to market disruption analysis) Orit Gadiesch, James Gilbert (both from Bain)
25) Strategy Mapping (1998), Orit Gadiesch, James Gilbert
26) Strategy Taxonomy (1998) (ten schools of strategy) Henry Mintzberg (McGill & Insead), Bruce Ahlstrand (Trent University, Canada), Joseph Lampel (University of St. Andrews, Scotland)
27) Strategy Analysis with Lorenz Curves and Gini coefficients (1999) (an interesting quantitative approach) Jorge Vasconcellos (Technical and Modern University, Portugal)
28) Strategic Squares (1999) Jorge Vasconcellos
29) Cultural Bifurcations (2000) (applicable to variegated teams and global competition) Charles Hampden-Turner, Fons Trompenaars
30) Strategy Diamond (2001) James W. Fredrickson (Penn. State), Donald C. Hambrick (University of Texas)
31) TDABC (2003) Time Driven Activity Based Costing, Robert Kaplan (Harvard Business School) and David Norton (Pallidium)
32) Beyond Budgeting (2003) Jeremy Hope, Robin Fraser (England, HBR)
33) Blue Ocean Strategy (2005) (creating new market space) W. Chan Kim, Renee Mauborgne (INSEAD) - independently treated at V. Marketing Strategy - The Q3 - Strategy Ship: Sailing the Ocean Blue, Charting New Market Space.
34) India´s "DWDG" Model (2010) (Doing Well by Doing Good) Peter Cappelli, Harbir Singh, Jitendra Singh, Michael Useem (popularized by) (Harvard Business Review)
35) BOP, MOP, FOP Analysis (2010) (Back, Middle, Front of Pack Analysis) H. James Wilson (Babson Executive Education)
36) ZEBRA (2010), acquistion analysis, BridgeS E C
III. Tools & Techniques Briefly Explained
(9) GROW It was modified and promulgated by a colleague, John Whitmore, who started his own coaching firm and wrote Coaching for Performance, Nicholas Breadley Publishers, London, 1997. One of the best known coaching books, it emphasizes asking questions and using the GROW model for prompt action and peak performance. It also treats the dynamics of team development and positions coaching as the essential team leadership skill. A 4th edition with new material was recently published. (The book has been translated into German as Coaching für die Praxis, a Heyne paperback.)
Goal - The end point needs to be precisely defined.
Reality - The gap between what is, and what could be: what steps are needed to bridge the gap?
Obstacles/Options - These need to be broken down into their components. What are the options to overcome the obstacles?
Will/Way - "Where there is a will, there is a way." "What one man can do, another can do." Commitment, intensity and persistence are prerequisites for achieving ambitious goals. The options to do that need to be specified with action plans for the W´s: Who does What, When, Where, with Which resources.
Bridges defines coaching as co-achieve. One can use also use ACHIEVE as an acronym, as shown below. However it is a little unwieldy, less memorable than GROW.
Assess the current situation - "what is"
Consider the future - "what could be"
Have ambitious goals
Imagine and innovate
Validate and verify action
Encourage commitment and enhance profits
1 Henry Mintzberg, Bruce Ahlstrand, Joseph Lampel, Strategy Safari, A Guided Tour Through the Wilds of Strategic Management, Simon & Schuster, 1998, p.8. This work is also the main source for the Strategy Schools cited in techniques (32) and (33).
2 The second acronym popularized by the Seebees was SNAFU. The euphemistic exposition is that it stands for Situation Normal, All Fouled Up.
4 There was an independent development of SWOT at SRI in the 1960s.
5 Harvey Mackay´s iterative approach is particularly relevant for maturing EBOs and SMBs.
6 Art Schneiderman created the technique and its terminology. It was popularized by Robert S. Kaplan and David P. Norton in their 1992 HBR article and later book.
(2) Harvard Business School Policy Unit professors – George Albert Smith Jr and C Roland Christiensen are credited with its formation in the early 1950s. Later in the 1950s another HBS Policy Unit professor Kenneth Andrews developed its usage and application. All three professors were specialists in organizational strategy as opposed to marketing. SWOT went on to be developed by the HBS faculty during the 1960s until SWOT became the tool that we use today.
Parallel development took place at Stanford: SWAT SOFT (Satisfactory (good in the present), Opportunity (good in the future), Fault (bad in the present), Threat (bad in the future)).
SWAT SOFT was the outcome from the research work on corporate planning conducted at Stanford Research Institute (SFI) from 1960-1970.
Apparently one of the first presentations of SOFT was at a seminar at Zurich in 1964 and Urick and Orr changed the F to a W and called it the SWOT (Humphrey, 2005) analysis. It was presented as a standalone tool rather than being part of a process.
Weihrich (1982) subsequently modified SWOT in the format of a matrix, matching the internal factors (i.e. the strengths and weaknesses) of an organization with its external factors (i.e. opportunities and threats) to systematically generate strategies that ought to be undertaken by the organization. Weihrich is credited with the four-box matrix we now use. H.I. Ansoff used the concept in his 1987 book, Corporate Strategy, revised edition, Penguin Books.
ADD SWOT ON STERIODS FROM IMAGES and SWAT AT NEW 13.03.10 AT STRATEGY BKG
Updated: Brendan Kitts, Leif Edvinsson and Tord Beding (2000) Crystallizing knowledge of historical company performance into interactive, query-able 3D Landscapes
(3) MBO - Drucker -- see "Books to buy" word.doc for further info on Drucker
(12) One needs to set goals and prepare an action plan. The first step to bottom-up strategy formation is to profile the customers. The Makay list to do so has the following categories:
Personal : Questions 1- 6
Education: 7 - 12
Family 13 - 19
Business Background 20 - 33
Special Interests 34 - 39
Lifestyle 40 - 57
The Customer and You 58 - 66
In the Elephant´s Coaching Toolkit an adaptation of the list above is presented in full as: "The Customer Qoogol", as well as "The Competitor Qoogol", see below.
The second step to bottom-up strategy formation is to profile the competitors. The Makay list to do so has the following categories:
Physical Scale 6 -10
Performance as an Investment 11 - 18
Pricing 19 -21
People 22- 24
Positioning 25 -28
Plans 29 - 31
Performance as a Supplier 32 -42
Prestige in the Business Community 43 - 48
Probing for Data 49 -53
Prize Fight . . . Them and Us 55 - 57
We will beat this competitor if we do the following five things right: 58- 63
Harvey Makay then discusses repeating the above analysis to derive a strategy. In fact, he sells his own concept short, not emphasizing it enough. Here is it is slightly re-phrased and re-stated in bold.
The third step to bottom-up strategy formation is to:
Repeat a detailed competitive profile on each and every competitor with particular attention to the last bolded question above. A pattern will be revealed of what needs to be done. You distill the iterations of the competitive profile into a strategic action plan.
Footnote: These three sentences may appear a little simplistic for the academically inclined reader. Note that the iterations to distill the strategy could be presented as a mixture of Socratic induction and Hegelian dialectic. The former refers to the process of gradually arriving at generalizations through questions, i.e. reasoning from the parts to the whole. The latter refers to a logical development of progressing from less to more comprehensive levels via the stages of a thesis, an antithesis, and synthesis as a first iteration. The synthesis in turn becomes the thesis for a second iteration, and so on. (Your former professor might be thrilled by your re-casting the concept at length in such terms -- your boss, well, probably not.)
This concept is especially powerful in the Internet world, cf. The Coaching Elephant and the Internet.
The good news is how simple this concept for strategy formation is. The bad news is the amount of work it entails. Furthermore, customers and competitors are constantly misbehaving! They are not consistent. They are not even always rational. The customers are making purchasing decisions for their reasons, not yours. The competitors sometimes appear to be using a random number generator to take decisions.
Understanding the customers and competitors, even after laboriously collecting the data, is a Sisyphean* task. A recognition of the difficulty of understanding the customer is the increasing number of executive seminars focusing on this issue alone. An example is the Harvard Business School seminar "Understanding Customers" a four day seminar aimed at CEOs and VPs of marketing and product development for, in 2006, $5,750, cf. www.exed.hbs.edu.
*Sisyphean requiring continual and often ineffective effort. In Greek mythology Sisyphus, the cruel king of Cornith, was punished in Hades by being forced to roll a heavy stone uphill, which kept on rolling back down.
In the Elephant´s Coaching Toolkit an adaptation of the second list discussed above is presented in full as: "The Competitor Qoogol". Reading it will make clear the amount of work involved.
Contrasting the Makay Approach to Forming Strategy with Traditional Approaches
The principal weakness to the traditional approaches, with a top-down orientation, is that the great variety of strategy formation procedures may lead to terminal confusion. One finds oneself in the position which Herbert Elliston described as: "couldn't fuse his thoughts out of the maelstrom of thinking" (fn. Webster's III under maelstrom, p. 1357, maelstrom is a whirlpool, der Strudel).
The principal weaknesses of this iterative approach is the quantum leap, or rather, the lack of it. Conceptually one is taking the primrose path. (fn. primrose path - path of ease and pleasure; path of least resistance). A well-known business axiom is that if you have enough money to throw at a problem to solve it, than you do not have a problem. A corollary is that if you can throw enough man-hours at a problem to solve it, than you do not have a problem. A CEO or sector head can easily arrange throwing enough hours at Qoogols to answer them. Then all one has to do is distill the data with enough iterations: no problem, instant strategy! Of course, one still has to execute. But at least now one can proceed with confidence.
Well, yes, as far as that goes. Without a doubt, one will compete better along the industry's value curve. You are certainly not going to make the Motorola blunder of collecting royalties on digital phones from Erricson and Nokia, but still managing to miss the market shift to digital. In the analog world of 1990 Motorola had 45% of the global market for cellular phones and an amazing 85% (!) of the global market for pagers. In the digital world of 1998, Motorola laid off 20,000 workers in order to survive. (fn. to source)
Meanwhile the Finnish company Nokia had come from nowhere to seize one-third of the U.S. market -- as a direct result of having succeeded in its quest for the Holy Grail of traditional strategy, the quantum leap. Nokia originally manufactured mostly rubber boots. Qoogol your boot customers and direct competitors as much as you like. You are unlikely to decide that what your customers really want is not rubber covered feet, or plastic covered ones, and not rubber or plastic covered hands either. What they really want are hand-held plastic telecommunications devices. Nokia was competing in consumer products on a low-tech value curve. With great daring it took a mighty leap forward to compete on a high-tech value curve for a line of completely different consumer products.
(14) 7- S - Searching for Excellence comments (cf. footnote at Vidale/Wolfe model at Papers) and:
1) A bias for Action - Intelligent companies experiment rather than debate.
2) Close to the Customer - Service and quality obsession from top to bottom.
<3) Autonomy and entrepreneurship - The key for big companies - Act small.
4) Productivity through people - Treat people like adults.
5) Hands on, value driven - Find a common cause and sustain it.
6) Stick to the knitting - Build on things you know.
7) Simple form, Lean Staff - Best if manager can control all aspects of the business.
8) Simultaneous loose - tight properties - Flexible to maximize autonomy. Tight on values.
(19) The Strategic Position and Action Evaluation (SPACE) Matrix MORE INFORMATION IN A SPACE PDF AT NEW 13.03.10 FOLDER UNDER STRAT MATERIAL
The Strategic Position and Action Evaluation or the SPACE Matrix is a four-quadrant framework which indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given enterprise or company. The SPACE Matrix Analysis is most often employed during professional market analysis of a firm. The axes of the SPACE Matrix represent the two internal dimensions of a competitive firm which are its financial strength or FS and its competitive advantage or CA] and two external dimensions which are environmental stability ES and industry strength or IS. These four factors are the most important determinants of an enterprise's overall strategic position in the marketplace. A generic SPACE Matrix is detailed below:
Depending upon the type of firm and its industry, a number of variables could make up each of the dimensions represented on the axes of the typical SPACE Matrix. Factors that are typically included are those found in the firm's External Factor Analysis and its Internal Factor Analysis (EFA & IFA) and these should be considered in developing a SPACE Matrix. Other important variables that can be included in a SPACE Matrix examination are a firm's financial performance such as return on investment, leverage, liquidity, working capital, and cash flow commonly are considered determining factors of an organization's financial strength. Like the TOWS Matrix, the SPACE Matrix should be completely customized to the particular firm being studied and based on factual information derived from industry and market data.
The steps required to develop a SPACE Matrix are listed below:
1. Select a set of variables to define financial strength (FS), competitive advantage (CA), environmental stability (ES), and industry strength (IS)
2. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables that make up the FS and IS dimensions. Assign a numerical value ranging from -1 (best) to -6 (worst) to each of the variables that make up the ES and CA dimensions.
3. Compute an average score for FS, CA, IS, and ES by summing the values given to the variables of each dimension and dividing by the number of variables included in the respective dimension.
4. Plot the average scores for FS, IS, ES, and CA on the appropriate axis in the SPACE Matrix.
5. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on they-axis and plot the resultant point on Y. Plot the intersection of the new xy point.
6. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point. This vector reveals the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative.
Some examples of strategy profiles that can emerge from a SPACE analysis are shown below:
The directional vector associated with each given profile suggests the type of strategies to pursue that are: aggressive, conservative, defensive, or competitive. When an organization's directional vector is located in the aggressive quadrant (upper-right quadrant) of the SPACE Matrix, a firm is in an excellent position to use its internal strengths to (1) take advantage of external opportunities, (2) overcome internal weaknesses, and (3) avoid external threats. Therefore, market penetration, market development, product development, backward integration, forward integration, horizontal integration, conglomerate diversification, concentric diversification, horizontal diversification, or a combination strategy all can be feasible, depending on the specific circumstances that the company is facing at the time.
(21) www.huthwaite.com SPIN two day workshop for $1600. Better is to purchase the book and workbook.
In 1976, English behavioral psychologist Neil Rackham set out to study success factors in human relations. He chose to study sales because it is a field where success can be measured: the most successful salespeople in a given organization are the ones who generate the most revenue.
Neil conducted the largest behavioral research project ever undertaken in the sales skills area.
- His team (40 researchers) analyzed more than 35,000 sales calls, over a period of 12 years, to provide the hard facts on successful selling.
There were, and still are, plenty of opinions on how to sell; the research provided proof. In his studies:
- Neil worked with top salespeople from more than 20 of the world's leading sales organizations.
- More than 10,000 salespeople in 23 countries allowed Huthwaite researchers to travel with them and observe them in action during sales calls.
Analysis of these calls resulted in well-documented evidence about how to be more successful in sales. The discoveries led to the creation of a number of models and frameworks, most notably SPIN Selling®, Huthwaite's renowned methodology that revolutionized the world of sales and defines consultative selling to this day.
Overall Impression of this Book
At 192 pages--47 of these in the appendices--the book is short and a quick and easy read. It does make useful distinctions between small and large sales and the differences in approach that should be used for each. The SPIN method of questioning makes logical sense and is a technique that can be applied to other forms of selling, such as landing a job or selling an idea to a group of coworkers or friends. Overall this book presented a convincing way to be successful in large sales. The one drawback is that the book claims that the SPIN technique is validated by studies of over 35,000 sales calls. The book's presentation of the data is less than convincing and incomplete. Bar diagrams are too simplistic and do not present significant amounts of underlying data, explanation of collection methods, or statistical measurements. The skeptic will likely have less confidence in the book as a result, doubting the usefulness of the information.
Chapter One: Sales Behavior and Sales Success
Selling cycle can be divided into five segments: the opening, investigating needs, giving benefits, objection handling and closing. (The four stages of a sales call are preliminaries, investigating, demonstrating capability and obtaining commitment.)
The author makes a distinction between effective sales methods depending on size of sale, small versus large.
In his research, the opening is perhaps effective in small sales, but not for larger ones. Investigating needs is the most important component of selling, for large sales. For small sales it is much less important. Giving benefits works well once needs are uncovered, but benefits are defined in a very particular way. Objection handling is not important to large sales success, while they may be effective for small sales. Closing techniques can be effective for small accounts, but are counterproductive in large sales.
In summary, for large sales the most important aspects are the uncovering of needs and offering benefits. Everything else tends to take away from sale effectiveness.
In uncovering needs, the author describes four types of questions that will lead the salesmen to an effective sale: situation, problem, implication and need-payoff. These describe the SPIN model, or the sets of questions that lead to sales success. Situation questions are data gathering questions about facts and background. Too many will bore the listener. Problem questions address or explore potential problems, difficulties and dissatisfactions. These lead to implication questions which aim to get the customer to explore possible implications of problems on his operation overall. Need-payoff questions are ones that lead the customer to propose the correct solution himself to the problem at hand and to help him deduce the need for the product that is being sold.
Chapter Two: Obtaining Commitment: Closing the Sale
In this chapter the author says that the traditional emphasis on closing techniques is misplaced. The closing has little correlation to sales success in big sales. Two conclusions are noted: 1. by forcing the customer into a decision, closing techniques speed the sales transaction, and 2. closing techniques may increase the chances of making a sale with low-priced products but with expensive products the opposite is true as the chances of making a sale are reduced. If a client detects that a seller is using closing techniques he becomes much less likely to buy.
An important point is brought up in this chapter, that of furthering the sale. Large sales do not close with one phone call but are instead part of a developing process that will likely take several steps. A failed sales call is one that produces either a no-sale or a continuation, where no new development to further the sale has been brought forth. A measure of a successful sales call or visit is either an order or an advance, something that furthers the sales through a follow-up meeting or some similar commitment from the potential buyer. A good salesperson will always strive to advance the sale.
A successful obtaining commitment strategy is composed of four parts: giving attention to Investigating and Demonstrating capability, checking that key concerns are covered, summarizing the benefits, and proposing a commitment.
Chapter Three: Customer Needs in the Major Sale
The author again makes the distinction between small sales and large ones and explains that needs develop differently for each type of sale. Needs are defined as any statement made by the buyer that expresses a want or concern that can be satisfied by the seller.
There are two different kinds of needs: implied and explicit needs. Implied needs are statements of problems, difficulties and dissatisfactions. Explicit needs are specific customer wants and desires. It is the satisfaction of explicit needs that result in successful sales calls. The purpose of questions in the larger sale is to uncover implied needs and to develop them into explicit needs.
Chapter Four: The SPIN Strategy
This chapter examines how the four SPIN questions--situation, problem, implication, and need-payoff--can be used to help the need-development process.
Situation questions are simple questions to establish facts. Too many of them will bore the buyer. They are not positively related to success, but are often needed to find information. Do not ask unnecessary situation questions.
Problem questions probe for problems, difficulties or dissatisfactions and invite customer to state his implied needs. Sample questions might include: "Are you satisfied with your present equipment?"; "Isn't it difficult to process peak loads with your present system?"; "Does this old machine give you reliability problems?". Experienced salespeople