CategoriesSales Consulting

Influence by Robert B. Cialdini

Robert Cialdini,  Professor of Psychology at Arizona State University, has identified 6 Principles of Influence—what makes people agree to do or buy something (based on 35 years of evidence based research)

  1. Reciprocation: ‘People repay kindness’
  • Social obligations: Humans inherently dislike being indebted to someone. We feel obliged to give back to others (a behaviour, gift, or service) that we receive first. E.g.: A friend invites you to his/her party, there’s an obligation for you to invite him/her to a future party (whether you like him/her or not!) A supermarket sold £1000 of cheese in a few hours by inviting customers to slice their own free samples. Hare Krishna society in the USA solicited donations successfully by offering a gift first (a rose, a book), people accepted (whether they wanted it or not) and they gave donations (whether they wanted it or not!)

The key is to be the first to give; make it personalised and unexpected. Amount of favour generally doesn’t matter much. (An actress helped her friend in a big way. Because when she wanted to move her house a few years ago, she had asked help to 20 friends, and only that friend had turned up)

Caution: Don’t mix repaying personal favours with business favours. (A boss can’t give a higher raise to his Reportee because he gives lift to the boss)

Tip: When you do a favour, don’t say, “Naah, don’t worry it’s no big deal” (losing the chance to influence the other person) or “Now, you owe me one” (forcing a commitment on the other person), but say “You would have done the same for me” (Conditioning the other person to think returning the favour as his own action)

  • Reject & Retreat: This technique consists of first making a higher demand, then waiting for it to be rejected, only to follow this demand up with a smaller one, (that you really wanted all along. It makes your demand feel like a concession). ‘If you want a kitten, first ask for a pony’. E.g. When a group of people asked to volunteer to manage a school-trip every Saturday for 2 years, they denied. Then, they were asked to do it only for one Saturday, they accepted!

Caution: Don’t make your first demand so high that the other person find you un-reasonable

  1. Commitment and Consistency: ‘People like to be consistent with the things they have previously said or done

Good personal consistency is highly valued in human culture. Inconsistency is commonly thought to be an undesirable personality trait. The person whose beliefs, words, and deeds don’t match may be seen as indecisive, confused, two-faced, or even mentally ill. On the other side, a high degree of consistency is normally associated with personal and intellectual strength. It is at the heart of logic, rationality, stability, and honesty.

Consistency is activated by looking for, and asking for, small initial commitments that can be made. Get people to do voluntary, active, and public commitments, and ideally gets those commitments in writing. (That’s why it is recommended to write down/verbally state our goals, as we then stand a much greater chance of sticking to them!)

E.g.: Households were called and asked to predict what they would do if they were asked to volunteer for three hours to collect for charity. Three days later, they were re-called and asked to collect for charity. This led to an increase in the numbers of volunteers by 700%. A woman who wanted to quit smoking, wrote it on a few business cards and gave it to the people she loved. The thought of not failing them made her comply—she quit smoking in 3 weeks!

Living up to our identity – “We are what we repeatedly do”- Aristotle. We will act in ways that are consistent with our identity, beliefs and values. American Prisoners of War (POWs) in Korea started co-operating, when they were labelled and classed themselves as a collaborator.

  1. Social Proof: ‘People follow the lead of similar others’

People are more willing to take a recommended action, if they see evidence that many others, especially similar others, are taking it (i.e. Social Validation. E.g. In a new city, which restaurant would you go to, the one with full parking lot or the one with empty one?) When people are uncertain, they look at the actions and behaviours of others to determine their own. (Mind doesn’t want to work, if others, similar to me, are doing it, they must have thought about it)

E.g.: In places of worship, bars etc. some money is already kept in the collection jar. It’s to stimulate other to give. Long ques outside (even if it’s an arranged one) make a bar, restaurant popular

  1. Authority: ‘People follow the lead of credible, knowledgeable experts’

People are more willing to follow the directions or recommendations of a person who they think has the relevant authority or expertise. Greater the perceived authority of a person, the more likely people are to comply

E.g.: One study showed that 3 times as many pedestrians were willing to follow a man into traffic against the red light when he was merely dressed as an authority in a business suit and tie. Hospitals have a 12% daily error rate, because, nurses and junior doctors will very rarely challenge the decision made by a doctor. In an experiment, Airplane crew did not challenge the Pilot when he did a catastrophic mistake (purposefully) that would have led to a plane-crash

We often perceive and interact with people with authority differently. It’s important to signal to others what makes you a credible, knowledgeable authority before you make your influence attempt. (E.g. Physiotherapists are able to persuade more of their patients to comply with recommended exercise programs if they display their medical diplomas on the walls of their consulting rooms.). Arrange someone to introduce your expertise to your prospects (“Speak to Peter, our head of sales. He has over 20 years’ experience selling properties. I’ll put you through now.”) Spend some time in the first meeting presenting your experience & expertise

  1. Liking: ‘People like those who like them’

As a rule, we prefer to say yes to the request of those we like over those we don’t. E.g.: Joe Girard won for twelve years straight the title of ‘Number one salesman’, selling on average five cars or trucks a day. One of his key tactics however was to employ the use of compliments. Every month he sent every one of his 13,000 former customers a holiday greeting card containing a personal message—‘I like you’. In Tupperware Home Demonstration parties, guests are 3 times more likely to purchase products because they like the party’s hostess than they like the products. When a salesman approaches the person recommended, saying “your friend recommended this for you” it increases the chance they will make a purchase. Turning the salesman away is difficult as it’s like rejecting one’s friend

We like people who are similar to us (same views, interests, beliefs and values), we like people who pay us compliments, and we like people who cooperate with us towards mutual goals. We, therefore, need to find areas of shared interest to increase rapport and connection.

E.g.  In a study on series of negotiations, when the discussion started like

How the discussion started % reached agreeable outcomes
“Time is money. Get straight down to business.” 55%
Before negotiating began, exchanged some personal information with each other & identified similarities both parties share 90%

(Tip: Studies found, people automatically attribute traits such as talent, kindness, honesty and intelligence to attractive/good-looking/well-dressed people)

  1. Scarcity: ‘People want more of what they can have less of’

People find objects and opportunities more attractive to the degree that they are scarce, rare, or dwindling in availability. We are more motivated to act if we think we are going to lose something, than if we are to gain something. E.g. ‘Save £50 a month on…’ would not be as effective as ‘You are losing £50 a month on…’.

An item that is scarce is more desirable than one that is freely available. E.g. When British Airways announced in 2003 that they would no longer operate the London—New York Concorde flight because it had become uneconomical to run, sales the very next day took off.

Even information that is scarce is more effective. A beef importer in the US informed his customers (honestly) that, because of weather conditions in Australia, there was likely to be a shortage of Australian beef. His orders more than doubled. However, when he added (also honestly) that this information came from his company’s exclusive contacts in the Australian National Weather Service, orders increased by 600%!

So, it’s not enough simply to tell people about the benefits they’ll gain if they choose your products and services. You’ll also need to point out what is unique about your proposition and what they stand to lose if they fail to consider your proposal.

  • Don’t be a Bungler or a Smuggler of influence, but be a Sleuth!


  1. Bunglers: Simply miss chances and cues that legitimately they should take to influence people. E.g. if they’ve done a favour to a customer, they would say “Don’t worry, it’s no big deal”. They don’t use the power of scarcity to further their sales cause; fail to produce proofs that their product works when they have adequate proofs that it does.
  2. Smugglers: They are too sneaky for their own good. They may use legitimate techniques of influence, but at the wrong time and out of context. “They get what they want, but Customers get what they don’t want!”
  3. Sleuths: They use all of the acceptable techniques of influence – at the right time and in the right context. This is the detective of sales, the professional who helps a customer discover ways to solve problems.


  • Other key points:
    • 7th principle of Influence: Reason Why
      Attaching a reason to a request increases the success rate:  “I have 5 pages, can I use the Xerox machine before you because I’m in a rush” had a success rate of 94% 60% success rate when no ‘reason why’ was given. [Stupid version of like ‘I have 5 pages, can I use the Xerox machine before you because I’ve to make copies’ also worked!]
    • Showing potential customers the most expensive item first then working downwards in price leads to an increase in the amount spent (as the next products seem cheaper in comparison).
CategoriesSales Consulting

Getting Things Done by David Allen

GTD—or “Getting things done”—is a framework for organizing and tracking your tasks and projects. Its aim is a bit higher than just “getting things done”, though. (It should have been called “Getting things done in a much better way than just letting things happen, which often turns out not to be very cool at all”.) Its aim is to make you have 100% trust in a system for collecting tasks, ideas, and projects—both vague things like “invent greatest thing ever” and concrete things like “call Ada 25 August to discuss cheesecake recipe”. Everything!

Sound like all other run-of-the-mill to-do list systems, you say? Well in many ways it is, but there is more to it, and it’s really simple. Promise! So please read on.

One of the basic assumptions of GTD is that you are dumb—or, rather, that your sub consciousness is quite dumb when it comes to thinking about things you should have done. For example knowing you need to fix your bike before next week, but instead of reminding you when you actually drive by the bicycle shop, it implants an incessant feeling of “I need to remember… something” in your brain.


The heartbeat of GTD is five steps that apply order to chaos and provide you the space and structure to be more creative, strategic, and focused. These five steps can be shown visually


One | Collecting Your Work

Collecting your work together and getting everything out of your head is the first stage of mastering your workflow.


The in-basket represents a place where you can collect all of your work and open loops. For example, this could be your email inbox, a physical inbox or apps like Evernote and to-do lists. When collecting your work, it’s important to get everything out of your head and into one of these baskets, even if this means jotting down a note on a piece of paper and physically putting it somewhere.

Two | Processing Your Work

Processing your work is all about taking everything in your in-baskets and working out what needs to be done with those items

What is It? This is a simple, yet important step. Answer the question, “what is the thing you’re dealing with?” Perhaps it’s an email from HR but what is it actually about? Is it an unimportant update about employee contracts, or is it some boring reminder about health and safety? Identifying the stuff in your in-basket allows you to effectively answer the next question.

Is it Actionable? Yes – If an item is actionable, you must first identify the “project” it’s part of (see “Projects“) and the “next action” required to move that item towards completion (See “Next Action”).

No – Often, the stuff in your in-basket requires no further action required. In which case, you can do one of the following three things (see “Trash”, “Someday/Maybe” and “Reference”).

What’s the Next Action?  The “next action” is exactly what it sounds like. It’s the next thing you need to do to take that item towards completion. Once you’ve identified the next action, you can answer the following question to work out your next move; “will it take less than 2 minutes?”

Do It: If the answer to this question is “yes”, just do it then and there. Easy.

Delegate It:  If the answer is “no”, you can ask yourself, “am I the right person to do this?” or “can someone else do this?” Depending on these answers, you can delegate the task.

Defer It: Finally, if you do need to do the work and it’s going to take longer than 2 minutes, you can defer it to later.

Three | Organising Your Work

Once you’ve processed your work using the above system, all of the non-actionable stuff can be organised into:

Someday/Maybe: These are the things you might want to come back to one date and that aren’t attached to any particular time frame.

Reference: These are the useful things that don’t require any action, but might come in handy later. It could be a supporting document for some piece of work, a spreadsheet of information or checklist.

Trash: Finally, if there is no point in keeping an item for reference and you don’t want to come back

Projects & Project Plans: A project is literally anything with more than two action steps that need to be completed e.g. planning a trip, buying a new TV or running a marketing meeting.

Waiting:  Keep a track of things you’re waiting for by creating a “Waiting” list.

Calendar: Deferred work that is time sensitive goes on your calendar to be completed at a specific time. GTD stresses that your calendar is only used for these time sensitive items and nothing else.

Next Actions:  Any deferred work that isn’t time sensitive goes onto your “next actions” list.

Four | Reviewing Your Work

Once you’ve organised everything so it’s in the right place, it’s important that you review your “next actions”, “calendar” and “waiting” lists on a regular basis. The order of review can be “calendar”, “next actions”, “waiting”, “projects” and “someday”.

Five | Doing Your Work

At last! Based on your review you will be able to decide what to do. When deciding what on this list to tackle first, you can consider the amount of time/energy you have, the context you’re in and it’s priority. For example, if you have only 10 minutes before you’re next meeting, you can make a phone call on your “next actions” (time).

A few key quotes:

-At any point in time, knowing what has to get done, and when, creates a terrain for manoeuvring.

– Suffice it to say that something automatic and extraordinary happens in your mind when you create and focus on a clear picture of what you want.

– Things rarely get stuck because of lack of time. They get stuck because the doing of them has not been defined.

CategoriesSales Consulting

The Art of Public Speaking by Dale Carnegie

So, how to improve at the art of public speaking? Lets take the example of grazing horses.

Did you ever notice in looking from a train window that some horses feed near the track and never even pause to look up at the thundering cars, while at the next crossing a farmer is trying to quiet his scared horse as the train goes by?

How would you cure a horse that is afraid of cars—graze him in a back-woods lot where he would never see steam-engines or automobiles, or drive or pasture him where he would frequently see the machines?

Apply the same horse-sense to ridding yourself of self-consciousness and fear: face an audience as frequently as you can, and you will soon stop shying. You can never attain freedom from stage-fright by reading a treatise.

By following these 10 tips, you’ll be able to eliminate that feeling and make your presentation a good experience for both you and your audience.

  1. Acquiring Confidence in Front of an Audience

Speaking in front of people can be terrifying. Some might argue that it is even more intimidating to speak in front of a smaller audience. To overcome this fear, Carnegie says to:

  • Practice multiple times
  • Be absorbed in your subject
  • Have something to say
  • Expect success
  • Assume control over your audience
  1. Subject and Preparation

Know what you’re talking about and keep your knowledge organized. Do research and have facts to supplement your speech. Create an outline, and once you’ve prepared your presentation, don’t be afraid to revise.

  1. Efficiency through Change of Pitch

Carnegie advises that for every change in thought, your voice should change in pitch. Work on noticing what your voice does when you speak, remember that having more inflections in your voice will sound more pleasant to your audience.

  1. Pause and Power

Knowing how to utilize pauses can greatly help your public speaking skills. They can be used for a variety of reasons like letting your audience mentally prepare for your next thought, creating suspense, or letting your message sink in with your audience.

  1. Feeling and Enthusiasm

Put feeling into your speech, and express that. Don’t be afraid to let go, even if it feels overdone at first. Be enthusiastic about your topic, it will help get your audience excited about it too. The more excited about and connected to your presentation your audience is, the more likely your message will resonate with them.

  1. The Voice

A speaking voice is essential for public speaking, but how do you train yourself to have one? To begin with, you have to relax. Don’t allow yourself to be nervous because there is nothing to be nervous about. Watch your breath and try reciting vowel sounds to relax and prepare for your speech.

  1. The Truth about Gestures

Gestures should be a reflection of what you’re feeling, helping convey that to your audience. They should come naturally, and should be one of the only unplanned parts of your speech. Make sure your movements are fluid and go along with what you are saying at that exact moment.

  1. Influencing the Crowd

Every crowd needs a leader. Be that leader for your audience! Guide your audience through your thoughts and keep them engaged. Establishing yourself as a leader will gain respect from your audience and help you get them to take the action you want them to.

  1. Growing a Vocabulary

Having a word in your vocabulary means three things: you know its meanings, you know how it works with other words, and you know how to use it correctly. When you hear a new word, make it a point to learn these three things about it. Hearing a word you already know, used in a different way, is a great way to increase your vocabulary as well. If you’re unfamiliar with that usage, look it up and learn it.

  1. Memory Training

You probably don’t want to or can’t memorize your entire speech word for word, so associating ideas will be essential to having your presentation go smoothly. It’s as simple as memorizing your outline. Memorize your key speaking points and some words associated with them, and work from there.

Audience expect big things from a speaker asking for attention: he must have either truth or entertainment for them. Get out there and own the stage!!!

CategoriesSales Consulting

Customers for Life by Carl Sewell and Paul Brown

Carl Sewell shares the lessons learnt from transforming his Cadillac dealership, revealing the secret to getting customers to return again and again. What follows might seem a little idealistic but do it right and it can work wonders.

Ask your customers what they want and give it to them. Do not make assumptions, ask them and they will tell you exactly what they want. Get them to spend an extra 10 mins explaining what they really want. Use this information to serve them better. Underpromise and Overdeliver. Build buffers to make sure you always overdeliver.  If the customer asks for anything the answer is “Yes”. You can charge them or not but you always say yes. Be available all the time.

Build systems. Anything you do needs to be measured, compared and attributed. Make sure the person doing the work checks it and is responsible for a free rework if necessary. Builds ownership. Fire the inspectors and the Consumer relations department. Get the person delivering the service to be directly responsible for the relationship. Get it right the first time, if you falter apologise and fix it for free. Always overdeliver.

Selling is theatre and everything you do is judged. Care for the customers and the employees equally. Both are equally important. Keep everything clean. Obsess over every single detail from the lawns to the bathrooms. Everything adds to the impression being formed about you. Have clear signboards wherever necessary. If they don’t Name, Describe or Direct remove them.

The customer is almost always right. But sometimes you need to show them the door. Segment-Segment-Segment. You cannot serve every kind of customer profitably. Select the ones who’ll value your service and WOW them at every opportunity.

Build easy ways for customers to give feedback. This is the best source of information to fix the faults in your systems. Ask for feedback at every opportunity and thank them for it.

Hire Superstars. Save more by paying them more through partnership pay. The increase in efficiency definitely covers the increase in direct cost and the indirect costs saving are just the Icing on the cake.

Borrow from everywhere. Go looking for things to copy. There is no pride in reinventing the wheel. But you can definitely improve upon it. But, always pilot test them before mass rollout.

Leadership is performance. You cannot fake it. You have to actually genuinely care about the business, employees and the customers. If you don’t others can sense it. They’ll not be genuine after that. No amount of fliers or sessions can change the damage done by the wrong signals given out by the leader. If the boss is a crook you cannot expect the employees to be honest.

Four components that allow self-esteem to prosper. Sense of achievement, being cared about, power (autonomy) and ethics &Values.

Be nice. Build trust. Gain reputation and forge strong partnerships. Sometime you might have to trade with competition to get something the customer needs urgently. Do it in good faith and everyone wins.

Everything regardless of what you do has cycle time. Reduce it as much as possible. Look at the areas you are not adding value and start cutting from there. Any value of value add/cycle time >5% is great. Aim for that.

Recognize your Customer lifetime value and take decisions accordingly. You might lose a few bucks here and there but overall you’ll come out way ahead. Do All of this with the profit in mind or you aren’t going to be able to do it for long.

CategoriesSales Consulting

Simplify by Richard Koch

This book talks about great simplifiers in the business world. It says that there are only 2, almost opposite, ways of Simplifying: Price-simplifying & Proposition-simplifying. It also explains how to do both these simplifications!

Part 1: Great Simplifiers

  1. Henry Ford: Simplified the Ford Model T so that it was not only easy to build and maintain by also could be driven by anybody. By reducing the price the market size dramatically increased
  2. IKEA: They achieved price levels that blocked competitors with big stores outside town and direct delivery from the manufacturer to store.
  3. McDonalds: Simple menu with good food at a price half of what you would expect anywhere else. The menu is fixed in price and the choice has been decided by the restaurant. But in addition McDonalds makes a point of usability, e.g. no tipping.
  4. The Consultants: The BCG’s 4 box system, cash cows, question marks, dogs and stars. It was a simple package that enabled young rookies to “advise” companies what their strategy should be
  5. Uber: Used technology to link customers with providers and take a 20% cut of the fee! Welcome to the 21st century of a networked world. Uber scores well on ease of use and utilityand the ‘Art’ as the author calls it, he means the overall experience

There are two almost opposite ways to simplify:

  1. Price-simplifying – the route taken by Henry Ford, by McDonald’s, Southwest Airlines, IKEA, Charles Schwab, and Honda – This requires cutting the price of a product or service in half, or more – sometimes over a number of years the price can be cut to a tenth of its previous level. If the price of a product is halved, demand doesn’t double.  It soars.  And if the product or service is simple enough, it can be sold everywhere around the world – There is a common template adopted by all price-simplifiers
  2. Proposition-simplifying – involves making a product or service a Joy to use by making it simpler: more useful, easier to use, and more elegant. Companies who have done this brilliantly include Google, Uber, Apple, ARM, Tetra Pak, and The Boston Consulting Group

Whereas price-simplifying is all about making it simpler for the Producer, proposition-simplifying is all about making it simpler for the Customer

Part 2: How to Simplify

Proposition Simplify: This happens in 3 steps:

Step 1: Make the product/service easier to use

  • Eliminate features: Keep only what is absolutely required
  • Make your product intuitive and easier. Hide Complexity. Is it Joy to Use?
  • Make it Faster: Nespresso, faster coffee anyone?
  • Make it smaller/lighter/portable.The Sony Walkman
  • Finally, make the product/service easier to obtain. iTunes, Uber

Step 2: Make it more useful

  • Vary the performance (make it more or less powerful)
  • Improve quality
  • Add new features, but only if it does not undermine Step 1
  • Provide a wider range of services
  • Personalize it

Step 3: Make it more aesthetically appealing

Product design is a crucial aspect of any consumer product, web design etc. e.g. MySpace’s demise. It had a cluttered and messy interface when Facebook offered a nice clean one

How to Price Simplify

Radically reduce the costs not just within the product but also the company to allow a profitable price reduction. To be meaningful the price has to be reduced by 50% or more.

9 step method to achieving price simplification:

Step1: Subtract features: No food in planes

Step2: Reduce variety: Ford

Step3: Add cheap benefits: IKEA Children play areas

Step 4: Automate: be able to scale your product selling

Step 5 Orchestrate

Step 6: Co-opt customers: McDonalds

Step 7: Sell direct

Step 8: Use simpler technology

Step 9: Scale Up: Grow quickly. Make it difficult for anyone else to copy your business

CategoriesSales Consulting

First, Break All the Rules By Marcus Buckingham & Curt Coffman

Don’t try to put in what was left out; instead draw out what was left in”

The Gallup Organization surveyed 2,500 business units. Positive answers to the 12 questions strongly correlated to better productivity, profitability, retention levels and customer ratings. Great managers routinely break all the rules. They take the conventional wisdom about human nature and managing people and turn it upside down. Managers as Catalysts. Managers are not Leaders. Great managers look inward, great leaders look outward.

The first key is to select employees based on talent rather than experience or intelligence. To do so, you must know what talent is necessary for the job. The best way to identify relevant talents is to study your best.

The authors define talent as “a recurring pattern of thought, feeling, or behavior that can be productively applied.”There are three basic types of talent: striving, thinking and relating talents. Striving talents explain the why of a person. Does he or she want to stand out, or is good enough good enough? Thinking talents explain the how of a person. Does he think linearly or does he or she strategize with “what if” games? Is he or she structured or does the person love surprises? Relating talents explain the who of a person. Whom does he or she trust, whom does he or she build relationships with? Does he love confrontation or avoid it?

The second key is to evaluate performance based on desired outcomes rather than direct control over the way a worker performs his or her job. Define the outcome and let each person find his or her own way to it. Let them find their path of least resistance. Resist the Temptation to Control, to create perfect people. “The road to hell is paved with good intentions.” Avoid the temptation to declare that your people don’t have enough talent. Don’t buy the belief that trust is precious and must be earned, be generous with it. Guard against the belief that some outcomes defy definition. Everything is measurable, it just takes more effort.

Rules of Thumb for turning talent into performance:

  1. All employees must follow safety and accuracy rules for everyone’s protection.
  2. Employees must follow required steps when they are a part of company or industry standards.
  3. Required steps are only useful if they don’t obscure the desired outcome.
  4. Steps don’t lead to customer satisfaction, but can only prevent dissatisfaction.

The third key to great management is to reject the conventional wisdom that people can be fixed. Focus on strength not on weaknesses. First, make sure each worker is in a role that uses his or her talents; casting is everything. Second, manage by exception. Don’t believe that fairness requires you to treat everyone alike. Act as if each worker is unique and give each what he or she needs to succeed. And finally, spend the most time with your best people. Don’t make the mistake of using averages to calculate performance. It is misleading and inefficient. In case of a Weakness either devise a support system to overcome the lack of talent, or find a compatible partner for him or her, or find an alternative role.

The fourth and final key is to find the right fit for your employees’ talents. Again, you will learn to avoid the conventional wisdom that promotion is the only just reward for high performance – mindset that creates an organization where everyone is ultimately promoted to their level of incompetence. One solution is to create pay plans that rely on broadbanding.

Execution requires Simplicity, Frequent interaction, focusing on the future and self-tracking (Goals & evaluations).

The Art of Tough Love

How do great managers terminate someone and still keep the relationship intact? Confront poor performance early. “Procrastination in the face of poor performance is a fool’s remedy.”

The Art of Interviewing for Talent

  1. Make sure the talent interview stands alone. The purpose is to see if the candidate’s recurring patterns of thought, feeling, and behavior match the job.
  2. Ask a few open-ended questions and then keep quiet. A person’s unaided response to an open-ended question is powerfully predictive.
  3. Listen for specifics. A talent will be illustrated with specific examples and experiences.
  4. Clues to talent. There may be an inclination towards certain activities. Analytical? Competitive?
  5. Know what to listen for. Pay careful attention to emotional responses such as “I really hate it when…” or “it really excites me to…”

Performance Management

How do great managers turn  the keys every day with every employee?

They follow a performance management routine. The common characteristics of this are:

  • The routine is simple. It comes in a simple format. No bureaucracy. No forms to fill out.
  • The routine forces frequent interaction between manager and employee. Ask how did a particular meeting make him feel?
  • The routine is focused on the future. What do you want to accomplish in the next few months? How can I help?
  • The routine asks the employee to keep track of his own performance and lessons learned.

Master Keys

What can the Company do to create a friendly climate for great managers?

Focus on the outcomes. The role of the Company is to identify the desired end. The role of the individual is to find the best means possible to achieve that end.  Strong companies become experts in the destination and give the individual the thrill of the journey.

  • Value world-class performance in every role.
  • Study your best managers.
  • Teach the 4 keys of great managers.

Gathering Force

“The intersection of two forces – each Company’s search for value and each individual’s search for identity – will change the corporate landscape forever.” World-class managers ride the momentum of these gathering forces by no longer trying to put in what was left out. Rather they work hard at drawing out what was left in


Annexure I: THE 12 QUESTIONS

  1. Do I know what is expected of me at work?
  2. Do I have the equipment and material I need to do my work right?
  3. At work, do I have the opportunity to do what I do best every day?
  4. In the last seven days, have I received recognition or praise for good work?
  5. Does my supervisor or someone at work seem to care about me as a person?
  6. Is there someone at work who encourages my development?
  7. At work, do my opinions seem to count?
  8. Does the mission/purpose of my company make me feel my work is important?
  9. Are my co-workers committed to doing quality work?
  10. Do I have a best friend at work?
  11. In the last six months, have I talked to someone about my progress?
  12. This last year, have I had opportunities at work to learn and grow?


Annexure II: Performance Management Meeting:

  1. What actions have you taken?
  2. What discoveries have you made?
  3. What partnerships have you built?
  4. What is your goal?
  5. What discoveries do you planning?
  6. What new partnerships are you hoping to build?


CategoriesSales Consulting

The Choice By Eli Goldratt

The most important choice we can make is ‘to lead a full life’. Really understand everything. Decipher the causalities that govern a situation! Living a meaningful, a full life requires only one thing: to think. Think like a scientist. And, each one of us have enough intuition and brainpower to think like a scientist. Good luck is Preparation meets opportunity. Bad luck is Reality meets lack of preparation. An unprepared person has no freedom of choice

We need humble arrogance. Be humble to assume that one doesn’t know. Be arrogant- have the confidence that one is capable of figuring out how to make things work

The more complicated the situation seems to be, the simpler the solution must be. The key for thinking like a true scientist is the acceptance that any real life situation, no matter how complex it initially looks, is actually, once understood, embarrassingly simple.

There is no limit to how much a company can improve. Get rid of forecasts. Anything that doesn’t need to be so needs to be analysed, from first principles.

The most meaningful opportunities are the ones that open when a person realizes how to overcome a constraining situation. Repressing a problem is a waste of an opportunity

For a person to think clearly, what is needed is to accept the concept of Inherent Simplicity. Nature is exceedingly simple and harmonious with itself. Few levers run the whole machine

Reality does not contain contradictions, but it is full of conflicts. Normally leads to a bad compromise. Treat it like a contradiction: look for the erroneous assumption, the source of the conflict. Eliminate the conflict, don’t settle for optimization

Look for daring solutions, and shoot at the big problems. Question assumptions. The big difference between organizations and individuals is that with organizations, the underlying assumptions are perceived not as assumptions but as facts of life

Obstacles to thinking clearly: (1) The perception that reality is complex (2) The tendency to accept conflicts as given (3) The tendency to blame the other party (4) Saying “I Know”

The belief in Inherent Simplicity also implies a deep conviction that harmony exists in any relationship between people.

Win-Win: Such a state exists for any relationship; Look for it; it is the key for reaching a full life. Seek the other party’s win, it dramatically increases the chance of finding such a solution. Not the win that is in conflict but a different not less important win

Goldratt says the key to thinking clearly is to avoid circular logic, Simple! You start with an effect, any effect, and dive down to the root causes by asking: ‘Why does the effect exist?’ The difficulty is, when we do so, we will reach causes that are abstract entities: causes whose existence cannot be verified directly through our senses. They probably do exist, but we know it through logic and not through direct info of our senses

Circular logic is a point of no return for thinking clearly. We must look for atleast another observable resultant effect. Then, you can dive down for its root cause. Inherent Simplicity to the rescue

So, how does one practice thinking clearly? Use any opportunity to try to decipher the cause & effect. Be it a casual conversation with a stranger, a comment from your wife, or something that you are reading. The more you practice this, to the extent that it becomes your second nature, the easier it becomes. People will even start calling you a genius. And this search may not even take more than a second or two!

People are Good. Trust them

Logic does not exist in a vacuum. The only way we can come up with a hypothesis or a predicted effect is by intuition. And intuitions stems from emotion. We as human beings are standing on a 3-legged stool: emotion, intuition & logic!

We have our strongest intuition in the areas that are the most important to us. The more we practice thinking clearly the deeper our emotions in those areas become. The deeper the emotions, the stronger is the resulting intuition. Reinforcing helix

An Optimist but never leaving things to chance, Goldratt ensures the deck is always stacked in his favour: puts safety nets upon safety nets. Goldratt calls himself an optimist with experience: a practical visionary

What you will become is your choice. You can no longer find refuge in blaming others, or blaming circumstances, or saying it’s out of your control or beyond your abilities. You have to take full responsibility for your life. This will lead you to a full life but not an easy life



CategoriesSales Consulting

The Power of Simplicity by Jack Trout

The Basics of Simplicity

  1. Simplicity – Why people fear it so much

Simplicity requires that you narrow the options and return to a single path. Paradox of choices. “If the glove doesn’t fit, you must acquit.” “Ab ki Baar, Modi Sarkar”.

  1. Common Sense – It can make things simple

The world is too irrational to be put into mathematical formulas. Get your ego out, Listen better, Be Cynical. Trust your common sense. It will tell you what to do.

  1. Complex language – it can cloud people’s minds

Language is getting more complicated. “Empty your knapsack of all adjectives, adverbs and causes that slow your stride and weaken your pace. Travel light.”

  1. Keep sentences short, remove unnecessary words.
  2. Pick the simple, familiar word
  3. Put action in your verbs.
  4. Write like you talk.
  5. Use terms your readers can picture.
  6. Tie in with your reader’s experience. (The essence of positioning.)
  7. Make full use of variety.
  8. Write to express, not impress.

Don’t be suspicious of your first impressions, they  are often the most accurate.

A Simple Summation – Big ideas almost always come in small words.

Management Issues

  1. Information – Too much can confuse you. Declutter to think clear

The first challenge is to acknowledge that you can’t absorb everything you think you need to know. And when you’re the one doing the communicating, be more economical in everything you write, publish, broadcast, or post online. You’re supposed to be a decision maker, not an information expert.

Demand that any report that reaches you have a one-pager. If it doesn’t, send it back. Send brief responses. Seven lines of text, One visual per slide is the ideal.

  1. Consultants – the source of a lot of nonsense

Introduce simple ideas and get it done. Its about doing the right thing not the most fashionable. Don’t trust anyone you don’t understand.

  1. Competitors – Simply think of them as the enemy

Companies must look for weak points in the positions of its competitors and then launch marketing attacks against those weak points.

  • Defensive Warfare Is What Market Leaders Wage. Leadership is reserved for those companies whose customers perceive them as the leader … A rolling company gathers no competitors. They attack themselves regularly
  • Offensive Warfare Is the Strategy for the Number Two or Three in a Category. Papa John’s attacked Pizza Hut at its weak point, ingredients. “Better Ingredients. BetterPizza.” Simple Story Great Results.
  • Smaller or New Players That Are Trying to Get a Foothold in a Category by Avoiding the Main Battle Pursue Flanking Warfare. Uncontested areas. Eg: Dell
  • Guerrilla Warfare Is the Land of the Smaller Companies. A Defendable Niche. Eg: Carribean Island

If you’re at war, it’s important that you adopt the qualities of a good general: be flexible, have courage, be bold, know the facts, be lucky.

  1. Strategy- Differentiation

In real estate its location, location, location. In business it’s differentiate, differentiate, differentiate. – Robert Goizueta, former Coca-Cola CEO.

In a world where everyone is after your business you must supply your customers with a reason to buy you instead of your competitor. If you don’t offer that reason, then you had better offer a very good price. That reason is then packaged into a simple word or set of words that is positioned in the ultimate battleground, the minds of your customers and prospects. We call that “positioning.”

  1. Customer orientation- POP not POD

One aspect of a marketing program that is often overlooked is that of reinforcing the perceptions of your existing customers. Make them feel smart about being your customers. Its not about knowing the customer, but the customer knowing about you

  1. Annual Budgets- Necessary evil

Step 1. Prepare Marketing Plans

Step 2. Rank Product Opportunities

Step 3. Assign Advertising Tasks(for awareness not changing minds)

Step 4. Stop When You’re Out of Money

Put your money where your opportunities are, not where they were.

  1. Prices- A thing is worth whatever the buyer will pay for it and your competition will let you charge
  • You’ve Got to Stay in the Ballpark.
  • People Will Pay a Little More for Perceived Value.
  • High-Quality Products Should Be More Expensive.
  • High-Priced Products Should Offer Prestige.
  • Late Entrants Usually Enter on Price.
  • High Prices and High Profits Attract Competitors.
  • Don’t Train Your Customers to Buy on Price.

The commandments of discounting:

Don’t follow the pack, be creative, use discounts only to clear stocks or generate extra business, put time limits on the deal, make sure the ultimate customer gets the deal, discount only to survive in a mature market, stop discounting as soon as you can.

  • It’s Hard to Win with a Low Price unless you have a structured, low-cost advantage over your competition. Southwest Airlines

Make Sure You Build Some Promotional Dollars into Your Price.

  1. Mission Statements – Mushy Statement shows it has no direction

Have a clear direction. Put the basic strategy into the statement. Present the differentiating idea.  Make sure everyone in the company gets it.

  1. Leadership

“The foundation of effective leadership is thinking through the organization’s mission, defining it and establishing it, clearly and visibly. The leader sets the goals, sets the priorities, and sets and maintains the standards.”

The best leaders are storytellers, cheerleaders, and facilitators. They reinforce their sense of direction or vision with words and action. A visible leader is a very powerful weapon. This kind of leader offers unique credentials for a company.

A Simple Summation – Good leaders know where they are going.

  1. Long-term Planning

Are you writing your competitors plan? Spot trends, not fads, and capitalize. Flexible!

  1. Organization

Conventional wisdom says that decentralization is good. It gets you closer to the market. Our view is that decentralization is bad. It dissipates your forces, adds to complication, and makes it difficult to keep things focused.

“If nothing ever changed, a decentralized company would be more efficient and effective than a centralized company. There’s no question that decentralization contributes to a sense of responsibility on the part of both the operating unit’s management and employees. But how does a decentralized company develop a focus? It doesn’t. Decentralization removes top management’s ability to point the company in one specific direction. And then to change that direction when conditions in the marketplace change. Decentralization is efficient, but inflexible.” Almost by definition, a decentralized company cannot have a focus on a correct strategic behavior or strategy. It can only serve as a center for accumulating financial results

  1. Marketing

A differentiating idea is a competitive mental angle. The idea must be competitive in the total marketing arena, not just competitive in relation to one or two other products or services. Second, a differentiating idea must have a competitive mental angle. In other words, the battle takes place in the mind of the prospect. In our definition, a strategy is not a goal. It’s a coherent marketing direction, in the sense that it is focused on the idea that has been selected. Second, a strategy encompasses coherent marketing activities. Product, pricing distribution, advertising – all the activities that make up the marketing mix must be coherently focused on the idea.

Opportunities are hard to spot because they don’t look like opportunities.

  1. New Ideas

Innovation has very little to do with genius. It has very little to do with inspiration. Let’s take an honest look at how the mind gets a new idea. It happens in three steps.

  1. Preparation. Immerse in the problem. Collect information, data, and opinions
  2. Incubation. While you are busy doing other things, a part of your unconscious mind is swirling. Your brain juxtaposes ideas, blends characteristics, funnels ideas together.
  3. Illumination. A new and reasonably complete idea surfaces (seemingly out of nowhere). The simplest way to solve a problem is to borrow an existing idea. Military designers borrowed from Picasso’s art to create better camouflage patterns for tanks.

The simplest way to invent a new product is to adapt an existing idea

Substitute; Combine; Adapt; Magnify or Minimize; Put it to other uses; Eliminate; Reverse or rearrange.

  1. Goals – They muck up marketing plans. Wishful thinking.

Bring reality. Stop trying to force things to happen and instead find things to exploit.

  1. Growth is a byproduct not a goal

A simple and powerful objective is to shoot for share, not profits. As a market emerges, your number one objective should be to establish a dominant market share. Too many companies want to take profits before they have consolidated their position. Never finance the company’s losers with the earnings from the company’s winners. This dampens your ability to pour on the resources to your winners. In our experience, less is more. Don’t spread yourself thin with line extensions.


People Issues

Chapter 19 – Motivation

What that CEO should be delivering is a platform of ideas on “how we’re going to kick butt,” followed by “here are the fundamental training and tools to do it with.”

Chapter 20 – Self-improvement

Here is some simple advice to deal with self-improvement issues.

  1. Understand what’s going on here. It’s a scam
  2. Leave personal growth to the person.
  3. Start by improving the basics.
  4. After the basics, work on skill building. “You never send a changed person back to an unchanged environment, That’s Organizational Development 101.”
  5. Remember, it’s called training, not recreation.

Chapter 21 – Success

Product Horse. Idea Horse. The other person horse. Riding is better than planning.

Is it Bold, Obvious, likely to disrupt the apple cart.

Chapter 22 – The Critics – Ignore them


In Conclusion

Chapter 23 – Simplicity

Papa John’s Pizza founder, John Schnatter “It’s all about better ingredients and quality and good old-fashioned hard work. thirteen years ago we simply decided to make a better traditional pizza. We now do that better than anybody does in the world.

Chick-fil-A  “We didn’t invent the chicken,” the ads say, “Just the chicken sandwich.”

Southwest Airlines. The airline was founded on the premise of keeping things simple. First there was only one kind of airplane, the Boeing 737. That made things simpler for the pilots and the maintenance people. Then there were no assigned seats, no food at all, no hubs, easy on, easy off is the airline’s philosophy.

The Kohl’s Department Stores. “We do 20 simple things that have impact taken together,” says CEO John Herma. “The key is the consistency of the execution.”

CategoriesSales Consulting

Hacking Growth—by Sean Ellis & Morgan Brown

Hacking Growth uncovers the methods of how some of the big companies compound wins over time. It focuses on customers—How to acquire, activate, retain monetize them. It is a practical method for growth, involving close working of the cross-functional teams, data-mining for insights, and continuous testing to achieve more consistent, replicable, and data-driven results

The 4 Steps to Driving Growth

  1. Build Growth Teams

It’s a cross-functional team

  • Managed by a Growth Lead: Part Manager, Part Product-owner, Part Scientist. Lead needs to have fluency in data analysis; expertise or fluency in product management and an understanding of how to design and run experiments
  • Other Team-members: Product Manager, Marketing Specialists, Software Developer(s),  Data analyst(s), Product Designer(s)


  1. Make sure your Product is a ‘Must-Have’. Identify an aha moment that users love
  • Creating a must-have product is the baseline requirement for rapid and sustainable growth— a product that people absolutely love; ‘can’t live without’ (vs. just ‘good enough’)
  • One must not move into the high-tempo growth experimentation push until one know one’s product is must-have, why it’s must-have, & to whom (what’s the core value, to which customers, why)
  • Two-part assessment to find out if your product is a Must-Have
    1. Must-Have Survey: How disappointed would you be if this product no longer existed tomorrow? Options—(a) Very disappointed (b) Somewhat disappointed (c) Not disappointed (it really isn’t that useful) (d) N/A—I no longer use it. Get at least a few hundred responses. If ‘very disappointed’ ≥ 40%, then the product is a ‘Must-have’. If not many Beta users, then better do Customer Interviews
    2. Assess the product’s retention rate: Tracking the no. of users who churn (weekly/monthly basis). Shorter time horizon helps deduce how many users are making the use of the product a habit
  • Get out of the building to find out what your customers really want from you and your product, what the true objections and barriers are to your product’s success. Be dispassionate about your product. Listen and observe, don’t pitch
  • Track the complete path of what a customer does—from first visit to making first purchase and then subsequent ones. Look for the behaviours that differentiate those customers who find your product ‘Must-have’ from those who don’t
  • Remember sometimes, “You often don’t know what you’re looking for until you find it”
  1. Identify your Growth Levers –
  • Focus on the right levers of growth at the right time. Be rigorously scientific in identifying the kind of growth you need and the levers that will drive it
  • Understand which metrics matter most for your product’s growth. Develop your ‘fundamental growth equation’. To find out essential metrics, identify the actions that correlate most directly to users experiencing the core value of your product. E.g. Uber—essential metric, no. of rides completed. So in addition to the no. of new people downloading the app, Uber would want to track in the no. of rides being booked, the no. of riders who return and rebook, and the frequency with which they are booking new rides
  • Develop dashboards to report only the most important metrics that map to your growth levers. Present information in a way that is actionable. Use ratios
  • Do Cohort analysis for deeper insights: Divide your customers or users into distinctive groups by a common trait
  1. Testing at High Tempo Learning more by learning faster. More experiments, the more you learn
  • Generally, big successes come from a series of small wins, compounded over time
  • The Growth Hacking process is a continuous cycle comprising four key steps:
  1. Analyse—Do set of user surveys and a set of interviews, Analyse data and gather insights

What are my best customers’ behaviors? What are the characteristics of my best customers? What events cause users to abandon the app/product?

  1. Ideate—Create Idea Pipeline, The best way to have a good idea is to have lots of ideas’. Discourage Self-censorship
    • Idea Template: Idea Name, Idea Description (Who, What, Where, When, Why How), Hypothesis (cause & effect), Metrics to be measured (more than one, improvements in one metric come at the expense of others)
  2. Prioritise—Prioritise experiments (‘Hacks’) on the basis of hard data rather than assumptions. Make experiment selection a collaborative process
  • ICE score system: Impact— the degree to which the ideas will improve the metric, Confidence— how strongly the idea generator believes the idea will produce the expected impact, and Ease— the time and resources needed to run the experiment.
  • Other Score Systems: TIR—Time, Impact, & Resources, PIE— Potential, Importance, & Ease
  1. Test—Run the experiments & review results. Prerequisite—ability to both gather data on customer behaviour and measure product performance and the results of experiments
  • Keep the experiment velocity high. Design Minimum Viable Test, then invest in more robust follow-on test
  • Identify both the experiment group & the Control group—Not exposed to the experiment
  • It’s critical that every experiment be designed to produce statistically valid results
  • Analysis can only tell ‘what users are doing’, See patterns to know ‘why they’re behaving that way’
  • When results are inconclusive, the best course is to stick with the original, or control, version.
  • Do a growth meeting of 60 Minutes: Metrics review and update focus area (15 mins), Review last week’s testing activity (10 mins), key lessons learned from analyzed experiments (15 mins), Select growth tests for current cycle (15), check growth of ideapipeline (5 mins)
  • US World War II commander General George Patton— “A good plan violently executed now is better than a perfect plan tomorrow.”

After the cycle, circle back to the ‘Analyse’ and decide the next steps. Look for early winners and invest. Quickly abandon those that show lacklustre results


Hacking the Customer Funnel

Use the above for different stages in the Customer Funnel: Acquisition Ò Activation Ò Retention Ò Monetisation. I haven’t summarised this section, as it is a set of ideas and examples. It’s best to read these


Avoid Growth Stalls:

Stalls are also often caused by companies

  • Becoming overconfident of having secured a premium position in the marketplace
  • Lose focus on their core products or services due to newly launched products
  • Being complacent and failing to innovate in marketing efforts. This can happen by wrongly assuming, reached the limit of the results from their growth levers or potential of the pool of data
  • Overlooking or disregarding organic channels of growth

One of the biggest challenges is breaking out of the bounds of currently successful ways of operating: the “if it ain’t broke, don’t fix it” mentality. Find ways to go beyond what’s “not broke” to in fact find something that works better


Other Key Points from the Book

  • Bain & Company and Harvard Business School discovered— a 5% increase in retention leads to an increase in profits of between 25 and 95%, because just small gains in retention lead to compounding revenue growth the longer customers stick around
  • 6 principles of persuasion from Robert Cialdini’s book ‘Influence’
  1. Reciprocity—People are more likely to do something in return of a favour
  2. Commitment and consistency—People who have taken one action are likely to take another
  3. Social proof—People look to the actions of others to help them make their own decisions
  4. Authority—People look to those in the position of authority to decide which actions to take
  5. Liking—People will do business more readily with people and companies they like
  6. Scarcity—People will take action when they are worried about missing an opportunity
  • 7 core factors that make reviews and testimonials effective—CRAVENS: Credible, Relevant, Attractive, Visual, Enumerated, Nearby purchase points, and Specific
  • Language/market fit: how well the language, you use to describe& market your product to potential Users, resonates with them & motivates them to give it a try. E.g. iPod: 1,000 Songs in Your Pocket
  • attention span (the time one focuses on information online) is now 8 seconds (12 seconds in 2000)
  • Effective rewards come in the form of status, access, power, and stuff (stuff being financial incentives or physical gifts). Good strategy is to blend tangible rewards, experiential and social ones
  • To know how much to charge for a SaaS (software as a service), do a survey:
  1. At what price point does [product] become too expensive that you’d never consider purchasing it?
  2. At what price point does [product] start to become expensive, but you’d still consider purchasing it?
  3. At what price point does [product] start to become a really good deal?
  4. At what price point does [product] start to become too cheap that you’d question the quality of it?

Map the responses, and it would look like the below graph


CategoriesSales Consulting

The 80/20 Principle by Richard Koch

What is the 80/20 principle? A minority of inputs lead to a majority of outputs

The 80/20 Principle asserts that a minority of causes, inputs or effort usually lead to a majority of the results, outputs or rewards. Typically, causes, inputs or effort divide into 2 categories:

  • the majority, that have little impact
  • a small minority, that have a major, dominant impact.

e.g. 20% of products or customers or employees are really responsible for about 80% of profits

(A useful cousin to 80/20 is the 50/5 principle. Typically 50% of a company’s customers, products, components & suppliers will add less than 5% to revenues and profits)

For Consulting companies,

  • 80% profits come from 20% Clients— Large clients and long-term clients. Large clients give large assignments; Long-term client have higher cost to switch to another consulting firm & they tend not to be price sensitive
  • 80% results flow from concentrating on the 20% of most important issues

Realize the difference between the ‘vital few’ and the ‘trivial many’. The implication of 80/20 is that output cannot just be increased, it can be multiplied! Conventional wisdom is not to put all your eggs in one basket. 80/20 wisdom is to choose a basket carefully, load all your eggs into it, and then watch it like a hawk!


  • How to think & use 80/20: Acting on a few key insights produced the goods
  1. 80/20 Analysis: Quantitative, Precise, requires investigation, provides facts, highly valuable
    Gather data. Arrange the data in descending order of importance; take cumulative data & percentage. Make comparisons between percentages in the two sets of data. Use Bar charts to  present data


  • When using the 80/20 Principle, be selective and be contrarian. Look at what really matters! g. Look at Distribution of profits, but not sales volume!
  • 80/20 Analysis is based on a freeze-frame of the situation at a particular point and cannot provide a picture of the trend or of forces that could change profitability. Profitability analysis of the 80/20 type is a necessary but not a sufficient condition of good strategy
  1. 80/20 Thinking: Qualitative, fuzzy, requires thought, provides insight, highly valuable
    Think deeply on any issue that is important to you. Make a judgement on whether 80/20 is working in that area. Act on the insight. Ask ‘What is the 20% that is leading to 80%? What are the vital few inputs or causes, as opposed to the trivial many?’
  • Applying 80/20 to business: Generate the most money with the least expenditure of assets & effort
  • 3 action implications
  1. Successful firms operate in markets where it is possible for that firm to generate the highest revenues from the least effort. A firm can’t be judged as successful unless it has a a high ROI, and higher margins
  2. It is always possible to raise the economic surplus by a large degree, by focusing on those market & customer segments where the largest surpluses are currently generated
  3. Raise the level of surplus by identifying the parts of the firm (people, factories, sales offices, countries) that generate the highest surpluses; Give them more power & resources
  • If you can identify where your firm is getting back more than it is putting in, you can up the stakes and make a killing. (And, the converse too—where you get less, cut your losses.) The ‘where’ can be anything: a product, a market, a customer or type of customer, a technology, a distribution channel, a department, a type of transaction, an employee or team
  • Do an 80/20 Analysis of Profits by different categories of business
    • First, By product/product group/type
    • Second, By customer/customer group/type
    • By any other relevant ‘split’ having data e.g. geographical area, distribution channel
    • By competitive segment

Two other questions, besides profitability, those are key to strategy:

  1. Is the segment an attractive market to be in?
  2. How well is the firm positioned in each segment?
  • Segmentation: The greatest insights come from a combination of customers & products into ‘dollops’ of business defined with reference to your most important competitors. A competitive segment is a part of business where it faces a different competitor or different competitive dynamics. i.e.
    • Do you face a different main competitor in this part of business compared to the rest of it? If yes, that part of the business is a separate segment
    • Do you and your competitor have the same ratio of sales or market share in the 2 areas: or are they stronger in one area and you in another
  • 4 steps to lock-in your core Customers
  1. Identify your key customers; and profile the heavy & frequent consumer
  2. Provide them exceptional or outrageous servicebeyond the call of duty
  3. Target new products/services at this core customers, developing solely for & with them
  4. Keep your core customers forever by developing relationship (strength, length, depth)

Serving the core 20% of customers must be a company-wide obsession!

  • Increasing Salesperson performance
    • Hang on to your high performers. Stay close to them
    • Hire more of the same type of salesperson. Ask them to hire more people like them
    • Identify what the top performers sell the most and what they do differently then
    • Get everyone to adopt the methods that have the highest ratio of output to input
    • Switch a successful team from one area with an unsuccessful team in another area
    • In Salesforce training: Train only those who are likely to stay on for several years

Sales Managers should:

  • Focus efforts on the 20% of products that generate 80% of sales. Reward Salespersons for selling the most profitable products
  • Focus on the 20% of customers generating 80% of sales & 80% of profits. Get customers ranked by sales & profits. Insist Salespersons spend 80% of time on their 20% customers
  • Put the highest vol. & profit accounts under 1 salesperson/team, regardless of geography
  • Lower costs and use the phone for less important accounts
  • Get Salespersons to revisit old customers who have provided good business in the past
  • Five rules for decision taking with the 80/20 principle
  1. Not many decisions are very important. So, don’t waste time over the unimportant decisions
  2. The most important decisions are often those made only by default. So, occasionally step back to look for intuition and insight, rather than analysis. What you need are intuition and insight: to ask the right questions rather than getting the right answers to the wrong questions
  3. 80/20/100/100 rule: Gather 80% of the data and perform 80% of the relevant analysis in the first 20% of the time available, then make a decision 100% of the time and act decisively as if you were 100% confident that the decision is right
  4. If what you’ve decided isn’t working, change your mind early. Don’t fight the market!
  5. When something is working well, double your bets. Don’t settle for modest growth!
  • Project Management: Focus all team members on the few things that really matter
  1. Simplify the Objective. Have one simple aim
  2. Impose an impossible time scale. This ensures the team focuses on the real value adding 20%.
  3. Plan before you act. In this phase:
  • Write down all the critical issues to resolve (If more than 7, remove the least important)
  • Construct hypotheses on what the answers are, even if pure guesswork
  • Work out what info required or processes to complete to test your hypotheses
  • Decide who is to do what and when
  • Re plan after short intervals
  1. Design before you implement. Or there will be massive, costly rework
  • Negotiation: Few points in a negotiation really matter. Don’t peak too early
  • Applying 80/20 to Life: Work Less, Earn & Enjoy more
  • Detonate Time-revolution: There is no shortage of time. We only make good use of 20% of our time
    • Dissociate effort and reward. Think Productive laziness!
    • Give up guilt. Doing what you like doing and making it your job is great, not wrong!
    • Pursue those few things where you are amazingly better than others
    • Identify the 20% that gives you 80%. Multiply that! Eliminate/reduce low value activities
  • Aim to have a lot of money. Start investing early in life. But don’t get overboard
  • Identify top relationships with allies & loved ones, nurture them. The best relationships are built on (a) Mutual enjoyment (b) Respect (c) Shared experience (d) Reciprocity & (5) Trust
  • The 7 habits of happiness: Make happiness the choice
    (a) Exercise (b) Mental stimulation (c) Spiritual/artistic stimulation/meditation (d) Doing a good turn (e) Taking a pleasure break with a friend (f) Giving yourself a treat &
    (g) Congratulating yourself


  • Simple is Beautiful! Progress requires simplicity. Simplicity requires ruthlessness
  • 1/5th of a company’s revenues account for 4/5th of its profits & cash
  • If you focus on the most profitable segments, you can grow them surprisingly fast. Harvest these segments- let go off the less profitable customers & products, cut off most support & sales effort, raise prices, and allow sales to decline and start making good profits!
  • Larger firms losing Market Share to smaller firms—because of the cost of complexity. Additional scale without additional complexity will always give lower unit costs
  • Outsource: Decide which is the part of the value-adding chain (R&D/manufacturing/ distribution/ selling/marketing/servicing) where your company has the greatest comparative advantage—and then ruthlessly outsource everything else
  • Do not listen to Accountants who bleat about ‘exit costs’; a lot of these are just numbers on a page with no cash cost. Even where there is a cash cost, there is normally a very quick payback
  • Go for the most ‘simple 20%!’ What is simple and most standardized is hugely productive & cost effective than what is complex
  • Immense cost reduction can be achieved by reducing complexity. By winning the war between the trivial many and the vital few. Use three 80/20 insights:
    1. Simplification thro’ elimination of unprofitable activity
    2. Focus, on a few key drivers of improvements
    3. Comparison of performance
  • A few key quotes:
  • Most likely, you make 80% of profits and cash in 20% of activity, and in 20% of revenues. The trick is to work out which 20%
  • Whenever you spot a 20% activity, run to it, immerse into it and use resources to exploit it
  • True best-seller books never make it to the charts but sell a reliable quantity at high margin
  • 01%of a person’s vocabulary sufficient for 50% of the things to do with a small hand-held!
  • Market share gives scale to spread Fixed costs; helps raise prices
  • The road to hell is paved with the pursuit of volume. Less is more
  • A common excuse for not cutting the product-range by 80% is: ‘the firm will lose stature.’ In reality buyers aren’t interested in being distracted from the products they want to buy
  • When reading a book: Read the conclusion Ò the intro Ò the conclusion, then dip lightly

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