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Make Better Decisions

Most people don't pay attention to the emotions at play behind the decisions they make, but they can certainly be influential. These emotions can be as simple as what we like or dislike or what we are predisposed to be for or against. Making better decisions depends on developing better decision-making processes.

In a technologically driven company that bid on large contracts, I was asked to examine a competitive situation where this company had lost out on a multimillion-dollar contract. I interviewed key people involved and facilitated a discussion of the case. The case study laid out three phases of the bidding process: the decision to bid, the bid preparation, and the debriefing after the bid was rejected.

I identified several key findings. In particular, it became apparent that the team that was responsible for putting the bid together had locked into a particular approach early on. This approach involved the technology they were planning to propose, the risk they were willing to accept in determining profit or loss should they win the project, and the other companies they were partnering with.

As the bid developed, it was difficult to adjust the approach they had taken and the assumptions they had made. One of the key findings was that instead of locking into a fixed set of assumptions when developing a competitive bid, this organization (and any others in similar situations) should have used a process called scenario planning. Scenario planning was first developed by Royal Dutch Shell in the 1970s as a way of trying to decide on major future investments in oil exploration and development. They realized that they couldn't predict the future, and that any single prediction of the future or the assumptions that it was based on could quickly become obsolete and undermine their decision.

Shell decided they needed to examine a range of options. They wanted to provide flexibility to adjust their actions depending on how the world energy and petroleum situations developed. At the time, they weren't sure whether there was going to be an excess of capacity or a shortage. As it turned out, there was a shortage to the extent that the U.S. had gas rationing for a time. By not locking into one prediction of the future, they were able to adjust their approach to take advantage of the evolving situation.

Innovative, large sales involve longer time frames. These longer time frames make it more difficult to predict what will happen within the industry, the client organization, or the financial situation. Having several possible options under consideration makes it easier to change direction and prevail over competitors who have locked themselves into an inflexible course of action.

The key in scenario planning is developing and testing the assumptions that underlie the decision. All too often, these assumptions are not explicitly identified, examined, and critiqued. They may not even be universally understood by the sales team, and the client may be operating under a totally different mind-set. To prevent a major misalignment, you should explicitly discuss, agree on, and write down assumptions. (To do so, you may want to use a technique known as nominal group.

This means having people write their own assumptions and collecting them before they hear what others have to say.)

For more information on how Shell developed its scenario planning approach, check their Web site (shell.com). There are a number of examples there of how they have used the process.

Challenging Assumptions

When we make assumptions that turn out not to be true, we can suffer negative consequences. A typical sales example is, "The customer has the budget for what I am proposing" or "I am working with the decision maker." If, in the excitement of going after a sale, you haven't asked the right questions up front (such as assessing budget requirements or the decision process), you may waste a tremendous amount of time. It's better for you to know from the start what you are working with than to find out when you present your recommendation to the customer that your proposal is dead in the water because of existing circumstances that you weren't aware of.

We make assumptions all the time, often based on our experiences. History is replete with examples of outmoded assumptions: the world is flat, no one will break the four-minute mile. To achieve breakthroughs, identify and challenge your own assumptions. Write them down and test them. Don't leave them to chance.

At the very least, identifying and clarifying your assumptions with others will minimize the risk that you and the other person are making different assumptions.

To succeed:

  • Challenge assumptions.

  • Compare with others.

  • Create a plan B.

    " Many of us were taught that the cancer cell was so messed up with so many biochemical abnormalities that it was impossible to correct them all and therefore really impossible to kill the cancer cell with medicines that hit specific targets in the cancer cell. The fact is that we know that's not true. We know that we can get very good responses and perhaps even cures with very specific targeted molecules. Imagine what we can do when we start combining them and hitting two or three targets at the same time."

    —Dr. Larry Norton, Memorial Sloan-Kettering Cancer Center, commenting on the unexpected success of Gleevec, a new cancer treatment pioneered by Novartis

Success Is Having a Plan B

Here is an example of how having a plan B can make a difference. There was a machine that played a critical part in making the chip used in cell phones made by two cell phone manufacturers. The machine was severely damaged by an electrical surge during a lightning storm.

The team from the company with a plan B went into action, contacting alternative suppliers who were able to ramp up relatively quickly and begin replacing the production that was lost from the primary facility. While these alternative vendors did not supply as many of the chips as the primary facility did, they knew the specifications and the process and could start relatively quickly.

The other company did not have alternative suppliers. They had to begin to look for them. This was a much more time-consuming process because it meant not only finding the suppliers, but evaluating their capabilities and then negotiating contracts and other arrangements. It was reported that this company lost hundreds of millions worth of sales as a result of this incident when they were not able to produce phones, all because of one critical machine being damaged. Who do you suppose was the primary beneficiary of these lost sales?

Now imagine if you were the salesperson who could have sold this account on having a backup.

Either-Or Thinking

Either-or thinking goes right along with wrong or untested assumptions in creating problems for sales professionals. When faced with a decision, how many times will someone think in terms of only two alternatives—"either this or that"—when there may be more possibilities? Don't get caught making that faulty assumption. Also, don't go to extremes without being aware that you are doing it. Going to an extreme eliminates options, and when we eliminate options before we can consider them we end up with suboptimal solutions. People typically go to extremes when they are emotional. (Witness the stock market.)


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