Cerius Experts: To Pivot or Not To Pivot
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Cerius executive experts weigh in on things to consider when determining whether your business needs to pivot or not.
Kristen McAlister: Thank you everyone for coming today and being part of our Cerius virtual meetup. This is kind of an ask the experts. I was in a meeting with several CEOs yesterday, and there’s a couple of topics that are very timely right now that I would love to get this panel of experts’ input on.
Kristen McAlister: I’d like to talk about some of the changes that need to be made. Pete, you’ve mentioned new goals. There’s a lot of hitting the reset button right now and I’ve heard you mention that a couple of times. I’ve heard many CEOs say, “I’m going to have a different company over the next three months or six months than I did three months ago. The industry is evolving. The environment is evolving and this is really my opportunity to hit that reset button for anything I need to do or that I’ve wanted to do.”
As we evaluate, should we be doing that and how much should we be changing our companies? What are you seeing out there? How are you advising CEOs to look at their company differently?
Why don’t we start with Kevin?
Kevin Ewaynk: Well, I think if you’re looking at a long term solution, you need to be thinking about from the get go your cash and where your company’s going to come out at three to six months, and then what you’re going to do with that and how you’re going to change how COVID has affected you. Are you looking at, as Annie said, moving to a long term model where we expand this to customers and is our security safe on the IT side of all of this? Or are we opening ourselves up by letting all of our employees go in. I would also ask Seth, on the marketing side, are we looking at our high value customers versus our desert customers versus our middle customers and who’s our problem customers and what are we doing to help them move forward? Is that how we’re looking at changing the company? Do you see that Pete or Seth, or do you see more of, “I’m going to keep doing what I’ve always done and I might change some of my systems.”
Seth Avergon: So from a pure marketing standpoint, we’re always looking at first, where is the need in the market? Because need is going to drive demand. Demand will then drive cash revenue. So, if you were doing X back in January, and there’s not much demand for that anymore, but you also have an offer, another product Y or service that is significantly more in demand. Now that’s when it makes sense to do a pivot or a reset and saying, “Okay, we had two product offerings. Nobody’s buying product A. Everybody’s going to want product B. I need to shift resources. I need to shift messaging. I need to even maybe shift sales responsibilities over in alignment with meeting demand out there.” So what the world needs, we then set up our messaging and our marketing messaging and our promotions around that need. Then we set up our teams around that. So we are going to have the kind of cash flow, the kind of revenue we’re going to need to get us through the next six months.
So purely, it’s what does the world need? What does the consumer, what does your customer need first and foremost?
Kevin Ewaynk: Are you trying to pivot entirely or are you trying to bundle those services?
Seth Avergon: It’s going to depend. So with one of my clients, they had 70% of their business focused on an area that is not really viable right now. And 30% doing something else that is much more interesting right now. So, we’re flipping the mix completely. They’re still selling the products were selling before, but all the energy, the effort, the marketing dollars have all shifted over to the other side of the boat at this point.
But to the bigger question of, “should you do a reset?” I think a lot of CEOs might be taking that on alone and you really should be bringing in your directors and your managers on that. We call this mission change, right? When you were doing this and now you’re going to have to be doing something completely different. That is a decision at the leadership level. You want to socialize with your people and share and get their input on what they’re seeing as well before you just decide to take the entire company and go a different direction with it.
Pete Todd: I think my comments on this really fall into a number of categories. First of all, from a CEO standpoint to look at pivoting, they have to pivot. They have no choice from a sales standpoint but to pivot because, frankly, they now have a customer base that they can’t visit anymore. So if you’re not adapting to the new normal, which is customers that either refuse to have sales visits or worse, just can’t for the time being, it’s really going to force a different set of behaviors and a different go-to-market plan that will involve really close collaboration with marketing and other stakeholders within the company, IT, etc.
I would take a step back and say to CEOs and PE groups that I’ve talked to, “Before COVID happened, you had a pretty good handle on what kind of sales organization you had. Was it focused? Was it really understanding what the customers’ unmet needs were?” How did they communicate? Did they track opportunities? Were they really in touch with their customers or were they kind of sloppy and went out and took some low hanging fruit off the trees? This is not a time right now for a sales team of road warriors that aren’t excellent communicators, that don’t understand their customers. Those people really can’t thrive in this environment.
So the pivot, not necessarily from a strategy standpoint, but from a customer standpoint, has to be one where you need a team of excellent communicators with focus that really understand their customer needs and what’s happening at the customer level for a number of reasons. For supply chain reasons or product roadmapping reasons into the eyes and ears of the company to harvest data from the market, such that if any pivoting is going to be done, it needs to be very much data-driven, not opinion driven. It needs to have data harvested from the guys that are closest to the customers, to have that feedback into the company to make really important decisions. And that’s why if there was weakness in the sales team in those areas before this, you really have to address it now, because otherwise you’re going to be handicapped as you go forward. If that’s a pivot, then that is something that needs to be pivoted for sure to be very customer focused. Of course people like Seth and I are very biased in that area because the organization should have always been customer focused, but now it really needs to be focused and you have to do it in a way where you’re communicating remotely. So it is quite a challenge.
I think that the second area of the pivot ties to that collaboration with marketing, not just for zoom meetings, but to be communicating with your customer base through push messaging and the right amount of messaging, not to be annoying, but to be helpful. And again, that’s another challenge in this new market. Some customers we’re hearing, not only can’t visit, but they’re okay with that. Maybe they didn’t want to be visited in the first place anyway. I think this could, for some companies, certainly in some industries, force them to really examine their sales strategy. Do they have an online sales capability? Do they have chat rooms to provide support? These are all things that need to be discussed again across the team because that’s what impacts everyone. And again to rely on data to drive that decision.
And then the last thing that I would address, purely from a sales leadership standpoint – If you take guys or gals that have been road warriors that are kind of like fish out of water right now because they can’t visit customers. I think it’s very, very important to have very clear goals on what’s expected from them in this environment relative to activity levels and to manage that closely. One simple technique that I’ve advised a number of companies on is a weekly summary report, which I call a five by five report. What five things did you get done this week? What five things are you going to get done next week, you personally not your team? Instilling that level of focus is just really critical. So all of this could be tied to hitting that reset button. Some of this is a best practice that arguably should have been in place beforehand, but here we are right now. It’s never too late to start working on that. And if you don’t know where to go, get help because you don’t want to fall further behind.
Kevin Ewaynk: I would add. Pete, that I’d want some P and L responsibilities looked at as well with those goals. It’s not just getting my customers who are in most need, but I want to make sure those are customers I want to go after and service.
Kristen McAlister: When you look at hitting the reset button, we’re so quick right now to say, “We’ve got to change things. We’ve got to keep up with it.” Kevin, from a finance standpoint, (and I appreciate your comments, Seth, about the leadership team) it’s not just about changing, even if the need is right there in front of you. What are some of the ways that you can depend on your leadership team from a finance and IT and HR standpoint. What should I be expecting as a business owner? Kevin, what are some things that you’re looking at from a financial standpoint as well?
Kevin Ewaynk: I’m looking at cashflow. I’m looking at profitability. Probably our sales are down, but I want to see where we can focus on those sales and make sure that the company is still doing overall a good job of meeting those needs of the customers. But doing a good job of making a profit and returning a decent profit to the owners, even though at this time it may not be what we expect. I’d like to make sure everybody on the teams knows what we’re trying to do, how we’re changing it, where the profits are coming from. Maybe not give them a full P and L, but let them know that, you know, these are the customers where this is our sweet spot to sell to and maybe how we change that and manipulate our mix a little bit.
Kristen McAlister: Thank you.
Annie, from an IT standpoint now. Technology has become front and center with the remote workforce, but there’s so many areas of support that can be provided, especially when we’re looking at doing things differently. We’re being forced to do things differently. What are some considerations?
Annie O’Grady: Picking up on the discussion around financial controls and stability, really focusing on where’s the business value versus business risk, and making sure that the IT resources are really supporting the businesses in those two areas. My top tip of the day – It’s a great opportunity right now to have conversations with your IT contractor or IT companies about the cost of IT and really look to them as a partnership. Look where they can help you in terms of the cost of IT, given the fact that your volumes may be down right now on a lot of the services that you’re using. So, good opportunity to look at IT contracts right now.
In terms of crisis management and tech resources, it took a lot of time to get the right people in the right places. As the business is under a bit of financial pressure, it’s going to be important to look at how you can creatively retain people and get the maximum value out of the work that they can do. You want to be using some of this slow time possibly for investing in the training and development of key people. What I’ve seen is that there is a risk around your people, so investing in them in practical programs is a really good thing right now when they have a bit of downtime and there’s a lot of online courses available for that.
And finally, it’s all around continued communications, as much as it is technology. It’s also, as company leaders, making sure there’s optimism, there’s touch points. I liked the five by five. I think that is great for sales, but I think it’s good for all areas, because I think in these uncertain times, people are looking for purpose. So wherever you can provide purpose, whether it’s an employee, line manager, leadership team, it’s really about creating that purpose for them, and creating it with a little bit of optimism that we’re all going get through this, but essentially keeping them focused.
Kristen McAlister: Making a change in a shift or pivot, however you want to categorize it, a lot goes into that. Gus, I’d love to hear how you’re advising CEOs – what suggestions you have as they’re looking at changing either the types of products they sell or even that sales process and how they’re delivering it.
Gus Ordonez: Yes, that’s a great question.
I look at this crisis from a business transformation and/or pivoting perspective. If we start with the end in mind, which is the customer, you always want to make sure that the customer has a high degree of customer satisfaction metrics for your company. So that is going to lead into how you handle the business development process, the data and proposal. What kind of margins do you want to apply near term versus long term? And that gets coupled into the financial metrics, the cashflow, the ROI that you’re actually looking at for the month.
So that brings the question as to what kind of an investment do you want to make into the product and/or the people. If we’re looking at this crisis, I think it should actually be focused on the people because you want to be able to work backwards towards the team that handles that customer and that product. And with that you can pivot with the team to enhance the skills of the employees and to enhance and/or pivot into a different product line where you actually have the core competency. You can’t just jump in and say, “We’re going to go make product Y from X.” You really don’t have that capability because people will not believe you or understand what your mission is. So that is going to affect your PE accounts as well as the investment front and the overall public perception of your company.
Kristen McAlister: Thank you.
Sheryl, from a leadership standpoint, communication is big when you’re making changes in your company. What are some of the things to keep top of mind?
Sheryl Moore: Absolutely. I think it’s always important that if you can try to bring people in so they feel like they’re involved in the processes and the decisions that you’re making. Right now I’m seeing that constant communication definitely, obviously is the key even though we’re communicating stuff that’s uncertain right now. But if you’re just providing some sort of update of what’s going on or what you anticipate to be the next steps that definitely keeps employees engaged and that’s so important right now.
Kristen McAlister: Thank you.
And Gus, I appreciate that you mentioned starting with the customer. I had a CEO tell a story recently of how they service retail and all of their customers were closed. They weren’t essential businesses. So what they did was brought together a number of their noncompeting customers onto a web conference and asked them, “What is your business going to look like and how can we support it?” They then started working backwards and over a 30 day period in partnering with their customers, they transformed their inventory, how they were going to sell it, and how they were delivering it. It was an incredible partnership and they cemented that relationship with their customer.
Gus Ordonez: That’s a great point. I have a couple of examples later on too.
Kristen McAlister: I’d love to hear that. You all have such an extraordinary view working with several different companies out there. I’d love to hear some stories of how customers, how companies are adjusting their product rationalization and their customer base. How are you seeing companies change?
Gus Ordonez: I’ll give you two specific examples. I follow closely the railroad industry. The railroad industry is bringing in a high level of automation into their railroads. You can actually drive a locomotive autonomously all the way from Los Angeles to San Antonio, Texas. It can be driven by GPS so you can actually automate and bring a high level of efficiency to this industry. They’re taking advantage of the product – the GPS is available. It’s actually been done in Australia already.
Finally, the next steps we picked to see some of that, the company that I, that I thought I was with for close to 10 years, you have acknowledged as corporations. The, they walked a walk on is a thing. They just bought a Raytheon, and that’s become a large portfolio of, aerospace industry as well as defense products.
But here’s an example of a company that closed the plant that I manage in San Diego County. I moved it to Puerto Rico, the Caribbean, and Germany. That same technology of environmental control systems for military aircraft is used to now create the ventilators or the DOD or the government some swung log advice. I said, ventilators systems for more hospitals. And so there’s an example of a poor technology. You know, mission and vision and purpose of the folks. You had a process already in place that basically just decided to go into a different industry. The medical industry.
Sheryl Moore: I’ve actually had a couple of clients that own restaurants that are now, in addition to take out, doing prepackaged meals, obviously because they can’t have people inside.
And then I have another client who is a blue jean manufacturer who, at first were not deemed essential, but then they decided to make masks for the hospitals. So they were able to put people back to work. So just coming up with different creative things for the business.
Seth Avergon: I’ve got one client who’s in the construction management space. They were in really good shape before this started in the sense that their teams are very silo’d and they already had a lot of remote workers. They’re so good at doing what they’re doing remotely that they’re starting to teach it to other firms. So a whole new business model where they’re going from doing construction management services to now teaching other companies how to do it remotely.
I have a small story backing up what you said about the restaurant. It’s a local vendor here, an event catering company, and you would’ve thought they’d be completely out of business. They have decided to become the food source for the public, so they are making large meal packs. They’ve got a menu they put out every week. Whatever you buy is about four servings and it’s not cooked yet, you buy it and you bring it home and you throw it in the oven. I’m like, wow. If you’d asked me 30 days ago, I’d say they’d be out of business, right? Because who’s doing events? Who needs catering now? But they said, “We’re going to feed the community. Come on down. Here’s the weekly menu and it changes every couple of days.”
Kristen McAlister: Okay. I’m going to have to get the name of that one, Seth, because I’m tired of cooking. Please send me that one.
Any other ones? I know we’ve seen quite a few of them. There is a website development company. That’s all they did. Every single customer put them on hold. They were not going to go through and update or reset or do anything with the website for cash savings. However, they had all the technology to put together an intranet for training. Because now with all of the working from home environment and bringing on new employees, training seems just about impossible. So they took all the same tools and put together packages for getting a company up and going on e-training.
And then going off a little bit, we talked about talent and communications and involving our employees. One of the things I’ve been hearing quite a bit lately is, “My business model is changing. Does my employee base? My employee’s skill sets? What I need needs a change.” And Pete, I think you alluded to that as well – Can our teams and their skill sets survive in the current or the ongoing environment?
What are some things that CEOs should be considering or thinking? Because that’s a tough thing. They’re still great individuals. My team is amazing, but how do I get them to shift as well? And as I’m hiring new team members, what is that new profile?
Pete Todd: I think it just reflects that the way, certainly from a sales standpoint, that the team will be selling in the future, will be different. I mean, it’s already different. And I go back to number of companies that I’ve been talking to, and I’ve been talking to them prior to COVID, they knew what they had on their hands prior to COVID. I think what’s really required now are people that can work very closely with their customers and communicate that very effectively internally because the decisions on pivoting or changes will really require that information. I also go back to the fact that there could be some skill sets that are missing in the company, if it’s determined that more of an online sales presence is something that they’d like to do.
I know a number of companies that I’ve been talking to have thought about it in the past, but they never pulled the trigger on it. And now this is something that they’re seriously looking at doing, and that’s a real change. So those skill sets would most likely not be in the company today. But again, I just go back to thinking about a number of guys that I’ve worked with in the past, a number of teams that I’ve had. They’re such creatures of habit and think, “Well, this is how I do things and I want to do things my way. [35:49] I wanted this and customers. I don’t want to communicate well. I’ll hit my numbers. Don’t worry.” Those people could have a problem in the new normal. I mean, everyone talks about I can’t wait for things to go back to normal, but the reality is things will likely never return back to the normal that they were in January. And so because of that, I think evaluating skill sets in light of what’s going to be expected coming forward, I think is very important. And that may even extend to the senior leadership as well. So, as I said, I think it’s good to get other opinions and get advice. But, I come back to, “You probably knew what you had on your hands prior to this and now you know there needs to be some transformation in light of the challenges that we’re facing right now.”
Seth Avergon: Just supporting what Pete just said, we’re not going back. Things are going to be different. It’s the only way of describing it. There’s no going back to what it was in December of 2019.
Kristen McAlister: It has the profile of a marketeer, your marketing firm that you’re using, your marketing personnel. You think the profile has changed a bit?
Seth Avergon: Yes, I was really reflecting on what Pete was saying, and he had some great insights. If you had order takers on your sales team prior to this, that’s not going to cut it anymore. And the same thing on marketing. What we talked about as best practices prior to this going down, in terms of being nimble and being critical thinkers and having good emotional intelligence – those are nice to have skills prior to this. Now their need to have skills. So, when I think about the people I work with, they all need to be able to get out of the box and think really critically about what we’re doing and how it’s going to operate because just standard routines, being an order taker, doing marketing the way you were doing it six months ago, it just doesn’t work anymore. Everything has just shifted.
I know it sounds cliche, but take a blank sheet of paper and think about your customer, think about the marketplace, think about how you are going to stimulate cash flow and start from the beginning.
Kristen McAlister: Annie, Seth just talked about soft skills, which I know there’s quite a bit written about and volumes on leadership and soft skills within the area of IT. That’s now more important than ever. How do you help make that shift from an IT perspective?
Annie O’Grady: This is a great time to really focus on who your team is for the future. As much as it is inclusion of setting that business strategy. It’s also inclusion of then aligning all the other business strategies to that, including IT, and treating IT as just another asset of the company.
So when it comes to the soft skills, it’s really targeting the core systems that you’re going to use in the future. If you’re flipping from external salesforce to an internal salesforce or an online salesforce, the systems are all going to need to change to align to that.
So as you go through that process, it’s really identifying the people changes, but also the system changes to support that, so that you maintain the lean organization.
Kristen McAlister: Thank you.
Kevin, I’ve heard a lot of conversations around finance and accounting. That’s your most secure, that’s got your bank account. Are you seeing the need for a shift in the type of people that you’re now interviewing or bringing on or shift in additional skill sets that are needed in this remote finance and accounting world?
Kevin Ewaynk: Well, typically IT people and finance people aren’t quite as extroverted as the rest of the company or maybe as sales or otherwise. So you’re looking at people who understand the theory that finance is an outward facing customer service department. We really need to step up and make sure that we’re providing good service to all the line managers, management teams, and executives and giving them the information they want in ways that they need, and making sure that we’re very responsive to those needs and understand that not everybody understands or lives in the world that accounting or finance does, or IT does.
I’m sorry, I don’t mean to step over you, Annie, but I also get a lot in IT and a lot of times that’s a different mindset and a different conversation than what people are used to. So you need to think about people who have some of those softer skills and ability to talk across languages – “I talk accounting, but it can also talk some IT, and by the way, I’m a people person also, and I can talk regular talk and get those thoughts across to you and help you understand what’s happening and how we can make the company better during these tough times.”
Kristen McAlister: Thank you.
Sheryl or Gus, any comments? Anything to add?
Gus Ordonez: I was thinking about my leadership. I want to see your perspective, what you want to look at, if you know that you’re going to need to transform your team and to possibly get into a different area, you want to look into those who are curious and learners, and those who are into innovation.
So you couple that innovation DNA with the strategy that you want to pursue. I think that’s the beginnings of a good recipe. And then from a perspective of how you want the employees to look at this changes, I would say don’t give up. Keep the optimism up. Be transparent with them as well as your customers in what you promise to do.
And from a financial perspective, I would recommend that you do not over leverage yourself financially. Plan for the long run and act quickly, but be aware of your financial cash flow and your financial goals for the year.
Kristen McAlister: Thank you
Sheryl, we’re talking about talent here. How are you advising on that talent optimization and why we need it in the future?
Sheryl Moore: You know, I’ve had a couple of conversations actually this week with, with leaders and with some of their staff. I’m here from an HR perspective, talking about making sure that as you’re returning people, you’re classifying them correctly, if you had to change. For example, we’ve seen some changes where leadership has had to take on different roles or maybe someone that was non-exempt who had to step up and is doing more duties that are out of their wheelhouse.
I’ve been advising that if you have employees that are stepping up and taking the initiative to do different things they’ve always wanted to, this is an opportunity for a leader to look at their talent and see what changes can be made. Is it the time to discuss some sort of succession plan for them, in the midst of all of this that’s going on?
I think it’s just looking at your employees and seeing where their talents lie. I know some of the conversations have been, “Well, I’m bringing people back to work, and I know there’s a couple of employees who were struggling with performance. Can I just not bring them back? Or can I just keep him furloughed or laid off?” So a lot of those discussions have been going on. But the ones that they do want to bring back and that they see potential in them, it’s just discussing next steps and the workforce planning process.