How digitization helped us during the last recession
My personal 10 learnings from the last crisis and everything around the bottleneck
We are currently facing another crisis – perhaps even a full-blown recession. The (unfortunately) common means of cutting costs and laying off employees won’t get you very far. What helps is to know the bottleneck of the company and to align the management to it – only (and really only) this way you can raise the crucial reserves. In the article, I explain 10 fundamental lessons that got me and my team through the crisis of 2008.
Let’s not beat around the bush, the fact is that when a recession hits, all established markets and supply chains are thrown into disarray. Everything is in upheaval and nothing can be counted on. You can be sure that something will change every day: Raw materials or primary products become more expensive or cannot be delivered. Regular customers are lost and new ones are urgently needed. All of this costs additional money, which is not so easy to come by in a recession anyway.
Laying off employees to cut costs seems like an easy solution. But it is certainly the wrong way. Employees mean know-how. And once this know-how is gone, it costs much more to rebuild it.
Who still remembers 2008?
Me and my first company in the middle of the recession …
This is certainly not meant to be an “I know everything better” blog. Rather, it is a small experience report with hints and tips beyond the standard reaction patterns. All of them homegrown, so to speak – learnings I made myself with my first company during the 2008 recession.
So I had just started my first company. We were growing, moving into our first nice office space, around 10 employees. And we were excited to have some exciting projects in the pipeline. And then there was 2008 – not a real recession, but a first taste … Within a few days, two big customers postponed the project start indefinitely.
Learning #1: When a recession (crisis) comes, it comes suddenly!
Who knows the advice “Eat your own dogfood”?
Fortunately, we were a management consulting firm that was dedicated to helping every company achieve breakthrough profit growth in the shortest possible time. Okay, it wasn’t about increasing profits anymore. It was about survival and not laying off employees.
Learning #2: “Eat your own dogfood” – now we had to advise ourselves!
First thought: Saving costs – no way!
The first reaction was, of course, to cut costs! But there wasn’t much to save. We were sitting in a small office anyway and had no company cars. Deregister the phone, sell the computer? Then you can no longer work – out of the question. Lay off employees? We didn’t want to – and, see above, it wouldn’t lead to anything except the loss of know-how.
Learning #3: You usually can’t get much out of cost-cutting without making yourself unemployable!
Second thought: Find the bottleneck!
Perhaps you know the ideas around “bottleneck management” (Engl.: Theory of Constraints) by Eliyahu M. Goldratt (book tip: “The Goal”). These were now put to use. The idea behind it is simple and ultimately it only requires five focus steps:
- Find the bottleneck! Attention: It can also be located outside the company.
- Relieve the bottleneck of everything unnecessary and make sure that it can work optimally.
- Subordinate everything to the bottleneck – really everything, all decisions.
- Expand the bottleneck! Attention: please do this only when points 2 and 3 are really exhausted – otherwise no real problem will be solved and only the costs will increase.
- Start from the beginning! Be careful that your inertia does not become the bottleneck.
Okay, all clear. We didn’t have a bottleneck in implementation – two projects had just been postponed. Nor in marketing, because we were growing and still had a lot of fresh and cool contacts. The bottleneck was in sales. So we had to see to it that we won the most lucrative contacts as clients as quickly as possible. The focus from now on was to make the most of the bottleneck.
Learning #4: In a crisis, Sales is a “good” candidate for a bottleneck.
Increase throughput in the bottleneck – but fast!
It is unbelievable how much potential is left in the bottleneck. As long as the store is running, implementation and processing usually limit the maximum possible while Sales adapts. Potential not in the sense of employees resting or working too slowly – rather in the sense of optimized processes.
Yes, it’s true, there is an infinite amount to read about sales and everyone feels they know a little bit better. To be honest: In the end, sales is all about listening to the customer and building trust. There are statements that you have to talk to a potential customer for at least 7 hours in order for him to place an order. In order to build this trust, the customer has to talk to an expert. And the expert must also be able to listen – simply checking off scripts or checklists does not create trust.
Learning #5: Spend time talking to the expert about the customer’s individual needs.
But how do you manage a bottleneck?
Stupidly, experts don’t make unsolicited phone calls to customers – you don’t want to disturb them. We did have a CRM in our company, and of course we made a point of calling potential customers every day. But somehow everything else was always more urgent …
In the course of this, we looked for solutions from the field of the Theory of Constraints. We found what we were looking for in the book “The Machine” by Justin Roff-Marsh. At its core, it is simple: “Separate all non-expert activities from expert activities. Move all non-expert activities to the back office and, most importantly, digitize and automate them.”
So “the expert should call five potential customers per week” became:
- Every new contact is recorded in Customer Relation Management (CRM) – immediately.
- Every new contact in CRM is evaluated for probability of success and lucrativeness within one working day. Do both turn out high? Then process with focus!
- A responsible expert is appointed for each contact. This expert considers what the potential customer’s most likely problem is (again: what is the bottleneck?) and what solution/product could fit.
- Each contact immediately receives an idea for a solution by e-mail. Yes, we have always made all our knowledge freely available – this is the only way to build trust.
- Two weeks later, a call from the back office followed to see if the person could do anything with the solution concept – or if they would like a more in-depth expert discussion. The back office was able to immediately enter an appointment in the calendar of the appropriate expert. Send out confirmation and set up a Zoom/Teams/Webex meeting – all at the touch of a button.
- A preparation appointment was entered into the calendar of the relevant expert for the day before the meeting. He then had time to deal with the customer and send him an individual reminder email.
- After the meeting, there was a results log with reaction options for follow-up measures in the back office.
Important: The process chain must be closed in such a way that everyone knows immediately what is urgent.
Learning #6: All steps are digitally mapped in the CRM and ensured via simple workflow control. This ensures that no contact remains unprocessed.
Optimization of the optimization
Since the experts themselves are a bottleneck, we structured the process steps in such a way that the expert was burdened with only minimal effort:
- The evaluation and search for the likely solution and the appropriate expert was done by the back office. Each expert had a profile showing their strengths and experience, and for each product it was clear which customer problem it solved – no effort for the expert.
- The back office organized the letter writing and appointment setting. The experts had open, maintained calendars and could indicate their time preferences for appointments – no effort for the expert.
- Once a week, the experts were sent an Excel file with all appointments, briefings and follow-up actions. The appointments were stored in their calendars, including the telephone number or dial-in link. They could therefore concentrate on pure preparation, the individual personal reminder e-mail and the appointment.
- In the appointment, the experts created a short protocol with follow-up actions for the back office and themselves and sent it back to the back office together with the Excel.
- The back office updated the CRM using the data from the Excel and the logs and created follow-up actions again – no effort for the expert.
Learning #7: Experts who are important for sales do not like to make phone calls and are “undisciplined” – you have to control and manage them!
The result – four times more calls – four times more orders
Within just a few weeks, we were able to quadruple the number of expert meetings. And that was despite the fact that only half of the back-office staff organized the meetings – the rest was digitized and automated.
Learning #8: The key is consistent bottleneck management and digitization!
After the bottleneck is before the bottleneck!
Geschafft? Nein, es gilt immer achtsam zu bleiben und die Lage aktuell und offen zu bewerten. Viermal mehr Aufträge – so viele Ressourcen hatten wir gar nicht … Also geht’s von vorne los: „Finde den Engpass!“ Bei uns verschob sich der Engpass – weg von Sales hin zur Auftragsabwicklung.
Learning #9: Companies that do too much at once waste resources and engage in harmful multitasking. When you pause projects, you pause multitasking.
The result: You can deliver more projects! (see also: Success factor for rapid digitization = capacity!)
“I love it when a plan works” (Colonell John “Hannibal” Smith, The A-Team).
Too simple and beautiful to be true? Yes, if you have a plan that you can follow and adapt to current developments.
Learning #10: Employees are loyal and have a lot of energy. They know what needs to be done. With a clever question, you can get a plan out of it in no time! (See also: Digitization – We need a project plan and approval, and fast!)
And how does the story of 2008 continue? I asked myself: If the experts are always the bottleneck …? Then you need products that can do without experts. And that was the birth of BlueDolphin “Consulting without consultants – the customer already knows anyway!”
Digitalization makes many things possible. You read it regularly – on MoreThanDigital