What do we do now? Here’s what.

As recently as April of this year, glimmers of CEO optimism made food industry headlines. But economic events just over the past week remind leaders to prepare themselves and their companies for new rounds of risk, uncertainty, even opportunity.

Has your company factored a reasonable number of “what-if” scenarios into its strategic plans? Have you underestimated your company’s full exposure when industry and market fundamentals keep shifting?

Time to undertake a 90-day set of actions to avoid the paralyzing and potentially deadly, “What do we do now?” trap.

Despite what recent history has taught us about the impacts of rapid and unexpected turn of events, surprisingly few food industry firms incorporate risk scenarios into corporate strategy. Chief executives agree that the ability to predict the future and respond quickly to threats and opportunities is a crucial part of their job.

We don’t suggest making strategic planning and execution any more difficult than it already is, but gone are the days of a precise, single forecast with a narrow, single strategy. We recommend a simple risk scenario process that factor in three plausible outcomes: one optimistic, one pessimistic and one most likely.

• Build a portfolio of moves, company and business unit models in response to relevant issues such as commodity cost volatility, availability of credit, competitive or customer consolidation, shifts in consumer patterns. Include big bets with large payoffs should opportunity arise.
• Consciously and dramatically strengthen and safeguard the organization by building resilience across key areas. This includes undertaking a series of no-regret actions that pay off and serve your business well in any scenario.
• Recognize the signals and warning signs that trigger scenario-based action when events unfold. Remain informed, vigilant and mobilized to expedite important new strategic decisions.
• Leverage a steady flow of intelligence on key customer or industry segments to enable quick action. Pursue a clear-eyed approach to secure your company’s position in the emerging situation or environment.

Preparing yourself and your company to make fast, informed decisions as circumstances require is a critically important business undertaking. Your organization's success may very well hinge on it.

Business Rogaining

Rogaining is the sport of long distance cross-country navigation lasting as long as 24 hours for champions. Teamwork, endurance, competition and an appreciation for the environment are features of the sport, which involve route planning and navigation between checkpoints using maps and a compass. Checkpoints are scored differently depending on the level of difficulty in reaching them, and teams select strategies to earn points based on the skill level of its members. The team with the most points wins.

The rules of Rogaining are relevant to a firm’s drive for growth with maps,  compass, high value checkpoints, low value checkpoints. But according to a recent Booz & Company survey of 1,600 global executives, 81% admit to entertaining too many route plans. Brainstorming ignites a range of internal frenzies that produce waste and financial shortfalls. Human nature is such that those originally responsible for bringing failed initiatives to the company often double-down instead of changing course. 

Blueberry can attest to a similar situation in the food industry as chasing too many or the wrong opportunities cripple companies by:

• Not focusing enough on the costs of the chase
• Clinging or reverting to what's worked in the past in a different environment
• Building strategies on the opinions of those with limited scope

As a result, core processes become saturated by trying to do too much, ultimately missing the numbers and more:

• Innovation dissipates
• The organization's identity becomes blurry
• Sales processes fall out of sync with customer purchasing patterns
• Collaboration fails to cut across internal functions to capture new customers
• Frontline and even middle manager employees do not understand how their efforts contribute to the larger goals of the business
• Accuracy is secondary to activity and output

Unfortunately, organizations only reward doing, not avoiding. Refraining is not celebrated because its effects are invisible. But when revenues and other financials are stagnant or slipping, great leaders pull the plug and scale back, not ramp up, on priorities. They refuse to get caught up in head games about which new products to pursue, what new markets or segments to enter, how many more activities to focus on and track.

Practice the arts of abandoning and avoiding, not embracing and chasing. Stop, re-evaluate, re-focus and get your organization back on a narrower path. Those that do are three times more likely to earn above-average revenue growth than others according to the Booz survey.

Rogaining is more than an international sport. It’s a smart way of scoring big points in business.

Avoid The Envelopes

A fellow had just been hired as the new CEO of a large corporation. The CEO who was stepping down met with him privately and presented him with three numbered envelopes. "Open these if you run up against a problem you don't think you can solve," he said.

Well, things went along pretty smoothly, but six months later, sales took a downturn and he was really catching a lot of heat. About at his wit's end, he remembered the envelopes. He went to his drawer and took out the first envelope. The message read, "Blame your predecessor."

The new CEO called a press conference and tactfully laid the blame at the feet of the previous CEO. Satisfied with his comments, the press -- and Wall Street -- responded positively, sales began to pick up and the problem was soon behind him.

About a year later, the company was again experiencing a slight dip in sales, combined with serious product problems. Having learned from his previous experience, the CEO quickly opened the second envelope. The message read, "Reorganize." This he did, and the company quickly rebounded.

After several consecutive profitable quarters, the company once again fell on difficult times. The CEO went to his office, closed the door and opened the third envelope.

The message said, "Prepare three envelopes."
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An old joke with serious undertones. CEOs must show top-line growth despite a less-than-accommodating market environment. Even when the numbers advance, how much new growth is sustainable over time? Is it possible that CEOs accept belly-filler accounts so the top number buys another year of economic recovery time?

Food industry chief executives need to understand their company's real sources of prosperity. This should never be left to the VP. The CEO alone has the authority to make necessary adjustments throughout the organization to get and keep the top-line number moving in a positive direction.

Let's focus on one common area of concern today. If you, like many in our industry, are concerned with sales results, here are a few steps you can take to kick start the number:

Step #1: Take a backwards glance

Identify and isolate what and where things have been going wrong or need improvement. Independently review the results from target account lists over the past 18 months to determine:

• How many targets resulted in face-to-face meetings?
• How many meetings resulted in a sampling or presentations?
• How many presentations resulted in new business?

What matters is not just the hit rate, but the miss rate. Your company must bear the costs of missed opportunities--or new business profit must absorb them. If your company has a 1-in-10 close ratio, it's time to reach for 2 in 10 and that can be done with steps 2 and 3.

 

Step #2: Assess the process

• Is your company's selling pattern in sync with customer supplier selection and purchasing timetables? Is your sales team late to the party, or maybe even a no-show?
• Are sales managers equipped to provide accounts with real-time justifications for customers to do business with your company?
• Do your priorities for the sales department include better Sales alignment and hand offs with other functions inside and outside the organization? Better segmentation and account targeting?

Identify the top 3 restraining forces in acquiring new business (look at the organization as a whole before zeroing in on silos) and the actions required to address them. Let data and facts, not opinion, speak in making this assessment.

 

Step #3: Take Action

 

Looking ahead with three critically important recommendations that will transform the way your company grows:

• Everyone on the team must be adept at identifying, communicating and proving that doing business with your company makes customers Better, Faster, More Cost-Effective than they were before or if they bought from someone else.
• Make sure capabilities of your organization, its high level flow of activities and their various inputs and outputs that define how you provide value to customers are appropriately aligned, measured and improved to achieve your organization's financial goals.
• Become ruthless in reducing or eliminating low-value activities wherever possible, freeing up valuable time to pursue and support profitable, sustainable new business. Review pre-recession modes of operation, as well as the value and return on discretionary activities such as industry events, corporate meetings and paperwork.

Take an authentic, no-nonsense approach to growth by making it sustainable and making it meaningful to both sides of the transaction table. With courage, focused attention and self-imposed accountability for executing our recommendations, you will be counted among other food industry's leaders as one mastering the process of generating new business.

Sales Time Is Now

Chief executives in the food industry are looking for more revenue. Out of the five primary services Blueberry provides, conversation usually comes down to, “How can you help us grow sales?”

The good news is that customers are still buying. There's no lack of artisan breads, desserts, marinara sauce, chicken breasts or appetizers on restaurant menus. Maybe they’re not turning as fast as before the recession, but plenty of products in your category are in development, being presented, sold, distributed and served in restaurants.

The bad news is when customers are not buying from your company.

Getting to the root of the problem to kick start new volume, we offer a few observations:

• Sludge in the sales pipelines is slowing down the system: There are too many poor targets, hits and misses, and too much activity unrelated to growing the top line number. Speed is everything in sales and many c-leaders are not taking active steps to free up valuable time and resources. The VP of Sales cannot do this to the extent a CEO can. He or she lacks the total-organizational scope, authority and accountability to remove bottlenecks and improve the process. In addition, the cost of activities unrelated to gains is high, and have very little to do with accumulating new sources of income for your company. Target accounts? Over half we've seen landed on the list without a snowball's chance of closing.
• The voice of the customer has grown dim or been lost in translation: It’s easy to make assumptions about what customers need from your organization. The information you get is usually watered down and filtered through internal channels. By the time business or opportunities are lost, it’s too late and the real reason for the defection is unknown as attention shifts to the next one. You need to know the truth about why customers are not buying from your company…and it’s rarely because of price.
• The wrong sales people are hired for the wrong reasons: A candidate has ‘relationships’ with certain high profile accounts and bingo—he’s hired. A VP of Sales recruits managers from a prior firm to build her “own team”. Smooth talkers, charismatic story tellers, likeable socializers…executives need to look past these behaviors and employ Sales Creators--experts in your products and services and in all aspects of sales from Prep to Interaction to Rapport to Pitch. You need people who will make the case for how doing business with your company adds value to the menu and helps improve customer revenue, grow profit and patron traffic. You need people who can communicate your company’s competitive advantage to avoid dickering about price. You need effective managers and excellent trainers, informed about the market and successful in fulfilling objectives.

Blueberry agrees that it’s time for chief executives to increase their focus on this critical area of the organization. Doing so relates to two of the top job's essential duties: Making sure there's plenty of money in the bank, and securing only the best talent for the company.

Revenue Masters

The dictionary defines a master as someone who is highly skilled or exceptional at something. Is your company a master at generating revenue?

The restaurant industry is optimistic but cautious about the future. The impact of rising commodity costs, gasoline, global unrest, and stubborn unemployment numbers can rattle consumer confidence and send patrons scurrying back to their own kitchens to hold onto their savings accounts. What’s a supplier to do?

Cost containment has been and should be an ongoing practice, but we believe that attention must now shift in a more focused and systematic way to revenue growth. Flat sales hurt financial performance more than rising costs. If a 5% growth rate is required to break even against rising costs, a shortfall gain of 4% requires 25% more cost reductions to meet the breakeven point.

Now factor in your company’s close ratio on new business. To avoid a direct hit to your bottom line, the profit from accounts that are won must carry the costs of those that are not—as well as other expenses that cannot be passed on to your selling price.

The ratio of customer wins to losses needs to improve. The recession provided an opportunity to uncover gaps in customer needs. The best suppliers use this knowledge to reinvent strategy, operations, innovation and organizational resilience—and are reflected in new revenue-generating behaviors. Here are a few broad-stroke examples:

• You have sharpened the account targeting process. This undervalued step frees up selling time to focus on best-chance opportunities and nail new volume quickly.
• At least 50% of your customer generation team is objectively rated as experts; in other words, they position your company’s offering with a razor-sharp value message, are unsurpassed in preparation, problem-solving, presentation and customer management skills. You have a systematic plan to transform remaining members into experts over the next 6 months. By developing experts, you dismiss the false assumption that customers form emotional attachments to sales managers that translate into new volume for your company.
• Your company’s value proposition has been tailored to today’s customer objectives to reduce food costs, labor costs and eliminate deep menu discounts.
• Your company carefully evaluates which industry functions provide the best use of sales time compared to other forms of account interaction. Let the results speak on this one.
• Your company outranks competition in highest value revenue-generation activities. This is from the customer perspective, not your company’s internal metrics.
• You as the CEO are directly involved in reviewing account targets currently on the table, asking the right questions about how or why they got there, the probability of close, and know the costs of getting business but of doing business. .
• The sales sludge has been removed from the pipeline, including some high profile targets that take years and substantial resources to close. Replace them with qualified accounts in new segments that spread risk and expand your company’s knowledge of emerging players.
• You have instilled confidence in current and prospective accounts that your company understands their competitive environment as well as your own and conform your value proposition to suit their objectives.

Each broad stroke requires detailed work to inset a revenue master culture in your organization. True, even best efforts may not prevent customer decisions that could negatively impact your business. But without taking proactive steps now, your company can migrate back to an internal focus--a paradox for supplier CEOs who should be looking intently to the outside to reconcile their company to the environment and grow revenue. It’s a brand new day and a whole new game.