Don't Be the Boiling Frog

Hello again! Welcome back to Connected Concrete, my platform for passing on what I've learned about managing plants and companies.

As you know by now, we at Idencia serve the concrete industry. Some of my posts (like the last one, What's Up With UHPC?) are specific to the industry. Others are more general and (hopefully) benefit readers in any industry.

Today I am going with the latter because the topic addresses a slow and steady shift in the business landscape over the past 25 years. Have you heard about the frog in the slow-boiling pot of water that didn't leave because he neglected to notice the change in his environment?

Boiled frogs? I'm curious.

The slow-boiling pot of water here is the shift in the power balance from business to the consumer.

One hundred years ago, consumers benefited from lower prices resulting from the innovation of the day, mass production. This was possible only because some businesses were able to achieve the necessary scale.

By virtue of this, Henry Ford could offer cars to consumers who could not have otherwise afforded them. He held the power. He was known to say: "You can have any color you want, so long as it's black."

The advent of the internet in the late 1990s turned that power balance upside down by providing information at scale to consumers. Consumers can easily select the exact car they want (along with very specific options) AND research the cost to the dealer. Advantage: consumers.

But what does this have to do with B2B business?

Everyone in business is also a consumer. As business customers, they expect the same power that they enjoy as individual consumers. This consumer mindset has therefore permeated business purchasing practices as well.

So, we're screwed?

Not at all. This presents an opportunity.

The key to regaining equilibrium is to reach customers on their own terms. This starts with a culture shift that respects the new power of the consumer.

When businesses could afford to place their own interests first, their practices were highly transactional in nature. The customer was merely the means to generating more revenue.

Now that consumers hold the power, smart businesses jump out of the slow-boiling pot of water and engage in relational business practices. These are practices in which the business' success is recognized as being inter-dependent with the customer's success or interests.

This is why consumer brands who identify with consumer causes do well. Companies like Patagonia, Tom's Shoes, Ben & Jerry's and Warby Parker all build their brands by promoting the interests of their target markets.

In B2B markets, companies can build very powerful brands by establishing internal cultures designed to proactively help stakeholders achieve success. This starts with their customers.

How about some for-instances?

Sure. Since this is a cultural change, it should be inculcated into every facet of the business. Here are a few examples:

Marketing

Transactional marketing lists features and compares them against the competition.

Relational marketing respects the market by offering educational insights and providing inducements for greater interaction at the convenience of the prospect. This often includes the opportunity to try the product before engaging.

I've said (more times than my colleagues would like to hear, I'm sure) that people who engage with us in any way (receive emails, visit website, visit social media pages, etc.) should come away from the experience with some value for having taken the time to engage.

Sales

Transactional selling involves cold calling and setting up demos with people who may or may not be truly interested. Demos are too often a run-through of what the product can do with very little conversational engagement.

Relational selling involves conversations in which the prospect's problems and challenges are explored, and a relationship is founded, before a presentation of the product is provided.

If there is not a fit, the prospect's (and sales person's) time is conserved. More importantly, the prospect comes away with greater awareness of, and hopefully appreciation for, the offering company.

If there is a fit, the conversation shifts to an illustration of how the solution can be offered to address the pain points identified in prior conversations.

Done correctly, a symbiotic relationship is developed in this process. Invariably, this relationship becomes the foundation for a sale.

In our business I lead the selling effort. We have a pipeline structure set up to categorize where opportunities sit in the progression of the sale.

After consistently applying a relational approach for some time now, it is getting easier to predict the likelihood of a successful sale for prospects at the very early stage of the pipeline. Those with whom I sense a 'connection' developing become our best prospects.

It is satisfying to see the success, but even more gratifying to establish these win-win relationships along the way.

Human Resources

In some ways, the power balance between employers and employees has shifted too. Whereas labor used to be plentiful, today it is in short supply. Skilled labor is in even shorter supply.

The transactional approach involves hiring and firing in search of the right fit.

The relational approach works with employees to help develop skills and progress along their chosen career path.

When I first started my career, I was fortunate that my employer paid for 100% of my graduate education (taken part time in the evenings). The criticism of this could be: "Well, that didn't pay off because you are no longer working there."

I would suggest that the long view is: "Yes, people do move on but the employer who invests in its employees will attract better candidates when they do."

Vendor Relations

We are all way too familiar with the transactional approach to vendor management. Vendors are asked to provide their best (lowest) price for the prestige of supplying a major customer. Part of the deal is that they will honor your slim margin by paying on 60-day terms.

How many of us like being treated that way by our customers?

The relational approach applies the Golden Rule: Treat vendors the way you want to be treated.

Beyond being right morally, this opens opportunities for creative ideas that can help serve your customers better. Engaging just-in-time delivery so that your company can do the same for your customers is a good example.

So, what's the grand vision here?

Peter Thiel, co-founder of PayPal, is known to be a Silicon Valley visionary. He has been quoted as saying: "Avoid competition as much as possible."

In this he was making the point that companies should not seek to "build a better mousetrap"; they should constantly be creating something new where the limits of competition do not exist.

In industries outside of Silicon Valley, where product innovation is not as rapid, creating inter-dependent relationships with customers is about as close as you can get to creating a unique experience for each.

By definition, a unique experience has no competition.

This is a wonderful opportunity to escape the slow-boiling water.

Next up, the new Idencia.

We are very excited about the forthcoming release of our new software platform in the coming months.

We are in process of completing a re-architecture that will upgrade our underlying technology to the state of the art, providing our customers with a better experience and creating a foundation for many new features in the future.

This will include a re-branding which will be announced at the same time. I'm very excited to speak to both of these in my next edition.

Meanwhile, I hope you will make a point to check out the latest epsiode of our podcast, Pardon the Dust: Dusting Off Construction with Caitlyn and Jillian. Caitlyn and Jillian interview Chris Peoples, COO of the North Carolina Department of Transportation.

I've listened and am really impressed by Chris. I promise you will come away with a new respect for the work being done by the North Carolina Department Of Transportation as a service provider and an employer.

Thanks for reading everyone. Have a good weekend!

Jeff