The chief learning officer’s enduring success depends on deep alignment with the highest goals, objectives and priorities of the enterprise. While unsuccessful learning officers often get mired in tactical, low-impact activities, the best understand that their agendas must clearly address the strategic concerns of top executives. So what does one find at the top of senior executive agendas? Two words: profitable growth.
From this perspective, the CLO’s performance appears inextricably tied to enhanced performance in the front office of the firm, where the customer is engaged and growth-driving value is managed. The question is: How might CLOs contribute more visibly, directly and effectively to the growth agendas of their organizations?
Research suggests that senior professionals in the learning field find it increasingly difficult to build the talents and skills, competencies and capabilities necessary to generate profitable growth. As it turns out, it is not enough to merely shift an organization’s perspective from selling products to selling solutions. Despite years of sales training and other efforts to build solutions-oriented expertise, customer-facing professionals are often unprepared for the onrushing forces of complexity and commoditization they now confront. According to McKinsey & Co., a professional development and management consulting firm, “solutions selling” has been hot for the past five to 10 years, but three-quarters of the companies that try to offer solutions do not manage to return the cost of their investment. Given these circumstances, it seems clear that senior learning executives must rethink how they address the core challenge of growth.
In an era of unforgiving competitors and increasingly demanding customers, learning leaders have to ask what is necessary to enable front-office employees—whether they are in sales, marketing, service or another interconnected role—to perform at much higher levels. After all, high-value decisions now involve multiple decision-makers from various disciplines and a clear-eyed assessment of operational risks, organizational changes and financial impact. CLOs also need to know what must happen for these various customer-facing professionals to collaborate among themselves—and with the members of a customer’s organization.
No salesperson should act alone in today’s complex, multi-party decision-making environments. Interdisciplinary account teams are necessary to ensure the client is managed in a sophisticated way. Meanwhile, smart customers increasingly seek guidance from reliable advisers and consultants to make the best decisions possible. Sellers who can confidently and competently step into that role—as collaborative value creators and designers—are likely to be highly esteemed by their clients.
CLOs, then, are challenged to determine how best to enable and accelerate the diagnosis, design and delivery of high-value customer solutions. This is not simply a challenge of building individual skill and talent. Rather, meeting the objective of profitable growth will require CLOs to think in terms of front-office and customer-facing collaboration—what some have described as “boundarylessness.”
Confronting the Value Gap
At the heart of today’s complex selling and value-creating challenges is an underlying phenomenon called the “value gap.” There are two primary sources for the value gap: the difference between the value you believe you provide and what your customers are willing to pay, and the difference between the value your customers expect to receive and what they actually do receive. This gap may exist in your organization if it is experiencing certain symptoms:
- Your sales force can’t generate pricing levels for your complex products and services that will deliver adequate returns.
- Sales cycles are becoming lengthier and costlier.
- It is increasingly difficult to forecast and plan for future results.
- Customer loyalty and profit margins are eroding.
- The company is struggling to enhance the value of existing customer relationships because clients don’t recognize the added value the organization presents.
It is not enough to unilaterally create and package solutions, and then take them to market. The value gap is the distance that must be crossed to ensure the customer can comprehend the seller’s value. This involves active diagnosis and collaboration to define value. But the gap also must be closed for the customer to willingly compensate the seller for that value. Too often, companies fail to close this gap, leaving themselves vulnerable to the low-ball offer of a competitor, the margin-killing ax of a procurement officer or even the resource-draining limbo of an unmade decision.
Five key barriers—ironically, erected by sellers—must be addressed in order to skillfully close the gap. One significant barrier is relevancy. Why should the customer recognize or care about the value that has been presented? When the seller unilaterally defines the value of a solution—as so many “solution sellers” today do—it becomes hard to clearly demonstrate relevance, which is in the mind of the customer. When companies fail to actively collaborate with their clients in a thorough diagnosis of pain and priorities, costs and considerations of change, they are unlikely to identify potential solutions that those clients consider to be relevant.
Another common barrier in this era of complex solutions is comprehension. Too often, sellers rush to present the value of a solution before a buyer is fully aware of or capable of understanding the magnitude of the problems (supposedly) being addressed. Perhaps the buyer nods politely through a sales presentation, and the seller walks away optimistic that a sale will commence. But unless the seller has diligently led the buyer, whose “cast” actually includes many “characters,” through a full examination of current problems and challenges, the buyer will remain unprepared to comprehend a complex solution—and the seller will remain unprepared to collaboratively design one.
Other barriers also may stand in the way of realizing one’s promise of value. The inflation barrier arises when sellers focus on benefits and features, side-stepping their responsibility to inform customers of the hurdles and risks to value achievement. The dilution barrier represents the seller’s willingness to allow the customer to strip relevant value out of a solution in order to simply attain a lower price. Finally, the implementation barrier destroys value when sellers seek to avoid accountability and blame customers for solution failures.
Learning executives have a critical role to play if organizations are to bring down these barriers and close the value gap. They can engage and enable the key parties involved in “value lifecycle management.” The value lifecycle begins with a relevant value proposition and continues through various stages concluding in value achievement—the measurement and acknowledgement of delivered value. In this era of complex solutions, it is clear that multiple individuals and groups will be involved as issues of relevancy, comprehension, inflation, dilution and implementation are addressed.
Three Dimensions of Value Achievement
The CLO can help build and reinforce the competencies and capabilities necessary to manage the value lifecycle, overcome these barriers and enhance customer-facing performance. Senior learning officers also can help span the boundaries and create the linkages necessary to ensure active collaboration—both within the organization and in association with the client.
As Goldman Sachs’ CLO Steve Kerr points out, learning leaders can provide the “common coffee pot,” support the sharing of successful insights and practices, and even help design the reward systems that enable people to perform most effectively. (To read an interview with Steve Kerr, visit www.clomedia.com/0805kerr.)
The opportunity that CLOs must now seize can be framed along three dimensions: discipline, systems and skills. Successful learning initiatives will address the value gap from all three perspectives to provide a strong, self-reinforcing capacity to generate and provide highly differentiated value. (See Figure 1.)
Professional discipline is the foundational element of success in the value lifecycle. It is a dimension concerned with mindset and motivation, emotional fortitude and standards of performance. This is a dimension on which the others depend. Without the mindset to see that value creation demands a deep commitment to diagnosing the client’s challenges from multiple perspectives, the systems that are put in place will inevitably collapse and few will make the effort to build necessary skills.
Learning efforts must frame (or reframe) the thinking of the organization, particularly its customer-facing professionals, to cultivate the “diagnostic mindset.” Just as the training of doctors and nurses primarily revolves around the importance of the diagnosis, sales professionals and others who touch the customer must begin to see how critical this orientation is to their own success and the success of the enterprise. In addition, learning activities should seek to facilitate boundary-less thinking and action, even explaining how it will be measured and rewarded. Participants in the wider value creation and delivery process should begin to understand the various roles and how they must interrelate in a collaborative, systematic fashion to achieve success.
Systems, the second dimension, are the organized procedures and processes necessary to generate a predictable result. Without systems in place, no new approach to value achievement can endure or scale. Change initiatives ultimately dissolve and disperse in the absence of systemic approaches, leading back to the functional silos and bureaucratic ineptitude that alienate most customers. Smartly designed learning activities can introduce and strengthen systems, enhance collaboration and build the capabilities necessary to sustain growth in complex customer environments.
Through the leadership of learning executives, professionals can develop a common language and processes that transcend functional boundaries. They can learn how to capitalize on the systems of value lifecycle management.
While learning officers themselves must collaborate with the executives responsible for these systems to prepare their deliverables, learning initiatives represent an opportunity to introduce relevant, new methodologies and reinforce them over time. Moreover, they offer chances to introduce outside parties—such as customers, suppliers and partners—into the learning process. Customers in particular can help customer-facing professionals better understand the perspectives of buyers and the intricate, multi-layered environments in which decisions are now made.
Skills, the third dimension of value achievement, are about the knowledge and ability of individuals to execute the systems that have been put in place. While mindset, motivation and systems are certainly critical to sustained performance, the objectives of individuals and account teams cannot be realized without the necessary skills.
What’s interesting is how the skill set necessary for success in today’s complex decision environments is changing. Whereas sales and account professionals may have been great presenters or even great problem-solvers in earlier eras, they now must have the business acumen necessary to guide their clients through difficult decisions that involve a great deal of opportunity, risk and change. Just as no physician would allow a patient to self-diagnose a serious medical condition, sales and account professionals must marshal all their knowledge, experience, resources and colleagues to help customers diagnose situations and in turn, make smart decisions.
Such decision-facilitation efforts increasingly depend on the skill of collaboration, but they also depend on other skills: listening, questioning, interviewing, relating, writing, negotiating, analyzing and managing time. Learning executives are in a position to ensure professionals develop and reinforce these skills—even as new skill gaps are identified over time.
A critical contribution of the chief learning officer is the assurance that the strategic objectives of the enterprise will be integrated into the systems, skills and disciplines of the learning programs, providing the vital context for learning.
Boundary Spanning and Capability Building
Consider the various roles and professions that are engaged in the value lifecycle at different points. The challenge that the CLO faces revolves around ensuring active collaboration and smooth handoffs among these parties. In order to address today’s “cross-functional dysfunction,” learning leaders must approach the growth imperative differently than they have in the past. Value creation has become more collaborative, continuous and dynamic. According to IBM CEO Sam Palmisano, the traditional model operates something like this: “You invent, you build, you sell.” In the new era, as he sees it, we must embrace a new model: “You go out and you listen, you solve, and you craft. It’s different.”
With this foundational thinking in place, we can begin to explore how learning endeavors can enable professionals with different capabilities and skill sets to appropriately participate in the value lifecycle. Whether they are active in the early stage of the cycle where relevance and comprehension are barriers to overcome, or later in the cycle when risk of dilution or implementation failure present hurdles, learning activities can help professionals understand their role in the bigger picture—and the actions they must take to perform effectively as part of a customer-focused team. At various times, professionals have either primary or secondary roles to play. (See Figure 2.)
Consider the question of relevancy, for example. Research and development, manufacturing and marketing professionals must actively collaborate to build a solution set that is relevant in the customer’s mind. Marketing, for instance, must listen to the “voices” of the customer and share its findings with the people responsible for building products and solutions. That means research and development must have more inclusive development teams, reflecting the priorities and demands of clients as well as the constraints and capabilities of manufacturing.
To address the barriers of comprehension, inflation and dilution, primary roles tend to be played by sales and marketing. They must collaborate to ensure the customer understands and acknowledges the proposed value. Further, they must work together to build a demonstrably clear business case that accurately reflects the cost of the problem in relation to the cost of a potential solution. In this way, they pull decision power away from price-driven procurement professionals—and empower the business decision-makers who benefit most from a fully defined and developed solution.
Sales and service, meanwhile, must actively collaborate to implement these value-rich solutions. As opposed to simply throwing a product “over the wall” to a customer (as was often the figurative case in the past), sales and service work together and with the client over time to continuously create, measure and monitor value. By collaborating, they can ensure that promised value is fully realized by the client and, therefore, the opportunity exists to extend and profitably grow the relationship.
As we have discussed here, the chief learning officer’s success—and elevation in the eyes of other executive leaders—is ultimately tied to profitable growth. The more directly the CLO can drive improvement in this regard, the more visible and valuable that individual’s organization will become. The CLO has a vital role to play in accelerating the learning and building the collaborative capabilities necessary to close the value gap.
Jeff Thull is president and CEO of Prime Resource Group, and a strategist and valued adviser for executive teams of major companies worldwide. He can be reached at firstname.lastname@example.org.Filed under: Measurement