Using market research from customer account executives when making assumptions is essential practise for every decision-making executive, says Nicholas Watkis.
It often seems that many business problems have their origins in assumptions that prove to be wrong. Whether it is the banking crisis, inept government actions, or failed business ventures, analysis often shows that the decisions made, while apparently logical and justifiable at the time, have subsequently proved to be wrong having been made on false assumptions. Assumptions in management often stem from misplaced trust, lack of understanding, and idleness, where an attitude of, 'it will be alright' encourages complacency.
For those responsible for producing sustainable profitable income for any business, assumption is a dangerous luxury. Business plans are always based on some assumptions because it is impossible to be certain about all future circumstances. But it is important to define those assumptions on which plans are based, and where possible test their validity and probability.
But as anyone involved in producing sustainable profitable income will tell you, making or maintaining the wrong assumptions will result in poor decision making, which can have expensive consequences. When considering those assumptions required for planning, clarity is necessary and verification desirable, but it is often the general assumptions of management that can be the cause of failure.
What precautions should be taken by the executive responsible for producing corporate income and the associated managers, in order to limit the effects of false assumptions? The simple answer is to 'check' and check again by asking the right questions, but reality is never that simple.
One of the objections to frequent questioning of subordinates is that it can undermine their confidence and morale, particularly if the same question is repeated. Some people regard being questioned about their work and responsibilities as being in some way insulting and demeaning, implying a lack of trust. But managers need to know and understand how their subordinates are performing, to understand where the problems lie, and to be able to provide help where and when it is required.
So how should this be done in order to achieve a full understanding of the situation, while at the same time not appearing to micro manage subordinates and their responsibilities? One answer is to have robust and regular reporting systems so that performance may be recorded. This is particularly important regarding the costs and investment in getting and retaining business. Making and maintaining full records of customer contact are essential in developing customer relations and to enable the anticipation of their potential future requirements.
The task of the head of corporate income is to produce the maximum sustainable profitable revenue, while minimising the level of assets, costs and investment. It is important therefore that business reporting systems provide detail at all levels of the business to indicate the contribution of different aspects of the business to justify the level of cost and investment.
Business income is produced by anticipating and satisfying customer’s requirement. The ability to anticipate and satisfy is dependent on the knowledge of customers in particular, and the market in general, as well as the knowledge of competitors, their products and methods. To obtain that information, one has to ask questions. It is important to be certain of what facts are thought to be known, and to be able to verify them, and to be clear about what is not known or which is assumed to be known but is not or cannot be verified. Questioning should be seen as a way to clarify understanding and not as a way to entrapment and blame.
Market research and knowledge from customer account executives may provide much of the external information that will aid anticipating and satisfying customer needs, but what about those internal actions within the company that may be crucial to retaining good customer relations in the future?
Is there a system for checking that goods and services are despatched correctly and on time? Do you know if the goods or services were received in good order, on time and to specification? Are you sure that the customer was satisfied with what they received and how they received it? Is there a procedure for checking that invoices are correct, including any special terms, and that all errors are reported on regularly? Are you sure that everything about your customer service is as good as it should be? How do you know? If you don’t know where things may go wrong, you will not be best placed to be able to correct them.
In a world hedged about with increasing amounts of legislation governing business and customer relations it is important that all employees are clear on how legislation impinges upon their actions. Training and verification that it has been received, understood and implemented is important. Businesses need to have a record of all decisions and actions that are taken regarding contact with customers.
Whether in business or anything else, one cannot know all the answers, however hard one tries, so assumptions have to be made to cover gaps in knowledge. But as far as possible those assumptions should be tested, and where necessary contingency plans should be in place if key assumptions prove to be false.
Nicholas Watkis is the founder of Contract Marketing Service, established in 1981. He is a fellow of the Chartered Institute of Marketing and a certified management consultant of the Institute of Business Consultancy. For more articles from Nicholas, click here.