A startup electronics manufacturer needed a pipeline tracking and forecasting system for their sales network. Management was convinced it was a straight-forward process that should be easy to automate. They hired a local consultant to customize an off-the-shelf CRM platform to give them visibility into the pipeline of each rep and customer. The vendor conducted no discovery—management insisted the system was so simple there was no need—and assured the company he could do the job in a month for less than $20,000.
Seven months later the project was six months behind schedule, $100,000 over budget and there was no deliverable in sight. During lunch with the sponsor—who happened to be an old friend—he shared his frustrations about the project and consultant. “The guy’s either an idiot or a crook. Our sales process couldn’t be easier, but he keeps saying he can’t get the software do what we need it to do. And while he’s trying to figure it out, he keeps billing us every month. I don’t know what to do. I need some way to track our pipeline, but I’ve got to stop this bleeding.”
After venting, my friend asked me a question. “You’ve dealt with projects like this, what would you do?” I said, “Well given what you’ve told me, I’d start by making sure he’s actually trying to build what you need him to build.” Then I had a question. “Did anybody ever map the process to see how a lead progressed through the pipeline to become a closed deal? And did anybody ever map the rollup of the leads through the organization to confirm how sales opportunities were managed?” He said, “Yeah, we talked about all that.” To which I replied, “But did you reduce those workflows to paper, did you draw them out? Everybody’s mind’s eye is different. If you don’t have agreement on something in writing, you don’t have agreement.” My friend confessed those maps had never been prepared and asked if I’d look into it. I told him to give me a day or two and I’d get back to him.
The next day I sat down with the consultant. We spent a couple of hours mapping the pipeline workflow and management structure on a white board—as he understood them. When finished, I transcribed our work, printed out the maps, then scheduled a follow up with the sponsor.
When we reconvened, I told my friend I’d been able to create the two process maps we’d discussed. I reiterated that the purpose of these drawings was to confirm that “What the consultant thinks you want him to build, is in fact, what you need him to build.” We began with the pipeline workflow—the horizontal dimension of the process. It was a detailed but traditional sales funnel. After reviewing the diagram the sponsor confirmed it was correct.
Next, we turned to the management structure or vertical dimension of the pipeline. This detailed how the sales channel was organized and how opportunities would flow through and rollup under the different managers who were responsible for the various customers, sales territories and regional management of the network. The vendors understanding of the sales pipeline management was very straight-forward—just as the sponsor had described. A copy of this diagram is presented below. Customers could have one or more Projects (sales opportunities) that involved one or more of the company’s Products. A Customer was handled by a Contract Distributor who had been assigned to a Sales Representative that worked for one of the company’s many international Contract Representation (Sales) Firms. These outside Sales Firms were secured and managed by Regional Sales Managers who were actual employees of the company. The Regional Sales Managers (with territories such as the Southwestern or Northeastern US) reported to Geography Directors (such as all of North America). Finally, all Geography Directors reported to the VP of Sales.
The key assumption of this rollup was that there was no overlap or cross-over between reporting relationships—meaning that a Distributor could have multiple Customers, but those Customers were theirs alone. One Customer could not be split among different Distributors or ever report to anyone other than the Distributor who “owned” that customer account.
Just as we had done with the first drawing of the pipeline workflow, I asked the sponsor to inspect the diagram and tell me whether it was both accurate and complete. After studying the map for a few moments he said that it was.
During my conversation with the vendor he mentioned he was having trouble handling “Corporate” versus “Regional” accounts. That distinction had not come up before, so I asked the sponsor what Corporate accounts were and how they worked. He explained—not seeing any issue. I handed him a pen and asked him to show me on the drawing how a Corporate account would roll-up differently than a Regional account. He studied the drawing again, then paused and said, “I can’t. That path isn’t on this map.” “Oh,” I said. “So this diagram’s not accurate!”
I began asking questions. Four hours later we arrived at the much more complex—albeit accurate—map of the sales network presented below. You’ll note the second drawing bears almost no resemblance to the first. The sponsor had somehow forgotten to tell the vendor all he knew. Then later, when inspecting the diagram with me, he unconsciously made the same mistake again. He initially said the map was correct—completely overlooking the missing details that made the map incorrect.
As we wrapped up our very long lunch, I not so delicately informed my friend (the sponsor) that he had nobody to blame but himself. “Your vendor’s neither an idiot nor a crook. He was trying to do exactly what you told him to do. The guy’s real crime was taking you at your word.”
Had the vendor confirmed how the pipeline worked at the beginning—something that took all of six hours—or aggressively followed up on the clues that critical details were missing, he could have saved six months and $100,000. My friend, the project sponsor, paid a penalty of one month and almost $17,000 for every hour he “saved” up front by insisting the vendor skip basic systems analysis. Those penalties are consistent with industry research. Unfortunately, many of us don’t believe that research until it happens to us.