Leadership Mandates During Crisis and Preparing for the After
New approaches for business planning, prioritizing markets and accounts, standing up response teams
These are just a few of the challenges manufacturing and distribution organizations are facing in this time of disruption. In Alexander Group’s virtual roundtable series, Leadership in Times of Disruption, 60+ manufacturing and distribution revenue executives across building systems and automation, industrial components, building materials and products, chemicals, automotive, aerospace and consumer goods came together to discuss the impacts and necessary strategy changes they are adopting as we pull through this global pandemic.
The general outlook: the timing of the rebound remains unclear. The majority of participants agreed that the reopening will be phased, not binary, and last into Q3 or beyond. Tracking recovery status and methods across the globe has become a necessity as manufacturers and distributors are developing the strategies to begin ramping up for after the downturn. In a recent Alexander Group flash survey, 93% of sales respondents expect the current crisis to have a negative impact on revenue. So what are manufacturers and distributors doing now and planning for the future to prepare for the “new normal?”
Scenario-Based Business Planning
Although the “dip” and duration of the current situation is still unclear, participants agreed that any sort of rebound will be both geographic and end-market specific. Forward-looking leaders from large multinational companies, including Anshu Mehrotra, president of ITW Welding, are focusing on how clients will want to interact in the new normal.
Concentrating on the health and wellbeing of both customers and employees will be a driver for the type of engagement models we choose. One participant quipped, “It will be a long time before I greet a client with a handshake.”
As for the metrics executives are tracking, the vast majority of the participants agreed that three measures matter most:
- Cash flow for both the company and for critical clients
- Pipeline health including: new orders, deals that have paused and existing orders canceled
- Government (federal, state and local) regulations of “essential” businesses to understand when people will get back to work
Capitalizing on pent-up demand will be a delicate balance of resources. Several participants emphasized that organizations spent too much time in the 2008 recession focusing on the crises and cutting cost and were ill prepared for the recovery. By keeping an eye on customers’ and competitors’ efforts, one participant indicated that they are beginning to create flexible deployment models so they will be able to “virtually” deploy field selling resources to sectors or geographies that open first.
Recalibrate for Long-Term Growth
Revenue leaders understand that during a crisis, inaction is not a valid option. Actions need to be tempered, however, and avoid risking long-term growth when the business environment returns to normal.
Participants rallied around two elements that require careful handling during the dip: headcount and deployment. During the 2008 recession, some organizations became too lean by cutting too quickly and deeply. As the economy rebounded, they were unable (or unwilling) to ramp up hiring and were left with sellers too overburdened to grow. One participant noted that while no reduction in force should be taken lightly, now may be a good time to move out low performers who have been under-producing well before the crisis hit. On the hiring side, companies that are quicker to rebound may have the opportunity to acquire talented sellers looking for work.
Regarding deployment, all sales forces now have inside or virtual sales team because of shelter in place and other government regulations. Many organizations have seen early success with the shift inside; others have found it difficult to reach customers (e.g., facilities managers who spend their days walking factory floors) via phone or web. Participants agreed that there will still be a role for field sales to play, but many of the activities (e.g., demos) once thought incompatible with inside sales are being executed admirably by remote sellers. One participant noted that customers appreciate the speed of response from inside (formerly field) sales resources. Another noted that spur of the moment/organic calls or video chats between seller and customer are frequent occurrences. Alexander Group foresees a shift in sales model to task inside sales with more responsibility, but keep certain key activities in the realm of field sales.
Response Teams
For most organizations, responding to the crisis has meant increased communication frequency―with customers, across internal functions (marketing, sales, service), and between sales manager and seller.
Organizations reporting the best tactical responses indicate that their business teams are meeting daily to go through forecasts, updated value messages and potential new insights. Additionally, those organizations have stepped up their front-line sales leaders meeting cadence with their sales teams. Most are reporting a multiple time per week connection.
Prioritizing Markets & Resources
One area that participants unanimously agreed on is the essential undertaking of realigning resources. Be it due to product demand, geographic location speed of recovery or the movement to online channels, manufacturers and distributors are placing resources within sectors that can provide quicker results in preparation for the upturn. Every firm and business unit are within a different phase of the cycle. Sectors such as automotive, medical device and consumer goods are realizing greater economic development during the crisis, while others are simply trying to sustain operations due to uncertain recovery time. This then creates a new set of challenges―ensuring that the commercial team can pivot and oversee accounts, geographies and products that are new to their realm and determining how to incentivize them for favorable results.
Overarching Themes & Takeaways
- Every business is in a different place in the cycle; economic development in certain sectors (automotive, med devices for elective surgery); others less focus ─ just trying to sustain operations because recovery is not certain or defined
- There will be a first-mover advantage by identifying areas that are recovering sooner (geographically – globally and/or within the US) and allocating resources to places where recovery is further along
- Strategic thinkers are already looking at trends (e.g. contactless delivery, virtual demos and customer success roles) and balancing those that are permanent versus those that may be more temporary
- Successful sellers will have to be agile, changing focus, messages or even pivoting into different channels
- Incentivizing, rewarding and retaining will be an issue all organizations will face within the coming weeks
- And helping committed and capable partners survive, if not succeed will be crucial for growth
A third and final session on this topic will be held on April 23, from 10-11AM ET / 2-3PM GMT.
As we prepare for the “new normal,” Alexander Group will be holding additional virtual roundtables for manufacturing and distribution executives on how to adjust quotas and sales compensation. This discussion will provide practical solutions for how to formulate a plan to defend pay for sellers including: determining at what point to take action, prevalent options to adjusting seller pay, and how to keep sellers well informed. Two sessions are available:
- May 5 from 2-3PM ET
- May 7 from 10-11AM ET
You can register for any or all of our manufacturing and distribution virtual roundtables by visiting our website and completing the online form.
For more information and insights on how to manage in times of disruption, please contact an Alexander Group Manufacturing or Distribution practice lead.
