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Marketing & Sales Improvement
Harvesting the Full Potential of Improvement
Chris ProvinesVP Preferred Practices & Methodologies
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
The Road Ahead
• J&J background and improvement journey
• Challenges / issues using traditional improvement approach (six sigma, lean, etc.) in marketing & sales
• The power of improving marketing & sales
• New approaches
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
• The Worldwide leader in healthcare- Pharmaceuticals / Biotechnology- Medical devices / Diagnostics- Consumer products
• Solutions to diagnose, treat, improve quality of life, and cure many conditions and diseases (such as):
J&J Is A Diverse Collection of Businesses Focused on Health Care
- Stroke
- Epilepsy
- Pain
- Anemia
- Heart disease
- Diabetes
- Obesity- Degenerative conditions
- Cancer
J&J Has Many Highly Independent Business Units
• Organization- 200 independent operating companies - $47.5B in revenue; 110,000 employees- Three business groups: Medical Devices & Diagnostics; Medicines & Nutritionals; and Consumer
• Culture- Exceptionally strong culture of decentralization and independence- Results driven orientation- Strong value structure (J&J CREDO)
J&J’s Corporate Wide Improvement Approaches Have
Evolved Over Time
Timeline1980 1990 2000 2006 >
CrosbyTQM
Signature of Quality(Baldridge like Assessment)
Process Excellence• Six Sigma• Lean• Design Exc.• Business Assessment
?
Val
ue
Better
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
Summary of J&J’s Journey and Progress
• Made Great progress in many areas (e.g., supply chain) with Process Excellence
• Great examples of using Process Excellence to improve in other areas of the business (e.g., NPD, Marketing & Sales, etc.)
…But not fully satisfied with our progress using Process Excellence in
Marketing & Sales
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
Benchmarking Data Shows Others Have Difficulty Deploying in Marketing & Sales
11%
10%
13%
22%
20%
32%
39%
34%
62%
33%
41%
44%
40%
43%
40%
34%
46%
23%
0% 20% 40% 60% 80% 100%
Highly effective Effective
Manufacturing
Supply chainEngineering
Customer svc
NPDIT
SalesMarketing
HR
What is your effectiveness in applying six sigma, lean or other improvement approaches to the following functions?
Source: Best Practices LLC; Global Benchmarking Council Survey
External Benchmark Data
Benchmarks Show Six Sigma, Lean or Other Approaches Have Least benefit
in Marketing & Sales
0% 20% 40% 60% 80% 100%
Operations
Manufacturing
Supply chainEngineering
Customer svc
NPD
IT
SalesMarketing
What percentage of six sigma, lean or other improvement projects benefit the following functions?
Source: Best Practices LLC; Global Benchmarking Council Survey
External Benchmark Data
Strongly Agree44%
Disagree4%
Agree52%
n=848, MD’s/Presidents & Mgmt Boards
While J&J Hasn’t Made The Progress We Want, Business Leaders See Value in
The Tools…
Improvement projects using PE Tools (Six Sigma, Lean & Design Excellence) add significant value?
J&J Internal Survey Data
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
“Simplify some methodologies to be implemented in the commercial organization”
“Help us use Process Excellence methodology in a sales environment versus manufacturing.”
“Customize the training to match the application. Training for commercial should not dive too deeply into statistical analysis, etc.…”
“Search for 6 sigma approach for marketing organization… balance the pure statistical approach and the need for business insight .”
…Yet J&J Leaders Want Help Harvesting Value Using Tools in Marketing & Sales…
J&J Internal Survey Data
How could Process Excellence be improved?
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
The Big Question
How do we make improvement tools & approaches better able to meet the needs of Marketing & Sales Area ?
Issue #1 – Traditional “Tools” Based Approach is Not Aligned with Culture of
Marketing/ Sales
• Focus on powerful tools• Strong statistical bent• Requires learning new “language”• Long time commitment to get “initiated” (training, project, etc.)• Large focus on cost savings
Traditional “tool” based improvement approach…
Marketing & Sales organization…
• Pragmatic, results driven• Orientated towards growth not efficiency• Already working very hard, long days• Speak business language & language of our customers
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
Improvement Projects with Traditional Approach Generally Have Long Cycle
Times Which of the following best describes the average cycle time of your unit’s six sigma, lean or other improvement projects?
Source: Best Practices LLC; Global Benchmarking Council Survey
4%
16%
39%
30%
10%
One monthor less
One toThree
Months
Four to SixMonths
Six to NineMonths
TenMonths or
More
External Benchmark Data
% of respondents
No wonder why marketing and sales folks don’t see as much value
Issue #2 Training Could be Improved to Better Meet the Needs of
Marketing/SalesTraditional approachTraining/Certification
• Weeks of in-class training
• Often taught by individuals with no marketing or sales experience
• Few or poor examples of tool use in marketing/sales
• Often teaching people from many different functions at once
• Often rigid certification
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
How helpful have the PE tools / methods been for your everyday job?
*Differences between groups are statistically significant
We Have Found Training Marketing & Sales Folks Together Increases Value
J&J Internal Survey Data
Separate training for Mktg & Sales
68.75%
31.25%
Open enrollmenttraining
28.57%
71.43%
Very helpful
Somewhat helpful – Not helpful at all
Marketing/Sales Folks Training in These Venues
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
• Many complex stat tools• Many tools rarely used in marketing / sales• Language often difficult to understand
Six Sigma DMAIIC
Define. Charter. SIPOC
Measure. Sampling. Gage R&R
Analyze. Multivariate . DOE. Hypothesis testing. Regression
Traditional approachContent
Issue #3 Standard Tool Set Not Aligned With Marketing / Sales Needs
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
Our Analysis Indicates That Many of The Traditional Heavy Stat Tools
Aren’t as RelevantMarketing& Sales
• Market / brand strategy• Product• Price• Channels• Communication
• Advertising• Promotion• Personal Selling• Public Relations• Customer Education
MarketingProcess/ Activity #1...........#80
Six Sigma, Lean & DExTool #1……..Tool #100
√
√
√
√
√
√
√
√
√
√
We broke marketing & sales into 80 processes and mapped PE tool use… Insights…
• Many tools rarely used• Core set of simple, but powerful tools applicable in most circumstances
DEx = Design ExcellenceJohnson & Johnson 2005. Do Not Copy or Quote without Permission
Insights…
• Need a different approach to deploying improvement tools for marketing and sales
• Tools need to be more relevant and oriented towards effectiveness/growth
• Specialized and focused training is necessary
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
…but is it worth the investment to build better improvement tools / approach for Marketing & Sales?
1% Improvement in:1% Improvement in:
Results in pre-tax improvement of:
Results in pre-tax improvement of:
PRICEPRICE 8.7 % Improvement8.7 % Improvement
4.5 % Improvement4.5 % ImprovementCOGSCOGS
Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin.
SGSG&&AA 2.4 % Improvement2.4 % Improvement
Why focus Improvement on Commercial Areas of the Business?
Typical S&P 500 business…
4.5 % Improvement4.5 % ImprovementVOLUMEVOLUME
Over Time Improvements in Marketing & Sales Effectiveness have Huge Impact
For the Average S&P 500 Company, improving marketing & sales effectiveness has the biggest potential payoff…
$1.2
$0.2
$0.4
$0.6
$0.8
$1.0
Do
llars
in B
illio
ns
1 2 3 4 5 6 7Years
1% SG&A Reduction
1% Volume Increase
1% COGS Decrease
1% Price Improvement
Source: S&P data from Business Week.Com; Internal Analysis; Assumes 50% gross margin and 12.5% pre-tax margin; Average Sales $13.5B.
Marketing& Sales
Effectiveness
Global Executives Believe Growth Not Cost Reductions will Fuel Earnings
Growth
Which of the following will be the most important source of earnings growth in the next 12 months?
Source: Mc Kinsey Quarterly 2005 Number 1; n=16,476 global business executives.
External Survey of Business Executives
New customers in existing markets
% of respondents
66%
63%
46%
19%
New products / services
Entry into new markets
Price increases
The Business Case for GrowthR
ev
enu
e
Gro
wth
Total Return to Shareholders
High
LowLow High
65%58%
10%35%
Bubble Size = % of Companies That Survive and Beat S&P 500 (’94-’03)
Insights…
• Top line growth is key• Simply cutting costs to drive earnings is not sustainable
S&P 100 Companies were segmented based on historical performance prior to 1994. The ability to survive the next decade was then evaluated…
Source: Adaptation from Mc Kinsey Quarterly. 2005 “Do or die struggle for growth”
The Changing Competitive Environment is Going to Require Companies to be
Better
How Do You Expect Competition to Change in Your Industry in the Next Year?
Source: Mc Kinsey Quarterly 2005 Number 1; n=16,476 global business executives.
External Survey of Business Executives
Greatly decrease
Stay the same
Greatly increase
0 1%4%
15%
45%
28%
7%
% of respondents
Insights… • If you’re not focused on improving the marketing & sales processes related to growth you are…
Missing a huge financial opportunity
Likely not fully aligned with needs of business
Forgoing a chance to make a strategic impact on the long-term success of your business
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
So What Does Success Look Like in Improving Marketing &
Sales… New, relevant toolkit oriented to growth
Tools and approach to address the most important issues
• Acquiring new customers• Growing business with existing customers• Entry into new markets• Developing and launching new products• Pricing
New approaches to training
Better assessment and selection of projects aligned with growth
A New Toolkit is Needed to More Fully Harvest Marketing & Sales
Improvement
• Market / brand strategy
• Product
• Price
• Channel
• Communication MIx
• Advertising
• Promotion
• Personal selling
• PR
• Customer Ed.
Personal selling ”Toolkit”
Deep dive Diagnostic
What should I improve?
Six Sigma, Lean & Other Blended Tools / RoadmapHow do I improve?
Best Practices
What does good look like?
Resources
Where else can I get help?
10 Key Areas
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
J&J’s Corporate Wide Improvement Will Continue to
Evolve…
Timeline1980 1990 2000 2006 >
CrosbyTQM
Signature of Quality(Baldridge like Assessment)
Process Excellence• Six Sigma• Lean• Design Exc.• Business Assessment
?
Val
ue
Better
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
Thank You!
Cprovine@CORUS.JNJ.COM
Johnson & Johnson 2005. Do Not Copy or Quote without Permission
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