The people who live in the U.S. and similar countries have been brainwashed to some extent. Conditioned, at any rate. The whole concept of "all men are created equal" that permeates our culture has lead us to believe that, except for the pretty differences of our various cultures, all humans are fundamentally the same. That the only difference between a Mulsim and a Christian are the Burka, the language and the place of worship, or things to that effect. This just is not so. The differences are not merely trappings.
In North America and most of Western Europe we have come to think that urbane civilization is just about within reach. We value life very highly and believe that is a characteristic of most people. We often project the idea that this applies to the world as a whole and that if we only treat others in a civilized way, they will reciprocate. We still seem to believe this. We learned nothing from the nationalistic collapse of Yugoslavia. We flatly refuse to acknowledge that Hamas and Hezbollah might actually have less than noble intent even in the face of ample evidence. When Muslim extremists chop off another head, it is not unusual for some people to justify this by pointing out Christian behavior during the inquisition as if actions 500 years ago in any way are indicative of western behavior today.
But these are old arguments. Today we have some new ones for how cultures differ in fundamentally different ways that speak directly to the value of human life. Not too many weeks ago we we worried about our pet food. It appears that some melamine made it's way in to gluten that was for use in manufacturing the foods. I imagine that most of use saw this as an issue of contamination... an accident or an anomaly like the Tylenol scare of a few decades ago. It is actually an indicator of that which I write. A fundamental difference how two cultures value life.
That gluten came from China. This is a country that maybe doesn't have the best controls on manufacturing quality. It turns out that it is not all than uncommon for melamine to be used as a filler in animal feeds there. Yep, you read that right. Melamine is a less expensive "substitute" for gluten. When you figure that out, and then figure out that we use gluten sourced from China for people food too, you quickly realize that there were a lot of panicked executives a few weeks ago. I can just imagine the conversations in the Lay's boardroom.
It seems that no contaminated gluten made into our food, just fido's. Hot on the heals of that catastrophe, though, comes new that the Chinese has another "substitute" used in food products, this time that has made it into people food, tragically. diethylene glycol, it turns out, is sufficiently similar to glycerin and sufficiently less expensive, to make it an attractive substitute. Diethylene glycol is similar to the stuff you put in your car's radiator and is a poison.
At least 100 children in Panama have fallen victim to this poison, recently, from consuming medicine prepared with what was supposed to be food grade glycerin shipped from China. Accidents can happen in this country. People do, in fact, make actuarial decisions about the value of life in this country. People do not make decisions that directly lead to guaranteed loss of life in this country, especially of children. That is a fundamental cultural difference and one that does not change overnight.
We live in an uncivilized world where life has vastly less value than we place on it. To think otherwise will certainly lead to calamity.
Showing posts with label Business Practices. Show all posts
Showing posts with label Business Practices. Show all posts
Sunday, May 6, 2007
Wednesday, March 7, 2007
March 7 - Arcane Practices of Selling to Large Businesses
Just about anyone who interacts with large corporations wonders at their strange policies and procedures. As a participant in a very small business who does business with very large businesses, I get to navigate this veritable minefield of “gotchas” from time to time when trying to sell my products and services. Normally you’d think that all you have to do to do business is convince someone with money that what you have to sell is worth the exchange, much like we experience when we go to the store and decide whether to buy Coke or Pepsi. Not so, selling to a large corporation.
After you convince someone that they want to buy your product, you then have to navigate an organization known as “purchasing” whose purpose is to perform the actual spending act that your customer had budget for. Now you have to convince the folks in this organization, too, and they have different qualifiers. They aren’t concerned with your product’s or service’s ability to solve problems for their co-worker. They are concerned with the question of are you worthy to do business with corporation XYZ.
Worthiness is composed of many things, almost wholly unrelated to what you do to make money. Are you ISO 9000 certified? Do you have corporate revenues of $50,000,000 per year? Do you carry liability insurance of $1,000,000 per incidence? Are you Sarbanes-Oxley compliant (even if you are not legally required to be, in which case, how would you know?) Have you executed a vendor approval legal agreement? Are your accounting systems compatible with their accounting systems? Have you implemented 6Sigma (a gamers quality system if there ever was one)? And, my personal favorite, have you negotiated the standard corporate discount (often before the price of the product has been set)? To someone anxious to make a sale, this list seems interminable and satisfaction of the terms insurmountable.
For those that work with professional salespeople in the technical world, know that knowledge of how to navigate this business process landmine is one of their most valuable contributions to the process. These folks often understand these processes better than the customers themselves. I’ve found it usual that salespeople know far more about corporate structure and practices than I do in most large companies I’ve worked for and they’ve certainly helped me get products into my customers and get money out.
Large providers who have already got themselves on the “preferred provider” list like things this way. They take advantage of it to keep small providers from competing with new ideas and products. Contrary to conventional wisdom, they also take advantage of this to keep small providers from competing on price. Large corporations are supposed to be enjoying “economies of scale”. In reality large providers also have all those purchasing in-efficiencies along with a lot of other bureaucratic overhead (a topic for another day) which more than eliminate the benefits of scale. Unfortunately, one of the greatest costs a small business has is cost of sales. The sales process represents a huge investment in resources (time, money, material, personnel) for something that does not have an assured product. By promoting this purchasing situation, large corporations vastly increase cost of sales for small companies while nearly completely bypassing these costs, themselves.
So what is a small company to do? Aside from actually satisfying the requirements, there are exactly three practices that I’ve seen work which may or may not be palatable or practical.
The first is to be acquired by a large company that already meets the requirements. If the sale is large, this may be just the exit strategy you need to profit from your small business. With the right acquisition deal, you may even still enjoy doing what you are passionate about, though under the umbrella of a new corporation.
The second is to find a large corporation willing to work as a proxy for yours. You’ll have to negotiate qualification with them, but it should be a much lower burden. These companies are often called distributors or aggregators, though any current provider to your customer will suffice. They have already become qualified vendors. In many cases this is the sole purpose for their existence. The disadvantage with this approach is the traditional cost of the middleman. They have to make money also, after all.
The third is a bit of a trick and takes some time and foresight. Identify a small company with a low barrier to sales that, and this part is key, is very likely to be acquired by the large company you want to do business with. Once the acquisition is complete, you are already on the approved vendor list. This takes time, but so does the standard approval process. The benefit is that you also get to sell to the acquiree in the meantime at zero additional sales effort.
This all highlights one of the major inanities of being an approved vendor. You only need to scale the barriers to get on the list, not to stay on the list. Once you are on the list, enjoy it and consider how you can use that to help other small companies and thereby find profit.
After you convince someone that they want to buy your product, you then have to navigate an organization known as “purchasing” whose purpose is to perform the actual spending act that your customer had budget for. Now you have to convince the folks in this organization, too, and they have different qualifiers. They aren’t concerned with your product’s or service’s ability to solve problems for their co-worker. They are concerned with the question of are you worthy to do business with corporation XYZ.
Worthiness is composed of many things, almost wholly unrelated to what you do to make money. Are you ISO 9000 certified? Do you have corporate revenues of $50,000,000 per year? Do you carry liability insurance of $1,000,000 per incidence? Are you Sarbanes-Oxley compliant (even if you are not legally required to be, in which case, how would you know?) Have you executed a vendor approval legal agreement? Are your accounting systems compatible with their accounting systems? Have you implemented 6Sigma (a gamers quality system if there ever was one)? And, my personal favorite, have you negotiated the standard corporate discount (often before the price of the product has been set)? To someone anxious to make a sale, this list seems interminable and satisfaction of the terms insurmountable.
For those that work with professional salespeople in the technical world, know that knowledge of how to navigate this business process landmine is one of their most valuable contributions to the process. These folks often understand these processes better than the customers themselves. I’ve found it usual that salespeople know far more about corporate structure and practices than I do in most large companies I’ve worked for and they’ve certainly helped me get products into my customers and get money out.
Large providers who have already got themselves on the “preferred provider” list like things this way. They take advantage of it to keep small providers from competing with new ideas and products. Contrary to conventional wisdom, they also take advantage of this to keep small providers from competing on price. Large corporations are supposed to be enjoying “economies of scale”. In reality large providers also have all those purchasing in-efficiencies along with a lot of other bureaucratic overhead (a topic for another day) which more than eliminate the benefits of scale. Unfortunately, one of the greatest costs a small business has is cost of sales. The sales process represents a huge investment in resources (time, money, material, personnel) for something that does not have an assured product. By promoting this purchasing situation, large corporations vastly increase cost of sales for small companies while nearly completely bypassing these costs, themselves.
So what is a small company to do? Aside from actually satisfying the requirements, there are exactly three practices that I’ve seen work which may or may not be palatable or practical.
The first is to be acquired by a large company that already meets the requirements. If the sale is large, this may be just the exit strategy you need to profit from your small business. With the right acquisition deal, you may even still enjoy doing what you are passionate about, though under the umbrella of a new corporation.
The second is to find a large corporation willing to work as a proxy for yours. You’ll have to negotiate qualification with them, but it should be a much lower burden. These companies are often called distributors or aggregators, though any current provider to your customer will suffice. They have already become qualified vendors. In many cases this is the sole purpose for their existence. The disadvantage with this approach is the traditional cost of the middleman. They have to make money also, after all.
The third is a bit of a trick and takes some time and foresight. Identify a small company with a low barrier to sales that, and this part is key, is very likely to be acquired by the large company you want to do business with. Once the acquisition is complete, you are already on the approved vendor list. This takes time, but so does the standard approval process. The benefit is that you also get to sell to the acquiree in the meantime at zero additional sales effort.
This all highlights one of the major inanities of being an approved vendor. You only need to scale the barriers to get on the list, not to stay on the list. Once you are on the list, enjoy it and consider how you can use that to help other small companies and thereby find profit.
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