The Stretcher: Changing the Wrong Variable

Reading The Bed of Procrustes: Philosophical and Practical Aphorisms by Nassim Nicholas Taleb (affiliate link), as well as hearing the author interviewed on CNBC, brought an important idea to my attention.

In Greek mythology, Procrustes offered travelers an iron bed for the night. If the traveler was to short for the bed, he used a hammer to stretch them until they fit the bed. If they were too long, he amputated their limbs to make them fit. Procrustes had two beds, so no passerby with the bad fortune to take him up on his offer for lodging would fit well enough not to need some work.

The idea of Procrustean bed is that the object of attention is forced to conform to some arbitrary limits. But Taleb described the idea in a slightly different way, which I believe is more important. He described it as changing the wrong variable.

Changing the Wrong Variable

In sales management, greater performance can result from changing one or more of many different variables, including three that are critically important.

I spent an hour working through these three variables with Dave Brock today, discussing the issues around changing the following three variables and the common results. The first variable is the close ratio. The second is the average size of the transaction. And the third is the number of opportunities in the pipeline.

None of these variables are easy to change, but there is a hierarchy that exists, and choosing poorly doesn’t usually or easily results in improved sales results.

We Need to Stretch Our Opportunities

It is common for sales management to go to more opportunities first. This is the easiest variable to work on, because it is believed that it can be accomplished by mandate; increase the number of your opportunities in the pipeline and multiply that against your average close rate and your average transaction and you have improvement.

The trouble with focusing on this variable first is that your close rate is still low, and the identification of qualified targeted dream clients to reach the numbers necessary almost always exceeds the hours available to create enough opportunities. You can’t easily stretch the opportunities to make them fit the result that you want (increased activity and increased opportunities is only the right solution for low activity and too low a number of opportunities).

The Right Variable

To avoid the Procrustean bed, you have to work on the variable that has the greatest impact on sales results and the greatest impact on productivity; that variable is the win rate.

By working on the win rate, you increase sales without having to double, triple, or quadruple the number of opportunities necessary. Time is the single constraint that none of us can overcome with our resourcefulness. Working within the confines of your time and limited resource, improving your win rate allows you to improve your sales results without changing any of the other variables.

Why then do we avoid working on the win rate and focus elsewhere? Because improving effectiveness is the most challenging improvement to make. Improving win rates is made up of tough stuff like being personally effective, have the right sales acumen, having the right business acumen, creating unrivaled value for your dream clients, and following an effective sales process.

For sales managers, it means teaching, training, and coaching their sales force. It means enforcing the sales process. It means focusing their sales force like a laser beam on targeting the dream clients for whom they can create the most compelling improvements, nurturing the relationships it takes to win, and competing for the opportunities against tough competitors who are worthy adversaries.

As a side note, the second variable you work on is transaction value. By increasing the transaction value, you can improve productivity without having to massively increase and manage opportunities, and it keeps salespeople from pursuing unqualified prospects that should have been mercilessly disqualified.

If you want to make an improvement in your sales results, avoid the Procrustean bed and work on the correct variable. Don’t get stretched.

Questions

Think about some area in which you need to make an improvement. What are the variables that you might change? Have you worked through the exercise to work out which variable should be changed first and why?

What are the variables that affect your sales results? Which variables are the most difficult to change? Why are they so difficult to change?

Has changing the easier to change variables resulted in the improvement that you had hoped for? Why do you think changing that variable isn’t enough? Why doesn’t it provide enough leverage?

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