Category Archives: Customer Psychology

Do Sales Incentives necessarily Improve the Margins?

One of our clients in Pune had invited me to diagnose the problem of their poor margins. When I asked the VP-Sales he said,” We are facing this problem for the last three years, so last year we have launched an attractive incentive scheme, but still it is not producing results.”

Most of the sales managers intuitively feel that incentives lead to higher margins.  However the research carried out by Edward Deci and Richard Ryan at the University of Rochester and Adam Grant at Wharton say that the effectiveness of motivation varies with the task.  There are two types of tasks:  Algorithmic and Heuristic tasks. Continue reading

Volition & Motivation: The Gap between Doing and Knowing

Most of us feel that attending a motivational program will help people achieve the individual and organizational goals. Kurt Lewin and Narziss Ach have made pioneering contribution in the field of motivation. Lewin was known for his field theory as well freezing and unfreezing  concepts in changing the human behaviour and believed that motivation and volition are the same. Narziss Ach  treated motivation and volition differently.

Volition happens at three levels: Continue reading

A Tale of Two Key-Note Addresses

“We are having our Annual Sales Conference and we would like you to deliver a Key Note address for our Pan-India Sales Team on Value Selling.” said Ramesh, the HR Manager of an IT company over phone.

“Thanks, but how did you know about me? “ I asked. “We make our own referral checks in the market before deciding on the speaker.” said Ramesh. Continue reading

Root Causes of Employee Disengagement

A number of surveys show that the majority of employees are disengaged from their work.  Factors that lead to the alienation of the modern executive  are: viewing life as  a means to an end ,  no respect for quality, abstractification and commodification. Continue reading

Importance of Weak Ties in Strengthening your Social Network

In your social network you have two types of ties:

  1. Strong Ties: These include your close friends whom you know well and with whom you interact frequently.
  2. Weak Ties: These are the acquaintances who know you superficially and your interactions with them are rare.

Between the two of them who should support you more in propagating your service? The intuitive answer is obviously the former,  that is the strong ties.  Let us look at a hypothetical scenario.  You (A) have strong ties with B & C with whom your total strength of the network is 28 connections whereas with X & Y you have weak ties and the total network among you is 25 connections. Which one should give you more mileage? (refer figure below)

strongweak-tie

Let us look at it mathematically.

You will observe that in strong ties there are lot of common connections which lead to a great deal of overlap. Whereas in case of weak ties, the overlap is less and the distributed network is high.

strongweak-tie_graph

You will observe that your message will spread to 7 new connections with strong ties whereas with 18 connections with weak ties.

Let us look with two examples:

  1. My book, Contextual Selling was published a few years back. I had conducted a few sales training programs for Rittal India, a leading manufacturer of IT enclosures. When Jacob Chandy, the Vice president Sales and Marketing went through the book, he immediately ordered for 80 copies. In the last 5 years I might have met him hardly 3-4 times.

I was delivering a Keynote address for Metrology Division of Carl Zeiss in 2014. After seeing the book, Mr. Wolfgang Schwarz, VP Sales based in Germany ordered for 30 copies. Our interactions over mail and linkedin are hardly 3-4 in the last two years.

I suggested Sunil my good old friend (strong tie) who was in sales about the book. He said, “I need a complimentary copy.”

  1. Last week I was conducting a program for Bruker Analytics in Mumbai. I had interacted with Dr. Shreeram Oak CEO, only once in 2012. After that meeting the second time I met him was while conducting the program.

In Mumbai I have two close friends, Amar and Ramesh (names changed) who are CEOs of companies in similar field and competing with Bruker. Both of them know me for the last 25 years. (We were working in the same company earlier ) Whenever we meet,  they regularly  complain about the poor quality of their salespeople and the need for a training program But training program to Rajan , no way!

Strong Ties:

  1. They know you too well. ( familiarity breeds contempt?)
  2. They move in almost similar circles
  3. There is a considerable overlap in their networks.

Weak Ties:

  1. They know you enough about your professional competence.
  2. More novel information about you can move into this network.
  3. There is a less overlap

The concept paper on Weak ties was developed by Mark Granovetter a Harvard Theoretician in 1972 as a part of his Ph. D. thesis. The Strength of Weak Ties is considered as a most influential sociological paper.

Quite often life is illogical and counterintuitive, do not ignore the weak ties,make the best use of them to improve the strength of your social network. Wish You a Very Happy and Prosperous New Year!

Rajan Parulekar|Paradigm Trainers Private Limited| #7, 7th Main, Binny Layout, Vijaynagar, Bangalore 560 040| T: 080 23207930, M: 98450 14098| rajan@paradigm-info.com

Importance of Tacit Knowledge for Organizational & Individual Growth – Part I

The two crucial challenges faced by today’s organizations in remaining competitive and thus  profitable are:

  1. Cut-throat Competition: I was talking to one of my clients who is in carbide tools, mould and die business. Twenty years back there were only 3 players. (two from Sweden and one from Israel) Today there are more than 20 players.(including  those from  Korea, Japan etc.) This has brought down the average margins by almost 50%
  2. Attracting and Retaining Talent: High competition leads to higher levels of attrition. It is assumed that a new executive starts contributing to the organization only after 7-8 months. Later he starts earning his salary and the real contribution starts only after 18-20 months. However in the present context, by the time the organization expects the employee contribution; the latter has already started looking out for greener pastures elsewhere.

Peter Drucker, the eminent management thinker predicted 40 years back that the future belongs to  knowledge workers and firms can have a competitive advantage only through effective knowledge management. There are three ways how firms can  remain  competitive:

  1. Generate new knowledge continuously.
  2. Disseminate the new knowledge across the organization in a systematic manner.
  3. Apply the new knowledge to develop new technologies , products and services.

There are two types of knowledge:

  1. Explicit Knowledge: Is the one which is available through systems, processes, technology, patents etc. This knowledge to a greater extent can be shared. Through technology transfer it can be acquired.
  2. Tacit Knowledge: This type of knowledge is with the individual and does not reside in SOPs. It is also context-specific. This is acquired through experience. The term was coined by Michael Polanyl in 1958 who said, “we can know more than we can tell.” It can be defined as skills, ideas and experiences possessed by an individual. Quite often they are not codified, written or verbalized and hence difficult to transfer from one person to the other. Examples of tacit knowledge are playing a musical instrument, preparing a signature dish, driving car etc.

Three decades back I was working with a renowned electrical consultant called P.H. Padhye in Mumbai  who was having a consultancy assignment  ( paralleling of existing Petbow and Skoda DG sets with the MSEB supply) with Ceat Tyres.  Once the plant had tripped off and the entire production had come to a grinding halt. The maintenance head and others were struggling to solve the problem but could not succeed even after 24 hours. When we went to the plant,  Mr. Padhye told the maintenance head, “ the setting of the speed governor of your alternators are wrong and that is why the tripping has occurred.” The problem was sorted out in half an hour. This is tacit knowledge.  Mr. Padhye was a very knowledgeable person. Once after a marathon session on electrical circuit design, I asked him,” how do you know so many things?” He replied, “after 32 years of experience in the industry, I know what I don’t know.”

Many of you must have heard the apocryphal story where the boiler of a steam turbine had malfunctioned. An expert mechanic  was called . He asked for a hammer hit it at the right spot and lo behold… the boiler started working.. When the mechanic submitted the bill of Rs. 10,000 /- The finance manager was quite perplexed. When asked for the breakup of the  bill for a task which did not take more than 5 minutes,  the mechanic replied as follows:

  1. 100/- for hitting the hammer
  2. 9900/- for knowing where to hit and thus solving the problem.

You will observe that the former is explicit knowledge whereas the latter is  tacit knowledge.

You will appreciate the importance of tacit knowledge through this example. recognising the face of a person in  a crowd is tacit knowledge;  whereas to  recollect the other details is explicit knowledge.  Only though experience this tacit knowledge is acquired. Every evening when the employees leave the office such tacit knowledge is leaving the organization and when a talented and experienced employee leaves the organization; such tacit knowledge is lost forever.

At a number of places I see that there are no jobs available for executives who are 45+.  This shows our irrational bias towards explicit knowledge (read technology) which youngsters seem to possess. But we fail to realize that  a fast-changing technology can even make a young executive redundant equally fast. What  is important is not so much as knowing a  specific technology but the ability to learn new things and the organization having such workforce (who are willing to learn continuously)  is called as a learning organization. A number of organizations feel cost to be  the only driver to retain a competitive advantage and replace older executives.

E.F. Schumacher in his book, Small is Beautiful has something relevant on this topic. Quote:

Education can help us only if it produced ‘whole man’. A truly educated man is not the one who knows a bit of everything, not a man who knows all the details of all the subjects (if such a thing is well possible). The whole man in fact may have little detailed knowledge of facts and theories (read explicit knowledge). He may treasure the Encyclopaedia Britannica because SHE KNOWS and HE NEED NOT, but he will be truly in touch with the centre.

He will not be in doubt about his  basic convictions, about his views on the meaning and purpose of his life. He may not be able to explain these matters in words; but the conduct of his life will show a certain sureness of touch which stems from his inner clarity. (read tacit knowledge)

Unquote (italics mine)

What are the different ways the tacit knowledge can be effectively harnessed shall be looked into my next blog…

Rajan Parulekar| rajan@paradigm-info.com|www.paradigm-info.com

On Human Nature – Case of Irom Sharmila

Irom Sharmila has called off her hunger protest against AFSPA. She went through pain, misery and deprivation for 16 long years. There were hundreds of people who have been killed in the encounters with army. What was Sharmila’s demand? It was to repeal the AFSPA act or to modify some of its provisions. Continue reading