How do you know it shouldn’t have been 34%?

Suzanne Levesque

There’s a story about a consultant being interviewed by the CEO of a large company for a potential assignment.

The story goes that the CEO shoots the consultant a steely gaze, leans back in his chair and says “While I’ve been in charge of this organisation for the last 3 years we’ve enjoyed an annual growth rate of over 21%, why the hell should I hire you?”

After a pause the consultant replies “How do you know it shouldn’t have been 34%”
He gets the gig.

It’s an amusing story, and one that’s worth keeping in mind when you’re putting together a business plan or revenue forecast.

Why? Well it comes back to a topic I’ve posted about previously which is the need to challenge assumptions in business strategy.

Here we’re in the realm of “what you don’t know about what you do know” which is a bit of a mind-melter I agree but basically it’s what you’ve baked into your thinking without thinking about it.

In organisations this is referred to as your “culture”, or “how we do things around here”.
As human beings it’s how we operate in the world; it’s the accumulation of our experiences and learnings over the years. It’s just the stuff we do without thinking about it.

I remember when I joined my last company as an employee with a challenge to turnaround declining revenues in the service and maintenance division of an equipment supplier.

The first thing I needed was some data and after asking around no-one had any.

A quick trip upstairs to IT and a chat with the resident techie in the DP room and I came back down with all the data I needed.

When discussing my analysis with other managers at the next Ops meeting everyone sat around slack jawed and shocked that I had managed to get hold of data that “for years” they had been asking for.

Fortunately for me, as an outsider to a very hierarchical organisation, I didn’t realise there was a way of doing things – I just went and got what I wanted.

This might have ruffled a few feathers but I didn’t care as it quickly enabled me to zero in on what was going wrong and put in place changes that successfully reversed over 5 years worth of declining revenues.

In the case of the story with our consultant, challenging the status quo when things are going well is something that rarely happens.

Everyone in sales knows that when you’re on target you’re left alone. My old sales boss, many moons ago, used to have a phrase that he didn’t care whether I was “tap dancing on Main Street on Friday afternoon” as long as I hit my quota.

But, of course, my quota was just a number that someone made up. Of course, it was based on some historical extrapolation or an arbitrary % of some larger target number that someone else made up (based on who knows what).

What if you’re hitting your targets but only working at half capacity? What if you’re actually leaving money on the table because you’re under-selling and under-pricing?

Of course, maybe you are doing everything you can do and your performance is absolutely top notch.

But how do you know that?