Technology should magnify competency but all too often it embeds incompetency.

Time after time I see organizations investing huge sums in technology that enables processes and decisions that kill competitiveness and drive down financial performance. One example that I came across recently was a CRM (Customer Relationship Management) platform from one of the biggest software companies in the world where the promotional video on the website ran the following customer scenario:

Scenario

• A North American organization in its last quarter uses their CRM technology to manage the pipeline
• They Identify the west region pipeline is short and threatening the overall number
• They further find the issues lie with the Enterprise deals that are blocking at the negotiation phase
• Further discounts are required to close the deals

Action

• Use the collaborative nature of the technology to get the key sales stakeholders together to discuss the deals
• Agree to give the discounts requested and quickly generate new proposals and close the deals

"Discounting fuels the race to zero!"

The big assumption in the above scenario is that giving the discounts was the right course of action, especially without any attention to the root-cause issues. When discounting is used to close deals it causes the competition to join in and the customers to leverage this behaviour and a self-fulfilling prophesy of commoditisation ensues.

What would good technology look like?

At the point where the above organisation identified that the revenue performance issue was with negotiating on Enterprise deals, they needed to see what capability gaps and weaknesses were causing this and the actions, money and time needed to fix it. Even if they take the discount hit to get the top number, there must be a strategy to prevent it becoming a continuous competitive weakness.