podcast | April 13, 2015
Case Study: Strategic Alignment Between the CEO and the Customer
Brian Walker, the CEO of Herman Miller, recently joined me on the SBI podcast. Brian has been the CEO of Herman Miller for 11 years. Brian is a proud alumni of Michigan State University with a degree in business administration and accounting.
Our discussion topic was getting, and keeping, strategic alignment from the CEO’s chair, all the way through the sales force to the customers.
You can listen to Brian here.
Herman Miller, founded in 1905, is the recognized innovator in contemporary interior furnishings, solutions for healthcare environments, and related technology and services. The company employs almost 7,000 employees, and does close to $2 billion in annual sales.
Invest 30 minutes and hear what Brian has to say about:
In my practice, I work with CEOs to accelerate the rate of revenue growth. I often find strategic misalignment the root cause of slower than expected growth.
If you are a CEO, and struggle with strategic alignment across departments, listen to what Brian has to say.
Speaker: Welcome to the SBI Podcast, offering CEOs, sales and marketing leaders ideas to make the number.
Greg Alexander: Hello everybody, welcome to SBI’s weekly podcast series. This is Greg Alexander, the CEO and co-founder of Sales Benchmark Index, and today we have an outstanding guest, somebody I’m really excited to have on the show. This is Brian Walker, and Brian is a CEO of Herman Miller. He’s been the CEO of Herman Miller for eleven years, and prior to this role he served as a CFO, the COO, and the president of the North American business unit. Brian is a proud alumni of Michigan State University, with a degree in business administration and accounting.
For those of you who are not familiar with Herman Miller, which would be a small percentage because the brand is so well-known, this company was founded in 1905. They’re the recognized innovator in contemporary interior furnishings, solutions for the healthcare environments, and related technologies and services. The company employs about seven thousand people and does close to 2 billion in annual sales. So Brian, welcome to the show.
Brian Walker: My pleasure, Greg. Good to talk to you.
Greg Alexander: All right, so today’s topic is something that I think Brian does especially well. I learned this recently, in spending some time with Brian, and that is getting and keeping strategic alignment from the CEO’s office all the way through to the sales force and ultimately to the customer, and we find that strategic misalignment can result in an organization missing its expectations and not serving its customers well. Brian has spent a tremendous amount of time on this, and for those CEOs that are listening and board members that are listening, I think you can learn a lot from him.
It’s a difficult thing to do and it’s something that takes diligence, and through this effort, Brian has played a role in leading the next evolution of the Herman Miller sales force, which has been a well-producing sales force for years, but as the customer market changes, we need to evolve and keep pace with that and he’s done that through strategic alignment. So Brian, let me jump in and ask you my first question.
So, I found that companies sometimes grow slower than they would like due to this misalignment between the sales leader, and in particular, I’m sorry, between the CEO, excuse me, and in particular, the sales leader. How have your driven your strategy all the way from the CEO’s office to the sales force?
Brian Walker: Well, Greg, one of the things I think, in fact, we’re a few days away from our annual strategy update with our board, and I think it started where a few years, probably four or five years ago, where we tried to get very clear about what were the major changes that we had to make in the business overall, and getting very articulate and sort of being relentless about communicating those over and over again, not only to the board of directors, but to every employee. And so we’re really deliberate at our communication to everybody, and you can also talk about strategy and get into all the little details about what it’s gonna take to do it.
We tried to get very clear about where we were coming from and where we wanted to get to, and we tried to get those down to four or five key things that had to be done at the corporate level. Then we’ve encouraged every leader in their job each year to say, what are the four or five things they have to get done to align with that overall set of changes that we thought had to be done in the business? I would tell you that it’s been sort of a relentless process of constantly going back to those four or five things each year, and every time somebody brings forward a business plan or a specific sets of actions, to say how do they tie to the overall, and what are the four or five things you’re trying to do in your area of the business?
Greg Alexander: When I think about the scope of what it is that you do, the breadth of your products and services, the amount of vertical industries that you’re in, the ones that you’re entering, how do you go from the universe of everything to four or five kind of big rocks?
Brian Walker: It’s a great question. I will give credit where credit’s due. I have a tendency to talk a lot, actually, about what I’m passionate about, and a few years ago one of my board members listened to me describe passionately my view of how Herman Miller had to increase the size of its addressable market. That was sort of the core idea that we were after, that yes we could gain share in our core market, but that we thought ultimately our ambition had to be to increase the size of the marketplace that we were addressing. I was talking about everything that it was going to take and he looked at me at the end of the meeting, this is a gentleman who works for Nike, and he said, “So you’re really talking about four or five big things that you’ve got to get done.” He really described them very succinctly.
Then we as a team took those and we of course ended up with a list of ten. We began to describe these vectors of work that we had to do to put each one of those in place, and it became clear over time that there was not really ten. Some of those merged together, and once we got clear of “Okay, this is going to take three years or five years to put in place, what have we got to do by year?” Of course, the things that are within a twelve to eighteen month window are fairly easy to describe exactly what’s got to get done, and as you get further out, of course, they become more aspirational, if you will, or less defined.
I think it’s a process of annually, at least annually, forcing yourself to do that, and one of the things we’ve developed over time is this belief that you can have a lot of details to your strategy but ultimately you have to be able to get it down to one page. So I’m sort of relentless now, that every time somebody brings me a strategy, whether it’s for a business unit, whether it’s for a product line, whether it’s entering a new market, you have to be able to get that down to one page, and on that one page you’ve got to tell me what are the major changes you have to make.
You have to have a good understanding of what is the situation analysis, ie. what are the drivers of the marketplace, what are the risks that you face to do that, what are your key goals and objectives, what are the talent you need to do it, and what are the key priorities you need to get it done? Then what are the investments you need? I think if you can keep those elements in front of you and if you force yourself to the discipline of having to get it to one page, you get clearer and clearer in your own ability to be articulate about it.
Greg Alexander: From your lips to God’s ears. A one page strategic plan! Some of the strategy documents I look at literally run in the hundreds of pages and sometimes I’m paralyzed by reading them. So that’s a best practice I would encourage all of our listeners to adhere to. Let’s talk specifically about connecting these four or five strategic initiatives, which can be multi-year initiatives, to the sales team, because the sales team unfortunately are driven to hit the monthly/quarterly/annual number, so to speak, and many of them don’t feel as if they have the luxury to think about out years. And yet the tenure of your team is one of the things I love about Herman Miller the most. People when they go to work there they stay there for their careers.
You’ve found this balance between hitting the short term objectives for the various stakeholder groups but also managing the business for the long term. That’s probably why you guys have been around for over 100 years. So how do you find that balance, especially with the sales team, which has to be short-term focused?
Brian Walker: I think first of all you have to use strategy to keep them believing that there’s a compelling future. I think at the same time you have to be able to say … We kind of really talk about two different things in our business. What is your strategy and then what is your of work and to me the of work is what are the tactics or the actual actions I’m going to take right now? To me, staying in front of the sales force is making sure they understand the long vision and can put in context the actual things you’re doing this year. But I think, and maybe I’ve learned this as much from you as we’ve done it on our own, is how do you help them translate long-term strategy in terms of the value for the customer?
I think we’re only partway on that journey, to be frank. Over time I think our industry, like a lot of industries do, began to talk to itself in its own language. Sometimes that doesn’t really resonate with the customer, that we’re using our internal language rather than an external voice. So I think the other thing we try to do, and I’d say we’re only partway on this journey, is try to convert not only our tactical language but our strategic language from being about us to being about what does it mean for the customer.
I think when we’re better at that and we think about talking to the sales force in a language that actually they believe they can use with their customer, it makes the strategy become more useful to them and come to life, which I think helps them have, I don’t know if the right word is patience, but it certainly gives them confidence that what they can talk to their customer about is not just what the products and services we have today are, but how they’re going to evolve over time to continue to solve problems for their customer.
Greg Alexander: Interesting.
Brian Walker: I think you’re right, it’s a delicate balance, and I think I would even say one of the things we’ve struggled with a little bit is that we’re a company that loves ideas, including our sales force, and at times you can get the whole organization so wound up around the future that it doesn’t wake up tomorrow morning saying, “Hey, yeah, but we have to actively go win deals today.”
Greg Alexander: Right.
Brian Walker: So one of the things we have done with our executive team, is we assigned our executives, our most senior executives, including me, to specific accounts and specific territories where they’re required to be out with the sales people actually working deals every day. To me, that’s the balance we’re trying to strike. You know, ultimately, I think our industry has often been a deal-maker’s industry. It’s about winning a project. We’re almost quasi in the construction business. And so you have to make sure that the organization doesn’t lose its balance around winning today while preparing for the future.
Greg Alexander: Yeah.
Brian Walker: And I think that has to be done at the executive level.
Greg Alexander: Yeah. All right, we’re going to take a quick break. We’re talking to Brian Walker, the CEO of Herman Miller, about strategic alignment from the CEO’s office all the way to the end customer. We’ll be right back.
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Greg Alexander: Okay, welcome back everybody. We’re here with Brian Walker, SBI’s weekly podcast series. Brian’s the CEO of Herman Miller, and Brian, I’m going to pick up our conversation from where we left off prior to the break. We were talking about strategic alignment and I want to dive a little deeper into this. One of the things that my exposure to you educated me on was when you make a product change, so your organization came up with the living office, which was very much going from a product focus to a solution focus, and I thought it was really fantastic.
The product team and the sales team have to be together. So it’s one thing to come out with a new vision, this new value proposition for a customer, this new solution. It’s quite another thing for the sales team to be able to talk intelligently about that. The added complexity in your business is you go to market through a dealer channel, who is dealing with their own set of issues. They own their own businesses. How do you keep the product team and the sales team connected at the hip?
Brian Walker: That’s a great question. I think it starts with making sure that we are deliberate about, and Living Office in our mind is really a strategy that does two things, Greg. Number one, it’s how do we help customers make the best informed choices about the things that they want to buy from us to create the places that are going to help their businesses or their hospital or their educational institution do what they do better? It’s also a methodology for our product teams to meet with our sales teams and with customers to understand not only how our current products are solving needs, but where we have unmet need that we have not yet developed a solution, or where the solution needs are changing.
So the better we can be at describing what our portfolio of solutions are and how they map to the customer’s need, and have the product teams talking to the sales folk from the position of saying, “Here’s our current solution set, and here’s how it’s going to evolve over time, I think that’s how you can keep those two connected, if they believe that they’re all on the same page of actually working for the customer, versus the product team thinking their goal is to get a thing to market, and the sales thing saying, “Yeah, well, that’s interesting. You have things, my job is to solve the customer’s problem.” So, I tell you, this is one of our emerging capabilities that we’re trying to get better at.
In the old days, when we had really one customer segment that we focused on, and really three product categories, to now a company that is facing multiple segments, sometimes with very different clock speed, and a broader solution set, the need for the coordination and communication between those two groups is actually increasing.
Greg Alexander: Yeah.
Brian Walker: One of the things we’re borrowing is we’ve just recently made a significant acquisition in the consumer space, so we now have a fairly large business serving people for their homes. One of the things we learned from those folks was the discipline of doing a catalog every six, six times a year means they have to do a lot more long range planning on how their product portfolio needs to change or is changing, and how they’re already preparing six catalogs out prior development and marketing to that point. So they have to get much more deliberate around the coordination of product creation, marketing, and sales, right? Those things have to hit the market together. In our core business, that wasn’t really the case.
In our core business, we do our development schedules, and once we got it developed, then we’d get it out to the marketplace. What we’re learning is, as we’re trying to teach the sales force, and give them more information on and more skills on how to solve for their customer’s need, the coordination of product development, marketing, sales, showrooms, and having those come together deliberately sometimes two and three years out in a product development cycle, we’re almost using what we’re learning from the consumer business to model that into our core business.
Greg Alexander: The clock speed, as you said, in the consumer business is so much faster, and the need to predict the future, it’s almost as if you’re in the fashion business.
Brian Walker: Absolutely.
Greg Alexander: Where you’ve got to make sure that you understand the wants and needs of your customers several quarters in advance. Okay, we’re going to take another break here to make the audience aware of another exciting content offer from SBI and when we come back we’re going to talk with Brian Walker about connecting the sales team with the operations team, because after all, we become what we sell. So we’ll be right back.
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Greg Alexander: Welcome back, everybody. Talking to Brian Walker, CEO of Herman Miller. We’re discussing strategic alignment and so far we’ve talked about how to keep the CEO and the sales leader aligned to the benefit of the customer. We just spoke about how to keep the product team and the sales team aligned. We learned a lot there from Brian in how to incorporate some consumer behaviors into the B2B world. Now we’re going to talk about the operations team. When I say operations I mean once you sell something to a customer, you have to deliver. You have to manufacture the product, you have to distribute the product, you have to bring that brand promise and that value proposition to life for the customer.
So, Brian, when you think about it, how often does the sales team, the office team, how early does the operation team get engaged with a customer? Is it strictly post-sale, is it prior to that? How do you drive a line in between those two groups?
Brian Walker: Greg, That’s a really good question, and I would say one of our thorniest problems, and I think one of our greatest opportunities for the future is more connectivity. And I would tell you that today because of our, today we’re sort of getting there by using the blunt instrument and making sure executives are out working deals, and that includes our operations executives. Also, we’ve had some very large projects where we’ve experimented by having a member of the operations team actually involved early on in the sales process, and this is where we had a particularly large project. Multi tens of billions of dollars, multi-year. Therefore the coordination between the customer and the dealer became critical and we integrated an operations person right from the beginning into the team.
It’s paid dividends because our satisfaction by the customer is probably one of the best we’ve ever had, which is interesting because it’s probably the largest project we’ve ever done.
Greg Alexander: Wow.
Brian Walker: It also resulted in significantly reduced costs for us, and the dealer, and actually better profitability. So I think we’ve satisfied the customer and we’ve satisfied the customer and we satisfied ourselves at a higher level by having that integration. Now, of course that’s easy to do when it’s one very large project. It’s much harder when it’s the day to day business that’s going on. One of my learnings, and this really came from your folks at SBI, is that in our world, probably a third of the orders that we’re working on in our core business are really being worked every day by the Herman Miller sales team.
There’s another 65-75% that are really being worked on by the dealers every day. I think our next big leap is to make sure that we have visibility to the totality. Now today I would say we often don’t see things that the dealer is working on, or until they become actually an order. Now, I liken this to some of our folks, it’s like we own a ferry on the Hudson River and our boat can typically carry 25 people, and we actually get advanced purchases from groups. And so we see 5 to 10 people out of that 25 in advanced purchases where they come to us direct to buy their tickets, but there’s another 15-20 folks that actually buy through a distribution channel.
We don’t know that they’re going to buy tickets. The problem is sometimes we get our boat to the dock and we realize there’s only 10 people there, and we’ve got a boat for 25 people. The problem is that means everybody who’s buying a ticket from us over time pays for the cost of having a boat to carry 25 people. It also means at times we show up at the dock and our distribution has sold more and we’re not ready to serve because we didn’t realize there were 30 people there, and we actually have a boat that we can put 30-35 people on, but we didn’t bring the bigger boat.
I think going forward, our integration with not only our sales team but our dealers because they really carry in our world four times the number of salespeople that Herman Miller has. We have to get more integrated with looking across the total not only of the potential but actually of what we’re quoting on so that we can (a) make sure that we don’t have waste by sort of having a ready to serve cost, if you will, or the opportunity cost that actually we didn’t know about. If we did we could have actually done something to be ready to service that customer.
I actually think this is one of our bigger next steps, is we’ve just gone through the process of implementing salesforce.com as our CRM tool. It’s been really helpful to get exchange between our salespeople and opportunities. What it hasn’t done yet though is gone all the way back and looked at the total things that are being worked on between us and the dealer, so that the coordination with our operations folks, so they not only know what the demand is in dollars, but what the demand is by item. Because as you just said earlier, in our business we have a massive variety of items. So being able to not only understand what the demand picture is in total, but understanding down to colors, materials, finishes, becomes really critical. So I think it’s one of the ways that we could dramatically increase customer satisfaction, which ultimately would make our salespeoples’ lives a lot easier.
Greg Alexander: Yeah. Well, it’s a benefit for everybody, right? Because as the information flow increases and you have greater visibility, the waste in the supply chain can be eliminated and you can extend those savings or a portion of those savings to the customer. So now your value proposition goes up. You sell a higher quality product for a more attractive price point. The customer wins. The dealer wins because things are going to be on time and on spec and quality will be high, and you win because you have a happy dealer and a happy customer. So it’s a big deal. How do you …
Brian Walker: I’d also say, Greg, the other benefit that’s out there, is that I think if we saw the total picture we might have a better understanding of where we’re winning and losing, which I actually think could feed our solution set development much faster, because today we’re not seeing the full picture. We may not even understand as fully as we could where the dealers are winning and losing.
Greg Alexander: Yeah. That’s a good point.
Brian Walker: And so if we saw more where they’re winning and losing, we would be much faster to respond with new capabilities. I think ultimately it may be one of those times you could find an absolute win-win between the dealer, the customer, and us, because having more information should make everybody’s lives easier and better.
Greg Alexander: Yeah, no doubt. Okay, we’re going to take one more break and when we come back, Brian and I are going to spend some time on the role the CEO should play in leading the sales team, and he has a lot to offer there so stay tuned, we’ll be right back.
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Greg Alexander: Okay, welcome back to the show. We’re talking to Brian Walker, CEO of Herman Miller, and we’re discussing the important subject of strategic alignment, all the way from the CEO’s office through the various departments and functions to the customer, and how by increasing strategic alignment, you can increase customer satisfaction and financial performance. Up to this point we’ve talked about strategic alignment from the CEO and the sales leader and also involving the product team, the ops team and the marketing team.
There’s a broader question that I wanted to ask and I think you’re the appropriate person to answer this, Brian, because you’re actively out there leading from the front. You as the CEO, you just told us earlier that you’re assigned a territory. You’re assigned accounts and dealers. There’s not a lot of CEOs that are doing that and I find that to be exceptional and I think it’s required in today’s day and age to do better than your peer group and grow faster than the organic growth rate of the market.
So if you wouldn’t mind, share with your peers why you chose to be such an active leader of the sales force, and now that you’ve been doing this for a while, what advice would you give them?
Brian Walker: Well, Greg, in some ways this was one of those epiphanies during, we’ve had a couple of very severe downturns in our industry and we had one between, following the dot.com bubble burst, and I was out on a bike ride and I was thinking about, we had this business that the industry was dropping quite dramatically. I was a young guy, I didn’t grow up in the sales side of the business, and I was giving some real thought to what were the things we could do and to be frank, a picture came to my mind of a gentleman that I knew who owned a business that we had acquired.
I knew that he spent a lot of time out with his customers, really understanding directly from them and with his sales team what was going on, and I was giving this some thought, I was actually out on my bicycle. I had said, “You know, the best thing we could do is have executives who actually didn’t have reports to listen to, but actually had the feeling that you get when you’re competing for business and you know when you’re winning and losing and what that feels like.” I thought, to be frank, it would get our competitive juices flowing and we would move faster. So we then went and signed executives out to the field, and I will say I find myself occasionally where I get away from doing that, that I’ve got other things I’m working on, you know, strategic stuff, board meetings. It always seems like the minute I find myself more connected with the field than out there meeting with customers. My strategic instincts get sharper, and we get more deliberate in our decision making and we move faster.
And so for me, and maybe this is a personal thing … I’m a big believer in data, I love to see information, absorb it quickly, but I don’t think anything can replace that feeling of being out there, one to one with your teams, whether that’s your sales teams or your operations team, we’re actually feeling what’s going on for them. To me, I believe in our business everything begins with orders and with customers. If we’re not really good at that, in tune to it, we’ll never actually get the business to where it needs to be.
I have found my best way to get market information is to be out there with the teams, meeting customers and watching their reactions to new ideas we have, understanding where we’re causing problems that we may not even know we have. I guess I had much more of a time of difficulty realizing it needed to be done, and it’s easy to fall off of that wagon, but every time we do I would come back to when we’re at our point where we’re wondering why the business isn’t doing what we wanted it to do or we thought it could be better, as soon as you get executives out in the field, it’s amazing how much better and sharper you get about what you’re planning to do.
Greg Alexander: All great points. So we’re at a time allotment here. I wanted to encourage the audience before we jump on the call, this audience is focused on growing their companies through sales and marketing effectiveness. One of the ways that our clients do that is through their executive briefing centers, where they host their clients to come in for strategic meetings with executives and product demonstrations. One thing I’ve learned from Herman Miller is that the environment matters. How that environment is laid out, how comfortable they are, how conducive the environment is, structurally and design-wise to learning and fostering deeper client relationships really matters. So Herman Miller is the best in the world at that. They’re pioneering this concept of Living Office, and I would encourage everyone listening here to go online at hermanmiller.com and check that out. If it’s something that you want to invest in, I’m sure that Herman Miller can direct you to the appropriate dealer.
With that, Brian, thanks a whole bunch for being on the show. I learned a lot, I’m sure our audience did as well, and best of luck to you as we go through the year.
Brian Walker: Thanks, Greg, I appreciate it.
Greg Alexander: Okay. Take care.
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