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Improving the world through engineering www.imeche.orgImproving the world through engineering 3
Today’s moderator
Eddie Winton
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Today’s guest speaker
Steve Pepperell
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Introduction
•How ‘Commercial Behaviour’ can help engineers lead the business strategy to Commercial Success
January 2015
•How understanding your businesses commercial imperatives will help you become a better engineer
February 2015
•The challenges the world will face over the next 25 years and what engineers can do about them
March 2015
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Today’s Agenda
• Review of Leading the Business Part 1
• Commercial thinking – The value proposition
• Transactional, consultative & enterprise selling
• Commercial awareness explained
• Reviewing the market – useful tools
• Measuring viability
• The engineer’s role in commercial thinking
• Summary
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The models we explored in the first ‘Leading The Business’ webinar
Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
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The models we explored in the first ‘Leading The Business’ webinar
Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
Improving the world through engineering www.imeche.orgImproving the world through engineering 9
The models we explored in the first ‘Leading The Business’ webinar
Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
Improving the world through engineering www.imeche.orgImproving the world through engineering 10
The models we explored in the first ‘Leading The Business’ webinar
Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
Improving the world through engineering www.imeche.orgImproving the world through engineering 11
The ‘Value’ proposition
ProductLeadership
•“They are the most innovative”
•“…constantly renewing and creative”
•“Always on the leading edge”
OperationalExcellence
CustomerIntimacy
• “A great deal”
• No-hassle company”
• “They never make mistakes”
• “Customised products and
services”
• “They are very responsive”
• “I am very loyal to them”
Customers tend to have 3 clear ‘Value’ discriminators
Remember: Value has a value only if it is valued!Bryan Dyson
Former CEO of Coca Cola
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Value: The common factor in a confusing world
Intrinsic Value Customers see value only in the product and, as a result, define value as the cheapest, easiest way to obtain the supply of product that they need
Extrinsic Value Customers see real value beyond the product and define value in terms of advice, problem solving, customisation, or the capacity to meet special and unique needs
Strategic Value Customers look for an extraordinary level of value from a deep strategic relationship with a few chosen suppliers
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Transactionalselling
Consultativeselling
Enterpriseselling
3 Selling modes enables the right approach to the customer
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Customer value and the three selling modes
Customer Value Type Selling Mode
Intrinsic valueCustomers
“a cheaper,no hassle pie”
Extrinsic valueCustomers
“a bigger slice of pie”
Strategic valueCustomers
“baking a big pie together”
Transactionalselling
Consultativeselling
Enterpriseselling
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Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
Commercial Questions for Engineers
• What suppliers can deliver now?• Which suppliers will be better in the
future?• What suppliers are the best innovators?
Will they partner?• What type of risks, are their financial,
delivery failure other?• Are their likely to be mergers or
acquisitions in the supply base? What will be the effect?
• What does the customer or consumer really need?
• Is that what is briefed?• Can you provide it at lower
cost, or higher spec, or environmentally friendly etc?
• Will any of these options result in higher profitability?
• Who is the market leader?• What do you do better than the
competition? Is it important?• What don’t you do as well?• How important are you to suppliers
versus the competition?• Do you know or understand their
New Product Development Strategy?
W
• What behaviours do you need to demonstrate to show Commercial Awareness?
• What is my role in the business in various situations eg Specialist, Project Leader, Negotiator, Manager?
• Are You Getting support for your ideas
• What is the current measure of success eg Profit, Cost, Market Share, Social Impact?
• How can you measure and track performance?
• What is the long term plan, and how will you get there?
• Have you read the Company annual Report?
• Are You clear about what your company is trying to achieve.?
• Do you understand your departments role in achieving these objectives?
• Do you think you are pulling in the same direction ?
• If not what are you doing about it
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Competition, suppliers & customers can be analysed using 2 simple tools
Strengths Weaknesses
Opportunities Threats
Positive Negative
Internal
External
SWOT
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Example of a SWOT from The Daily Telegraph
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Competition, suppliers & customers can be analysed using 2 simple tools
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We’re not looking for more information we are looking for insight
Insight is the Aha!Moment
• Understand the issue.
• Commercial problems often involve a large number of disparate factors.
• Swot & Pest help you to understand the wider factors influencing a problem.
• Write down couple of sentences (no more than 100 words) explaining exactly what the issue is.
• This is called ‘The Pivotal Question’ .
• Once the question is properly defined the answer usually follows very quickly
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Ansoff’s Matrix – Marketing strategies
Market Penetration
Product Expansion
Market Expansion
Diversification
Lowest Risk Medium Risk
Highest RiskMedium RiskNew
Market
Esta
bli
sh
ed
Market
EstablishedProducts
New Products
Increasing RiskIn
creasin
g R
isk
Igor Ansoff
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The viability of a proposal can be measured in many different way’s
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The engineer’s role in commercial thinking is A pivotal one
Improved Forecasting
Efficient Production Techniques
Don’t focus on what could be done but on
what needs to be done
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Commercial Awareness
Supplier Base
Consumer and/or
Customer
Competition
Behaviours & Attitude
Viability
Strategy
Summary: Understanding commercial imperatives will help
you become a better engineer & enable you to lead the business
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Any questions?