Practicality and rationality are two of the core drivers in the Finnish culture. This is also visible in business: many of the largest and most successful Finnish companies were founded or are being led by engineers. Consequently, many companies have a natural tendency to focus heavily on the product or service delivered. This has, no doubt, resulted in many success stories over the years. On the other hand, there are also many midsize companies with great unused growth potential. It is obviously difficult to increase sales if potential buyers don’t know what you could offer them.
Case: Finnish company in the engineering industry
[First of all, this is not a story about any specific company. Rather a reflection of what I have, sadly, seen many times. So if you feel that this story is about you, it just means that you are not the only one struggling with these problems.]
In Finland, there is an often heard – but false – saying: “a good product sells itself”. It has probably felt very true for many engineering companies during their first years. Since if you have a product that is better than the ones currently on the market, you will relatively easily find technology-driven clients who see the value of your product and who are even willing to help you develop it. This means that your company can grow quite quickly alongside a large client. You have proven that your product works and the money is rolling in.
The next phase is finding more clients that have the same problem. This is the point where you start hiring sales people and scaling production capacity. As an engineer, it might be tempting to let someone else do the “dirty sales work”. But you’re looking for trouble, if you leave the selling solely to the sales people: it is not only about finding more customers, but also about developing your business and your ability to deliver customer value.
Effective sales people do a good job bringing in more customers and opening discussions. You probably start to smell the roses when you get new business and new clients. Requests for proposals start pouring in. All is well and you can finally buy a new car and start an expensive hobby like golf. But this is the point where, in my opinion, many engineering companies have forgotten to consider what their future growth requires. At the moment, you are good and you know what your customers need, but every day, your vulnerability to changes in the market and your sales team increases. Instead of just growing your sales force and meeting more and more customers, you should start to think about systemizing your sales and building the company’s strength and capabilities. Relying on a few good sales people and key customers is a risky road.
Over time, many engineering companies have seen their sales force become a back-office group of people whose main task is to answer to order and proposal request. Anxiously waiting for the phone to ring, often not even having time to meet customers, because of the long list of proposal request to answer (or at least it feels like a good excuse not to). Slowly but surely, you start to lose touch of what the customers actually want. Your hit rate starts to fall, so you need to do more and more unproductive back-office work just to stay alive. After a year or two of this, your ability to deliver customer value starts to lag behind. As a result, you can no longer maintain investment in product development, and so you start to lose the technological advantage you had in relation to the competition.
And then you find yourself where many Finnish engineering driven companies are today. Struggling with price-driven negotiations against global companies that have production in low-cost countries. Trying to hold on to your current customers. On a path to more troubled times.
Luckily, you have a lot of know-how and experience that is difficult to copy. The question is: how to best put it into work for you benefit? How to put the company back on the growth path?
..to be continued