Blog Post

"Sales feed egos. Margins feed families."

group_photo.jpgI read a nice story in Crain’s Small Business today about Scott and Mitch Silver, and their marketing firm Printable Promotions, in Chicago.

The piece outlines why the Silver brothers abandoned managing “activities” through their org chart hierarchy, in favor of a flat, employee-empowered strategy that they’ve dubbed, “managing by objectives.”

This is the second time Found|READ has addressed the virtue of weighing Outcomes vs. Activity. It is a subtle discipline, but based on how it helped Printable, you might want to try it, too. As Scott tells Crain, it works because: “Sales feed egos. Margins feed families.” (Just look how happy his staff is!)

According to Crain, in Printable’s early days, when closing sales mattered most (as it does at all startups) Silver’s 15 employees were reviewed based on activities like “did [you] call all these customers to follow up on the fact that they owe us money?”

Notice: the criterion was ‘did you follow up,’ NOT ‘did you get the money!’ Sales are an activity. The margin is the ultimate result of the activity.

Scott tells Crain that managing activities this way

“[created] a lot of internal inefficiencies, with all sorts of back and forth. If there was a problem, sales would look into it, then production, then I would, then it was back to accounting for a discount or to fix it some way… once we started to reach critical mass, there weren’t enough hours in the day for us to be part of it.”

So in 2006 the brothers switched strategies to focus on the results of the activity, not the activity itself.

For example, instead of “following up” the goal became: “I will acquire five new clients” or “I will keep my profit margin at a certain level.” Or, for the non-sales people, something like, “I will collect 85% of our receivables within 60 days.”

Then, to alleviate management’s need to oversee everything…

…the Silvers empowered their staff to make decisions, as long as they could answer ‘Yes’ to 5 questions:
1) Is it right for the customer?
2) Is it right for our company?
3) Is it ethical?
*4) Is it something for which you are willing to be accountable?
5) Is it consistent with our company’s basic beliefs?

We emphasize #4, because we think is the most important: Printable’s employees now set their own goals, and it’s up to them to figure out how to reach them. This includes personal goals, like quitting smoking. Why?

“It’s more about principles than tactics,” said Scott. “The idea is goal-setting is for your whole life, making you a more complete person,” Scott emphasized.

A more complete person is a more complete team member. This is how focusing on results, rather than activity, has transformed the Silvers’ business. According to Scott: “[We used to have] 50% of sales people meeting their goals. This quarter, I think everyone is going to hit them.”

For more on why results matter more than activity, read Chris Michel’s earlier Found|READ post:Outcomes vs. Activity. Chris knows a lot about this. He founded an early social networking site, in 1999, sold it to in 2004 for $40 million, then founded Affinity Labs, which he sold to Monster for even more — $61 million — earlier this month. Talk about outcomes. Congratulations, Chris!

5 Responses to “"Sales feed egos. Margins feed families."”

  1. Great job,
    One of the common elements market leading companies embrace is pushing decision making down to employees closest to the customer, congratulations.
    Also, your blog reminded me of when my regional mangers would return from client meetings and I would ask “how did you do?” The tell tale sign the objectives were not achieved was the phrase “we had good meetings…” but I wanted sales!
    Mark Allen Roberts

  2. Thanks Neil, lemme ask about it. Im sure our crack tech expert can handle it.

    Meanwhile, why don’t you write a post for us about how that internship experience of being “empowered” as informed your career since? I’m sure it has, especially in how you manage your own staff now, yeah?


  3. My favourite undergraduate internship was the one in which I was pretty much left to my own devices; I was simply asked to ‘test out’ a recruitment social networking tool. I went ahead and tested it, but I also produced a growth modeling tool in Excel and cobbled together a pitch document which could be used to re-sell the software to clients. I loved every minute of it! So although I didn’t have the management by clearly defined objectives, I was empowered to make my own decisions and I was a much happier employee because of it.

    Carleen – sorry for going off-topic (I can’t find another place, or email address, to make a suggestion), but can we get an RSS feed for the comments please? It shouldn’t be difficult to do on a WordPress blog, just ask the development team to copy in one line of code into the ‘single.php’ as documented in the WordPress Docs (I’d suggest putting it between the ‘% Comments’ link and the ‘Share/Send’ link);


  4. From wikipedia:

    The term “management by objectives” was first popularized by Peter Drucker in his 1954 book ‘The Practice of Management’

    And it’s a fairly well known methodology. So “that they’ve dubbed” doesn’t seem correct.