Kaizen – An Incremental Method to Achieving Revenue Growth

Kaizen is an approach that can be used in sales to convert more customers, with no cost associated with the approach, leading to increased revenue growth

Small Changes That Make a Big Difference

I’m excited to tell you about another approach I’ve implemented at many start-ups to driving revenue growth and help them achieve their next level growth milestones. No matter at which stage of your company’s growth you’re sitting.  It is an approach that has delivered substantial results and large overall improvements in operations and efficiency. It has set my clients up for success to achieve their next level revenue growth milestones.

Traditionally, most entrepreneurs go down the path of raising funds. Their investors help to speed up the process by demanding a return on their investment as soon as possible. Normally demanding a 5X – 10X revenue growth within twenty-four (24) months. All to prove the service or product worthy of survival.  This methodology is applicable across the world, from here in the heart of the Start-up Nation, in Tel Aviv, to Silicon Valley, San Francisco and on to the M4 Corridor in the UK.

Nevertheless, 90% of start-ups fail.

Often, when bringing in outside money, we’re bringing in radical risk and with that frequently comes radical change. People can’t operate in an environment of such dramatic change. Something in the brain shuts off, fights the absolute transformation, and puts us in a “fight or flight” mode. This prevents us from thinking clearly and creatively. When radical, innovative change fails, it takes down departments, even whole businesses. Companies that tried their hand at large-scale innovative change and failed include such major players as Xerox, NASA, Nokia, MySpace, and AOL. If organizations of this size struggle, then the prospects for early-stage start-ups attempting whole scale changes are not good.

The No Cost, Simple Approach to Revenue Growth

But the approach I am going to outline below is based on a simple principle, whereby the focus is to make small performance improvements (marginal gains), rather than reinvent the wheel to try and revolutionize the way we’re currently working. These small steps bypass our mental alarm system, prevent it from shutting off and allow our creative and intellectual thoughts to shine. The results are long-lasting revenue growth. When part of a larger strategy (start-up strategy should differ depending on stage) the results are powerful and frequently astonishing.

This technique is called the Kaizen Approach and has led to huge results from those that have adopted it. Sir Dave Brailsford used the Kaizen Method and Aggregation of Marginal Gains as a way to lead the British Olympics Cycling team in numerous recent Games.  When he had taken over as performance director, Britain’s participation in the sport was widely regarded as a joke, with only one gold medal having been secured in the history of the games.  Soon, Britain was leading the world and the Olympic medals table in the sport.

Kaizen also gained a reputation in Japanese business and was behind Toyota’s early transformations.

Of course, there are legions of stories – frequently unevidenced – of leaders turning small businesses into million-dollar organizations within a few months thanks to dramatic change.  Usually, such radical transformation does not work.  Many business leaders try such an approach, but the human-animal is built to resist revolution in an organization; this is true through senior management, team leaders, and indeed all employees. 

Hot Chocolate On A Cold Winter’s Night…Don’t Forgot The Marshmallows

Any of us who have tried to make innovative changes to drive more sales and revenue growth, and wondered why they didn’t work; or are thinking about making such transformations in order to help achieve our next-level revenue growth milestones will find that this article should help us by examining how we can adopt another change approach, the Kaizen approach. This alternative path to innovative hyper-growth is like your hot chocolate on a cold winter’s night, or a Sunday roast dinner at our favorite pub, or our favorite pizza or watching our favorite sports team beat their biggest rivals; it’s comforting in all the right places, hits the spot, and delivers continued confidence, leading to success.  

Is Kaizen Originally From Japan?

The term Kaizen originates from the Japanese language meaning “good change”. Asian origins can be misleading as Japanese philosophy is hard to translate to western culture. But that does not apply here. Kaizen actually began in the US during WWII. The US realized they needed to supply allied nations with food, arms and equipment and so they needed to pivot their factories to manufacturing such supplies. Just as they entered the war, many of their best managers and employees left for overseas combat. Nevertheless, companies needed to be taught to become more efficient and productive. However, there was no time for a complete re-appraisal of how a business operated. Instead, they were encouraged to look for hundreds of things that could be undertaken to improve existing practices using current equipment. Everyone was involved, from supervisors to ground floor employees, in looking for ideas, suggestions, and other small improvements that could be easily made.

It All Originated From WWII – Training Within Industry

This was known as TWI – Training Within Industry. The TWI method helped the Americans to improve productivity in the manufacturing industry during the war. For example, it guaranteed the production of airplanes and weapons even while working with employees who had no work experience in manufacturing.

TWI was a contribution to the victory in WWII because the Americans were able to produce high-quality equipment quickly and get it shipped overseas fast. After the war, the original managers and employees came back to their jobs and so TWI ended, bringing back the old methods. After the defeat of Japan, the US-supported them in rebuilding their industrial infrastructure. The programs developed by the TWI Service were just what were needed to help Japan accomplish this goal. The massive training of the TWI’s programs over the following decades in all facets of Japanese industry pushed the principles taught and became an integral part of what is known today as Japanese Management. A major element of these methods is Kaizen.

Kaizen for Employees

Kaizen is embraced within most tech start-ups as lean development. It has helped me to run sales and business development teams, leading them to achieve, even exceeding, long-term net new revenue growth milestones.  The Kaizen approach improves sales conversion rates, reduces wasted sales demos, increases sales rep performance and overall revenue numbers. I’ve learnt to encourage Kaizen as a management approach and use it as a tool to encourage employees to come to their leaders with solutions to problems and not just the problems themselves. This fosters positive change and encourages employees to care more about their personal and professional lives, leading to a more committed, inspired and proactive workforce.

Revenue Growth; Kaizen for Managers

I frequently work with managers stressed by the pressure of revenue growth targets.

In the US, Chief Revenue Officers (CRO) last on average 14 months before they’re given the boot for underperforming.  When I work with these leaders I find that their problems often originated because they’ve tried the innovative rapid change tactics and it’s not worked.  This is especially the case when looking to expand overseas into new markets, something I call ‘disruptive growth’ and offer as a service (see bottom of blog for me details).

My approach here is to apply Kaizen for managers. Small tiny steps to improvements often lead to more sales and revenue growth.

A Case Study for Kaizen:  

I recently met with a tech start-up.  Although the team had found a Product/Market fit, they were still bootstrapped.  Their objective was to increase client numbers to around 10.  They would then look to raise a Series A round.  Their problem was the company was struggling to close and keep more than 3-5 clients at a time.

I introduced them to my Kaizen approach, however, they couldn’t see this method working for their particular business problems, especially when these seemed so big and they had limited funds to address them.  Their founding team of 3 had grown but was still a small team of just 7. I met them during a lunch break and gave all 7 a free talk and advice on the Kaizen approach to problem-solving. Towards the end of the meeting, I broke them up into three groups, mixing a founder into each group. I asked them to think of their smallest step to improve their current systems. There were caveats: the step couldn’t cost anything, had to benefit their clients, and wasn’t focused on revenue growth.

The Customer Success Manager’s Intervention

Immediately this innovative lady was thinking with her revenue growth hat-on:

‘A few weeks back,’ she began, ‘I was trialing some CRM tools for a few weeks.  Only one of the CRM providers messaged me regularly to find out if I had any questions on specific features I’d been using the days before, thoughts on the user experience and if there was anything they could do to improve my experience with their CRM. They are the provider who stood out in my mind.’

‘My suggestion is to apply this approach with our clients.  My portfolio isn’t full, so I could take this on, and speak to our companies during their trial periods, rather than just at the end.’

The suggestion was welcomed by the rest of the team, although two of the three founders were sceptical about whether such a small action could deliver the sort of big results they needed. 

My Role is Making Marginal Gains through the Kaizen Approach thereby More Sales and Revenue Growth

The skeptics were wrong.  The feedback from trial customers was not only positive, but the founders saw more than this too.  Trialists were converting to customers, more sales.  Word was spreading and inbound leads started to flood in. As the company saw so many sales from this one small change, they brought me in to help them adopt more of a Kaizen approach to revenue growth.

Revenue Growth; Increasing Sales Executives close rates

One area at which I looked involved the sales executive and their conversion rates. I listened to a few demos and analyzed notes from follow-up calls. I found a mismatch between what the sales executive assumed was important, following the demo call, vs the priorities of the prospect and their actual primary needs. The incremental change here that led to revenue growth was to give a summary of the demo at the end. Include the key features/prospective client’s priorities in the summary to get confirmation.  This to be reinforced by email to get additional buy-in from the client and give them the chance to state their priorities if the sales executive had got it wrong.

The clients loved it. It demonstrated interest in them from the start and gave the client a chance to discuss their pain points/priorities further. More importantly, leading to more sales and revenue growth.

Another thing I found was that the “no shows” for demos was too high at 15%. A small change implemented by the sales rep was to include a re-schedule link to give a chance to change the event date rather than not show. In addition, the day before or the morning of the demo I suggested they send an email to confirm the demo meeting.  Much to the founders’ surprise the no-show rate reduced to less than 5%, leading to more sales and improvements in sales funnel KPIs.

These were three small, comfortable steps that cost the start-up nothing that led to revenue growth.

A few months later, though, they led the start-up to raise their first round. This was great news.  This company is now a thriving client with whom I continue to work.

This incremental approach is not unique.  It is common in tech and saas companies who use lean development to push their technology.  What I hope I have demonstrated here is that this lean concept methodology, focussing on marginal gains through the Kaizen approach, is something that can be used in teams whose goal is revenue growth, who work in a client-facing setting, and whose role is to drive more sales and more revenue.

Kaizen for Revenue Growth In Summary

The Kaizen method is a perfect way to improve revenue growth.  The approach is on-going – there are always small, low- or no-cost changes that can be made to improve systems and processes.  Like any growth change strategy, the Kaizen approach needs buy-in from the c-suite – but also enfranchises all staff to contribute to a company’s success.  Such an approach raises morale and loyalty from employees – all of which are key elements in a successful team and culture. 

As Dave Brailsford proved, small changes deliver more sales and revenue growth in time.  Often, a relatively short time at that!

This is not my only approach to consultancy.  Sometimes larger innovative growth changes – I also refer to these as examples of disruptive growth – are indicated, such as international expansion. But even then, breaking down these changes into small, manageable chunks promotes buy-in, is more manageable, is a safer way of establishing or developing a foothold in a market, and improves the chances of success.

There is more about the concept of marginal gains in the ‘Incremental Growth’ section of my website, https://joshswerdlow.com/services/

Why not connect with me on LinkedIn and get in touch.  For the sake of a phone call or email, I might well be able to take a look at your business and offer input into the marginal gains your company can make. This can improve efficiency and productivity, and therefore close more sales.

Leading, ultimately, to more sales and increased revenue growth.

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