Like many other firms, a client of mine is having trouble getting those employees just below the partner level to sell. The firm serves the healthcare provider industry and works for major medical centers. It has grown rapidly over the past fifteen years by dint of hard work, high quality service and good management. Five years ago the executive committee made a decision which contributed to the firm’s growth and profitability: They decided to work only for the largest medical complexes. They also set a lower limit on the size of fee the firm would accept, resulting in their turning away a lot of small projects from small clients. Though there was much grousing about this decision, the committee held it’s ground, and the wisdom of the decision was soon apparent. Firm revenue increased by 35% the following year. A significant share was attributed to replacing small clients and assignments with large ones.
But cutting away the small clients caused a problem that hadn’t been expected. Young professionals had learned to sell by pursuing work that senior partners weren’t interested in. In other words they practiced on the small client, where it was safe. When a small client gave the work to a competitor, the consequences were minor. The same partners were unwilling to let their young colleagues pursue the big accounts where so much money was at risk. When I interviewed several of the firm’s rainmakers, they told me that they, too, had learned how to develop business by going after small prospective clients. In the earlier part of the careers, the firm had been much smaller and there were fewer large medical centers to sell to, so selling to small clients made more sense.
And just where are the future leaders of the firm to hone their selling skills now? Can they be licensed to sell a limited number of cases to small clients? Will the senior partners commit to mentoring them more diligently than in the past, allowing them to learn while pursuing work at larger accounts? No one has the answer yet. Unless, of course, you look beyond the narrow field of selling professional services.
Over the past quarter century, General Electric has been consistently among the best developers of executive talent. As GE and its business units grew the company ran into an analogous problem to the one we are contemplating here. The businesses were just too big and the stakes too high to be left to green managers. So, where were new managers to learn to manage? GE’s answer was the lemonade stand. The term was company argot for small businesses, often acquired as part of bigger businesses. Instead of selling these assets off as unneeded, some would be kept as training schools for new managers. If a new manager screwed up, it didn’t matter much. After all, it was just a lemonade stand.
I believe in setting lower limits to project and client size. It’s a great way to increase revenues and profits. But let young professionals learn to sell where its safe. Let them practice selling two or three pieces of business at small accounts before you ask them to sell something big to a huge one. If they lose such a sale, it doesn’t matter much; it’s only a lemonade stand!