Here is a new-and-improved picture of leadership priorities..

This picture shows the way leadership priorities need to be adapted.

This is the Strategic Picture. There is a hierarchy…

Strategic Thinking is the elite business function. Action without strategy will deliver, at best, short-lived success. In our commoditized world the pace of change is hyper-quick and every product and service gets copied as prices drop with competition.

Now - Leaders need step out of the rat-race and free up time for strategic thinking.

Leaders need to adapt by...

Creativity is key to differentiation. And differentiation is the key to attracting clients and growing volume and gross margin. Some folks have lots of creativity. Everyone can learn it. Leaders must lead by example or step aside and allow others to lead the creative process.

Creative processes are the way to Insight. And, Insights plus Relationships are the foundation for Influencing and expanding sales.

Here's a picture that captures that last point...

The Delicate Balance Required To Meet & Serve Client Needs

…and, prior to doing that, a tool to help you

Some time ago I took a Marketing course and learned about the Price-Quality-Service Triangle [PQS Triangle].

In summary, we were taught a company could provide one or two of these 3 things, but not all three.

What's your business capable of doing?

• Providing lowest Price?
• Providing highest Quality?
• Providing best Service?

We linked the PQS Triangle to Differential Advantage by creating "PQS + DA"...a simple tool to help people hone in on the differences [their clients would perceive] and the advantages [their clients would receive]. That lead to the following 1-Page Tool:

It became clear that few companies can offer the lowest price and survive. So, we "x-ed out" Price as an option...helping our clients focus on Service & Quality...the only 2 options for delivering value to their clients.

Now, we have made another update. We have flipped the PQS Triangle upside-down and precariously balanced it on 2 foundation pieces: Insight and Relationships. 

This picture summarizes the business-development advice we provide to clients:

• Do not compete on Price...for 99% of business a lowest price strategy is a recipe for disaster...find other ways to provide value in the form of Service or Quality or both
• Identify the specific Differences your clients will recognize in your Services or Quality or both
• Identify the specific Advantages your clients will receive from your Services or Quality or both
• Build Relationships with your clients, multi-level if the client makes purchasing decisions by consensus
• Create and deliver Insights of value to your clients

Is your gross margin growing?

I'm assuming you have a concrete definition of gross margin, you measure performance against a gross margin target/goal, and your gross margin contributes to growth of cash-flow.

Is your gross margin growing?

If not, Why not?

You may sum up your answer in 2 words - "competitive pressures", which typically involve price competition. Your competition is offering lower prices and you feel pressure to do something to react to the competitive pressure.

When your prices are under competitive pressure you often react 2 ways:

1. You drop your price "to meet the competition" and 
2. You hold your price and lose the client to the competitor who offered the lower price. 

When you drop your price in response to competitive price pressures and you keep the client, one of 4 situations exist:

1.  You are still able to meet your gross margin target...and your cash-flow is not impaired

2. You make a positive gross margin but it fall shorts of meeting your gross margin target...and your cash-flow falls short of expectations
3. You make a negative gross margin...and your cash-flow is reduced
4. You are not sure about your gross margin because you do not measure it...and you are equally unsure about your cash-flow.

When you hold your price and lose the client: sometimes they depart quickly, they slip away without fanfare; sometimes they leave following an agonizing energy-eating sales process. Either way, the client is gone. The gross margin you forecast is gone. And, the cash-flow you forecast is gone.

In all of the above scenarios your gross margin is not growing.

If the above scenarios are what you are experiencing on a day-to-day basis then your gross margin is not growing. 

And that's not where you want your business to be.

You want to make some adjustments so:

• you have an accurate understanding of your gross margin
• you know how exposed your gross margin is to price competition, the less exposed the better
• you have strategies for growing gross margin
• you communicate those strategies to your people, especially your sales people

Gross margin is intimately linked to Value proposition...Value as seen by your clients, that is.