Linda Richardson interviews Frank Cespedes, Senior Lecturer of Business Administration at Harvard Business School
I don’t know anyone better suited to help us close the chasm that exists between actual selling behaviors and strategy than Frank Cespedes. Frank brings the rarest of combinations: 15 years as a professor, 12 years leading a business where he modestly says “he got lucky”, and then a return to Harvard Business School.
In his latest book, Aligning Strategy and Sales: The Choices, Systems, and Behaviors That Drive Effective Sales (Harvard Business Review Press) http://www.amazon.com/Aligning-Strategy-Sales-Behaviors-Effective/dp/1422196054/ ) he provides a road map and tools to equip organizations to align their sales efforts with their business strategy. His data indicate why forging this alignment is the most difficult and expensive part of implementation for most firms and the main reason strategies fail. Frank lays out a practical and clear path for forming, articulating, and executing a successful strategy and accomplishes something other books do not: he makes the critical link between strategy and sales.
Frank recognizes there is semantic confusion when people think about strategy. “Strategy requires clarity about where we do and don’t play in markets,” he says. “But many companies confuse strategy with ‘vision’ or ‘mission’, which is about why a company exists and what it adds to society, or ‘goals’ which are the metrics we use to keep score. Executives then say things like ‘our strategy is to provide superior products . . . or great service’ and somehow expect a coherent response in the field.” Conversely, he emphasizes that “effective selling is ultimately an outcome of these choices, not just the result of heroic efforts in the field. There’s no such thing as effective selling if that selling is not aligned with the company’s strategy.”
A business strategy is a set of choices about direction, the brand, and how people, money, and time in an organization get prioritized and allocated. It helps managers lay out both the analytical and behavioral implications of how a company proposes to deal with the opportunities and threats inherent in its market today and tomorrow, not yesterday. “Clarifying these elements,” says Frank, “forces leaders to sharpen their external market positioning and help specify the required sales tasks. The good news is that, when a firm has a coherent strategy, this can usually be expressed in under 100 words.” But Frank also reminds us that every strategy comes with a “sell by” date determined by market changes.
When there is a disconnect between strategy and the sales effort, resources are wasted and vulnerabilities are created. Frank shows that no matter how clever or creative or augmented by social media tools, selling won’t generate sustained returns unless you close this gap and, to do that, effective sales training takes more than generic selling skills.
Aligning Strategy and Sales is an exceptional book. It is a how-to book but much much more. Supported with compelling research, it gives a framework for building a strategy and creating coherent integration. It demonstrates application with examples, best practices, and success stories. The book goes into the challenges around developing a strong and cohesive strategy: the impact of a doubling of the number of direct reports to CEOs since the 1980’s, the increased detachment of corporate from field realities, sales force turnover that (across industries) averages about 25% annually, the lack of research about how to link strategy with the nitty-gritty of field execution, and a protracted planning process that, in many firms, makes even a great strategy irrelevant by the time it gets to sales executives.
He provides a framework for the critical task of linking strategy and sales in the form of the seller’s compass. The top line of the graphic, Business strategy/market choices and market and customer characteristics, determine the sales tasks that must be accomplished and therefore what salespeople in that company must be good at to implement the strategy. “In any business,” he emphasizes, “value is created or destroyed in the market with customers. The market includes the industry you compete in, the segments where you choose to play, and the buying processes at customers that you sell and service. A strategy not informed by these facts is a slogan, not an actionable strategy.”
Then he tackles the challenge of aligning selling behaviors with the required sales tasks and focuses on three levers available to every company to accomplish this:
- Salespeople—who they are, what they know, how an organization hires and develop the skills of the sales force “so they can execute your strategy, not those of a generic selling methodology or what they learned at another company that made different choices.”
- Sales Force Control Systems—performance management systems including ongoing management practices, how the sales force is organized and deployed, key performance indicators to measure effectiveness, sales compensation, and incentives. His chapter on sales compensation may save you money or redirect how you spend that money, and also motivate you to re-think assumptions about incentives and sales behavior.
- Sales Force Environment—the wider company context in which sales initiatives get developed and executed, how communication works (or not) across functions, how managers (not just reps) are selected and developed, how salespeople work as a team, and performance reviews which Frank believes is “a grossly underutilized lever for influencing behavior in most organizations. Busy sales managers often treat them as drive-by conversations that are mainly about compensation, not review and development. “
Frank defines the actions for executing these levers and forging relevant links between big-picture strategy and specific selling efforts. The kind of alignment he advocates is not a quick fix. It takes a systematic approach. Under his tutelage it is doable and he makes the case that it is essential for profitable growth.
He also tackles the challenge of communicating strategy. Surveys reveal that fewer than 50% of employees say they understand their organization’s strategy and, worse yet, the percentage decreases among the ranks of sales and service people. Research tells us that people today must see an ad about 11 times before it registers. Similarly, embedding strategy in an organization takes repetition. The message should be simple and substantive, and it should clarify:
- The Objective—the priorities (quantitative and qualitative) that will motivate behavior and resource allocations in the firm.
- The Scope—where the company chooses to play and—equally important– not play in its markets. This is required, he argues, to make target customer selection and therefore sales force call patterns efficient. “If a company does not choose, then in a competitive market, one of two other groups will choose for it: either competitors or, in voting with their feet, customers. Neither group necessarily has your best interests at heart. Conversely, many sales comp systems, based on gross volume incentives, generate a disconnect between strategy and sales efforts.”
- The Advantages—what it means for the customer value proposition and the capabilities the company has, or can develop, to deliver that value in areas where the company plays.
Surprisingly, despite decades of attention to planning, there has been very little research on strategy execution in the field. As Frank puts it, “If the gods of strategy even mention sales—which they rarely do—it’s typically advice from a fortune cookie: work as a team or reorganize. In other words, do good and avoid evil. Conversely, there is a vast literature about selling. Much is anecdotal but much is based on good common sense and behavioral research. But most sales advice treats selling in isolation from strategy. There’s often a perverse result: people work harder but not necessarily smarter.”
Frank’s advice to C-Suite and sales leaders is threefold: “First, as always, People. You need disciplined hiring that’s linked to your strategy, focused and customized training, and on-going attention to broadening sales skills as markets and sales tasks change. All serious research about people in business underscores these fundamentals and debunks glib prescriptions about talent acquisition.” The second item is Performance Reviews and coaching. “The most important coaching in sales happens, or should happen, in performance reviews. This is a trainable skill—Linda, your work is still the best in this area, in my opinion—and there’s lots of room for improvement in most sales forces when it comes to conducting reviews.” The third area Frank calls “Perspective: It’s not the responsibility of the market to be kind to any company’s strategy or sales force. It’s the company’s responsibility to understand the evolving market and its sales tasks. And this can’t be done from headquarters, the branch office, or only through data analytics.” He sums it up with a quote from a novel by John Le Carre: “A desk is a dangerous place from which to view the world.’’
When I asked Frank why this topic, he said: “As a young professor teaching MBAs at Harvard, I always hated that annoying aphorism, ‘Those who can’t do, teach!’ Then, when I ran a business, I saw how often strategy and sales are ships passing in the night and the consequences are wasted resources. And people are often surprised by the data in my book about the magnitude of the resources involved. So I also care about this as a citizen. Companies’ abilities to make better use of their resources are important for society, not only shareholders. At least 14 million people work in sales jobs in the U.S. They work hard, but their viability and success depend on these alignment issues as well as their own smarts and hustle.” As a former teacher and professor I share his sentiment. I am grateful that Professor Cespedes refutes that aphorism as a master teacher and capable and generous doer.