This post originally appeared on HBS Working Knowledge.
In some respects, developing strategy is the easy part. Executing that strategy in alignment with strategic priorities is where real mastery of management takes place. Harvard Business School senior lecturer Frank V. Cespedes shows how it is done. Key concepts include:
Strategy implementation is essential for marketplace success and often essential for longer-term valuations and growth options.
When companies get serious about developing and executing an integrated strategy in the field, three front-and-center issues are pricing, market segmentation and opportunity selection, and performance management.
Aligning strategy and sales is ultimately a leadership issue, requiring leadership team dialogue and coordination across functions.
In some respects, developing strategy is the easy part. Executing that strategy in alignment with strategic priorities is where real mastery of management takes place. We asked Harvard Business School senior lecturer Frank V. Cespedes, who is faculty chair of a new HBS Executive Education program, Aligning Strategy and Sales, to give us a glimpse into how it’s done.
Working Knowledge: Why is it so important for companies to create a stronger connection between their strategic priorities and their go-to-market initiatives? How critical is it to their long-term revenue growth?
Frank V. Cespedes: For most firms, the largest, most difficult, and increasingly expensive part of strategy implementation is aligning field behaviors and go-to-market systems with espoused strategic goals.
It’s the largest because doing this well is essential for marketplace success and often essential for company valuations and growth options. A key to meeting growth potential is eliminating the gulf between big-picture strategy and day-to-day field execution.
It’s often the most difficult part of implementation because you’re dealing with a combination of core factors in business: market analysis, strategy development, incentives, people management, developing a performance culture, and sustaining that culture in the face of inevitable market changes that are often outside the control of the selling company.
And it’s increasingly a bigger portion of expenses for firms. For example, a recent study indicates that while production efficiencies have enabled an average S&P 500 company to reduce the cost of goods sold by about 250 basis points over the past decade, SG&A (selling, general and administrative costs) as a percentage of revenue has not declined.
Aligning strategy and sales is therefore critical to long-term revenue growth for most firms, and poor alignment means both direct and opportunity costs for companies. But it’s especially critical for owner-president, privately held, and entrepreneurial firms. They are often competing with bigger and better-resourced companies in their markets. They need to move faster and more coherently than big companies, and that means they must be better than big companies at aligning their strategic priorities and their go-to-market initiatives.
That may be unfair, but it’s not a level playing field out there. Doing this well is, or should be, an important component of competitive advantage for these firms.
Read the full article.