The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. There are basically four ways to create that value: (1) invest in projects that earn more than their cost of capital; (2) increase profits from existing capital investments; (3) reduce the assets devoted to activities that earn less than their cost of capital; and (4) reduce the cost of capital itself.
In my experience, most CEOs, CFOs, and other C-suite executives involved in strategy formulation know these finance basics. (Or, they learn fast after a few investor meetings.) But far fewer understand and operationalize the core sales factors that materially affect each value creation lever.
Read the full article on Harvard Business Review.
In the first decade of the 21st century, less than half of all startups in the U.S. survived beyond three years. And of the nearly 44,000 companies founded in 2000 and listed in the Capital IQ database, less than six percent achieved more than $10 million in revenues by 2010. As venture capitalist David Lee once said, “It’s never been easier to start a company and never harder to build one.”
One of the main reasons for this failure rate is entrepreneurs don’t identify their target demographic correctly. Without clarifying your core customers, selling is ultimately a function of individual, heroic efforts in the field, not a scalable platform for growth.
The following four steps can reverse this downward trend…
Read the full article on Entrepreneur.com.
Every year, U.S. companies spend more than $900 billion on their sales forces, but typically see only 50 to 60 percent of the financial performance they’re promised. The problem, Harvard Business School Professor Frank Cespedes says, is the “disconnect between selling behaviors and strategy. In his book Aligning Strategy and Sales, Cespedes discusses why bringing these two elements together is crucial for every company’s longevity, and offers his advice for making the realignment a reality. He shared his insight with Associate Editor Maria Minsker.
Read the full interview on CRM Magazine.
For a business to grow, it must have a strategy and that strategy must be aligned with sales. The problem is often companies don’t have a strategy, or if they do, there’s a gap between that strategy and what their sales teams are doing.
“Research shows relatively few companies successfully execute their strategies. And on average companies deliver only about 50% of the financial performance that their strategies and sales forecasts promise,” says Frank Cespedes, author of Aligning Strategy and Sales. “Now that’s a lot of wasted money and effort. … Companies regularly overpromise and under-deliver when it comes to sales and profitable growth.”
The problem stems partly from impractical strategy planning processes, he says. A firm might take five months doing planning. In the meantime, the market continues to move and sales must respond issue by issue and account by account. That means the eventual strategy is irrelevant to sales executives.
Read the full article and listen to the interview on RainToday.com.
Every company needs a strategy—a forward-looking plan for the future—and every company needs to keep that bottom line growing through sales. But all too often, the folks devising the grand plan and the folks sealing the deals are not on the same page.
In his new book, Aligning Strategy and Sales: The Choices, Systems, and Behaviors that Drive Effective Selling, Frank V. Cespedes laments the fact that sales and strategy rarely make a joint and complementary appearance in MBA classrooms or academic journals. Professors stick safely to the realm of publishable strategy theories; the sales side is left in the hands of consultants and trainers. This, he says, is just the start of a larger problem: the inability of businesses to tie their sales practices to their overall strategy.
Read the full review in the HBS Alumni Bulletin.
One of the best books ever written about selling is David Dorsey’s The Force. Dorsey turns a year in a Xerox sales district in Cleveland into a riveting drama about people, accounts, the operatic highs and lows of the sales cycle, and the triumph of making quota. Dorsey focuses on Fred Thomas and his sales team and the sometimes strange but effective motivational techniques of his district manager, Frank Pacetta. It’s a great ethnographic study of B2B selling for capital goods.
But even as Thomas and Pacetta make their sales, Xerox is missing the larger strategic point, although the facts are staring at them in every office where Thomas and his team make sales calls: more and more copies are being handled by printers linked to personal computers, not by copiers. Thomas is doing his best to maintain Xerox’s share in copiers. But the disconnect between sales and strategy (in this case, a lack of strategy to deal with a technology that is redefining the market and customer behavior) is the hidden subtext of the book.
Even Dorsey, as great an observer as he is, misses it. Instead, he explains that by the mid-1990s Xerox competed with Canon, Kodak, Minolta, Ricoh, Savin, and other copier manufacturers, without mentioning HP, Brother, and other makers of computer printers that were eating Xerox’s lunch. It makes Dorsey’s summation of his story a non sequitur: “A once-thriving American business loses share to the Pacific Rim, gets scared, adopts TQM practices, raises productivity, and begins to win back business. The way the Cleveland district sells copiers illustrates . . . this comeback.” No. How could it be when selling, however clever and creative, is divorced from the main strategic reality facing the firm?
Read the article on Harvard Business Review.
It’s become commonplace for observers to tout the transformative potential of digital technologies and bemoan the allegedly slow pace at which companies support these initiatives. Two recent blogs published by HBR.org are representative and, I believe, wrong.
Walter Frick, an HBR editor, contrasts the enthusiasm of executives for spending money on digital initiatives versus their relatively unsupportive boards. “Digital growth is appropriately a priority for a diverse swath of organizations, and boards need to get with the program,” he writes. Didier Bonnet of Capgemini agrees, and is refreshingly direct in suggesting the cause: the average age of independent directors in S&P 500 companies is almost 63, they did not grow up with online technology, and many should be replaced for their lack of “digital awareness.”
Read the full article on Harvard Business Review.
Teamwork. Whether in meetings or retreats, there’s no doubt you’ve heard these words repeatedly preached by senior executives. However, few firms actually focus on alignment where it counts most: linking big-picture strategy with the nitty-gritty of customer acquisition and retention in sales efforts.
Poor alignment of sales and strategy incurs both direct and opportunity costs, putting your company at a severe disadvantage. As proven by income statements, selling is by far the most expensive part of implementation for firms. Companies in the United States invest in their sales forces three times more than consumer advertising, 20 times more than online media, and 100 times more than social media. Despite this spending on sales, 56 percent of senior executives agree their biggest challenge is ensuring that day-to-day decisions are in line with strategy and allocating resources in a way that supports strategy.
Read the full article on Business 2 Community.
With so many books focused on the elevator pitch, closing the sale, or other minute sales techniques, Aligning Strategy and Sales is a refreshing change of pace. Frank Cespedes digs deeper into improving a company’s sales and performance by looking at creating stronger connections between a company’s broader mission and strategy and the sales force on the ground. The book stresses better communication between management and sales, strategic hiring, and effective delegation of responsibility that allows staff to both manage and sell.
Read the full article on 800-CEO-READ.
Aligning Strategies and Sales is a book that can help growing small businesses make enterprise level decisions and appreciate the potential results more clearly.
What does it take to be effective? Moreover what does it take to be effective at the right time? Given the speed of the Internet, success is becoming more dependent on being systematic where it counts. Such organization has potentially great value when strategy and sales are aligned.
To gain that alignment in a successful way, consider the book Aligning Strategies and Sales: The Choices Systems and Behaviors That Drive Effective Selling by Frank Cespedes. The author is a senior lecturer at Harvard Business School. I received an advanced copy through Harvard Business Review and was intrigued by the author’s earnest effort to make selling meaningful for those who struggle to organize sales.
Continue reading on Small Business Trends.