Aligning Strategy & Sales. It's time to address the enormous cost of the Strategy-Sales gap

1

The Dialogue That Rarely Happens

Jim Koch, the founder and CEO of Boston Beer Company

(BBC, maker of Sam Adams and other leading craft beers),

is one of the smartest and most analytical business leaders I

have ever met. Jim has three degrees from Harvard, but to

his credit, he overcame the handicaps.

After graduating from business school and law school,

he worked for seven years as a strategy consultant with

the Boston Consulting Group (BCG) before starting BBC

in 1984. For some time, Jim was the sales force at BBC,

and he makes regular sales calls to this day. In a “street

sales” business, this involves many cold calls on bartend-

ers, wholesalers, and other impatient customers. Like

Willy Loman reminiscing about the New England terri-

tory or Odysseus recalling his encounter with the Cyclops,

he has stories: “I routinely have bartenders tell me that

the manager isn’t in today when the manager is stand-

ing ten feet away. I was once thrown out of a New York

City grocery store because the owner saw me removing

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6 W E H AV E A P R O B L E M

competitors’ stickers that were blocking Sam Adams. I’ve

had a customer pull a gun on me. Selling isn’t for sissies.”

But after thirty years, he also emphasizes something cru-

cial about sales and strategy: “I’ve come to see making a

sales call as one of the most challenging intellectual activi-

ties there is—certainly more immediately challenging than

anything I did at BCG . . . When I walk into a bar, I have

about thirty seconds to understand the economics of the

place: What is its strategy, and who are the clientele? How

does it make money? What’s the weakest draft line, and

how would sales increase if we replaced it with one of

ours? Who’s the decision maker? Then you need to con-

nect personally.”1

In pharmaceutical sales, the window of opportunity is

estimated to be about five minutes; in enterprise software,

the selling cycle can take months; in certain key-account

situations, it can be years. But Jim Koch is describing the

moment of truth in any strategy for every company across

industries: what happens to all the analysis, vision, plan-

ning, and (if it truly exists) strategic direction when your

people are in front of a potential customer? As Churchill

reportedly said to the Admiralty after Gallipoli, “However

beautiful the strategy, you should occasionally look at the

results.”

This book looks at how to get sales results that link

with strategy. In doing this, I hope to help address a glar-

ing gap in both management theory and practice. It’s a

gap, moreover, that new technologies and changing buyer

behavior increasingly expose. But to deal usefully with

that gap, we must first understand the relevant players,

what needs to be linked, and why it’s worth your time

and effort.

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The Dialogue That Rarely Happens 7

Strategy Priests

Late in life, the painter Georges Braque was asked for his

opinion about his old friend Picasso: “Pablo? He used to

be a good painter, but now he’s just a genius.” Whether or

not you agree with Braque’s opinion about the later Picasso,

you have in most organizations undoubtedly met the kind

of person he describes: long on vision, short on craft and

tactics, eloquent about ideas, but basically speechless when

it comes to the implementation realities and requirements.

I once attended a presentation at GE by a corporate execu-

tive about a proposed cross-selling strategy. At one point,

one of the veteran line-of-business heads sitting next to me

whispered in my ear: “This guy is one of our strategy priests:

he operates where the rubber meets the sky.” It was not a

compliment about “thinking outside the box,” and the pro-

posal went nowhere.

In my career as a business manager, a consultant, and an

academic, I have probably been part of as many strategy

meetings as anyone. My experience is that very few actu-

ally articulate the implications of espoused strategies for

customer-contact behaviors in the field. In fact, few strate-

gic plans even mention sales activities in relation to financial

goals, brand aspirations, and alleged competitive advantages.

Moreover, the process for introducing and reviewing these

plans often exacerbates the separation of the “strategists”

from the “doers” in the field. The typical process is a kick-

off sales meeting followed by a string of emails from head-

quarters with periodic reports back to headquarters on sales

results. Each communication is mainly one-way, and there

is too little of it. One result is that the root causes of under-

performance are often effectively hidden from both groups.

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Research indicates that my experience is representative.

In the twenty-first century, corporations spend an estimated

$100 billion annually on management consulting and allied

training, most of it aimed at creating or changing strategy.2

In response, business schools graduate annually tens of thou-

sands of aspiring strategists and big-picture thinkers. Yet,

according to surveys by strategy consulting firms themselves,

less than half of frontline employees say they are clear about

their firm’s strategy, and customers are even more mystified:

80 percent of managers said they believed their companies

had strongly differentiated strategies and products, but fewer

than 10 percent of these firms’ customers agreed.3

One result is that, like clockwork every few years, some-

one publishes a study that finds that relatively few—some

research indicates less than 10 percent—of even effectively

formulated strategies carry through to successful execu-

tion.4 Moreover, on average, companies deliver only 50 to

60 percent of the financial performance that their strate-

gies and forecasts promise.5 At the risk of being pedantic,

let me point out that this means something like 90 percent

of companies fail to execute strategies and that, if manage-

ment were to realize the espoused potential of its strategy,

the increase in value—to employees, shareholders, and, ulti-

mately, society—could be as much as 60 to 100 percent.

What’s the problem? One big problem (as one often hears

whispered about organizations) indeed starts at the top . . .

in the hushed halls and assumptions of the people nominally

in charge. My colleague Cynthia Montgomery conducts a

revealing exercise in senior-executive programs at Harvard.

She is a strategy professor in these programs, and the partici-

pants are typically CEOs or other C-level executives. Toward

the outset of each program, she asks executives to list three

words that come to mind when they hear the word strategy.

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The result of doing this with groups from across industries

and with a global sample of senior leadership thinking about

this core aspect of business? “Collectively, they have produced

109 words, frequently giving top billing to plan, direction,

and competitive advantage. In more than 2,000 responses,

only 2 had anything to do with people: one said leadership,

another visionary. No one has ever mentioned strategist.”6

And no one ever mentions sales. Also, I think you will agree

that even leadership and vision, while essential, are still a long

way from implementation where it counts: in your organiza-

tion’s encounters with current and prospective customers.

Given this lack of attention to field realities, you can see

why a simple statement—“I’m from Corporate, and I’m here

to help you”—is one of the oldest jokes in most firms. Many

field managers relate to corporate strategy pronouncements

as just a nice chart, another presentation, a vision that has

little to say about how sales should allocate money, time,

and people. Someone once defined a critic as a person who

knows the way but can’t drive the car. The fact is, in many

firms the top managers, removed from the realities of cus-

tomer contact, are often blithely unaware of the embedded

strategic commitments and competitive tests that field activi-

ties daily represent. Yet, as Jim Koch emphasizes, under-

standing those activities demands and deserves at least as

much effort as strategy formulation.

Sales Sinners

If the strategic shepherds often issue pronouncements sev-

ered from realities in the field, then admittedly many in sales

are a wayward flock focused on the ground immediately in

front of them.

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For over twenty-five years, Andris Zoltners has been

teaching an executive course to sales leaders at Northwest-

ern University and other venues. Each time, he asks the sales

leaders in attendance, “How do you know when you have a

successful sales force?” and “What issues are you currently

faced with?” Over the years, he has built a database of more

than 2,400 responses from more than 850 sales leaders.

According to his categorization of the results, their responses

overwhelmingly focus on metrics and operational improve-

ments within the sales function, independent of strategic

objectives.7 Some 84 percent of the responses cite current

selling efficiency issues such as:

• “Salespeople lack closing skills . . . don’t spend enough

time prospecting.”

• “We are not achieving quota consistently . . . Goal

setting processes result in unfair sales targets.”

• “Territory alignment needs to change: large differences

in territory potential are creating unfairness in the

sales force.”

• And, of course (as with nearly all executives), complaints

about IT and lack of “enough” information: “Sales

information is lacking: accuracy and timeliness of sales

dashboards are inadequate due to IT problems.”

Only 13 percent cite issues external to the sales force, divided

between market issues such as “We must adapt to changing

customer needs and new technologies” and internal com-

pany issues such as “The company product line is shifting.”

Finally, just 3 percent focus on sales effectiveness issues,

and even these responses are typically defined by internal

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rather than external market criteria: “We just launched a

new Sales Effectiveness and Growth Initiative aimed at

improving sales force performance” and “Management has

taken a keen interest in improving global sales effectiveness”

(imagine that!).

This tendency to focus almost exclusively on tactics and cur-

rent operations, while failing to think or act strategically, is

not unique to sales. But it is exacerbated in sales for a few

reasons. One is the nature of life in this area of business. Sales

management involves hundreds of decisions in market time,

not company time. Life inside any sales organization is filled

with deadlines, calls, periodic crises, pressures to perform, and

(in contrast to many other areas of business) common man-

agement assumptions that there are seemingly straightforward

and transparent metrics to judge performance: sales per quar-

ter, sales per employee, did she or didn’t she meet quota? As a

sales manager once said to me, “In this job, if you don’t survive

the short term, you don’t need to worry about the long term.”

Another reason is the disconnect between planning pro-

cesses and the requirements of sales decision making. Accord-

ing to surveys, about two-thirds of companies treat strategic

planning as a periodic event, typically once per year and as a

precursor to the annual budgeting and capital-approval pro-

cess. Companies tend to do plans by business unit, irrespec-

tive of the firm’s go-to-market approach (which, for good

reasons, often spans business units). Forget, for a moment,

that strategy is not the same thing as a financial plan or

capital budget. “The numbers” in financial models should

express plans and their resource-allocation implications

in quantitative terms. If not, they’re basically important-

sounding garnish on a pitch—something venture capitalists

recognize when they evaluate entrepreneurs’ business plans.

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We will return to this issue in chapter 4. Instead, consider

the following description of the typical planning process,

based on research with over 150 companies worldwide:

Companies that follow the traditional strategic planning

model develop a strategy plan for each business unit at

some point during the year. A cross-functional team ded-

icates less than nine weeks to developing the unit’s plan.

The executive committee reviews each plan— typically in

daylong, on-site meetings . . . The plans are consolidated

to produce a companywide strategic plan for review by

the board of directors.

Once the strategic-planning cycle is complete, the units

dedicate another eight to nine weeks to budgeting and

capital planning (in most companies, these processes are

not explicitly linked to strategic planning). The executive

committee then holds another round of meetings with

each of the business units to negotiate performance

targets, resource commitments, and (in many cases)

compensation for managers.8

Nine weeks plus nine weeks plus “another round of meet-

ings” equals somewhere between four and five months of

“planning.” While this is going on, the market is doing what

the market will do. No wonder only 11 percent of executives

in this survey said they were highly satisfied that strategic

planning is worth the effort. No wonder more than half (53

percent) in another survey of more than eighteen hundred

executives say their strategy is not understood by employ-

ees and customers.9 Buying processes at customers have no

responsibility or interest in accommodating your planning

process, and sales must respond issue by issue and account

by account. In other words, even if the output of planning

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is a great strategy (a big if), the process itself often makes

it irrelevant to sales executives, who must make important

decisions throughout the year in accord with external buy-

ing rhythms and selling cycles at multiple accounts.

Strategy priests and sales sinners: my terminology may be

fanciful, but the gap is real. It is also costly. Virtually every

discussion of effective strategy implementation you have

read, and will read, stresses the importance of alignment.

This is especially true when it comes to the links between

strategic intent and sales action, which should be a two-way

street: strategic direction is essential for sales effectiveness,

and sales knowledge of actual customer behavior is essen-

tial for ongoing strategic relevance. But the current situa-

tion between strategy and sales at most companies brings to

mind Gandhi’s quip when asked his opinion about Western

civilization: “I think it would be a good idea.”

Competency Traps

And it can get worse because, as happens in organiza-

tional life, “no good deed goes unpunished.” The focus

on improving selling efficiencies often has negative unin-

tended consequences. Much sales training is based on gim-

micks, unsupported assumptions, and glib generalizations

about “selling” that simply don’t apply. But much is based

on sound fundamentals about listening, problem identifica-

tion, and understanding value from the customer’s point of

view. The problem is that, disconnected from strategy, even

good training can have a perverse effect: the sales force gets

better and better at things that customers care less and less

about . . . and the cycle can be self-reinforcing.

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A popular sales training course preaches—and I mean

preaches—a common message to sales sinners: “There is only

one reason salespeople lose orders: They are OUTSOLD . . .

You have a personal responsibility to be competitive . . . It’s like

a street fight.”10 No, there are lots of reasons that a salesperson

can lose an order, and it’s important to disentangle the correct

cause-and-effect relationships. If you don’t, all the investment

and effort and passion can unfortunately lead to what I and

others have described as “competency traps.” Each function

in the firm, including sales, gets better at routines within its

domain, but these same routines keep the firm, and its top

team as well as salespeople, from gaining experience with pro-

cedures more relevant to changing market conditions.11

To understand competency traps in practice, an analogy

can be helpful and scary. In 1961, Nikita Khrushchev pledged

to outproduce the United States in steel, coal, cement, and

fertilizer within twenty years. You may have seen old news

reports of Khrushchev pounding his shoe on a table at the

United Nations and pledging that “we will bury you!”—

somewhat like the typical football-and-war rhetoric of many

motivational speakers at sales meetings. What we tend to

forget is that the Soviet Union actually made quota, produc-

ing more of these goods by 1981 than did the United States.

The difference, of course, is that over that time, the United

States was adapting to a changing world and pioneering a

different economy, one based on plastics, silicon, transistors,

the web, life sciences, and many other innovations, while

the Soviet Union (like some companies) “lumbered on build-

ing its mighty edifice of obsolescence.”12 As a leader in your

firm, you can worry prudently and diligently all you want

about “disruptive innovations,” but you ultimately need a

sales effort aligned with strategy to do something about it.

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Over time, the strategy-sales gap can affect the entire

culture of the firm, just as it affected daily life and organi-

zational interactions in Communist states. Unrealistic plans

generate a growing expectation that plans and forecasts

will not be met. Then, as the “I told you so” becomes the

repeated experience of business heads and other people in

the field, it can become the normal expectation that perfor-

mance commitments won’t be kept—which, in fact, is what

the data about strategic forecasts versus actual implemen-

tation results indicates. Performance reviews (discussed in

chapter 10) then become like Lake Wobegon, where every-

one is above average because a culture of underperformance

has managed expectations downward. And managers,

expecting not to meet forecasts, spend more time rational-

izing results and protecting themselves—the finger-pointing

or CYA syndrome, as some have called it, that character-

izes a culture of underperformance.13 The sales organization

becomes less intellectually honest about its capabilities in

relation to the market today and tomorrow (not yesterday),

and strategy discussions are therefore based on less reliable

information. And so on, in a downward spiral reminiscent

of the slogan that the Solidarity union used when it orga-

nized worker slowdowns in the Gdansk shipyard under

Communist rule: “They pretend to pay us, so we’ll pretend

to work!”

Avoiding the Traps

Linking sales efforts with strategy is vital for implementa-

tion and profitable growth. Conversely, daily sales practices

affect strategy and ongoing strategic options: those selling

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efforts—successful or unsuccessful, focused or diffused,

smart or stupid—constrain and redirect strategies in various,

often unintended ways. In any situation where you have

interacting variables like this, you must confront the inter-

actions and diagnose the problem. That’s what’s needed to

improve selling and strategy.

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