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What Senior Executives Should Know About Sales

September 30, 2016 • LEADERSHIP, STRATEGY & MANAGEMENT, Global Business, Editors' Pick

By Frank Cespedes

Business is more complex, data more abundant, and more specialists are needed to stay up-to-date with functional best practices. As a senior executive, you can worry all you want about disruption, but you need a salesforce aligned with strategy to do something about it.

 

There have been big changes in the C-Suite of companies globally. The number of executives reporting to the CEO has doubled in recent years, mostly an increase in functional specialists like CIOs and CMOs, not general managers responsible for cross-functional integration.1 Meanwhile, the number of Fortune-500 and S&P-500 companies with COOs has decreased to about 35%.2 Three decades ago, COOs outnumbered CFOs in those firms, not now. Business is more complex, data more abundant, and more specialists are needed to stay up-to-date with functional best practices.

These changes affect a core task of a CEO and other senior executives – the formulation and implementation of strategy – and the aggregate results have not been good. Consider:

• Surveys indicate that in most firms less than 50% of employees say they understand their firm’s strategy, and that percentage decreases the closer you get to the customer in responses from sales and service employees.3 It’s tough for people to implement what they don’t understand.

• Even worse: In a McKinsey survey of 772 directors, only 34% believed their boards comprehended their companies’ strategies.4

• Almost 3-of-5 senior executives (56%) say their biggest challenges are ensuring that daily decisions align with strategy and allocating resources in ways that support their company’s strategy.5

• The result is a performance gap: firms realise only about 50-60% of the financial return their strategies and sales forecasts promise.6 That’s a lot of wasted time, money, and managerial effort.



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About the Author

cespedes-webFrank Cespedes teaches at Harvard Business School. He has written for publications including Harvard Business Review, Organization Science, and The Wall Street Journal, and is the author of six books including, most recently, Aligning Strategy and Sales: The Choices, Systems and Behaviors that Drive Effective Selling (Harvard Business Review Press), which was cited as “the best sales book of the year” (Strategy + Business), “a must read” (Gartner Group), and “perhaps the best sales book ever” (Forbes). He received his BA from City College of New York, MS from MIT, and Ph.D. from Cornell University.

 

References
1. Julie Wolf, “The Flattened Firm: Not as Advertised,” California Management Review (2012).
2. Jason Karalan, The Chief Financial Officer (New York: Public Affairs Books, 2014), p. 9.
3. Data from Effectory employee surveys, a database of about 300,000 responses from companies worldwide, as cited in C. Zook and J. Allen, Repeatability (Harvard Business Review Press, 2012), p. 44.
4. D. Barton and M. Wiseman, “Making Boards Work,” McKinsey Quarterly (December, 2014).
5. Booz & Company, “Executives Say They’re Pulled in Too Many Directions and That Their Company’s Capabilities Don’t Support Their Strategy,” www.booz.com/global/home/press/article/49007867.
6. See the study by Marakon Associates and the Economist Intelligence Unit in M. Mankin and R. Steele, “Turning Great Strategy into Great Performance,” Harvard Business Review (July-August 2005).
7. A. Agrawal, O. Nottebohm, and A. West, “Five Ways CFOs Can Make Cost Cuts Stick,” McKinsey Quarterly (2010).
8. Data from Frank V. Cespedes and Daniel Weinfurter, “The Best Ways to Hire Salespeople,” Harvard Business Review, online edition (November 2, 2015).
9. Louis V. Gerstner, Jr., Who Says Elephants Can’t Dance? Leading a Great Enterprise Through Dramatic Change (New York: HarperBusiness, 2003), p. 182.

 

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