article | January 11, 2017
Your Secret Weapon - The Chief Strategy Officer
Today’s article demonstrates how a Chief Strategy Officer can help a sales team. A common challenge among sales leaders is taking strategic imperatives the CEO has laid out in the strategy and translating that into an operating plan. It’s difficult to grow revenue faster than your industry’s growth rate and faster than your competitors. Leverage the How to Make Your Number in 2018 to access a revenue growth methodology to hit your number quarter after quarter, and year after year.
I recently interviewed Julian Lighton, the Chief Strategy Officer for Renaissance Learning. Julian served as Head of Strategy and Corporate Development at Rovi, which is now TiVo, and before that at Neustar and Cisco. Prior to his strategy roles, Julian was a partner at McKinsey focused on the software and services vertical. Julian is uniquely qualified to demonstrate how a Chief Strategy Officer can help a sales team.
Sales leaders become overwhelmed with conflicting priorities. The primary source of the conflict is the lack of clarity from the CEO as to how the corporate strategy translates to the sales operating plan. Untangle the conflicting priorities with help from your secret weapon: The Chief Strategy Officer.
Why this topic? The best sales leaders we see blend strategy and execution masterfully. The average sales leaders we see don’t understand strategy, even though they think they do because they think a collection of sales tactics is a strategy. This is not their fault. Most of them have never been trained on strategy development. This is where a partnership between the sales leader and the chief strategy officer can be a great partnership and produce great results.
Lean on the strategy leader to help you translate the corporate strategy into the sales operating plan. My interview with Julian is priceless for a perceptive sales leader striving to accomplish the corporate objectives with his or her sales team. Access the audio podcast of my interview with Julian if you prefer to listen. Review the interview questions and answers from a top strategy officer who has walked in a sales leader’s shoes.
For their benefit of those who have never been trained on strategy development, start by providing a definition of strategy in layman’s terms.
Simply put, it is the why and the what of a corporation. It’s the why the corporate exists. Its purpose, its mission, its vision. What problem is it trying to solve? Here, for an example, do you have a very tightly focused value proposition in terms of a discrete individual product or are you trying to solve multiple problems across a spectrum for a series of customers? Then the what of the problem. What is it that you’re actually selling in what markets with what sales motion with what go-to-market or route-to-market with what pricing? Et cetera, et cetera. It’s the description of the and the what. It’s as much made up of what you’re not going to do as it is of what you’re actually doing.
That’s a great layman’s term description. The why and the what with an added emphasis on making sure it also includes what we’re not going to do. Okay. My next question for the benefit of our audience, which again is comprised of many sales leaders who haven’t been trained on strategy development, how is strategy and execution different?
In most companies, the difference is a continuum. If we take strategy as being the why and the what, execution becomes the how, the where and the who. Now you have to bear in mind with execution to understand the degree of execution. Are you crawling, are you walking or are you running? You’re already in a marketplace and you’re up in your level of execution or are you just beginning? For a sales leader, it would be really focused around, “Okay, what’s my plan for the year? What am I going to sell? Where am I going to sell it? Into what accounts or to what customers with what sales motion at what price? Am I going to go indirect or direct? Am I going to have a solution-led consulting-based conversation or a more transactional product-based view? That execution view of the world of the how, the who and the where I think is a good description.
Greg’s Response: that is a great description. I like the idea of the continuum. The why and the what precedes the how, the where and the who. I think that’s a great way for us to look at it.
One more question to help educate the sales community. If you think about the big rocks of the CEO’s corporate strategy, the things that a sales leader would need to know in order to go do the how, the where and the who, could you maybe highlight the big rocks in a CEO’s corporate strategy force?
This again is a really interesting conversation from again a continuum point of view and it varies significantly between a business to business and a business to consumer perspective. I’ll explain what I mean by that. The big rocks generally are going to fall into either quantitative or qualitative discussions. Quantitative relatively obviously being how do we generate revenue, which is a combination of price and orders. Then how do we manage to generate profits, which is really a conversation around what is our cost of sales, our cost of goods sold, etc.? Versus the qualitative, which is how do we generate happy customers? How do we generate happy partners? How do we generate happy employees?
The dialogue between those hard factors and the soft factors is what makes it a little bit more complex and more of a continuum. For instance, for a sales leader, how much do I really want to be able to drive sales volume versus profitability? That might also then impact on what am I really doing in terms of customer satisfaction and how am I thinking about employee satisfaction? Compensation, incentives, work conditions, culture, et cetera. That balance between the qualitative and the quantitative is really the dialogue around what kind of firm are you building? That ends up being the internal execution framework of strategy.
How should a sales leader translate financial objectives found in a corporate strategy? Things such as EBITDA or EPS into sales objectives. Maybe things like quotas and revenue forecasts.
I’m going to offer a little bit of a framework here. I’m a big fan of what’s called Value Creation Planning. Essentially understanding how a company generates value for its shareholders. That generally breaks down into a series of value drivers and underneath that a series of KPIs or metrics. For a sales leader, the value drivers that they’re going to be most concerned with are going to be price. It’s going to be market acquisition, so basically finding new logo customers, net new customers, which is essentially driving wallet share … Cross sell and upsell. Finally, renewals if you’re in a subscription or services business.
Those areas are going to be ones where they lend themselves to develop metrics from a financial point of view. The constituent pieces that are underneath that … For instance, let’s take price. Price would be list price minus your effective discount that leads to an overall effective price. That little financial calculation can be represented very simply on a dashboard for a corporation and represents a value driver. Another one might be, for instance, a market share acquisition, where you’re looking at number of new customers against unit share. For each one of these, Greg, a sales leader really needs to understand how they can move each of the different KPIs and how the KPIs attach to the value drivers.
Inside a strategy, the strategy should articulate what are the most important value drivers at any one moment for the corporation? Back to our earlier conversation, should we be driving more upside in terms of order volume or should we be driving more price increases? Two very different levers. Should we be driving more net new sales or should we be driving more renewals? Both have impacts in terms of coverage, in terms of sales motion, in terms of incentives and in terms of actual focus and therefore linearity and achieving metrics over time.
One of the challenges that is expressed to me by sales leaders directly is that what they’re being asked to do isn’t connected or in alignment with what the CEO is trying to do very often. There seems to be a communication gap that sits between those two things. They’re trying to solve that problem. That’s the reason I ask that question, which is can I take these strategic imperatives that the CEO has laid out in his strategy and somehow translate that to my in-year sales operating plan? They’re struggling with that. They get into a fight with the CEO and the CFO over resources. Any guidance there?
Having run a sales organization, myself at Cisco, the way I tried to deal with that problem was to be able to talk in a way that the CEO is going to be able to understand my current situation or my problem and share that framework so that we can walk through it together. The easiest way I found that to do … Or to do that, sorry. Was to be able to lay it out in the terms that I’ve just mentioned. How am I currently creating revenue? What’s the proportion between new logo sales versus cross sell and upsell versus renewals? What am I doing around pricing? Where do I sit today in the marketplace? Am I premium priced? Am I not? How do I accomplish a services attach? Just lay out the lay of the land so that we can all use the same terminology and understand how the levers relate to one another.
Then secondly, pose the question as to … Okay, maybe my CEO is asking me to do two different things that happen to be misaligned at the same time. Maybe he’s saying, “Look, I really want you to drive market share but at the same time, I want you to try and get more profitability.” Well in doing that, it poses a paradox of not only how am I laying out my coverage, but also really what is my focus? Am I really supposed to be going off the competitors and trying to take away market share or am I really trying to concentrate on value up-selling? Getting more pricing, better value composition out of my customers. That way we can hold the problem together and ask, “Which is the greater priority? Therefore, what am I really supposed to be doing?
Greg Response: Great advice because holding the problem together, that’s a headline for the show. Let’s go ahead and emphasize that word because I think sometimes the problem disintegrates, if you will. Then next thing you know, we’ve got five different problems and they’re not commonly defined. People are off working on different things. You mentioned the conflict sometimes between strategic initiatives. Should I go get share or should I be a premium provider? Et cetera, et cetera. Competitive strategy. That’s usually spelled out in the CEO’s strategy but it sometimes can be at a high level. We’re going to compete with XYZ company based on this product portfolio as an example. When it hits the street and the sales team has to go compete against that competitor at the deal level, it doesn’t hold up.
How do you close that gap between thoughts and concerns that might be shared in a boardroom versus what’s actually happening in the street?
Right. Earlier we talked about executing strategy, which is the how, the who and the where. I think the competitive part of corporate strategy is the clearest example of this. Let’s use a business to business example. Let’s say we’re selling in an enterprise sales environment. You’ve got a sales rep, an account executive calling on a customer. Let’s assume that our company is multi product instead of single product. The sales rep has already sold something into that account. Now they’re considering, “What should I cross sell and upsell?” The CEO is saying, “I want you to go and both pitch share, but I also want you to raise pricing.” The account exec, who probably has three or four, maybe even eight to 10 other accounts, is driven in terms of splitting his time. Should I spend more time on the account that I’ve already got or should I go and spend more time on getting new accounts and selling into the accounts that I don’t have?
Then in terms of pricing, where can I get the best price realization? Can I get it from a net new logo or can I get it from cross selling and upselling in that particular account? That example becomes the crux of being able to execute. Getting clear inside that account as to what franchises you’re competing for and on what terms you’re going to compete. Is it product differentiation? Is it pricing differentiation? Is it service differentiation? What that means for you in terms of whether you’re going to price those things separately, whether you’re going to bundle, whether you’re going to go for multi-year and try and use a discounted philosophy to capture the account long-term and take out the competitor.
Those types of questions are where strategy becomes real for the sales force. I’ve always felt that the best strategy leaders really get down into that level of detail with the sales leader and think through the implications of what it is they’re talking about at the higher level because otherwise it’s very difficult to make it real. Not just for the sales leader, but also for the sales force.
Greg’s Response: That example you use was a great teaching example. I hope everybody that’s listening, particularly those sales leaders that are listening, that demonstrated for you right there on how a chief strategy officer can help you. All the way down to the individual account level, getting clear on how you’re going to compete, what terms you’re going to compete with, and so on. Really connecting strategy to execution.
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