Faculty Program Spotlights

Interview with Faculty Chair Frank Cespedes

Firms must have a strategy that's relevant today and tomorrow, not yesterday.

Firms that compete in a highly competitive global economy must be able to integrate business strategy and sales activities. This remains the primary way to ensure that a company's internal objectives are communicated to and supported by its customers. In this interview, Frank V. Cespedes, faculty chair of the Aligning Strategy and Sales program at Harvard Business School (HBS) and author of a book on the topic, discusses some of these issues and the key benefits of the program.

What are the greatest challenges companies face regarding strategy and sales?

First, for many companies the most expensive part of implementation is, by far, what they spend on sales and other go-to-market efforts. Yet, research indicates a big gap between strategy and field execution in sales. On average, companies deliver only about 50–60 percent of the financial performance that their strategies and sales forecasts promise. That's a lot of wasted money and managerial effort. One reason is that very few strategic plans even mention what needs to happen in the field or how to implement it. So it's very important to articulate this.

Also, companies must understand the implications of their strategy where it really counts—in the external marketplace with customers. Value in any firm is created or destroyed outside the firm, not in conference rooms or meetings, and that means sales, pricing, product introductions, and account management—the core topics in the program.

Finally, even if the firm has a coherent strategy, executives must be able to analyze and dissect the sales tasks required to execute the strategy, align actual selling behaviors with those tasks, and put in place the relevant metrics and incentives. You can't do that if you stop at the level of the glib prescriptions in most books about sales and strategy. You need tools for understanding how these links apply to your strategy, not at another firm or in an idealized "generic" strategy. If you don't have these tools, even if your title is CEO or CFO or Executive Vice President of Global Sales & Marketing, then you're likely to be a sucker for surface explanations of sales shortfalls and poor performance.

What do corporate leaders need to think about when aligning strategy and sales?

First, leadership must have a strategy that's relevant to the external market as it functions today and tomorrow, not yesterday. Key externals include the industry in which you compete, the market and product/service segments where you choose to play, and the nature of your customers' buying processes. Moreover, it's equally important to articulate and communicate the strategy to salespeople and other functions in the firm in ways that they can understand and embrace.

Second, leaders then need to translate strategic choices into the performance management processes that ultimately drive effective selling behaviors. These processes include:

  • Your People—who they are, how you hire, and how you develop their skills and attitudes over time;

  • Control Systems that help to shape daily behavior—including how the sales force is organized, and compensation and incentive systems;

  • The wider Company Environment in which go-to-market efforts are developed and executed;

  • How sales managers are selected and how salespeople work as a team if and when that kind of coordination is important;

  • How performance reviews are handled; and the interactions between Sales and other parts of the firm that affect value delivery and value extraction in a strategy.

And finally, leaders must recognize that effective selling is the output of a firm's processes as well as hard work and smart sales people. It's worth a leadership team's effort to master these links, because it can positively change what they do in sales and how they do strategy.

What mistakes do companies make that stand in the way of such alignment?

One issue is pricing, which is a moment of truth in any business. It's where you test the coherence of a strategy and a value proposition. Pricing should reflect the value of what a company is providing as well as the objectives of its strategy. In my experience, however, this is not the case. Most pricing programs are cost-plus in nature or simply a residue of "how we've always done it." Nearly all executives who attend this program tell me that a key takeaway is to reexamine how they price to different customer groups and, equally important, the process by which their salespeople handle price negotiations.

Another is what I call "opportunity management": identifying and marketing to the right kind of customer. It's a vital issue and an important part of what compensation, incentives, and performance reviews should focus on. But many firms implicitly instruct their salespeople to "go forth and multiply," and as a result the sales team brings back a variety of customers that place very different demands on the company's strategy, its resources, its limited capital, and its other capabilities. Over time, this process fragments the company's strategy and selling efforts, no matter how elegant or savvy the "official" strategic plan may be.

What will participants gain from the Aligning Strategy and Sales program?

Aligning Strategy and Sales focuses not only on developing a strategy, but also on understanding and implementing that strategy where it counts—with customers. It's about linking what a company says it wants to do and how it goes about doing it when interacting with customers in the field.

The program provides a structured process and company-specific workshops for looking at the key issues. This means not only strategy formulation, but also strategy articulation to the sales force. And the program examines—through case studies, lectures, and application exercises—the various ways that a company can influence the behavior of its salespeople. This includes its recruitment and selection criteria; compensation and incentives; how it trains salespeople after they're hired; how it conducts performance evaluations; and how it develops the specific capabilities that support the strategy.

Second, participants in the program interact with other smart, experienced executives—from firms across industries and national borders—who have a broad range of cross-functional experience. This provides multiple perspectives that enhance the learning experience. Almost always, issues that a given company believes are "unique" to their firm or industry reflect a pattern that other executives in other industries have encountered. Part of our job as faculty is to facilitate that dialogue about good and bad practices that our experienced participants bring to the discussions.

Overall, the program can help clarify a company's strategy and accelerate what needs to be done in the field in order to maximize opportunities and create value. And if the company's current strategy is not clear or easy to communicate, that in itself is important learning. We offer sessions designed to help participants clarify the strategy.

Who should attend this program?

Aligning Strategy and Sales is designed for anyone who interacts with customers or has a hand in developing or executing strategy. It's ideal for sales executives, CEOs, CFOs, operations executives, and service executives. We've also had people from private equity and venture capital firms attend, along with operating executives from some of their portfolio companies. It's often the first time they have had a structured and actionable dialogue about these issues. We encourage participants to attend in teams, and this is especially valuable in the workshops. But the case studies, lectures, and workshops are relevant to those who attend with colleagues or as individuals. The same is true for the discussions, and the informal and invaluable networking that's part of the educational experience at HBS.

Featured Program

Aligning Strategy and Sales