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MAKING BUSINESS
STRATEGY WORK BY STEVEN R. WATERS
It’s the end of the quarter and the company has missed its projections for
the third quarter in a row. CEO Thom Nolan has assembled his executive
team for an offsite meeting to try and understand what is going wrong and
why. Nolan has been in his position for 18 months and had high
expectations for turning around the company’s lackluster performance.
Not completely satisfied with his inherited management team, Nolan
brought in several star performers from his previous company. Together,
they began an overhaul of the new company’s business strategy. After 6
months of development, the new strategy was announced with some
fanfare at an all-company meeting. It showed promise for the first two
quarters but now things were beginning to look a bit bleak. As expected,
the Board of Directors was not happy.
Avoiding Einstein’s Theory of Insanity
2 © 2013 SRWGroup, LLC
Companies on average deliver only 63% of the
financial performance their strategies promise
“The gap nobody knows is the gap between what a
company’s leaders want to achieve and the ability of
their organization to achieve it.”
1
Nolan began the offsite meeting
reviewing the previous quarter’s
results and the new business
strategy. He then asked each
division head to report on their
individual results with
recommendations on improving
performance for the next two
quarters. There was a tinge of
blame in the air. Even Nolan’s
handpicked performers appeared
to be backpedalling. As each
executive spoke, Nolan began to
wonder, “Is our strategy flawed or
are we just not executing it in a
way that delivers the performance
we need?” Thom Nolan, like many
other chief executives, had tripped
over “the gap that nobody
knows.” His next actions will
determine whether he succeeds or
simply validates Albert Einstein’s
theory of insanity: doing the same
thing over and over again and
expecting different results.1
“The gap nobody knows is the gap
between what a company’s
leaders want to achieve and the
2
ability of their organization to
achieve it.”2 The frustration caused
by this gap is often acknowledged
but seldom discussed. Researchers
estimate “that companies on
average deliver only 63% of the
financial performance their
strategies promise.”3 The
implications are clear: not closing
this gap poses significant risks to
the business and impacts the ability
to sustain competitive advantage.
Our firm conducted a survey to
determine if this gap is based on
reality or perception. We were
specifically interested in the gap
between business strategy and the
performance of sales and
marketing teams. If we could
validate that the gap exists, could
we identify the primary factors that
affect that gap? Once identified,
what actions should be taken to
“bridge the gap nobody knows?”
(continued)
3 © 2013 SRWGroup, LLC
The age-old problem: marketing hates sales and sales hates marketing
1
More than 140 executives and managers participated in the survey, 46%
of them working for companies with revenues greater than $1 billion
(USD). The vast majority of survey participants felt that their company’s
sales and marketing organizations were not well aligned with their
company’s overall business strategy. Although a small percentage of
participants felt that marketing was more aligned than sales, the
identified factors of misalignment were almost identical for each
department.
Sales vs. Marketing
A couple of years ago a senior professor of marketing and logistics, at a
world-renowned business school, was approached with some questions
regarding sales effectiveness. “Before we begin,” he said, “you need to
understand that at this business school; we think of sales and selling as
high school.” (Is there any wonder why there might be some
misalignment between marketing and sales?)
The professor’s remark points to an age-old problem: marketing hates
sales and sales hates marketing. The reality is that both sales and
marketing can profit through a better understanding of their individual
roles, capabilities and responsibilities. When sales departments are not
aligned with marketing, our survey shows a strong, negative linear
relationship between sales and its ability to execute business strategy.
Even when marketing is strongly aligned with business strategy, its
effectiveness is stymied when marketing is not simultaneously aligned
The vast majority of
participants saw
misalignment of sales &
marketing
(continued)
4 © 2013 SRWGroup, LLC
Where there are no clear metrics, a lack of accountability between
stakeholders exists and vice versa.
2
with sales. The net result is the
same: peak performance can only
be achieved when business
strategy is aligned with the actions
of sales and marketing
departments when they are in
alignment themselves.
The Top Three
We know that the gap exists and
that top performance is achieved
by bridging that gap, but what
factors contribute to the gap? Our
survey found both sales and
marketing departments in
agreement on the following:
1.) No clear metrics for
defining or measuring
success.
2.) Lack of accountability
between stakeholders.
3.) Poor communication
between executive teams,
sales and marketing.
Where there are no clear metrics, a
lack of accountability between
stakeholders exists and vice versa.
The research data does not make
clear which comes first: the
chicken or the egg. What is clear is
the necessity of defining success in
terms that sales, marketing and
management all understand and
can measure. What is also clear is
that when sales and marketing are
not aligned, there WILL exist a lack
of accountability between
stakeholders. Where there is poor
communication, there WILL be
poor alignment between sales and
3
marketing.
What to Look For In Your
Organization
Many executives state to us their
concerns over their sales
departments not truly
understanding their customer’s
businesses. We’ve heard
comments like, “our salespeople
are very product-oriented and
need to have a business discussion
with our customers, not a product
discussion.” If this is occurring in
your organization, take a close
look at your marketing department
as well. Our data indicates that
when sales is too-focused on
internal issues in your company,
then the marketing department will
also be too-focused on internal
issues and not focused on the
customer. It is simply impossible to
differentiate your organization from
your competitors and sustain
competitive advantage when your
sales and marketing departments
are inwardly focused.
Suppose, for example, that your
organization is selling paper to
JCPMedia, the print and paper
group responsible for creating the
JCPenney catalog. They buy in
excess of 260,000 tons of paper
yearly. JCPMedia’s business
criteria for buying? Beyond price,
quality and availability, JCPMedia
evaluates their suppliers’
environmental, forest
management and antipollution
strategies and practices.4 In other
words, it’s not all about the
5 © 2013 SRWGroup, LLC
product! To successfully sell to
JCPMedia, your organization’s
sales and marketing must be tightly
aligned to compete effectively
and to earn the right to “eat
sideways” into the account.
In our opening example, CEO
Thom Nolan thought that he had
communicated the new strategy
effectively. The reality is that poor
communication is the biggest
roadblock to solving the gap
between strategy and execution.
Our research indicates that this is
the primary factor of misalignment.
Mankins and Steele point out that
poorly communicated business
strategies “makes the translation of
strategy into specific actions and
resource plans all but impossible.”5
Insanity to Sanity
Regardless of the size of your
organization, you can restore sanity
to your business strategy and
bridge the gap between it and the
day-to-day execution of your sales
and marketing departments. The
first step is to evaluate your current
situation carefully by challenging
your assumptions and identifying
performance gaps. Doing so will
help you identify the right measures
for defining success and discard
those which confuse the
organization. This is easier said
than done and may even require
third-party evaluation and analysis.
Second, make sure that the
identified measures are tied to
individual performance of the
stakeholders. Look closely at your
compensation plans. Are you
inadvertently rewarding the wrong
behaviors? A direct line of sight is
needed between the strategy and
individual accountability.
Finally, are you effectively
communicating the strategy, the
measures and the implication of it
all? To successfully execute the
strategy, the specific actions
required of each stakeholder must
be clearly understood and each
stakeholder must be in agreement.
Remember: you are “better off
with a strategy that is 80% right and
100% implemented than one that is
100% right but doesn’t drive
consistent action throughout the
company.”6
So this year, expect different results
by expecting something different
from the sales, marketing and
executive stakeholders in your
organization. By closing the gap
between strategy and execution,
you will significantly impact your
value to your customers while
increasing shareholder value.
Frustration will recede and sanity
will return. (For the record, we’re
sure about the frustration but
maybe not the sanity!)
FOOTNOTES
1 Attributed
2 Bossidy, Larry, & Charan, Ram. (2002).
Execution: The Discipline of Getting
Things Done. New York, NY: Crown
Business.
3 Mankins, Michael C., & Steele,
Richard. (2005). Turning Great Strategy
into Great Performance. Harvard
Business Review, July-August, p. 5.
4 Kerin, R.A., Hartley, S.W. & Rudelius, W.
(2004). Marketing: The Core. New York,
NY: McGraw- Hill/Irwin. p. 121
5 Mankins & Steele, p. 7
6 Gadiesh, O. & Gilbert J.L. (2001, May).
Transforming Corner-Office Strategy
into Frontline Action. Harvard Business
Review. p.17.
Steven R. Waters is
President of the SRWGroup, a results-
driven business strategy consultancy
headquartered in Minneapolis, MN. Steve
holds a MBA from the University of Minnesota’s
Carlson School of Management.
8056 GOLDEN VALLEY ROAD MINNEAPOLIS, MN 55427
USA +1 612.454.1467
www.srwgroupconsulting.com
