I recently finished a book by Bob Lutz, the former vice chairman of General Motors. He goes into great detail on why, in his opinion, GM lost its competitive advantage in the market. The book is called, “Car Guys vs. Bean Counters.” In it he explains how very smart and well-educated executives lost track of the primary objective of a successful automobile company. And that is creating, designing and manufacturing automobiles that the public wants to purchase.
The book goes into great detail regarding the numerous stages of approval that need to happen in each phase of the process. He further documents the fact that the VPs responsible for final approval before a car can move on to the next stage are so overly cautious that decisions take far too long. The reader gets the opinion that the high-paid executives are more interested in job preservation than delivering a quality automobile. The bean counters are more focused on parts commonality across the various divisions than delivering a car that will turn heads.
Let me share a direct quote from the book:
American business, especially in the service and manufacturing sectors, has become, as the Brits like to say, “too clever by half.” The problem lies, as it often does, in the deliberate intellectualizing of a very simple task: creating and selling a meaningful product or service to the public. It’s not rocket science.”
So the lesson is very simple. Build a car that the public wants to buy first. The rest will take care of itself. At the end of the day, if all the internal numbers are perfect and the cars are produced under budget, who cares if there is no market for them and they sit unsold on dealer lots?
In the tech boom in the late 1990s and early 2000s the company I worked for lost some focus in a different way. The products were outstanding and in great demand. The issue was how to deal with the growth internally. The decision was made to grow the sales force at a rapid pace. To accomplish this daunting task many outstanding sales execs were immediately promoted to first-line sales managers. First-line sales managers were promoted to second-level management slots. This, of course, meant that sales execs responsible for handling strategic accounts had to be back-filled quickly.
During a two-year period I had four sales managers! Each manager felt the need to meet my accounts and requested my assistance in arranging meetings. Several of my accounts told me flat out they had no time to meet my new manager based on the longevity of the previous three. And quite frankly, I couldn’t blame them. It became a challenge to continue to explain the revolving door. Additionally, numerous other layers of sales management were added to the organization. And each level of management felt the need to demonstrate value to their boss that resulted in more reports and more meetings.
I go into more detail on the philosophy of flattening the sales organization by focusing on the sales exec and client relationship, as opposed to focusing on adding management, in chapter 14 of my book.” What they don’t teach you in sales school”
The two examples above, while from different industries, have a common theme. Both companies, during a particular timeframe, lost focus on their most important asset: the customer. In GM’s case they were more focused internally on their cost controls. In my case we were more focused on growing a sales organization. We therefore lost continuity with some major accounts because of the disruption. This allows for the competition to gain a foothold. A long-term partnership between a client and a sales exec is a valuable asset. In my opinion it should not be severed unless absolutely necessary.
Before adding levels of sales management, be sure the new position will add real value to the organization. And in a sales organization the only value that matters is sales productivity.
As Bob Lutz quoted in his book, “this is not rocket science.”
I wrote an article on the value of business relationships back on June 13, 2013. You can read it by clicking here: Are Business Relationships Really Important?
Companies interested in boosting revenue should focus on where the deals get done. In my opinion, they should flatten the sales organization by hiring professional sales execs that can run their sales territories like a business. Hold them accountable for revenue generation and expenses control. Offer compensation packages that will keep them employed to ensure long-term client relationships. Have some of the best talent in the company calling directly on customers. Eliminate levels of sales management that are not contributing to revenue production. In addition, hire outstanding first-line sales managers. This philosophy will provide more value in the field, where decisions are made and deals get done.
The point is this. When reorganizing a sales team, maintain a clear focus on your clients. Be mindful that there is competition, and don’t be so arrogant to believe that orders will continue to come in, regardless of how many times sales people are replaced.