This book review originally appeared in Baltimore, Washington and Philadelphia SmartCEO Magazine.
I’m often asked what I believe is the most important trait to succeed in sales or business. Anyone who knows me knows my answer – business acumen. Today, more than ever, those individuals who possess business acumen have a tremendous advantage over those that don’t.
This is especially true in sales. It’s funny (sad really), but if you were Rip Van Winkle having just awakened from a 50-year sleep, and you walked into most small and mid-market sales organizations, you probably wouldn’t be able to tell the difference.
All too often, sales reps are making the same boring phone calls and making the same mindless pitches chasing fewer and fewer dollars. Sales managers track the same activity numbers that have absolutely no correlation to sales success whatsoever.
Sales training budgets have increased much, and, what’s worse the focus of that training is still primarily on product knowledge and some version of sales skills. But, ask yourself this: Have the trillions of dollars that companies have invested in sales training, salesforce automation and marketing really paid off?
The results of the last four years clearly answer that question – they haven’t! If you look at any meaningful measure of business success, the news is bad. Profit margins, return on equity, and assets are down. Sales costs are rising, and price pressure is at an all time high as procurement departments have seized unprecedented power in buying decisions.
As an executive, you should remember two quotes that should be at the top of your mind when you look at your sales efforts:
- The problems we face today cannot be solved at the same level of thinking we were at when we created them – Albert Einstein
- The definition of insanity is to do the same thing again and again, and expect a different result – Thomas Edison
It is crucial that you stop, and ask yourself what are the critical components that will allow your salespeople to be insanely successful? Don’t stop at the clichés like personality or persistence. Sure, those characteristics are important, but they do not cause success. There are just as many (or more) personable, persistent salespeople that fail as those that succeed.
If your products and services require a meaningful investment from your customers or you claim to make a significant impact on customer’s results, there are two critical pieces that absolutely must be present: business acumen and judgment. These characteristics are really flip sides of the same coin, as good judgment comes from business acumen. If you want to break free from the commoditized treadmill, where so many small and mid-market companies find themselves, you must develop business acumen in your salespeople.
Kevin Cope, author of Seeing The Big Picture: Business Acumen to Build Your Credibility, Career and Company and founder of Acumen Learning, defines business acumen as the “keen, fundamental street-smart insight into how your business operates and how it makes money and sustains profitable growth, now and in the future.”
Businesses are complex, and the issues they’re dealing with face greater and greater complexity. One small problem or change can have a ripple effect through the entire company. The only way you can successfully cut through this complexity is to understand the critical drivers of a business. Cope point out five: cash, profits, assets, growth and people.
To get the action (and margin) that you most likely want for your products and services, your salespeople must be able to influence real decision makers in organizations. Seeing the Big Picture, accurately points out five abilities needed to do this:
- See the “big picture” of the organization – how the key drivers of a business relate to each other, work together and produce profitable growth, and relate to the “job” your product/service does.
- Understand important company communication and data, including (and I’d add, especially) financial statements.
- Use your knowledge to make good decisions.
- Understand how your products/services impact key company measures and objectives.
- Effectively communicate your ideas to employees, managers and executives.
While Cope’s book is written for the reader within a company, the book is a tremendous resource for developing business acumen for any application. It’s a book you should give to every salesperson.
Anyone who has heard me speak knows that I believe business acumen is the most important capability for a successful selling. One of my goals in writing this blog is to support the development of business acumen in the sales process.
I started reading the book Seizing the White Space: Business Model Innovation for Growth and Renewal. I found the title interesting because I often advise executives to “seek the white space.” I’ll provide a more detailed review of the book when I’ve finished reading it. However, regardless of the rest of the book, Chapter 2, The Four-Box Business Model Framework, is must read for everyone.
Mark Johnson provides one of the simplest and powerful descriptions of what a business model is, how to understand it, and how to affect it. Looking briefly at the four elements from the four box business model, they are:
Customer Value Proposition (CVP) – An offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem (or satisfy a job-to-be-done) at a given price.
Profit Formula – The economic blueprint that defines how the company will create value for itself and its shareholders. It specifies the assets and fixed cost structure, as well as the margins and velocity required to cover them.
Key Resources – The unique people, technology, products, facilities, equipment, funding, and brand required to deliver the value proposition to customers.
Key Processes – The means by which a company delivers on the customer value proposition in a sustainable, repeatable, scalable, and manageable way.
Understanding your customer/prospect’s business model is critical – I repeat CRITICAL – to becoming indispensable. If you don’t understand, you cannot make The Shift to selling results, and you’ll find your company, your offerings, and your sales efforts increasingly marginalized.
When you do understand their business model, you can begin to answer important questions like:
- Which boxes do we impact?
- How do we impact them?
- How will our customers business model improve as a result of our impact?
- What is that worth?
With those answers in place, your customers will be far more interested in talking with you and far more open to sharing their needs with you.
Anyone who has heard me speak about the sales process knows that I’m crazy about the importance of business acumen in creating a successful salesperson or sales team. As I’ve written, business acumen is the key driver of success.
I’m constantly asked the question, how can we increase the business acumen of a sales team. Other than taking advantage of our Business Acumen for Salespeople program (okay, guilty as charged, a shameless self promoting plug), my answer is usually very complicated.
I thought I’d share a simple step to improving business acumen for salespeople (one that we’re going to weave into what we do). Simply assign one of your salespeople to one of Warren Buffet’s annual letter to shareholders (my recommendation is that I’d assign different reports to each rep, but assigning one to all of your reps will certainly save time and could enhance some learning). Then, have them deliver a synopsis. Have them share what they learned and “teach” the business points within the report.
To make the exercise really useful, make sure you’ve read the report and ask questions. Buffet’s Annual Letters are some of the best business teaching tools I come across. If you and your salespeople understand how the businesses of Berkshire Hathaway make money, you’ll naturally see an increase in business acumen.
My favorites for this are the reports from 2006, 2007 & 2008. Personally, I found this year’s report (2009) not to be as effective a tool.
I remember the childhood joke that the only thing worse than finding a worm in your apple is finding half a worm. I thought of this joke when working with a prospect recently and we agreed that the only thing worse than not having a sales force is having one that is not effective.
I do not believe that most businesses can grow effectively without building a high-performing sales team. Therefore, the only option today is to build one that is high performing. An average, or even above average, sales team will not be able to overcome the challenges of commoditization, and will actually contribute to the underlying causes of commoditization.
And the fact is that sales teams today are less effective than ever!
Well, we’ve been studying this issue for the last 18 months, and I have to admit that I was perplexed in determining the underlying cause(s). I can report to you now, that while we may have not yet completely solved the riddle, we’ve identified the key cause for the struggle. Simply put, salespeople (as a whole, and in great numbers) lack business acumen.
At Imagine Business Development, we define business acumen as:
The ability to intuitively grasp the performance drivers for someone else’s business – and then clearly explain how your product or service will drive THEIR results. It’s an “ROI on the fly” conversation that’s an equal mixture of business understanding, asking the right questions and pouncing on opportunity when it presents itself.
Sales professionals that possess business acumen will have the greater advantage positioning their offerings for greater success (measured by faster sales cycle and pipeline cycle times and greater margins) than their competitors while operating in the same external landscape as their competitors.
Salespeople who fail to develop business acumen will be forced to battle in tighter commoditized spaces, looking to eek out decreasing margins against higher expenses – not the future I’d like to live in.
This means that salespeople must – I repeat, must – become more adept at understanding business – and the key drivers of business success. In a previous post, I highlighted the insight that it is no longer enough to be the best at something, you must know your customer’s business model and your customer’s customer’s business model to succeed. You cannot do this if you do not have adequate business acumen. And if you can’t understand the business model, you can’t understand the results your offering is supposed to provide.
Stay tuned to this blog for more about business acumen for salespeople and what we at Imagine are going to be doing to support your efforts in developing or increasing it. Your feedback and insights are welcome.