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Previously I have written of the three fatal flaws in designing a selling process:
Management ignores these flaws at their peril.
Selling is further challenged by these self-inflicted wounds salespeople bring to the selling process:
Management and ownership too often ignore these flaws and self-inflicted wounds, itself another fatal flaw that dooms the selling effort. It’s an unintended negative consequence of proper risk management.
Consider what we learn from the article, “Is Your Risk System Too Good?” that appeared on the Risk Management Association web site in October. The article describes how proper risk management often leads to overconfidence and, unintended, more risky behavior.
For instance: if your car has anti-lock breaks, four-wheel drive and passenger and side air bags, you might feel safe enough to drive 65 mph on ice. After all, you reason,
there are safety systems protecting you. Your driving behavior is riskier than it would have been in the absence of these risk mitigants.
The article describes how Bankers Trust and Long Term Capital Management failed, despite industry leadership in risk management. The strength of the risk management system led to top executive overconfidence.
Could a similar phenomenon occur with corporate sales management?
Companies invest in product development, facilities, branding, etc., to establish powerful market positions. Ownership’s reliance on successful corporate strategy leads to a risk adjustment, regarding both the importance and proper deployment of the sales team. Strategy is supreme, sales a hanger-on, perhaps a necessary evil.
By contrast, in a healthy company selling is embraced as a multiplier of successful strategy, helping provide the cash flow to fund the company’s next breakthrough.
Not surprisingly, ownership and management often allow salespeople to become order takers – having concluded they can rely on corporate strategy. The unholy alliance between salespeople and management is enshrined:
Successful corporate strategy becomes a narcotic, numbing executives, causing them to ignore their sales management responsibilities.
Fortunately, there is a solution. A change in system design is necessary. It has these components:
No matter how strong the corporate strategies and results, the sales department must operate on the premise sales are declining or a decline is imminent. This will defeat the unintended consequences of risk adjustment.
The sales team must be developed into a team of warriors, constantly improving skills, in good times or bad. There must be a permanent crusade.
Such a team can deliver a 20 percent increase in sales and prevent risk adjustment.