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Business Success = f (solve > sell)

Solve versus sell. In today’s current era of constriction, layoffs, and leadership pull backs, where are successful executive leaders investing?

I was recently asked if there was a benchmark to validate a company’s growth trajectory to which I could point as the right balance of sales/business development (BD) to other OPEX investments. My simple answer is that if sales or BD spending > customer success spending, sustainable growth is at risk.

The Pragmatic Institute summarizes well that a great product solves problems. “The ability to solve someone’s problem is what makes a product great, not the number of features it offers. As Theodore Levitt, an American economist and professor at Harvard Business School, once said, ‘People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.’” I couldn’t agree more.

So How Do Strong Leaders Prioritize Solve vs. Sell?

While sales are critical to any business, companies seeking sustainable and differentiated market growth need to better solve customer problems. Satiating these needs requires investing in core attributes of business growth: customer success, product enhancement, talent development, and future business evolution. So why then have I increasingly witnessed corporate cuts in these areas to fund sales silos? My hypothesis is that there is an array of hidden motives among leaders as to how they will achieve success… and selling has become a tactic that fragile leaders employ to satiate near-term metrics at the expense of longer-term shareholder, employee, and customer/client value.

As someone who has balanced the intersection of corporate growth, longer-term planning, and quarterly investor conversations, I continue to see a trend of investing in sales disproportionately over these core attributes of corporate growth. The upside is that new biz pipelines get bigger. The downside is that customers get less and less enthralled. Most of us know the story of Kodak and Blockbuster, but have we learned from them? I’d offer that unfortunately, leaders who are cutting support for current customer and employee success while overly incentivizing sales have not.

Leaders Who Sell

Current examples underscore that investing in solving problems is a greater indicator of corporate success than simply selling more. Take for example, GoPro, a company that lost its market share to competitors because of its myopic focus on sales, not innovation. GoPro was once very successful making action cameras, but has since fallen on challenging times, losing market share to companies like DJI. GoPro was first evaluated in 2012 at $15B. By 2018 stock prices fell nearly 83%, going from hero to zero. Learning from its mistakes, in 2021 GoPro raised its market value to $800M and as of recently, is valued at $755M. Perhaps they oversold themselves.

GoPro fell into the trap of growing via a narrowed focus on sales, specifically by targeting subscription offerings. Growth gave way to scale, as is typical in many early stage companies. But as the company learned, the reality is that sell + earn ≠ sustainable success. Internal investment declined. Earnings shrank. Competitive positioning devolved. Leadership was rewarded in quarterly $$$$$$. Going bankrupt didn’t matter.

Unfortunately, this is just as true in the professional services industry, where industry laggards often are identified by siloed sales teams, limited staff development or career mobility, and constrained differentiation, innovation, and infrastructures. Just listen to some earnings calls and see if leaders can talk easily about their customer successes and you can quickly tell whether there is deep engagement.

Leaders Who Solve

Now look at the case of Zappos. Many traditional stores didn’t believe people would buy shoes online. Rather than simply selling shoes, Zappos solved the problem of ensuring that ‘trying on’ was just as comfortable at home as in a store. It understood from the outset that sales budgets wouldn’t secure customer affinity - customer experience would. Its customer success teams had nearly unlimited budgets and time to ensure that products were delivered. Customer calls were not directed to a website, but fielded as an opportunity to turn around an issue - securing loyalty and longer-term success.

Other organic approaches emphasize problem solving through investing in customer and employee success. At Bloomberg, staff need to spend time working the help desk to understand customers’ needs. The online travel company, Fareportal, prioritized a NY-based help desk over online ad spending to increase growth through customer success. Home Depot employees have to work in-store once per year regardless of title or seniority. These companies not only prioritized solving customer needs, but ensuring a mutual benefit for staff development.

Leading service firms have learned the solve > sell equation, too. Global consulting leaders such as Accenture, Deloitte, and Booz Allen Hamilton have embedded in their employees that growth is a result of client satisfaction - and current business experience begets future business opportunities. Business development is predominantly embedded with client service, not in separate sales teams.

Harvard Business Review makes it clear that within professional services companies, “a practice’s ability to deliver value to clients rests on the skills of its professionals, and the skill set of those professionals affects the choice of clients.” It’s no surprise that these sector leaders are applauded for their disproportionate investment in their offerings, talent, and overall client and employee experience.

Changing the Equation

The reality is that too many companies - especially those with commoditized products or services - have digitized the death out of an experience and accentuated volume over viability to generate revenue. They’re following the near-term adage of growth as ‘revenues > expenses’ and scale as ‘margin expansion.’ And for a few quarterly earnings, perhaps that works…

But if you’re ascending to lead a business for not just quarters but years, remember that the chief revenue officer is just one role on the team. Sales are obviously needed, but not at the expense of innovation, talent, infrastructure, and overall elements of solving market challenges and delivering sustainable, competitive value. As you look to lead and balance the seesaw of solve vs. sell prioritization, ask yourself:

  • What problem are we solving for customers and clients?

  • In what ways do our budget priorities directly align with these problems or needs?

  • Are we investing in current customers as much as we are in future ones… including supporting the employees delivering customer success?

  • Are the sales/BD teams invested (incentivized) in longer-term customer success and part of the overall delivery team?

Leaders who succeed are those who understand that a business must have a problem to solve before it can sell. Companies need to invest in integrated customer delivery (acquisition through success), product enhancement, and future evolution to thrive. By focusing on solving over selling, businesses can build a loyal customer base, secure future sales, and achieve sustainable success.

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