Sales Growth. Baumgartner Thomas

to make any kind of necessary transformation. It will already be too late. It can be hard to catch up to others that have gotten the jump. It can feel risky to make this type of move, but once you recognize that the market will go in the new direction with or without you, there’s really no other choice.”3

      Make It a Way of Life

      Such success stories are of little relevance if they are just a stroke of luck and can’t be replicated. From what we learned in our interviews, they are not. Sales executives make their own luck by developing the ability to peek around corners and consistently identify sales opportunities that may not materialize for 12 or 18 months – or longer.

      How do these managers decide when to pounce on a tactical opportunity or commit in advance to investments in a market that will pay off years from now? The leaders we interviewed do not simply gamble on market movements; they have institutionalized a forward-looking approach. They do their homework and have a fact-based rationale for new initiatives and investments. And they have built a track record of success that gives them credibility in their organizations.

      There are many ways of generating this forward-looking view of the market, such as investing in the analysis of new trends and potential winning concepts, and encouraging customers to commit to new trends. Both require the right mind-set and a willingness to commit resources.

      Leaders do not simply gamble on market movements – they institutionalize a forward-looking approach.

      A contract manufacturing company that builds products for IT equipment makers has had great success with a dedicated trends-analysis function. It deploys a team of speculative market analysts whose job is to predict which hardware products will have meaningful volume in the next two to three years – and which potential client companies are likely to develop such products. That gives the company a perspective on its target customers a couple of years before they become large.

      The contract manufacturer uses several strategies to build these insights, including spending time with the venture-capital firms that fund new companies. It adheres to the simple strategy of following the money. It is a safe bet that a good proportion of the companies that receive significant rather than speculative investments from the venture-capital firms will end up as exactly the fast-growing companies the manufacturer is interested in.

      The manufacturer also speaks to customers about which emerging products and technologies it is pursuing, and it continuously evaluates the supply chains of its customers (and of its customers’ customers) for emerging sales targets. One of the outputs of this analysis is a list of small but fast-growing companies that may evolve into major users of contract-manufacturing capacity. The manufacturer then invests in building relationships with these companies to convert them into customers. The investment is essentially a subsidy – taking on a customer whose initial volume is too low to be economically attractive. Some of these emerging companies will never grow into marquee customers. A few, however, will become major players, and the manufacturer will have locked in a profitable order stream. In less than two years, this group was consistently able to deliver a 15 percent return on investment (ROI) by identifying new opportunities the company would otherwise have been unlikely to get.

      As we mentioned at the start of the chapter, one high-tech company has created a high-powered solutions unit that is dedicated to preparing major customers to commit early to new trends. The team is staffed with a mix of former consultants, professors, and respected industry leaders from high-potential market segments. Its task is to find ways to accelerate demand by influencing important decision makers to be early adopters.

      The ultimate goal is to help the company get customers to commit to investing in the next evolution of technology ahead of its competitors. So the group spends its time producing thought-provoking industry perspectives, quantifying the benefits of its offering for individual companies, and building relationships with influential company executives and government officials. The most compelling ideas can reduce adoption time for new technology and accelerate uptake in an entire customer segment or country. The company then benefits disproportionately, given that it already has a strong market position.

      Building and sustaining the capability to take a forward-looking view of the market is not easy. As we looked across all of these great sellers, two common characteristics emerged: the mind-set of sales leadership and resource commitment. Sales leaders must consistently monitor the macro-environment in search of sales opportunities. Even good sales leaders find this challenging, given the relentless pressure to hit near-term targets. This is why resource commitment is important.

      In other words, forward planning must be part of someone’s job description, not just part of top management’s lengthy to-do list. Sometimes, it falls within marketing but, in many cases, it is sales’ responsibility. The level of investment will vary depending on the company and its context. At the high end, we see formal operations such as the market-shaping team at the IT supplier. At the other end, forward-looking analysis is embedded into annual capacity planning. The most common arrangement is a small, centralized sales team whose responsibility is to scan opportunities and convert those it finds into tangible sales leads. Many companies that we see investing real resources ahead of demand are equally rigorous in taking costs out of sales. A conscious eye on where resources are no longer important creates the capacity to invest.

      Forward planning must be part of someone’s job description.

■ ■ ■

      Thinking three moves ahead is vital in any game and essential to sales growth. It does not come automatically, however. Companies have to follow the lead of the high-tech player we mentioned at the top, which spotted the multimillion-dollar opportunity of a big trend. They need to learn the lesson of the automaker and build their sales resources on the ground well ahead of time in order to end up among the market leaders. And like the manufacturer that analyzed its potential customers, they need to embed the concept of looking forward into the sales organization’s mind-set to guarantee that impressive 15 percent rate of return. EMC’s William J. Teuber, Jr. has certainly embraced these ideas, as has Karim Amin, from Siemens Power & Gas, as both explain in the interviews that follow this chapter.

      In the next chapter, we’ll see how top sales managers don’t just take a macroview of opportunities; they’re also able to turn the microscope onto their existing markets to find the untapped pockets of growth.

      Interview: William J. Teuber, Jr., EMC

      Vice-Chairman

      How do you anticipate megatrends such as cloud computing?

      We use a multipronged approach. We follow our cutting-edge customers closely to see what they are doing. We listen to our engineers – our innovation engine – to hear where they want to drive things. We have a sophisticated business-development team that monitors new company formation carefully. We work with research universities to discover which emerging technologies have potential commercial applications. Then we marry all that thinking with what our customers are thinking. Trends don’t appear clearly from any one source. They come into focus when you bring a mixture of perspectives together.

      How has your go-to-market model scaled up with your dramatic growth?

      It has scaled with our opportunity. We have learned to focus where our opportunity exists, both with current customers and outside our base. We identify opportunities by region and by customer, and we get very granular with irrefutable data to see where we can move the needle. Having that discipline gives us the ability to devise a plan to capture dramatic growth through our direct sales force as well as through channel partners.

      How do you reconcile the quarterly heartbeat of your sales organization with the need to invest ahead of demand to capture long-term opportunities?

      In a publicly traded company with a public report card every 90 days, you have to do both. In our international operations, we introduced a three-year sales planning process to get beyond the 90-day mentality of “How will I make my number this quarter?” We monitor how markets are going to develop and prioritize opportunities that will generate the best growth over the next four to eight quarters. We’ve also created a

3

Based on interview with Mark Garrett and Dan Cohen that appeared in “Reborn in the cloud,” McKinsey Insights, July 2015.