Afterword
Puzzled, we asked what he meant. “I haven’t always been in sales,” he explained. “I grew up in engineering but then spent time in the IT department, HR, and marketing. Sales is actually a new thing for me. What’s interesting is that I would think the Challenger approach would apply to almost any of these functions.” He continued, “When I was in IT, we were always talking about how to improve the ability of our folks to deliver value to our internal business customers . . . you know, to get out of ‘order taker’ mode and be seen as a trusted adviser, a consultant to the line, that sort of thing. Then, when I went to HR, it was the same discussion. Ditto for marketing. That’s really what Challenger is all about . . . and that’s not a problem only for sales reps. Have you guys thought of looking at this model in a non-sales setting?” In fact, we hadn’t, but our colleagues here at the Corporate Executive Board have. One of the great things about being part of a company like ours is that we have hundreds of colleagues around the world producing cutting-edge content for every corporate function imaginable. The Sales Executive Council is part of our broader sales and marketing practice, but we are just one of five major practice areas across the company. We also have practices in human resources, finance and strategy, legal and compliance, and information technology. All told, our company serves more than 200,000 business leaders across roughly 4,800 organizations in over fifty countries. That’s a pretty wide angle to get on any business issue. So we picked up the phone and asked a number of our senior research colleagues and even some of our members, “Does the Challenger model apply in your world?” What we learned was fascinating and suggests that this member might be on to something.
INTERNAL BUSINESS CUSTOMERS WANT INSIGHT TOO By this point in the book, one thing that should be very clear is that what customers want more than anything else is for their suppliers to deliver insight to them—new ideas for saving money and making money that they’d not previously considered. It should come as no surprise that internal business customers want—or perhaps more appropriately, expect—the same thing of the corporate functions they work with. Take, for example, HR. Our sister practice that serves heads of recruiting, CLC Recruiting, found that of all of the things that could account for recruiter effectiveness, it was the recruiter’s ability to be a strategic adviser that accounted for 52 percent of effectiveness, compared with 33 percent that was driven by pipeline management and only 15 percent by the ability to manage the recruiting process. That’s a striking finding. But what was more interesting was that only 19 percent of recruiters would currently qualify as true talent advisers to the business partners, according to heads of recruiting. We’ve heard something very similar from our colleagues in the CEB IT practice. Last year, our program that serves CIOs, the CIO Executive Board, looked at the question of how to improve the value that IT business liaisons (the IT staff who interface with line executives) deliver to their internal customers. Historically, this has been an area where IT departments have a lot of opportunity to improve. The CIO Executive Board found that between 2007 and 2009, the percentage of business leaders rating their IT departments as “effective” at applying IT capabilities to business needs actually declined. In 2007, 31 percent of business leaders rated IT as “effective,” but that number shrank to 26 percent in 2009. And it’s not just senior leaders who think IT has room to improve; it’s end users too. In a 2009 survey of more than 5,000 end users, we found that a stunning 76 percent disagreed with the statement that their job performance had improved because of a new system delivered by IT. What we’ve found in IT is very similar to what we’ve found in recruiting and, of course, sales. Business customers want their IT business liaisons to bring them new ideas for how they can use technology to save money or make money. Efficient service delivery is all well and good, but what the business really
values is insight into how they can compete more effectively. Think about the parallels here. In our study of business customers, we found that 53 percent of loyalty was driven by the sales experience—namely the supplier’s ability to deliver unique insight to the customer. These are very similar results to what we learned makes recruiters and IT business liaisons effective in their jobs. We also found that the reps who can deliver the unique insights customers are looking for—the Challenger reps—represent only 27 percent of all salespeople. Again, this is very similar to what our colleagues in recruiting and IT found.
BREAKING OUT OF ORDER-TAKER MODE The corollary to being a Relationship Builder as a salesperson is to be seen as an “order taker” in other functional areas. We heard this time and again in our discussions with our CEB colleagues. Our corporate communications practice, the Communications Executive Council, told us that communicators have long been fighting to move upstream in the value chain with their business customers. They want to move from “managing the message” to “managing the debate,” but in order to do this, they need to practice something called “tactical deafness.” In other words, heads of communications try to get their teams to purposefully ignore the specific tactic a business customer is asking for (e.g., “We need a press release on X”) so that they can instead dig for the strategic reason driving the request (“We need to make sure our competitors see that we’ve moved into this space”). Doing this, a savvy communicator will often identify opportunities to deliver much greater value than what could have been accomplished just by “taking the order.” One of the best practices we teach members in our communications program comes from the VP of communications at an auto manufacturer. She taught her team to practice a five-step process designed to enforce rigorous critical thinking about partners’ business problems. The process ensures that corporate communications’ solutions target the most significant drivers of partners’ performance gaps. Communications’ use of the problem-solving process has strengthened the quality and impact of its solutions to partners’ business problems and has increased the transparency of communications’ contribution to performance improvements. In this way, this practice has helped position the function as a consultative partner capable of driving business results. Sometimes the stakes are even higher. Companies rely on central functions like strategy, R&D, and procurement not just to take orders, but to make sure the business is thinking through its assumptions rigorously—whether those assumptions pertain to a new market opportunity or the price to be paid for critical inputs and materials. Our procurement program, the Procurement Strategy Council, recently looked at how Purchasing leaders can equip their managers to effectively challenge line customers’ deeply held beliefs. “In order to generate truly innovative ideas,” our
colleagues explained to us, “procurement must be able to understand the strategy and—more important—understand the assumptions that underlie it. With this knowledge, procurement can go beyond analyzing spend data to find other areas that could benefit from procurement’s expertise. After learning the assumptions that underlie the business’s strategy, procurement should push back on weak points to determine which parts of the strategy are based on false or questionable premises. Challenging these ideas and coming back to the business with a superior alternative will generate significant improvements to the company.” R&D is also an area where questioning assumptions and deeply held beliefs is of paramount importance, lest the organization end up blindsided by unseen risks or be held captive by its own biases. To help them emerge successfully from the current wobbly economy, companies are looking for “transformational innovation” from their R&D groups—in other words, they’re looking to feed the front end of the innovation pipeline. The payoff for getting this right is huge for a company: Our R&D practice, the Research and Technology Executive Council (RTEC), found that R&D organizations that excel at seeding the growth portfolio with transformational ideas generate double the new product sales relative to peers. In addition, transformational ideas have development cycles that are 11 percent faster than their competitors’, since ideas that are well scoped and connected to market needs require less rework. Our colleagues found that of all of the competencies for an R&D department to possess, “strategic influence”—that is, the ability of R&D to influence corporate and business strategies—delivered the greatest return in terms of enabling these transformational ideas. At the same time, nearly 70 percent of R&D heads our company surveyed reported that their teams lacked this important capability. The issue here, for most organizations, is that the front end of the innovation funnel is where many good ideas go to die. Companies, it turns out, frequently miss out on transformational innovations due to R&D’s inability to convince business partners of an idea’s merit. The reason so few ideas are successful in the market is often because R&D scopes out good ideas, fails to convince the business of the relevance of ideas, or is unable to connect ideas to market needs. In response, our RTEC colleagues have pulled together a series of best practices—not unlike what we’ve delivered in support of the Challenger Selling Model. The practices they’ve been out teaching their members have to do with new ways of arming the R&D team to challenge the entrenched assumptions of the business, avoid knee-jerk rejection of new opportunities, and compress the time it takes to collect feedback on early-stage ideas.
SPEAKING THE LANGUAGE OF THE BUSINESS A common, though very tactical, pitfall we see internal business functions struggle with is their inability to communicate to business partners in terms they understand. More often than not, this is because folks at the corporate center are experts in their specific domain area, and while their knowledge of their functions—be it legal, IT, or HR—instills confidence in business partners, it does little to assist these functional experts in communicating compelling ideas and insights. One financial services company we work with in our customer service program, the Customer Contact Council, described for us what is an evergreen problem for customer service: getting the business to take action on customer complaints. Historically, they had presented complaint data in “call center terms,” that is to say, in terms of number of calls, total time required to handle complaints, etc. But they found it difficult to break through with business customers. In response, they developed a “complaint-to-market impact” model that helped them calculate, for any customer complaint, what the likely financial impact would be for the company. Suddenly, business customers were all ears. According to the VP of customer service, “There are always customer issues that end up ingrained in the organization. This data—because it’s in clear terms you can’t ignore—really puts the issues right in your face. It helps us find systematic issues and convince others that it’s worth partnering with us to fix them.” One of the worst offenders when it comes to technical jargon is legal, as technical a function as exists within the large corporate enterprise. One member of our legal program, the General Counsel Roundtable, told us that it’s an area where he spends a fair bit of time and energy developing his team: “Skills attorneys learn in law school aren’t the ones that will make them effective in a business setting. As law students, attorneys learn to write long, technical briefs. These are great for a judge, but they’re terrible for a businessperson. We spend a lot of time on how you communicate to your business partners. I even bring in a communications coach to help them stop saying things like ‘whereas’ and ‘heretofore’ in their presentations. They’ve got to be able to engage with the business if they’re going to be successful in an in-house legal setting.” This particular general counsel goes on to explain that it’s not just technical
jargon that gets in the way of attorneys’ being effective in dealing with business customers; it’s also their natural predisposition to want to “call balls and strikes” rather than give the business options that will help them make decisions: “Attorneys like to give gray answers—this decision ‘might go for you or against you’—but that’s not helpful to our customers. They can’t make informed decisions with guidance like that.” To help get his attorneys out of this mindset, he actually enlists the help of an outside expert who teaches litigation risk projections. “We don’t have a crystal ball,” he explains, “but we can give probabilities on decisions and estimates for potential damages. That’s a lot more helpful to our business partners than saying a judgment ‘could go either way.’”
EARNING A SEAT AT THE TABLE Just getting rid of jargon and speaking in business terms might make the business listen to what you have to say, but it’s unlikely to earn you an invitation to critical strategy meetings or make you a “must-have” voice at high-risk decision points. It’s a way to not get ignored, but probably not a way to get sought out. To earn a “seat at the table,” corporate center staff need to deliver compelling insights, and there aren’t a lot of second and third chances given out here by busy line executives. One of our favorite tactics for picking those occasions to “plant the flag” and make your team an indispensable business partner is from our market research program, the Market Research Executive Board. Market researchers struggle with all of the problems we’ve discussed so far—they have, in most companies, propagated their own reputations as nothing more than “order takers,” and they struggle to relate to business partners because of how steeped they tend to be in their own technical domains. The practice in question comes from a high-tech company whose research leader had identified a number of opportunities for market research to substantially inform strategic debates going on at the highest levels of the company. The problem was that the market research function was newly centralized in the company and hadn’t yet earned a seat at the table with these other senior leaders. As the head of research at the time explained, “We were able to identify areas where we could advise the firm strategically but were not yet in a position to be heard by management. They first needed to experience exactly what a strategic adviser is capable of doing, so the challenge was finding the opportunity to show my group’s abilities.” To make sure that his group put its best foot forward, he established a handful of criteria that would ensure they wouldn’t waste an opportunity to make the right first impression with senior leadership: (1) The project had to correspond to an issue of significance on management’s agenda; (2) there had to be a high likelihood that the research team would uncover significant insights; (3) the project had to be within the group’s expertise; (4) there had to be a high probability of resolution to the issue; and (5) the project had to have low resource requirements. Sound familiar? The criteria of the head of market
research bear a real resemblance to what makes for a good teaching pitch. In fact, some of them are identical to the SAFE-BOLD Framework we discussed in chapter 5. The criteria helped the research department deliver compelling insights in their first presentation to the management team, ultimately doubling the number of strategic projects they were asked to complete and increasing the department’s budget by 65 percent. “The trick,” the director of the team explained, “is finding the right issue. Once you achieve those early successes, doors start opening and executives make time for the group because they know we are going to have something important to say.”
A PERMANENT RESET? At the Corporate Executive Board, we offer a number of similar training programs for corporate center staff across our memberships. Our HR and Finance Leadership Academies, for instance, are heavily focused on building consultative skills for high performers within these different corporate functions at our member companies. Similarly, our market research program offers consultative skills and presentation skills training. All of these offerings are consistently sold out, suggesting that this is—at least for now—a pressing issue for functional leaders. But will demand for these kinds of skills and capabilities fade? It’s hard to predict what skills will be in vogue in five or ten years in large companies, but we would argue that it’s unlikely that business customers will lower the bar anytime soon for their corporate center colleagues. Internal customers, like outside ones, will continue to be open to new ideas for saving money or making money and they will reward suppliers—whether external suppliers or the corporate functions that support them internally—who bring insight to the table. While the business may have no option but to work with an internal supplier, they often hold the purse strings, and the gap between funding to keep the lights on and funding for large-scale projects and solutions can be quite wide indeed. We suspect that the Challenger concept resonates so well with other functional areas beyond sales because it suggests a promising alternative to the current state in which many functional leaders find themselves today. Just like the supplier fighting for a customer’s loyalty, functional leaders want—for themselves and their teams—a seat at the table where the biggest business decisions are made. The Challenger model offers at least a starting point for these teams to stand up and be counted in a way that is fundamentally different from the reactive, order-taking world.
ACKNOWLEDGMENTS PRINCIPAL CONTRIBUTORS While this book has two authors on the cover, it is, like all Corporate Executive Board studies, the product of an enormous team undertaking. At the top of the list of contributors are three individuals who, along with the authors, formed the core of the research team behind this work: Karen Freeman Karen served as research director of the Sales Executive Council from 2008 to 2010 and was the driving force and principal thought leader behind the original Challenger study, Replicating the New High Performer, in 2009 as well as the follow-on manager effectiveness study, Building Sales Managers for a Return to Growth in 2010. It was her unfailing commitment to delivering the most powerful and provocative research possible—in effect, her ambition to push the thinking of even our most progressive members—that ultimately made the Challenger study the most successful ever delivered by the Sales Executive Council. Karen has also served as research director of SEC’s sister program, the
Marketing Leadership Council, and was a recipient of the “Force of Ideas” award, one of the highest honors bestowed on a Corporate Executive Board employee, in 2010. She is currently managing director of learning and development for the Corporate Executive Board. Timur Hicyilmaz Timur has served as SEC’s head of quantitative research since 2005. In this capacity, he has been the quant “visionary,” survey designer, and principal modeler and data analyst behind all of SEC’s major research initiatives, including all of the major quantitative studies that underpin the findings discussed in this book. Timur’s keen quantitative skills are second only to his incredible capacity for using data to reframe the way managers think about their organizations and his amazing depth of knowledge in B2B sales and marketing. Timur currently serves as a senior director within the sales and marketing practice of CEB, where he continues to oversee all of the quantitative research for SEC, MLC, and their sister programs. To this day, he is one of our most sought-after researchers for engaging in member conversations, especially around large-scale strategic issues. Todd Burner
Todd Burner served as the day-to-day project manager on both the 2009 Replicating study as well as the 2010 Building study. As team leader, Todd devoted more time to these research studies—including countless early morning, late evening, and weekend hours—than anybody on the team. A perfectionist at heart, Todd held his team to an incredibly high bar, knowing that only the most insightful content was worthy of our members’ time and attention. Without Todd’s intellectual rigor, commitment to excellence, and dedication to his team, it is doubtful that these studies would have been delivered on time, let alone at the standard they were. A gifted business leader, Todd currently serves as research director for the IT Leadership Exchange, the Corporate Executive Board’s program for middle-market CIOs. WITH SINCERE THANKS Beyond the principal contributors to this research, there is a long list of individuals and organizations without whose commitment and support this research and this book would never have seen the light of day. First, we owe a tremendous debt of gratitude to the leadership of our firm, especially our chairman and CEO, Tom Monahan, and the general manager of the sales and marketing practice, Haniel Lynn. It was their commitment to our company’s core values, especially what we call the “Force of Ideas,” that kept
the organization steadfastly focused on delivering major, groundbreaking research to our members, even in the depths of the recession when it might have been easier and more expedient to focus resources elsewhere. With the support of Tom, Haniel, and our company’s senior leadership, we were able to concentrate the firepower of a truly awesome research team on discovering and defining the Challenger Selling Model. Specifically, we wish to thank current SEC and MLC research team members Jamie Kleinerman, Victoria Koval, Patrick Loftus, Patrick Spenner, and Josh Setzer; we also wish to thank current SEC research director Nick Toman, who has continued to lead the SEC team in exploring the Challenger Selling Model and building resources to help our members implement it within their own organizations. We also owe a tremendous amount to a number of former SEC and MLC researchers who each had a profound impact on the research that went into this book: Mary Detterick, Brianna Goode, Jason Grimm, Rob Hamshar, Hadley Heffernan, Andrew Kent, Aaron Lotton, Ashok Nachnani, Laurel Nguyen, Woody Paik, Tom Svrcek, Alex Tserelov, and Barry Winer. Beyond the research team, we are supported by an all-star cast of executive advisers who bring the content to life for our members. The advisory function, which is headed by Tom Disantis in SEC and Katherine Evans in MLC, plays a critical role in the research process at CEB. In addition to Tom and Katherine, advisers who’ve heavily influenced this work include Dave Anderson, Anthony Anticole, Anthony Belloir, Jonathan Dietrich, Michael Hubble, Doug Hutton, Meta Karagianni, Rick Karlton, Matt Kiel, Ted McKenna, Peter Pickus, and Stacey Smith. Where our member advisers leave off, our own consulting group, SEC Solutions, picks up. As we’ve pointed out in this book, the SEC Solutions team is responsible for providing customized engagement-level support to member companies looking to implement any and all of the elements of the Challenger Selling Model. Led by Executive Director Nathan Blain, Practice Leader Simon Frewer, and Member Services Leader Sean Carr, the SEC Solutions team is a world-class outfit, and the offering they have created in this space, the Challenger Development Program, is the envy of the industry. Beyond these three individuals, many SECS team members—including Joe Bisagna, Charlie Dorrier, and Jason Robinson—provided ongoing feedback on this work. On this point, one SECS team member—Jessica Cash—deserves a special thank-you for spending countless hours with this manuscript, helping us to significantly sharpen the teaching and insights contained herein. We also owe a tremendous amount to the SEC Solutions facilitator team—former sales and marketing leaders from our member companies, such as Tyrone Edwards, former
head of North American sales at Merck, and Drew Pace, former head of sales at Bank of New York Mellon—who have continued to help us spread the word about the Challenger Selling Model and refine our thinking on what it means to take control of the customer conversation. Ours is a unique craft and we and our teams rely heavily on the thought leadership and mentorship of those in our company who are best at what we do. Eric Braun is the sales and marketing practice’s head of research and has been intimately involved in the Challenger research, alternately serving not just as chief of research quality control but as insight “Zen master” to our team. His fingerprints are all over this research, and the end result is much better for it. Before Eric assumed this role, we had the privilege of studying under several research legends and masters of the “CEB Way,” including Pope Ward, Tim Pollard, Derek van Bever, and Chris Miller. At different points in time over the past decade, these individuals taught us what it means to deliver research and insight worthy of our members’ time and attention. Last but not least, we are indebted to our own commercial team at CEB. Very early on, we were fortunate to be able to tap into the experiences and insights of our own “homegrown” Challengers such as Kevin Hart and Kristen Rachinsky. These individuals let us sit in on their sales calls and endured our many questions about why they sell the way they do. Outside of CEB, we of course owe thanks to Neil Rackham, author of SPIN Selling and numerous other renowned works in the field, for his time and thoughtful consideration throughout this project. We are honored to be associated with Neil, the “professor emeritus” of the sales world. All of our work at the Corporate Executive Board is inspired by our members. They direct us to their most pressing issues, give generously of their time so that we can learn how these issues manifest for them and their commercial organizations, allow us to survey their reps, managers, and even customers, and, when called upon, to profile their best practices and tactics so that other members might avoid reinventing the wheel. Within a membership that now spans hundreds of companies and thousands of individual sales and marketing leaders, we would like to specifically thank a few of our current and former members for their above-and-beyond contributions to this research: Deb Oler, vice president and general manager of Grainger Brand, has been on the Challenger journey since long before it had a name. Her organization’s many accomplishments and contributions to the Challenger Selling Model have been discussed in detail in this book, and Deb herself has been unfailingly generous with her time since we first stumbled upon her groundbreaking sales approach in
late 2007. A true “guru” in her profession, she has continued to challenge us to further define the Challenger model and ask what’s next for B2B sales and marketing. Kevin Hendrick is senior vice president of sales for ADP’s North American Employer Service business. A true first mover, Kevin has taken the Challenger Selling Model and applied it to his organization as quickly as we’ve been able to turn out the research. The tremendous success he’s seen with the model aside, Kevin has been an invaluable resource to our team. Having a member who is so eager to apply the insights from our work and report back what he’s learned has helped to ensure that this work stays grounded in the realities of B2B sales and marketing and that its lessons stay practical, as opposed to simply theoretical. Finally, we wish to thank Dan James, former CSO of DuPont, who has been a guiding light for us from day one of this journey. As one of our leading members, Dan has given countless hours of his own time to help guide this research and provide feedback on it. While CSO, Dan gave us access to his reps, managers, and customers. He also agreed to be profiled for several best practices he and the DuPont team had ar-chitected. Since his retirement from DuPont, Dan has served as one of the principal facilitators of the Challenger and Manager Development programs offered by our SEC Solutions group and has been an ongoing adviser on this book, conducting numerous interviews, helping us think through some of the trickier implementation issues in the Challenger model, and even editing the early manuscript of the book itself. Speaking of editing, we would be remiss for not acknowledging the fantastic support of the many talented and dedicated professionals who helped shepherd this book through each phase of the journey: our agent, Jill Marsal of Marsal- Lyon; the terrific team at Portfolio, including our very talented editor, Courtney Young, and her editorial assistant, Eric Meyers; our very patient graphic designer, Tim Brown; our own excellent marketing and PR team at CEB, including Rory Channer, Ayesha Kumar-Flaherty, and Leslie Tullio; and last but not least, Gardiner Morse, senior editor at Harvard Business Review, for his support in helping us to unveil the Challenger Selling Model to the broader business community. The final thank-you is the most important one. This research and this book would never have been possible were it not for the support and encouragement of our families. Anybody who has written a book knows that it’s a big undertaking and that the price for the time it takes to get it done is often paid by those closest to the author. Matt’s beautiful and talented wife, Amy, and their four wonderful children, Aidan, Ethan, Norah, and Clara, showed nothing but patience and love for their
father and helped keep him sane and grounded throughout this project. His only regret is that The Challenger Sale is unlikely to be included in the Magic Tree House series, and thus is likely to go unread by the Dixon children for the foreseeable future. Brent can only wonder at his amazing wife, Ute, whose patience knows no bounds despite being sorely tested at times, and his two beautiful daughters, Allie and Kiera, who challenge him to see the world anew every single day. May you grow up to be Challengers in whatever you choose to do. But first . . . we’re going to Disney World.
APPENDIX A Excerpt from the Challenger Coaching Guide TEACH Pre-call Planning Questions • What business problem will you be focusing on with this customer? How do you know that this is of critical importance to them? How have you seen similar companies approach this problem?