Should Sales Drive the Corporate Culture?
A B2B firm typically consists of several groups: finance, marketing, engineering, manufacturing, and, of course, sales. In every such firm, there's one group that tends to create the corporate culture and thus drive the overall strategy. Usually, top management "strobes" with that group, even if they're not part of it. So here's my question:
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In B2B, the correct answer is Sales. Here's why.
The only reason a business exists is to make profitable sales.
Read that last sentence three times, because there's an entire MBA's worth of business wisdom in it. If you believe that statement is true, then the follow must also be true:
In a for-profit business, every job has a single purpose -- to help profitable sales take place.
Therefore, the value of EVERY activity inside EVERY for-profit business can be assessed by two criteria:
- Does it generate qualified leads, resulting in more sales, thereby increasing revenue?
- Does it reduce the cost of sales or cost of goods, thereby making the average sale more profitable?
- Finance. The job of the finance group is to make sure that the company is profitable. That's only possible if sales take place, so when finance groups throw roadblocks in the way of the sales team, they're actually shooting themselves in the head. While many CFOs get this concept, some continue to think of sales as an expense rather than the point of being in business.
- Marketing. Every marketing activity should either attract new customers (generate qualified leads) or make it easier for sales to close business (reduce the cost of sales.) For example, a direct mail campaign or branding exercise is wasted money unless it successfully attracts new customers, thereby potentially increasing revenue.
- Engineering. Every activity should focus on designing products and services that existing and future customers want, thereby making it easier to attract new customers, thereby increasing the revenue stream. New product designs that nobody wants to buy is wasted effort; even pure research (ala IBM Research) is a waste if there's no hope of a salable product.
- Manufacturing. Every activity should be focused on building high quality products that attract new customers, while reducing manufacturing and distribution costs. While those costs aren't traditionally counted as a "cost of sales", they are really the same thing, because both cost of sales and cost of goods are only meaningful concepts if a sale actually takes place.
Does this mean that the Sales group should be performing all these functions? Of course not. People who can sell have got no business pushing pencils in the back office. Instead, the Sales group should be telling these other groups what they must do, at least in a general sense, in order to ensure that profitable sales continue to happen.
More importantly, all activity in all those groups must be measured and compensated based upon whether those profitable sales eventually take place. That's always the case in B2B.
In B2C, the case is a bit different, because the selling process is sometimes split off from the other functions, often in the form of a retail establishments and distributors that are only loosely connected to the companies that make the products.
In B2C, the best run companies tend to have an engineering culture, although I've seen some that do fairly well being run by the manufacturing group and, more rarely, by the marketing group.
But even in those firms, the NUMBER ONE concern is always -- will people buy this product? Sales, in other words. So while the sales group isn't creating the culture, the sales function is still the guiding light.
There's a word for companies that forget this simple fact and start thinking that they're in some other business than selling something to somebody. That word is "bankrupt."