1. MAKING
BUSINESS
STRATEGY WORK
BY STEVEN R. WATERS
Avoiding Einstein’s Theory of
Insanity
It’s the end of the quarter and the company has missed its projections for
the third quarter in a row. CEO Thom Nolan has assembled his executive
team for an offsite meeting to try and understand what is going wrong and
why. Nolan has been in his position for 18 months and had high
expectations for turning around the company’s lackluster performance.
Not completely satisfied with his inherited management team, Nolan
brought in several star performers from his previous company. Together,
they began an overhaul of the new company’s business strategy. After 6
months of development, the new strategy was announced with some
fanfare at an all-company meeting. It showed promise for the first two
quarters but now things were beginning to look a bit bleak. As expected,
the Board of Directors was not happy.

2. 2
1
“The gap nobody knows is
the gap between what a
company’s leaders want to
achieve and the ability of
their organization to achieve
it.”
Nolan began the offsite meeting ability of their organization to
reviewing the previous quarter’s achieve it.”2 The frustration caused
Companies on average
results and the new business by this gap is often acknowledged
deliver only 63% of the
strategy. He then asked each but seldom discussed. Researchers
financial performance their
strategies promise division head to report on their estimate “that companies on
individual results with average deliver only 63% of the
recommendations on improving financial performance their
performance for the next two strategies promise.”3 The
quarters. There was a tinge of implications are clear: not closing
blame in the air. Even Nolan’s this gap poses significant risks to
handpicked performers appeared the business and impacts the ability
to be backpedalling. As each to sustain competitive advantage.
executive spoke, Nolan began to
Our firm conducted a survey to
wonder, “Is our strategy flawed or
determine if this gap is based on
are we just not executing it in a
reality or perception. We were
way that delivers the performance
specifically interested in the gap
we need?” Thom Nolan, like many
between business strategy and the
other chief executives, had tripped
performance of sales and
over “the gap that nobody
marketing teams. If we could
knows.” His next actions will
validate that the gap exists, could
determine whether he succeeds or
we identify the primary factors that
simply validates Albert Einstein’s
affect that gap? Once identified,
theory of insanity: doing the same
what actions should be taken to
thing over and over again and
“bridge the gap nobody knows?”
expecting different results.1
“The gap nobody knows is the gap
between what a company’s
(continued)
leaders want to achieve and the
2 © 2013 SRWGroup, LLC

3. 1
The vast
majority of
participants
saw
misalignment
of sales &
marketing
More than 140 executives and managers participated in the survey, 46%
The age-old
of them working for companies with revenues greater than $1 billion
(USD). The vast majority of survey participants felt that their company’s
problem: marketing
sales and marketing organizations were not well aligned with their hates sales and sales
company’s overall business strategy. Although a small percentage of
hates marketing
participants felt that marketing was more aligned than sales, the
identified factors of misalignment were almost identical for each
department.
Sales vs. Marketing
A couple of years ago a senior professor of marketing and logistics, at a
world-renowned business school, was approached with some questions
regarding sales effectiveness. “Before we begin,” he said, “you need to
understand that at this business school; we think of sales and selling as
high school.” (Is there any wonder why there might be some
misalignment between marketing and sales?)
The professor’s remark points to an age-old problem: marketing hates
sales and sales hates marketing. The reality is that both sales and
marketing can profit through a better understanding of their individual
roles, capabilities and responsibilities. When sales departments are not
aligned with marketing, our survey shows a strong, negative linear
relationship between sales and its ability to execute business strategy.
Even when marketing is strongly aligned with business strategy, its
effectiveness is stymied when marketing is not simultaneously aligned
(continued)
3 © 2013 SRWGroup, LLC

4. 3
2
with sales. The net result is the marketing.
same: peak performance can only
What to Look For In Your
be achieved when business
Organization
strategy is aligned with the actions
of sales and marketing Many executives state to us their
departments when they are in concerns over their sales
alignment themselves. departments not truly
understanding their customer’s
The Top Three
businesses. We’ve heard
We know that the gap exists and comments like, “our salespeople
that top performance is achieved are very product-oriented and
by bridging that gap, but what need to have a business discussion
factors contribute to the gap? Our with our customers, not a product
survey found both sales and discussion.” If this is occurring in
marketing departments in your organization, take a close
agreement on the following: look at your marketing department
as well. Our data indicates that
1.) No clear metrics for
when sales is too-focused on
defining or measuring
internal issues in your company,
success.
then the marketing department will
2.) Lack of accountability also be too-focused on internal
between stakeholders. issues and not focused on the
customer. It is simply impossible to
3.) Poor communication
differentiate your organization from
between executive teams,
your competitors and sustain
sales and marketing.
competitive advantage when your
Where there are no clear metrics, a sales and marketing departments
lack of accountability between are inwardly focused.
stakeholders exists and vice versa.
Suppose, for example, that your
The research data does not make organization is selling paper to
clear which comes first: the JCPMedia, the print and paper
chicken or the egg. What is clear is group responsible for creating the
Where there are no clear metrics,
a lack of accountability between the necessity of defining success in JCPenney catalog. They buy in
stakeholders exists and vice terms that sales, marketing and excess of 260,000 tons of paper
versa.
management all understand and yearly. JCPMedia’s business
can measure. What is also clear is criteria for buying? Beyond price,
that when sales and marketing are quality and availability, JCPMedia
not aligned, there WILL exist a lack evaluates their suppliers’
of accountability between environmental, forest
stakeholders. Where there is poor management and antipollution
communication, there WILL be strategies and practices.4 In other
poor alignment between sales and words, it’s not all about the
4 © 2013 SRWGroup, LLC

5. product! To successfully sell to stakeholders. Look closely at your value to your customers while
JCPMedia, your organization’s compensation plans. Are you increasing shareholder value.
sales and marketing must be tightly inadvertently rewarding the wrong Frustration will recede and sanity
aligned to compete effectively behaviors? A direct line of sight is will return. (For the record, we’re
and to earn the right to “eat needed between the strategy and sure about the frustration but
sideways” into the account. individual accountability. maybe not the sanity!)
In our opening example, CEO Finally, are you effectively FOOTNOTES
Thom Nolan thought that he had communicating the strategy, the
1 Attributed
communicated the new strategy measures and the implication of it
effectively. The reality is that poor all? To successfully execute the 2 Bossidy, Larry, & Charan, Ram. (2002).
communication is the biggest strategy, the specific actions Execution: The Discipline of Getting
Things Done. New York, NY: Crown
roadblock to solving the gap required of each stakeholder must
Business.
between strategy and execution. be clearly understood and each
Our research indicates that this is stakeholder must be in agreement. 3 Mankins, Michael C., & Steele,
the primary factor of misalignment. Remember: you are “better off Richard. (2005). Turning Great Strategy
Mankins and Steele point out that with a strategy that is 80% right and into Great Performance. Harvard
Business Review, July-August, p. 5.
poorly communicated business 100% implemented than one that is
strategies “makes the translation of 100% right but doesn’t drive 4 Kerin, R.A., Hartley, S.W. & Rudelius, W.
strategy into specific actions and consistent action throughout the (2004). Marketing: The Core. New York,
resource plans all but impossible.”5 company.”6 NY: McGraw- Hill/Irwin. p. 121
Insanity to Sanity So this year, expect different results
5 Mankins & Steele, p. 7
by expecting something different 6 Gadiesh, O. & Gilbert J.L. (2001, May).
Regardless of the size of your
from the sales, marketing and Transforming Corner-Office Strategy
organization, you can restore sanity
executive stakeholders in your into Frontline Action. Harvard Business
to your business strategy and
organization. By closing the gap Review. p.17.
bridge the gap between it and the
between strategy and execution,
day-to-day execution of your sales
you will significantly impact your
and marketing departments. The
first step is to evaluate your current
situation carefully by challenging
your assumptions and identifying
Steven R. Waters is
performance gaps. Doing so will
President of the
help you identify the right measures
SRWGroup, a results-
for defining success and discard
driven business strategy
those which confuse the
consultancy
organization. This is easier said
headquartered in
than done and may even require
Minneapolis, MN. Steve
third-party evaluation and analysis.
holds a MBA from the
Second, make sure that the University of Minnesota’s
identified measures are tied to Carlson School of
individual performance of the Management.
5 © 2013 SRWGroup, LLC

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