I had the opportunity to present at CFO Enterprises annual
Corporate Performance Management (CPM) conference in New York last week. Robert Kaplan opened the conference with an
update on The Balanced Scorecard and Activity Based Costing. He used some great examples of companies like
Volkswagen to illustrate how organizations are mobilizing the entire company towards
executing a few key strategies utilizing the Balanced Scorecard. David Axson, of Accenture (formerly a partner
at the benchmark research firm – The Hackett Group), opened the second day with a great session on
our need to recognize that the speed and impact of world politics, business
events and even weather have an increasingly stronger direct influence on this
year’s financial plan. Organizations must
be more nimble in their planning, forecasting and budgeting processes in order
to survive.
Most of the speakers talked to the finance audience about
alignment, strategy and execution. Each
and every presentation I attended mentioned increasing revenue and increasing
forecast accuracy – from both a revenue and cost perspective. The challenge I observed however is that many
of the follow-on conversations led back to the traditional topics of how to
improve budgeting, consolidation and forecasting. This has been the traditional view of CPM
over the years. I believe that while
this is important and necessary, it’s missing a key element - sales force
alignment. It’s hard to find an organization that doesn’t
have strategies that involve penetrating new markets, selling more to
customers, launching new products, yet there was precious little
conversation about how to align and motivate sales teams in order to execute
these strategies.
Based on the feedback that I received at my session and the
follow-on conversations I had with attendees, it appears that I hit a nerve.
When CFOs think about strategy and organizational alignment their perspective
on what sales should be doing is quite often at odds with what the heads of Sales
believe. One example of this disconnect
is that most sales organizations are striving to introduce incentive plan
simplicity. Many CSOs believe their
sales compensation plans are too complex, too confusing, too rigid, and are
looking for ways to simplifying them in order to drive the desired behavior
from their sellers. Many of the leading
compensation plan consultants argue that a good sales incentive plan should have no more
than three components.
Yet when CFO Research Services surveyed CFOS about the same
topic, CFOs responded the most important thing that Sales could do to ensure
reaching its goals is to Encourage Sophisticated Sales Behavior. They want to drive up-sell, multi-year deals
and other high-margin offerings. The
goal is to drive bottom-line improvements and overall customer retention. Increasing sophistication is at odds with
increasing plan simplicity.
Both the Sales and Finance leadership are motivated to
improve sales but their views of the solution lead to conflicting tactics. This is just one area of the discord. Sales Self-Service, the right role for
business analysis, how best to set sales
targets, technology to support sales
management are just a few of the topics that Sales and Finance need to agree on
in order to work together to drive organizational alignment and driving
increased high-margin business.
When considering how to execute strategy and improve organizational
alignments CFOs and CSOs need to make sure that they are aligned first.
If you would like copies of some of the research I reference here just let me know and I will forward it to you.
