Leading Through Chaos: Aligning Strategy, Sales, and Human Judgment in the Age of AI

Welcome back, everybody. Now you're in for a treat. We have Frank Cispidas in the house. He's professor at Harvard Business School. He's a bestselling author, and I want to welcome you. Thank you for your time. Frank, tell us more about leadership. What should sales leaders be thinking about in this chaotic time?

For me, one of the perennial issues with sales is aligning the company's strategy, its direction, with what actually happens in sales. Execution. That's a big deal for companies. Most companies are not well aligned. And there are a couple of reasons for that. One is a dirty secret in many companies that they don't really have a coherent business strategy. I've been part of as many strategy meetings as almost anyone. And when you cut through the rhetoric at a lot of these meetings, what leaders mean by strategy is let's pick a big number and go for it. Unfortunately, it's a little more complicated than that. Secondly, especially in larger companies, research indicates a big misfit. If you look at the planning processes now in the Fortune 500, all, on average, they take six to nine months to do that every year. While that's going on, the market is doing what the market is doing. And sales in particular has to respond in market time, account by account. So even if the output of the strategy meeting is a great strategy, which is obviously a big if, very often it's irrelevant to sales because they've had to make these changes. And the third thing is another dirty secret about a lot of businesses. I had a colleague here at Harvard who did really a terrific bit of research about the composition of the C suite senior leadership groups in the Global 1000. And what she found is that over the last 20 years, the number of executives reporting directly to the CEO has on average doubled in those companies, twice as many. But if you step back and ask, who are these people? What were they doing before they were senior leaders? The reality is that very few of them were general managers. In the sense Gerharden, which I think you and I use that phrase. You know, a GM is somebody running a line of business or has P and L responsibility. There were mainly specialists. You know, the cio, the head of data science, you know, now the VP of AI or something like that. And the reality is that fewer people than ever before have made it to senior executive positions with prolonged customer experience, you know, customer engagement experience in their career trajectory. That also contributes to the misalignment. So that's where I started. Whatever leadership is about in businesses, it's about producing and executing a relevant market. Strategy that's getting tougher to do, and it leads to that misalignment.

The second issue to me is, is that strategy communicated effectively?

Yeah.

To the people in the field, the.

Answer based on the research is a pretty definitive no. You know, research here consistently comes up with results that less than 50% of people in companies, when you ask them, do you understand your company Strategy? Less than 50% say yes, which means more than 50% are saying, I don't know. And here's the really perverse result of the research. The closer you get to the customer. In other words, when you ask that question of people in sales service, the percentage of people who say, I understand my company strategy goes down. It doesn't go up. Now, there's a reason we call them sales reps. They represent the company with the customer, and they are the ones that the research tells us are often the most in the dark about strategy and the clarity of that strategy.

There are two ways to look at the strategy. Whether it's centralized, it's from the top down, or it is pushed to the bottom, where people get delegated, they get empowered, and they can make decisions like, you know, one typical example is Ritz Carlton, where everyone is empowered to settle customer issues. Whereas in other companies, it's centralized and you have to go three levels up before you can get to a decision maker.

There's usually a pendulum effect here. The same company will go back and forth. And look, both you and I have been around long enough to have seen that pendulum swing a number of times. No strategy is forever. You got to think about a strategy like buying a perishable good in a grocery store. You know, when you buy milk, cheese, whatever, there's usually a sell by date, right? It's good. Up until this date, every strategy has a sell by date. The problem, of course, is you don't get an email from the market or from Harvard Business School telling you when you've reached your sell by date. Right? That's a judgment call that people have to make the second comment. And, you know, once I say this, it sounds so obvious, but I find even smart executives forget this. It is not the responsibility of the market to be nice and kind to your strategy. It is your responsibility to adapt to the market. That's the way the world works. And that's what leads us to that pendulum. And I think, quite rightly, you're looking at both ends of the pendulum. Now, when do you push it out there? When do you empower people at the coal face, at the front line, in General, in the early stages of a market or product life cycle, when you're still engaged in what people call customer discovery, what is our ideal customer profile? What's not, what do we know about their buying criteria, and what does and does not resonate when you're still in the process of figuring out a product market fit, or in some markets where the use cases for the same product are very, very different, and as a result there are distinct segment differences, that's when you push it out there, because that's where real knowledge is. When do you bring it back home to the Vatican? Right. When do you centralize in general? When you're scaling? When you already know the answers to those other questions? Or in certain markets where there are significant scale economies in training your people and having them do it more or less the same way, I don't think there's anything wrong with that pendulum back and forth by itself. The world changes. You've got to stay up with the changes. The issue is, are you in the right place at the right time on that pendulum swing?

What is the best way to respond as a leader in a time of chaos, where people need clarity and people need to remind it, what is not negotiable, what is constant and what needs to change?

We certainly live in a world of high uncertainties and lots of different stuff happening faster than ever. And that is a challenge for leaders and especially a challenge for sales leaders. I think you're using the right word to frame the situation. Clarity. You got to begin there. That's the first thing. There is a wonderful bit of research that was first done over 20 years ago, and it has since been replicated at least 30 times. And what these people do when they do this research is they talk to the top 10 leaders in 125 companies around the world. It's not the same 125 each time, but if you think about the Global 1000, they're picking 125 of those companies each time. And they ask each of the top 10 leaders in each company, what is your company's five most critical strategic priorities? So you can see how the arithmetic works. If all 10 of the executives in a company said the same things, the number that comes out would be 5. If each of them were saying 5 different things, the number that comes out would be 10 times 5 or 50. After doing this research over 30 times, trust me, 30 times 125 is a good database for this kind of research. But most Harvard Business Review articles are based on two or three examples. You know, and the author tries to generalize to the universe, the median number of top five priorities that comes out is 35. Now, I'm going to ask a question and some people in our audience may laugh, but I actually mean this question quite seriously. What is it like to work in any organization that has 35 top five priorities? How are resources being allocated? What's the capital budgeting system like? The reality is everybody gets a little bit. What happens very quickly is that that company with 35 top five priorities, it very quickly becomes what I call a global mediocrity. In other words, it's actually pretty good at lots of different things, but it's not very good at any subset of those things. And whatever else you know about strategy, strategy is about being good at certain things that really matter to our target customers and that we can do faster, better, cheaper than our competitors. So that's number one. Number two is communication. It is very, very difficult to to over communicate in most organizations. The single most common complaint I've heard in my career from CEOs is, you know, darn it, we've got this new product, new initiative, whatever. I keep getting these questions, I've already told them three times, and I always cite the research about how often we now know people must hear an ad before it registers. And that number is about 11. So every time I hear a CEO complain, I've already told him three times, I say, great, you only have eight times more to go. And a lot of people get bored doing the same thing. It is an important part of management and leadership priorities. And then communicate, communicate, communicate.

What are the core principles of selling and leadership that remain constant? And no matter what technology comes on the market, those things remain constant.

And what changes sales is very, very context specific. Right? It depends on what you're selling. Selling software is different than selling consumer durables is different than selling professional services, etc. It's culturally specific. It depends where you're selling and to whom you're selling. Selling in the United States is different than selling in Latin America or the Middle east and so forth. And yet it's an area of business where many, many people make these huge generalizations unsupported by any data except what in academia we would call n equals 1. When I sold for X, which by the way was 15 years ago, here's what made me successful and I'm sure it'll work for you 15 years later in a different market. There's a lot of that that goes on. You got to cut through that and essentially Understand that it is specific. That's where you begin to find the timeless principles. Timeless principle number one. The most important thing about selling is the buyer, not the seller. So you've got to figure out, because it's context specific, who is our target buyer, how do they buy? Why do they buy? And there is no one answer or secret sauce to that. That is an empirical question. The second thing is, and you know, this is quite rightly an important theme in the Selling Power conference this year, technology is a tool. It's becoming an increasingly important tool, but it is only a tool. At the end of the day, managers must manage. And that's especially true in sales, where people are and will remain very, very important. And then the third, a principle, and I think it's related to the second. We're obviously living through a data revolution, right? And it's only the early stages of that data revolution. We still have a lot more to go. Sales historically has been a kind of black box in many organizations. Rest of the company doesn't really understand it, but if the black box throws off its quarterly volume, you know, leave them alone. Those days are changing because of the data revolution. And the reality is most companies are already awash in data. They have more data than they know what the heck to do with. But the result is that they use data to generate what I call a lot of factoids. And by that I mean interesting, probably true, but interesting. But only marginal things that are relevant to our buying and selling process. So you the data is the data, the questions are the important ones, and that's where the managers come into play. Those are my timeless principles. Buying. Don't confuse the tools with the people that have to use the tools. Data is vital. You can't run a salesforce these days without good data. But at the end of the day, data doesn't give you answers. It has to be interpreted and applied.

So the role in that age of uncertainty is the leader needs to become more of an orchestrator than before.

I think that's right. But begin by avoiding the negatives. I mean, there are many people that believe they can manage this area of business through a spreadsheet. They really believe that. And the answer is no, you cannot. For reasons that I think once they're pointed out, most people get the spreadsheet is a lagging indicator. Sales is about tomorrow, it's not about yesterday. And secondly, I always remember a comment that a colleague of mine made when I was a new professor. We were doing research about sales and he was twice my age and at one point he's looking at the day and he says, you know, Frank, people are such a messy variable. And they are a messy variable, but that doesn't mean you can't ignore them. That's like ignoring the entire equation.

So what makes the world messy today is AI. Let's talk about the real role of AI in sales. What is your take as a big picture issue?

I think the important thing about AI, I don't think it eliminates sales. Sales, right. You hear a lot of talk that you've always heard this talk. You and I have heard this talk, you know, for over 30 years. Sales will be disintermediated. People in the 1930s were saying salespeople will be obsolete because there's a new technology called the telephone. And once we have telephones, why do we need salespeople? Why can't I just call you up and say, look, I need six of these? In the 1950s, the National highway system was being built and people said, well, that's going to eliminate salespeople because now people can just drive around and see what's available. Right? That didn't happen. The information superhighway of the 1990s, now we hear the same thing with AI. It's the same old song. It does not eliminate these people, but it does change what they need to do for a living. And in the case of sales, its major impact will be reskilling, upskilling. And then, and this is where I think you, you really focus for 2025, 2026, 2027. You got to get back to what I'll call the core value proposition in AI. And the core value proposition is that the, the AI tool, the, the, you know, the machine learning language algorithm can do many tasks, not all, but it can do certain tasks either almost as good as a human being, sometimes even better. What that does is free up time for human beings to do what they can do better than machines because of judgment and a variety of other things. Now, in sales in particular, that is a big deal. If you look at the data, most salespeople on average are only spend about 30 to 35% of their time in actual customer contact. Now if you can make that 40% or 50%, that is not only a major productivity increase in most companies. What you're usually doing is also increasing the addressable market of the company. Because segments that were economically infeasible now become feasible. Would better go to market utilization. How do you do that? You begin by looking at the low hanging fruit. And in sales, when it comes to AI, the low hanging fruit I think is a lot of marketing tasks, you know, so called content marketing in many sales models. I mean in my experience, 80 to 90% of most content marketing collateral, the machine can do it in sales. Customer research AI was made for this. So you want to empower your people and you want to give them the tools to do that research before they call on customers. Sales administration tasks One of the reasons that the customer contact time on average is so low is because of all the administrative tasks most salespeople have, AI can help a great deal there. And then you know, email lists, establishing the cadence, especially in inside sales organizations for calls. All of that is low hanging fruit. And what I see going on is that the better companies with the better managers know where those leverageable tasks are and they're focusing the tools there and embedding it in workflows. And then the salespeople can make an extra call a day, which is five calls more per week, which is 20 calls more per month, etc. Etc.

So in order to win in the age of AI, we need to, in my opinion, go beyond the average level of critical thinking. We need to elevate that. So the question is, do you agree with that? And a second follow up question, how do you do that?

First I agree with that. That's one reason why I don't think salespeople will be replaced but their tasks will be different. Now how do you do that? No one easy answer because my old colleague was right. People are a very messy variable. But a couple of suggestions to our audience about where to look, where to begin. Begin by understanding one of the consistent results of research about how adults learn. And this especially applies to salespeople. Adults in your company are not studying for the final exam in my course. That is not what motivates them when they get up in the morning. What we know from the research. And again, this applies especially true to salespeople. It's what the researchers call modeling behavior, peer learning. In other words, salespeople learn the most. Not from a trainer, I hate to say this, not from a professor. They learn the most from the best of their peers. They watch their peers in action and they say, you know, the way you dealt with that price. Objection. Gerhardt, that was clever. I'm going to use it. The way you frame the value proposition. I hadn't thought of it that way. I can see why that resonates now. This is an area where technology is the good sales manager's friend. We have more and more technologies that do two things. They're able to disseminate best practice, good practice much more efficiently. And they're also able to deal with another characteristic of adult learning. Adults on the job pay attention to information when they need it and where they need it. This is exactly where technology helps. On the phone, on the iPad. Increasingly when the rep is in front of a customer, engaged in a conversation, you want to be using technologies to do that. The second thing I would say, and I think this is very important as a general rule what technology is doing, and I predict AI will accelerate this, but it's making companies more transparent to their customers. Right? We already know all the data about in an omnichannel buying world, you know, people argue about the percentage x percent of the buying cycle is already finished before they even talk to a salesperson. All right? One result of that is that sales in many markets, especially B2B is becoming more of a cross functional task. And what I mean by that is what we also know from the researcher is no matter how they bought, if they have an issue with the product, they're going to call the person who sold it to them. That's usually sales and it's sales job. No matter what their job description says, it then becomes their job to go back into their companies and and fix it. So I think also an important part of training and critical thinking for salespeople that for the most part is not part of sales training programs. Giving them cross functional knowledge of their own company and putting in place processes that help them establish relationships with those people. If you're in sales and you're smart, you go out of your way to make sure that you're nice to the people in delivery and order fulfillment because you want your customers to be at the top of the list. And that's exactly what you should do. Stuff like that is becoming more important, not less.

It almost seems that the salesperson needs to become like an ambassador between the host country and the home country. Where to speak the customer's language, understand the customer's problem, but also speak the company language, understand the company's offerings and value proposition, and mediate and use AI as a tool, but use more creativity, innovation and critical thinking to be a true partner with the customer.

Sales is a classic example of what people call a boundary role. They work at the boundaries of two organizations, the buying organization and the selling organization. And you're exactly right. Their role is to orchestrate and in practice negotiate how those things come together. All I'm saying is technology is making that a Wider and wider boundary role.

Let's go back to the thing that you told me before we started. You found a paper by Peter Drucker. Tell me about it.

It's an article that Peter Drucker wrote in 1965. And the article called the Manager and the Moron. And it's all about technology. The moron in Drucker's article was at the time the IBM system 360. Right. That was the big mainframe breakthrough. Drucker called it a moron because his point was that the computer, and this by the way, remains true. With AI, the computer can only respond to whatever is been put in it. It is still true. Garbage in, garbage out, right? That's the big issue with many of these AI tools. They can process enormous amounts of data, but the data quickly becomes out of date. The manager is the one who has to ask the right questions, decide what the goals are. Why are we using this machine to do whatever it's going to do? I don't know if Drucker was aware of this, but at about the same time there's a wonderful story about the, you know, the great artist Pablo Picasso, in the 60s, he was actually hired by IBM to sort of do some of the backgrounds on their ads. And apparently IBM gave him a demo of the System360 because they were impressed by it and they thought Picasso would be. But apparently after the demo he said, you know, computers are useless. All they can do is give you answers. But most of life is about the questions. That was also Drucker's point. And this hasn't changed with AI. If anything, what you earlier called those critical thinking skills, that ability to understand what it is we need to do and why that's become more important. You know, the AI tools themselves are, in my opinion, you know, they're coming down in price. I don't want to say they're commodities. But you know, these big companies that are literally investing hundreds and hundreds of billion dollars in data centers. Look, you can see what's going to happen. You're you. They're going to offer you significant discounts because they need to keep their data centers humming. That is not the scarce resource. The scarce resource, the potential bottleneck is knowing what the hell we want to do with these tools. And that's what the manager does, not the moral.

That is a good way to end this conversation. Frank, I can't thank you enough. And I recommend to the audience. Go and get Frank's book. It's the best book on sales management. Thinking about how to win in a market that is not transparent. Your book offers several keys to find the best way to the customer's heart.

Dear heart, as you know, flattery will get you everywhere with me. Thank you very much for those comments and thank you for inviting me. It's always a pleasure to speak with you. We'll do it again at some time in the future.

Thank you.