Strategy

Effective sales leadership in times of crisis

OLYMPUS DIGITAL CAMERAI just read an interesting interview in The Information with Moscow-born Misha Lyalin, CEO of Zeptolab, a self-funded mobile game maker that is one of Russia’s best known tech startups (source: https://www.theinformation.com/There-s-a-crisis-happening-in-the-Russian-tech-industry, for those who subscribe).  He said: “Any crisis is a great opportunity for people who are smart and know what’s up”.  The interview was really about the current crisis in the Russian tech sector, but his statement stimulated some thinking on my side for unrelated reasons.

Indeed, we have a crisis of our own in Norway, with the oil price currently at USD 69,17 and possibly moving further down.  I wrote a blog post some months ago about the same crisis when the oil price first fell below USD 100, and predicted lay-offs, reduced investments levels, technology risk averseness, and reduced investor interest in sectors with material couplings with the oil and gas sector.  Well, now it is much further down, and we are starting to see real impact.  Dagens Næringsliv today reported as an example an 80% increase in foreign investor’s interest in shorting oil-related shares listed on Oslo Stock Exchange, where the main index is already down 10% since summer (source: http://www.dn.no/nyheter/finans/2014/12/05/0734/USA/usa-i-dag-vedder-mot-norge).

The contrast between Mr. Lyalin’s statement and the general sentiment on Oslo Stock Exchange is stark, but is also a good starting point for a discussion of effective and ineffective sales leadership in times of crisis.  In this blog post I will explore the qualities of effective sales leadership, and effective leadership in general (as there is no material difference), in times of crisis.

Let us first start by defining crisis: In this context we will focus on externally driven events that dramatically and on short time-scales reduce our ability to conduct our business the way we are used to.  Poor execution, poor morale, or poor strategy does not in this context count as a crisis, and is to be considered mere self-inflicted wounds.  Typical drivers of a crisis are technology shifts, decreasing output prices, increasing input prices, and changes in the regulatory environment.

Effective sales leadership in times of crisis can be studied through three lenses:

  • What characterizes effective business strategies? Times of crisis are also times of great opportunity for (new and possibly incumbent) players, as pointed out by Mr. Lyalin.  This is also the story of Joseph Schumpeter in his work “Capitalism, Socialism and Democracy” (1942) about so-called ¨creative destruction’.  This is the story I would have liked to tell, but statistically and in terms of new business generation, the picture is mixed.  See for example the story about the PIIGS after the 2008 financial crisis.
  • What characterizes effective organizations? Times of crisis are also times of volatility, uncertainty, complexity, and ambiguity (VUCA).  VUCA management, a term derived from military terminology, requires a prepared and resolved organization, or at a deeper level, an organization that is able to: anticipate changing conditions, understand implications, appreciate interdependence of variables, prepare for alternatives, and interpret and address relevant opportunities.
  • What characterizes effective individual leaders? Times of crisis probably require different leadership skills, at an individual level, from those in more stables times.  This is at least the assumption of many business books and much academic writing.  I have personally found inspiration in perspectives provided by leaders of emergency relief organizations, as well as from leaders in business: Suggested Bill George, former CEO of Medtronic and professor of management practice at Harvard: face reality, bring people into your confidence, ask them for help and ideas, gain their commitment to painful corrective actions, and volunteer yourself before asking others to sacrifice (adapted from http://guides.wsj.com/management/developing-a-leadership-style/how-to-lead-in-a-crisis/).

That said, the above is to some extent theory, and reality is that technology SMEs will have to do the following in times of crisis: keep existing friends (= customer, partners, suppliers, investors and employees) happy, be flexible about what to offer to the market, seek out a limited number of selected new opportunities in the market and pursue those aggressively, and preserve cash (or in Bill George’s words: “Build a mountain of cash, and get to the highest hill”).  Essentially, the same recipe applies at the EVP Sales & Marketing level.  And, just hunker down will not save your bonus, your option package, and your company.

Next week I will close the year by reviewing some KPIs that you may want to implement in your sales organization to drive performance; as nothing is like some serious business thinking during the Christmas holiday period and we all want to get off to a solid FY15.

Discussion

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