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Scrum for Sales: A B2B Guide to Agility in Organization, Performance, and Management
Scrum for Sales: A B2B Guide to Agility in Organization, Performance, and Management
Scrum for Sales: A B2B Guide to Agility in Organization, Performance, and Management
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Scrum for Sales: A B2B Guide to Agility in Organization, Performance, and Management

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Many companies want to make their sales agile. Some of them have tried to set up agile sales organizations, but such top-down approaches and big-bang rollouts seldom seem to work. This book shows how the elements of the leading agile framework “Scrum” should be applied to install agility in the salesforce, improve sales performance, and resolve typical performance issues in sales organizations. It contains concrete guidelines, real-world examples, and useful tools to create the necessary change step by step and built to last.

LanguageEnglish
PublisherSpringer
Release dateOct 30, 2021
ISBN9783030829780
Scrum for Sales: A B2B Guide to Agility in Organization, Performance, and Management

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    Scrum for Sales - Michael J. Scherm

    © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021

    M. J. SchermScrum for SalesFuture of Business and Financehttps://doi.org/10.1007/978-3-030-82978-0_1

    1. Agility Is More Than a Buzzword: Why B2B Sales Organizations Must Become Even More Adaptive

    Michael J. Scherm¹  

    (1)

    Straubing, Germany

    The most basic task of any B2B salesperson is easily explained: Help the customer to buy (Perreault & McCarthy, 2002). What B2B customers need from their salespeople has continuously changed over the course of the past few decades. Changes in technology, the market environment and customer preferences have meant that companies have had to re-assess and adjust the sales task and, with it, the role of their sales organizations and salespeople.

    Before the advent of the Internet and abundant digital data, salespeople helped customers process their buying decisions by providing information on their company’s products: technical specifications, prices, and other product-related information. George Akerlof (1970) emphasized the underlying role of information asymmetry in business exchanges in his seminal essay.

    Advances in information technology and telecommunications then made it possible for customers to have more and better information about vendors’ offers. Information asymmetry between vendor and seller was no longer an issue. At the same time, vendors’ products became ever-more complex solutions. The buyer’s main difficulty was now to maintain a clear view of the overwhelming variety of offers in the marketplace and understand how complex bundles of hardware, software, and services could help to solve their organization’s business issues. The Solution Seller, which has been prevalent since the early 1990s, helps the customer to do this.

    Not only have vendors’ solutions become more complex, but digitalization, Internet-driven new business models and the dissolution of established paradigms in an increasingly networked global economy have meant that virtually every aspect of human life seems to have become more challenging (Khanna, 2016). Accordingly, the challenges that businesses now face are no longer as transparent as they used to be. New competitors can pop up from anywhere—and grab market share in established markets at frightening speed—as shown by the example of Amazon , Google, Uber, or Netflix. The Consultative Seller supports buyers in their purchasing decisions by cutting through the dense fog of confusing challenges: of which they may have a blurry picture but not a sufficiently clear understanding to fully define what they really need.¹ Within the past few decades, the increasing complexity of the sales task has gone hand in hand with a shift away from a tactical focus to a more strategic role of the salesperson (Cravens et al., 2011).

    Now that the second decade of the twenty-first century has dawned, are we experiencing the advent of a new archetypical seller, the Agile Seller? Various economic trends, as well as the dramatic impact of the recent COVID-19 pandemic, suggests that the time may have come for a fully flexible way of selling. Here are five key challenges that corporate buyers face, and vendors’ salesforces must react to:

    1.1 It Is VUCA Time (Again): Both Buyers and Sellers Need to Become More Flexible

    VUCA (Ptak & Smith, 2019) is not necessarily new to companies and their sales organizations. Throughout economic history, there have always been periods of volatility , uncertainty, complexity, and ambiguity . The Vietnam War or the oil price shocks of the 1970s are well-remembered examples from the second half of the twentieth century. After the world economy experienced a phase of relative stability beginning in the 1980s (Konchyn, 2016), VUCA now seems to have returned stronger than ever. Since its inception in 1993, the simple moving average of the CBOE Volatility Index shows roughly three VUCA periods. The emerging markets crisis of the late 1990s, combined with the burst of the Internet bubble, the Enron scandal and the 2001 terrorist attacks on the World Trade Center still had a comparatively mild impact on the perception of volatility in the market. The financial crisis of 2008/09 then caused a considerably higher spike in the index before the COVID-19 pandemic drove the index to new peaks.

    The COVID-19 pandemic may be just another example of a black swan event (Taleb 2010). Or it could dramatically change the way we do business over the coming decades. While the real economic consequences of COVID-19 are still to be revealed, the danger of new pandemics will continue to loom over the globalized economy and not be easily forgotten.

    When business leaders are asked what will help them cope with the challenges of the VUCA world, the answer is often agility (Glenn 2009). Numerous surveys confirm that the vast majority of CEOs aspire to more business agility, particularly in light of the COVID-19 pandemic (Denning, 2020). Both buyers and sales organizations will naturally have to follow this path and become more agile: they will need to be sufficiently flexible to adapt to quickly changing, volatile business environments with uncertain outcomes. Consequently, sales organizations will need to change their offerings as well as their way of selling back and forth, depending on the customer’s most urgent needs at any given moment. The COVID-19 pandemic has shown how these needs can change within days: Buyers looking for solutions to support growth opportunities will have needed to switch into survival mode and find ways to sustain liquidity from 1 day to the next. Vendors’ salespeople, who may have been perfectly equipped with growth strategy toolkits, must suddenly make themselves useful by supporting customers’ crisis and cash management strategies. The pandemic also means that they can no longer do this in personal, face-to-face interactions—rather, they must do it remotely. It is, therefore, no surprise that, compared to pre-COVID-19 levels, digitally-enabled sales interactions are now seen as being more than twice as important as traditional sales interactions (Sharma et al., 2020, p. 238).

    Yes, it certainly is VUCA time again and, if they want to survive, vendors and their salespeople must adapt to sudden changes in customers’ business objectives and needs. Struggling to find the right term for their brainchild, the creators of the agile philosophy in the early 1990s also considered calling it adaptive philosophy, the idea being that the core of agility lies in its ability to adapt to changes.² Looking at today’s world, even sales organizations may profit from adopting Scrum as a leading agile framework.

    1.2 Changes in Technology and New Business Models Mean Both Purchasing Teams and Sales Organizations Must Become More Diverse

    New technologies are popping up daily. More and more industries are becoming technology-driven and near-tech: Software is eating the world, is how Netscape founder Marc Andreessen famously put it in the year 2011.³ As products become increasingly complex solutions, this, in turn, makes services all the more significant to companies’ revenue and profit. Since 1980, the volume of services in B2B has increased by 59 percent (United States Government, 2020). According to a study by the Aberdeen Group, services today deliver 25 percent of manufacturing companies’ revenue but 50 percent of their profit. They are the key revenue driver for a growing number of companies. Companies that expand their service offerings boast a 141 percent higher customer satisfaction score as compared to those that do not (Aberdeen Analyst Insight, 2013).

    One reason for the servitization of offerings is that customers no longer wish to own machines or assets (Baines & Lightfoot, 2013). In a volatile business environment, they do not want to freeze money in fixed assets as they did in the more stable old business world.⁴ Instead, they want to keep their business infrastructure and cost structure flexible. Consequently, they prefer to rent machines and tools or, even better, to pay for the outcome instead of the tool. There are numerous examples of how companies have adopted a service-based business model. For example, Schneider Electric, a leading French provider of building technologies, used to sell components and devices for heating, cooling and managing buildings. The company has now begun to take on the management of its customers’ entire building technology as a value-added service, helping them to optimize their energy consumption across all their facilities (Wheeland, 2010). In a similar vein, construction companies no longer buy drills and tools from Liechtenstein’s Hilti. Instead, customers increasingly choose a case-based compensation model and pay for the number of drill holes rather than the hardware required to drill them (Ramge & Morgenstern 2007; Neely, 2007, pp. 1–10). The trend towards servitization is rapidly speeding up across many industries (IDC, 2018; Stegman, 2015, p. 1f.; Brown et al., 2011, p. 3ff.; Sawhney et al., 2004, p. 35ff.; Raddats et al., 2019).

    In the software industry, Cloud offerings had initially shown a slow uptake in the market as customers were hesitant to have their data hosted by a third-party provider and off-premises. Now, however, the Cloud has come to dominate the software landscape, and market leaders like Salesforce.com have built their whole business model around software-as-a-service (Wood et al., 2016).

    Software vendors were among the first companies to realize that the traditional way of selling was no longer compatible with the new, service-based business models of the Cloud. In the old model, once a traditional, on-premise software solution had been sold, the salesperson’s job was essentially done. The customer paid the money for the solution on the vendor’s terms and conditions upon purchase, the commission was paid to the salesperson, and the customer was stuck with the solution whether or not employees actually used it. Cloud solutions shift the business model from ownership to on-demand, from predictability to flexibility. Initially, vendors attempted to lock customers into long-term Cloud contracts, similar to the maintenance contracts of the pre-Cloud era. However, customers and competitive forces have pushed an increasing number of them to design highly flexible offers that customers can suspend or cancel monthly. Traditional product sales meant demand fulfillment. In contrast, service selling means that vendors must generate demand continuously to ensure their solutions are used by their customers’ employees, partners, and customers (Aberdeen Group, 1998, p. 10).

    For the salesforces of vendors, this implies: It is no longer sufficient for salespeople to ensure that customers buy a solution. Rather, they need to ensure that customers embrace the value of the solution and that people in the organization use it. Adoption Selling is the keyword in this context (Wood et al., 2016). And vendors must win customers’ trust on a much broader basis than before: It is not enough to merely persuade the customer that their machine or tool will work fault-free. Now, they must convince the customer that their whole operating model—which is increasingly difficult to grasp—works flawlessly and is sustainable. From the customer perspective, the uncertainties associated with buying are now much higher than compared to the old, product-centric world (Beckwith, 2012, p. 85ff.; Wood et al., 2016, p. 147ff.).

    For companies, these changes in the selling environment have two consequences. Firstly, selling does not end with the sale but must cover activities at the tail end of the customer engagement lifecycle: vendors must help stakeholders throughout the customer’s organization understand that the purchased solutions are useful, and they must teach employees how to get the most out of these solutions. Secondly, salespeople alone are not enough. Any employee in the vendor’s organization who can help the customer increase the adoption of a solution can be seen as performing critical sales activities. In this sense, companies are becoming omni-selling organizations.

    The implications are particularly relevant for service employees (Sharma et al., 2020, p. 239), with service organizations still having a significant amount of work to do: More than 80 percent of companies covered in a study at the Ruhr Universität Bochum consider their service organizations to be insufficiently effective in selling even their own services. In fact, more than half of the companies surveyed say their service people do not sell at all (Schmitz & Huckemann, 2020, p. 16ff.) The same survey shows that more than 90 percent of companies see the salesforce, and nobody else, as being responsible for most customer interactions. Indeed, almost three-quarters of the companies surveyed see customer loyalty and the avoidance of customer churn to be the sole responsibility of the salesforce—even though these are key drivers of company profitability.⁵ Clearly, the shift towards the omni-selling organization will require a significant change in the mindset of most companies.

    The evolution of the omni-selling organization will necessitate that resources from all over the organization drive sales activities—and that those in the organization who are not yet able to do so will learn from those who do. Chapter 2 deals with how Scrum fosters interdisciplinary team and organizational learning, where the agile framework may provide useful support for companies on their way towards tackling the challenges of the changing business environment.

    1.3 Channels Are Shifting; So Is Customer Value

    The advances in the technology described above not only change what is being sold, but they also change how things are being sold. Rowland Moriarty and Gordon Swartz emphasized as early as 1989 the role of technology in sales and marketing in their HBR article, Automation to Boost Sales and Marketing (Moriarty & Swartz, 1989). Ten years later, Larry Friedman and Tim Furey’s The Channel Advantage (Friedman & Furey, 1999) outlined how digital and telesales channels were changing the way customers buy. Channels have been shifting and continue to shift: From face-to-face to tele to digital, and from human interaction to machines to artificial intelligence (Antonio & Glenn-Anderson, 2018). In large parts of the B2B market, for a long time the credo had been that transactions are too complex, and relationships are too intricate to allow anyone other than the highly qualified account executive to initiate, manage, and close deals.

    Things have changed fundamentally in recent years: Since telesales marked the first big shift in sales channels, digital channels have assumed an ever-increasing share of both B2B interactions and the B2B buying cycle. Seventy-five percent of B2B customers said they find it easier to buy from a website as opposed to a salesperson, according to a 2017 Forrester Study. And fully 93 percent of them said that they prefer closing deals online once they have made their buying decision (Forrester Research, 2017). Indeed, according to Toman et al. (2017), customers spend approximately two thirds of the B2B sales process researching online channels before they even speak to a sales representative. It is safe to assume these numbers are even higher today and that they are valid not only for re-buys and low-complexity products but also for customers who seek to solve highly complex business challenges.

    In parallel, an increasing portion of companies’ transactional business is being shifted to purchasing platforms. For example, Germany’s Adolf Würth GmbH & Co. KG, a world leader in mounting solutions and professional construction equipment, saw e-procurement grow by roughly a third in 2019 (EFKAM, 2020). Purchasing platforms and networks such as SAP Ariba, Mercateo and Newtron have also boasted impressive growth numbers in recent years, and continue to grow rapidly. Of course, COVID-19 has provided yet another push to the adoption of digital supply chain solutions (Galer, 2020). Having started out as electronic purchasing platforms for individual companies, these solutions are developing into collaborative purchasing networks, which take away part of the key functions previously fulfilled by vendors’ account managers: intermediating and networking (Forrester, 2019).

    As an ever-increasing part of the customer’s buying cycle shifts to digital channels, the question then is what will be left for today’s B2B salespeople? It is high time that B2B salespeople re-consider the value that they bring to the table for their customers. Maximizing the amount of work not being done, the Agile Manifesto⁶ asks teams to carefully evaluate the value added by the team, by each team member, and by each of their tasks—both towards the customer and towards the team itself. Alongside techniques like Value Stream Mapping,⁷ Scrum provides the framework to do this.

    1.4 Customers Have a Different Understanding of Value Than Vendors Think They Do; And Salespeople Need to Continuously Reflect on What It Is

    Even when sales organizations do reflect on the value that they bring to customers, they often get it wrong as customers expect different things from them than they think.

    When, back in 1970, George Akerlof emphasized the role of information in business interactions, it was the lack of information and, correspondingly, asymmetric information distribution that prevented people from buying. Fifty years later, exactly the opposite is true: It is the abundance of information that slows down or even blocks buyers’ decision-making processes.

    In general, the amount of information that people must cope with has exploded over the past century—and the growth seems to continue exponentially. In his 1981 book Critical Path, Richard Buckminster Fuller (1981) described how the Knowledge Doubling Curve has created ever-accelerating affluence of information over the past century: Until 1900, human knowledge doubled approximately every century. By the end of World War II , this period had shrunk to 25 years. Today, on average, the amount of available information is doubling every 13 months (Schilling, 2013). However, it is not the availability of information that challenges nowadays’ corporate buyers. Rather, finding the right information, separating relevant from irrelevant data, judging their validity and quality, and finally making sense of the data is where business people need help. According to Robert Kelley (1985), in 1985, 75 percent of the knowledge required in a person’s job life was stored in their minds. This number decreased to somewhere between 14 and 20 percent in 1997, and 8 to 10 percent in 2006. Corporate stakeholders need somebody to help them find the proverbial needle in the haystack of information—the needle that makes the difference between success and failure in their business.

    More information also means more choice—which is not always a good thing. In 2000, psychologists Sheena Iyengar and Mark Lepper from Columbia and Stanford universities published a study on how too much choice actually prevents buying decisions: They set up a sales booth for jam at a local food market and changed the number of different jams on display back and forth. On alternating days, people would find 24 and six different types of jam, respectively. As it turned out, more choices prevented people from buying: While the shop that boasted a greater variety of jams attracted more visitors, the one that provided a smaller choice made more sales (Iyengar & Lepper, 2000). Similarly, the abundance of information and choice are two key reasons why, in a Gartner study (2019), 77 percent of B2B buyers stated that their latest purchase was overly complex or difficult.

    It is not only the increased amount of information and choice that confront customers—it is also the increased number of people and calls required to reach these people. Various studies show how the number of people involved in a typical B2B purchase has increased over the past decades. Naturally, every additional person brings in additional views, requirements, and politics. This means that sales cycles have become longer and even more complex (Toman et al., 2017; Sharma et al., 2020, p. 238; Miller Heiman Group, 2017, p. 11). Indeed, the study by Toman et al. demonstrates that B2B customers are overwhelmed and often paralyzed rather than empowered in today’s B2B marketplace. Consequently, buying decisions are delayed or prevented altogether. Purchasing organizations struggle to deliver the right strategy for coping with the complexity.⁸

    Abundant information, a confusing marketplace, and commoditization that makes products and services increasingly interchangeable mean that customers travel through their decision-making process in a much less determined and orderly fashion than they used to. They jump back and forth in their customer journey, they make unexpected turns, and when everybody thinks the buying decision has finally been made, the game starts all over again. In short: Buying processes are not linear, and they are more complex than ever.

    Customers struggle to cope with all this. Somebody needs to help them buy. But the help that customers need is different from what vendors think it is.

    Most sales methodologies claim to put the customer in the center, but they are still largely linear, and they still view the process from the seller’s perspective. They focus on the solution that the vendor offers. CRM systems institutionalize the linear perspective. Since the dawn of the new millennium, researchers have therefore suggested an evolved sales process to match customers’ needs. This process is not sequential but rather a collection of simultaneous, iterative activities and interactions between buyers and sellers (Moncrief & Marshall, 2005). Approaches like Sharon Drew Morgen’s Buying Facilitation have put the focus on the various challenges that B2B buyers have to tackle along their customer journey. Salespeople need to be neutral navigators who support the buyer in completing the various tasks within their buying process (Morgen, 2003, p. 2). These tasks include, for example, sorting out the background politics that prevent buying decisions; coordinating information flow to bring all relevant internal and external stakeholders on board for the purchase; matching the proposed solution against the rules and norms of the organization; and synchronizing the solution’s purchase and implementation with current and planned initiatives in the organization and its surroundings (Morgen, 2003, p. 12). According to a bespoke 2019 study by Gartner, 83 percent of buying groups’ activities are spent on internal tasks and only 17 percent on interactions with potential suppliers. These internal struggles are where salespeople can really help.

    This view is different from traditional sales approaches and different even from consultative selling, because it focuses on neither the vendor’s products and solutions nor the business problem that the customer needs to solve. Instead, it focuses on helping the buyer navigate the buying process or, in other words, on helping customers overcome the obstacles that prevent their organizations from buying.

    Salespeople can only meet customers on their buying journey when they continuously reflect on what tasks their customers must complete and what challenges they must overcome to get the deal done. Sales organizations must react flexibly and provide exactly the kind of support and resources that customers need in their current situation to move the deal forward. Scrum’s rituals facilitate reflection on the team’s goals, methods, and ability to deliver a mandatory element of every sprint. Equally, Scrum asks teams to continuously reflect on the value that they deliver to the customer. The way Scrum handles Backlog Items—aka tasks and deliverables—provides the necessary flexibility to meet the customer’s current requirements even when they have changed in comparison to the original plan. The Scrum Board provides a simple but effective tool for tracking where the team stands in the completion of these tasks. Consequently, Scrum may offer the right framework for providing what customers really want in their buying process.

    1.5 Participation and Collaboration Are the New Paradigms: Sales Organizations Must Cater for This Fact

    As described above, collaboration between customers and vendors goes beyond a joint effort to overcome the hurdles in the customer’s buying process. Customers want co-operation on all levels of the B2B value chain: from procurement to operations to sales and marketing (Porter, 2004). Value co-creation, that is, the idea that vendors and customers jointly create business value, has gained in currency over the past 15 years (Van Der Meer et al., 1996). Studies suggest that companies that work closely with customers on the creation of business value, collaboratively developing new service offerings and value propositions, have seen a significantly positive effect on customer satisfaction on the sustainability of customer relationships, and on sales growth (Kohtamäki & Rajala, 2016; Frow & Payne, 2007; Hottenrott & Lopes-Bento, 2014).¹⁰ Well-known examples of companies that co-create offerings together with their customers include Danish toy manufacturer-turned-business-consultancy, Lego. The company actively engages customer user groups to co-create new solutions for corporate education and management training (Wainewright, 2019). Deutsche Bank, which asks B2B and B2C customers to participate in an innovation challenge on crowd storming platform jovoto , generating ideas as to how artificial intelligence may help the company reinvent its customer service experience.¹¹ Power tool maker DeWalt engages a diverse group of professional and home users in its Insight Community in each phase of the development cycle, leveraging their ideas for the creation of new solutions.¹² Finally, Maschinenfabrik Reinhausen, a German world leader in high voltage solutions, has set up Innovation Teams to include customers in the development of innovative solutions, which are jointly marketed by the company and its customers.

    The trend towards co-creation blurs the boundaries between vendor and customer. Equally, it dissolves the boundaries between the different business areas within the vendor’s organization: Joint R&D projects with a customer help generate propositions for new target markets. In turn, these trigger ideas for new, joint sales, and marketing approaches, which lead to considerations about even closer integration of processes and systems. Sales organizations must cater to the fact that salespeople are no longer the ones who control the customer relationship. Rather, they co-ordinate the vendors’ and the customers’ joint efforts to collaboratively generate value.

    Collaboration will need to include not only customers but also partners—and provide partners a perspective for the future. Currently, 80 percent of a business customer’s corporate IT budgets do not go into adding more innovation but into the maintenance and management of current systems. This will change: Artificial intelligence and centralized installation, management, and the maintenance of solutions in the Cloud mean that channel partners will see large parts of their budgets decrease. They will suffer from this change unless they find new propositions and offers together with their OEMs. In other words, they will suffer unless they collaborate with their OEMs on new propositions and offers (Wood et al., 2016, p. 26). Customer collaboration is a core feature of agile approaches like Scrum and Design Thinking (Hoda et al., 2010, p. 521). Chapter 2 will detail how Scrum provides the framework for integrating customers and their perspectives in the work of the team.

    According to Stephen Brown and his colleagues, collaboration within the vendor’s own organization matters, too. Companies that wish to collaborate with their customers and deliver good service to them also need to keep their employees happy (Bitner & Brown, 2008, p. 7; Brown et al., 2011, p. 6). Employee turnover is comparatively high in sales organizations across industries, which means both employers’ and employees’ expectations may not be as well aligned as they should be (Mayer & Greenberg, 2006). Various studies indicate that today’s Digital Natives highly value team-oriented collaboration and flat hierarchies (Patz, 2016, p. 408). They want to have a say in the company’s decisions and to be taken seriously (Nowotny, 2018, p. 23). Collaboration in agile teams is closely related to self-organizing team practices. These practices include collective decision-making, self-assignment, self-monitoring, self-evaluation, and self-improvement (Hoda, 2011). They appeal to team members’ intrinsic motivation, whereas traditional, authoritarian, autocratic management decreases motivation (Chowdhury, 2008, p. 175ff.; in this context Wolff, 2016, pp. 431–445). Various studies have indicated that team autonomy in the context of new business development has a beneficial impact on development speed, development cost and overall success (Sharma et al., 2020, p. 241; Patanakul et al., 2012). The shift from managed to autonomous teams, for example, has been shown to reduce defects by 90 percent at carmaker Volvo, service errors by 13 percent at FedEx and to have created a cost advantage over competitors of 60 percent at C&S Wholesale Grocers (Sharma et al., 2020, p. 241). Collaboration and flat hierarchies are also important because, in today’s fast-changing business and technology environment, managers are forced to rely on their employees’ knowledge more than ever before (Gloger, 2016, p. 212). Knowledge itself is also a key motivational factor for salespeople (Santos Ferreira, 2017).¹³

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