Based on an interview with Bert Paesbrugghe and on his article “Aligning sales and operations management: an agenda for inquiry” (Journal of Personal Selling & Sales Management, 2018), co-written with Deva Rangarajan, Arun Sharma and Robert Boute.
In today’s highly competitive b-to-b marketplace, customers no longer want to be sold just any product or services. They want relevant, customized solutions. This requires overcoming differences in mindsets and goals between sales and operations departments. It’s a challenge, but it can be won.
Bert Paesbrugghe is an Assistant Professor at IÉSEG School of Management in Paris. He holds a PhD in Business Economics from Ghent University, and his research focuses on buyer-seller relationships, industrial marketing, and servitization. Bert has published in Industrial Marketing Management and in the Journal of Personal Selling and Sales Management. More recently, he won the first prize at the 2018 AMA Sales SIG doctoral dissertation award.
Gone are the days of the old-fashioned hard sell – pitch, argue and close. Nowadays business-to-business sales is about solution selling. Rather than pushing a product or service, firms have to understand their clients’ aspirations and collaboratively come up with a solution that matches their needs. Why the new customer-centric approach? It’s simply necessary to surviving in today’s hypercompetitive marketplace.
“It’s a buyer’s market, and customers are more and more demanding,” explains IÉSEG professor Bert Paesbrugghe. “They are empowered customers, who have access to more and more information, can compare offers online, and with globalization, can have goods shipped from say, Hong Kong.”
A shift to solution selling isn’t automatically successful. One potential reason for failure is lack of coordination between sales and other departments, which often differ in their goals and/or mindsets. “Operations management is typically focused on lean operations and efficiency, and providing customized solutions for customers has not been a priority,” write Bert Paesbrugghe and his co-authors in a newly published article. “Operations want to streamline production, have forecasts, and a lean attitude is good, but operational excellence doesn’t always translate into customer satisfaction,” Professor Paesbrugghe adds.
Both departments need to align their goals of more efficient production and happy repeat customers for profit. In other words, solution selling requires deep integration of sales and operations. The team of researchers believes this area calls for further investigation. To identify and address research gaps, they examined both what was happening in the field and in academic circles, interviewing senior executives and scanning the literature.
While different firms have different ways of effectively getting sales and operations management to collaborate, five good practices were mentioned by more than half of the participants in the qualitative study as critical elements of success.
1. Including other functional teams as well, such as finance, procurement and IT. For example, one firm involved finance so as to aid in realistic budgeting and forecasting. “This is useful when sales risk over-promising and under-delivering, asking their colleagues in production to come up with something new at short notice”, says Professor Paesbrugghe.
2. A collaborative environment both internally – among the sales and operations management teams – and externally – with customers. This can take the form of meetings or visits to customers by operations teams.
3. To ensure each team works toward the same common goal, companies set up common key performance indicators (KPIs) and bonus schemes. “If a customer asks for speed delivery, it can impact everyone’s evaluation,” Professor Paesbrugghe suggests.
4. Company culture and cross-functional knowledge sharing is key. Interviewees stressed that it was important that all employees understand the alignment process and know that their efforts are valued and rewarded
5. Last but not least, integration strategies require top-management support, especially if they involve structural changes or capital investments.
All in all, doesn’t all this just boil down to getting people to work together? Paesbrugghe agrees, comparing the endeavor with football: “You need a good coach to bring the players together, the point is not to have the most spectacular action but to win the game.”
Interestingly, when the researchers surveyed the extant literature, they found that a similar “silo mentality” needs to be busted in academia. While they found hundreds of articles with data and analysis about either sales or operations, only 34 focused on the interaction of both functions, out of which only 12 collected data from both sides, and again out of that lot a mere 10 simultaneously addressed the needs of both sides.
Related research topics that could be explored further are the creation of an interface department, organizational culture issues such as job rotation and joint training programs, and top management involvement to better align sales and operations management.
“It’s about busting silos and aligning the different departments,” says the researcher, warning that change management is a delicate endeavor and should be undertaken with care, not rushed into headlong after reading an article. He suggests first “testing the ground” at different levels, “seeing what the customer wants and working backwards from there,” so as to improve customer loyalty, which is becoming more and more difficult, but creates value for all parties.
The authors followed a three-pronged approach. They first conducted in-depth interviews with 11 senior executives from 10 major firms operating in the business-to-business domain to understand how sales and operations collaborated in the field. Then they carried out a survey of the extant literature, to identify gaps in research, which they submitted to practitioners for validation. Finally, they reached out to sales researchers to verify the validity of the topics identified.
Aligning sales and operations management: an agenda for inquiry, Journal of Personal Selling & Sales Management (2018) Deva Rangarajan (Ball State University), Arun Sharma (University of Miami), Bert Paesbrugghe (IÉSEG) & Robert Boute (Vlerick Business School) , DOI: 10.1080/08853134.2018.1450148