Chapter 10: Forty Desks — On Competency
Victor’s desk is in perfect order. Post-It notes sit neatly stacked in the back left corner exactly aligned with the stapler. Next to the stapler is a metal cup containing three ballpoint pens, a highlighter, and four whiteboard markers — black, green, yellow and red. A laptop connects to a large monitor. The only other items on the desk are keyboard, mousepad, and mouse. To Victor’s left on the wall is a whiteboard. Half of the board contains an intricate workflow design, meticulously rendered in a complex arrangement of black lines, blue boxes, and red diamonds. Underneath the drawing, lettered bullet points note the detail of data states, data flows, and data rules for the setup of Salesforce.
The other half of the whiteboard displays a simple org chart: two sales pods drawn side by side. For each pod, there is a box that says “Account Executive” connected to two boxes below with the words “Sales Development Rep” inside. The first pod has the title “Enterprise.” This pod sells to dealer groups containing ten or more stores. The second has the title “Regular.” This pod focuses on the rest of the auto dealer landscape — smaller dealer groups and independents. Victor is in recruitment mode and just last week he filled the sixth box with a name — Fred. Fred started yesterday. Today is the first sales meeting with the full complement of “Sales 2.0,” Victor’s name for the sales group.
You told Victor stories about SparkLight Digital’s first attempt at a sales team — the chaos and disorganization, the lack of process and productivity. You have vivid memories of the frustration you felt, watching precious cash pouring into an ill-conceived sales effort. That’s why this time you chose the leader of sales carefully and recruited Victor after a lengthy process. Based on your research into his background and conversations with previous employers, you are convinced he brings order — the functional, structural and workflow clarity necessary to build your revenue engine. Yes, he is relatively young — twenty-eight years old — but he comes highly recommended from his previous job. As the first VP Sales in a fledgling startup, he drove revenue to $30M over five years leading the company to a successful exit. He knows how to build from scratch and has the discipline of a Marine drill sergeant — just what you need right now.
Victor’s plan is to remain at just two sales pods until both of them perform at a consistent, profitable level. You agree with him on this. Victor should only add more pods after you see a pattern of repeatable performance.
On Victor’s whiteboard, bullet point notes identify SDR performance requirements: the minimum daily dials, daily emails sent, expected connect rates and conversion rate to scheduled demos. SDRs will be expected to achieve three scheduled AE demos per day. AE performance expectations are also on the wall. AEs should average six new demos a day. Out of these demos, AEs should maintain twenty active Opportunities. This requires that they purge any zombies and replace them with new high-potential prospects. From these Opportunities, five stores per month per AE must be shepherded to “closed won.” Victor believes the Enterprise pod will prove capable of doing better than five, but it’s a good place to start.
These notes and drawings are just part of the detailed three-month plan Victor has developed. As he prepares to walk into the conference room to hold his first sales meeting with his full department, he goes back over his PowerPoint slides. Page 1: a summary of the ideal customer profile. Page 2: descriptions of the three key buyer personas (General Manager, General Sales Manager and Internet Sales Director). Page 3 sets out SDR performance requirements; page 4 reviews AE performance requirements; pages 5–7 provide an overview of the demo pitch deck; page 8 goes into the commission plans for SDRs and AEs; pages 9–12 describe how to manage prospect status in Salesforce.
All looks good: he feels ready to go. He decided that after his own presentation, he will introduce the new VP Marketing, Serena, to share a few words about Marketing’s role in supporting Sales. The relationship with Marketing will be important — he looks forward to sitting down with Serena and developing a well thought through plan for Marketing to drive leads to the SDRs.
After wrapping up a meeting with Joe and Vijaya, you head over to the conference room. You decided to sit in on Victor’s first Sales meeting. You just want to observe — so you situate yourself in the back corner. The four SDRs and two AEs are already settled in their seats and chatting animatedly. There seems to be a lot of energy in the room.
A moment later, Victor walks through the door. He springs to the front of the room, quickly plugging a USB cord into his computer. As his PowerPoint flashes on the screen, he starts right in. The presentation is polished and crisp. Slide by slide, he takes his fledgling new Sales department through the plan. He talks about the unique value proposition of SparkLight Digital and the SparkAction CRM. He highlights the different roles of each sales pod. He goes through each role — both SDR and AE. He shares expectations for both process and results. He then talks about how to pitch value, not features — especially the value we deliver by enabling such a rapid, high-quality initial lead response.
He then turns to the SDRs. “You’re going to make a lot of calls every day. That’s your job. Only a few will connect with your target. When a decision maker takes your call, it’s your moment of truth. You have just five seconds to achieve the first goal.” he says. “What’s the first goal?” No one answers. “Your first goal is to earn the right to thirty more seconds. You do that by posing what I call the ‘shockingly provocative question.’ Then, in thirty seconds you need to make your pitch. This requires ‘speed to ah hah,’ where the prospect says in his mind, ‘I get what you do and why it’s relevant to me.’ That will win you the final minute and a half, during which time you answer questions and get the customer to commit to the appointment. The only way you will get a demo appointment is if you can clarify the customer’s pain — make them feel it — and then give them a glimpse into how powerful our aspirin is. Remember: you’re not there to sell them the product — just the demo. Five seconds, thirty seconds, a minute and a half: that’s the plan.”
Around the table, everyone is leaning forward, taking notes and listening intently. The spirit of the room is no-nonsense. Victor goes around to each person, asking for comments and inviting questions. There are a few, which he addresses. You are impressed — Victor is really buttoned down. At last, he looks up. Seeing no more questions, he says “Excellent. So next up, I have asked Serena, who just came on as our head of Marketing, to stop by. I think it’s important for Sales and Marketing to regularly meet face to face, so we can see eye to eye”.
As he says this to his troops, Victor pops his head outside the conference room door, in search of Serena. At that exact same moment, Serena pokes her head in. They run smack into each others’ noses.
Victor flushes red and jumps left, but does so just as she steps right. Serena laughs as a second awkward tango ensues, two-step here and two-step there. As she finally hops past him, she says, “talk about eye to eye and face to face!” Laughter ensues.
She skips to the front of the room, guitar in hand. “What do I think of the relationship between Sales and Marketing?” she asks, “Here’s what I think!” Without preamble, she launches into a hearty strumming rendition of “We Are the Champions.” By the second verse, everyone in the room has joined in. She holds her hand up for the final verse, then sings it solo:
“Ours is the best CRM.
And we’ll keep on selling ’til the end.
SparkAction Rocks Best.
All Others Fail the Test.
We are the Champions of the World!”
She finishes with a flourish. There are two seconds of silence, followed by wild cheering, clapping, and stomping of feet. With a quick hop and a “ta-da!” motion with her hands, Serena proceeds to describe her plans.
Despite the quirkiness of her entry, her overview of the marketing plan is spot on. Serena shares with the sales group that she has a big vision to uplift the SparkLight Digital brand. New collateral materials are in production. Planning is well underway for the Digital Dealer trade show, just two months away, where “we will make a huge splash”. Arms waving, with an electric smile and a creative stream of consciousness, she mesmerizes the team with her energy.
At the back of the room, you smile, remembering your joy three weeks ago when Serena accepted your VP Marketing offer. At thirty-five, she brings a strong track record to the company. Twice she has run marketing at SaaS startups — the first didn’t make it, but the second became a big success. That company sold a product with customer lifetime value (LTV) in the $70K range — very close to the LTV of SparkLight’s average customer. This is important, because marketing always must deliver results within a boundary condition set by LTV. It’s a SaaS rule of thumb that marketing and sales cost per acquired customer can never be more than ⅓ of LTV. The fact Serena has led a marketing organization that worked successfully on a similar constraint to yours is significant. Furthermore, she is a creative force and a wellspring of energy, and her references were off the charts. You are delighted she accepted and is on the team.
Five minutes later, Victor steps back up. A perturbed look covers his face as he brings the meeting to a close with a mumbled “thank you” to Serena, and a brusque, “OK, let’s get to work” to the Sales 2.0 group.
With that, it’s over.
As you walk back to your desk, you wonder whether Victor and Serena — your two most important new hires — are the most inspired marketing and sales combination in history, or a train wreck in waiting. As you pass Victor on the way back to your desk, you glance a smile his way; a clouded countenance is his only response. In the anteroom of your mind, excitement, hope, and fear mingle in awkward conversation.
All things being equal, the best team wins.
Competency is a boundary condition. It defines the upper limit of an employee’s (or a company’s) impact and output. Competency is not static; the boundary can rise over time. In fact, cultivation of competency through coaching and development is a major source of leadership leverage. When an employee combines competency with high motivation, the upper boundary of competency may be approached, perhaps consistently — but never exceeded.
“Decision dynamics” is the part of the People Design Framework dedicated to organization design decisions.
In decision dynamics, the starting point is mission and vision. Given your mission and vision, you assess your company’s current market position, define key strategic imperatives, determine the people implications of those imperatives, and develop a new organization design.
The first organization design decision to make is to assess the competencies you require vs. the competencies you have in hand. In assessing competency, start at the top. If you or any executive has an excessively large competency gap, it must be addressed first. To focus elsewhere would, as the saying goes, be putting lipstick on a pig.
Leadership theories abound. In the 19th and 20th centuries, management scientists tested and advocated various theories of leadership including the Great Man Theory, Behavioral Theory, and Transformational Theory. A more recent example is the Five Dynamics Theory, with its origins in Gestalt psychology. All theories seek to identify the competencies required of leaders.
Competency assessment at the top differs from competency assessment in other roles. Executives work “on” the business, which vests their roles with profound leverage and impact for either good or ill. A CEO’s effectiveness is measured by the capacity to project sound and strong directional, executional, and moral voice. This capacity emerges from specific competencies. Rarely does any one person fully possesses all the competencies necessary for leadership — but great leaders augment their gaps with the strengths of other top executives.
Research shows that there are multiple approaches to leadership that can be equally effective. In his research, Dr. Richard Hagberg found that successful leaders exhibit one of three profiles:¹
- The visionary
- The relationship builder
- The execution leader
These three approaches, while highly differentiated, can all be successful. However, regardless of leadership approach, success depends on both contextual and personal grounding. Contextual grounding refers to deep clarity about the world as it is, both inside the organization and out. And personal grounding is the capacity to act with authenticity, clarity, compassion, and conviction. Personal grounding is closely aligned with the leadership virtues (quality, caring, temperance, prudence, courage, and justice).
Like a diamond, executive leadership is multifaceted. From research and experience, twelve executive leadership competencies stand out. Of these, the first six are required of every leader. The second six are required of the executive group as a whole. Let’s call these the “Twelve Exhibits.”
Every executive, most importantly the CEO, must exhibit:
- The leadership virtues — Quality, caring, temperance, prudence, courage, and justice
- Self-aligned cultural evangelism — Talk the talk and walk the walk
- Clarity of mission and vision — Where we’re going and why
- Outside-in strategic clarity — What matters now
- Urgency and results focus — Do it, do it now
- Organizational awareness — Alertness to the organization’s health, competency, and directional alignment
And collectively, the executive group must exhibit:
- Capacity for creativity and innovation — Embrace the creative perspective; advance innovation
- Capacity to build competency — Coach, develop, recruit, fire
- Capacity to build relationships and exert influence — Connect, mobilize and develop
- Capacity to drive change — Envision, architect, build, implement, stabilize, optimize and scale
- Capacity to manage with consistency — Build communications architecture, maintain situationally-aware decision processes, pursue goal-based operational management, and exercise coaching and correction disciplines
- Function-specific capabilities — Job-specific functional knowledge, experience, and skills
The “exhibits” shown in dark blue are a must for all executive leaders, most importantly the CEO. In fact, when these attributes are observed in mid-managers and individual contributors, they may point to significant potential for advancement.
As to the next six (in light blue, above), the level of competency possessed by any given executive may vary. For instance, the CEO may be a visionary, a relationship builder or an execution leader. Given that native tendency, some competencies will be superpowers, and some will be gaps. Wherever the CEO has a personal gap, she should ensure it is filled elsewhere in the executive group. This requires the CEO to know her strengths, weaknesses, and native leadership orientation. With accurate self-awareness, she is more capable of putting in place an executive group that brings the necessary mix of leadership competencies. Towards this end, many CEOs enlist the help of coaches, who can observe and offer an independent perspective on gifts and gaps.
Leadership leverage is bounded by competency. The higher the competency bar, the greater the leadership leverage. That is why executive hiring decisions are so important. In a VC-backed startup, board members exercise a fiduciary duty to periodically evaluate the performance and effectiveness of the CEO, who serves at the board’s approval. In turn, the CEO owns the responsibility to assess executive group members. They, in turn, must assess the people hierarchically below them.
Executive level assessment starts with knowing what you need. Clarity is a result of walking through the “Decision Dynamics” steps (as shown in the People Design Framework). Once your competency requirements are clear, consider the “Twelve Exhibits.” Does the incumbent meet your competency bar? This is an act of judgment, informed by observed behaviors, 360-degree feedback, and critical events. Let’s say you conclude there is a significant competency gap. Then you must judge the capacity of the incumbent to close that gap and assess how long that will take. This leads inevitably to a judgment as to whether the required time and energy is available, given the reality of your business — or whether a change is required.
If you decide a change must be made, you next consider who would be a qualified candidate. For a key executive hire, when evaluating candidate competency it is particularly important to consider the Twelve Exhibits. Validation is gleaned through in-person candidate interviews with you and other members of the executive team and board, plus reference checking and perhaps the use of personality and cognitive assessment tools. The goal is to gain as much clarity as you can before a commitment is made.
No candidate is perfect. You simply must decide what type of “imperfect” you can live with. There are some things that brook no compromise. If you find a significant shortfall in one or more of the first six competencies on the Twelve Exhibits list, don’t walk — run. But with the final six competencies, you can make a judgment. Clarify what you need most, and make sure the final successful candidate measures up.
The determination of competency requirements does not stop with executives. Each role must be occupied by someone who possesses the minimum required skills. Further, in an empowered culture, everyone from top to bottom is expected to work “on” the business as well as “in” the business. You expect every employee to possess sufficient interpersonal skill and domain knowledge to contribute to continuous improvement.
To pursue your strategic imperatives, a comprehensive company competency audit may occasionally be required. Performance requirements must be clear. Each incumbent must exhibit both role competency and cultural fit. Inadequate competency or a cultural misalignment must be fixed, or a change must be made.
As you move up the hierarchy — from supervisor to manager to director and beyond — the competencies in the Twelve Exhibits become more and more important. The minimum viable performance threshold must rise as responsibility and scope of authority grow.
Employee surveys, direct observation, and 360-degree reviews can help you assess competency. Whether you avail yourself of these tools and approaches or not, the point is that you must always do your best to discover the true competency of the people in your company, as well as the people you need — and then act accordingly.
As Lao Tzu said in Tao Te Ching, “The truth waits for eyes unclouded by longing.”
Serena’s desk is a chaos of books, laptop, iPad, papers, a Power Rangers collection, and trophies. Above her desk framed photos are arranged in a loose array, all featuring groups of people with smiles on their faces. On the whiteboard to her left, five different brand designs are artfully sketched, each with different color schemes. A brand hierarchy is drawn on the right, showing “SparkLight Digital” at the top, and “SparkAction CRM” underneath. A list of product features follows, colorfully highlighted. The images present an interesting bouquet of iconography. At the top left corner of the whiteboard, there are seven different competitive positioning statements written in bold, sweeping cursive. There’s a big circle around the third one: “Gain the Spark to Spike Sales.”
The trade show booth display arrived yesterday. Ten feet wide by ten feet high, it stands sentry in the front lobby. The SparkLight Digital logo jumps perkily from a circle on the top left hand of the display. In big letters across the top runs the slogan, “Gain the Spark to Spike Sales.” A big photo dominates the middle of the display, showing a happy, frazzled auto sales rep confronted by a line of restless prospective car buyers. Next to the photo, three short value claims are highlighted. On the other side of the photo, under the headline Key Product Features, a bullet point list of six short feature descriptions follows.
Across the office, Victor broods. For the past month, he’s held daily fifteen-minute huddles with his whole team, inspecting preparations for the trade show. Before the show starts, he wants at least fifty appointments scheduled. Booth traffic is great, but appointments convert best. Dealers from all over the country will be in attendance — over 2,000 of them. Given SparkLight Digital’s inside sales model, trade shows are the only opportunity to meet prospective customers. It’s just two weeks before the show, and he’s concerned: only twenty-five appointments are set.
It’s not just the trade show prep that bothers Victor. SDRs aren’t following established operating procedure. The updating of prospect status in Salesforce is ragged at best. Salesforce shows only thirteen scheduled appointments for the trade show, but Victor knows that the actual number is twenty-five. This type of breakdown in executional discipline can’t be tolerated. It compromises Victor’s capacity to keep track of progress, a cardinal sin. If he doesn’t nip this in the bud now, he’ll never get the engine running properly.
At today’s huddle, the point is clearly made: update prospect status after every call, no exceptions. Nods fill the room. Later, as everyone walks soberly back towards their desks, Serena passes by. She stops, shouts “Hey Guys!” and strikes up a soapy rendition of “We Are the Champions.” Laughter fills the air as Victor frowns.
- Richard Hagberg, Ph.D. and Jack Forem, “The Three Pillars of Leadership: Discovery of a New Leadership Model,” http://www.hagbergconsulting.com/three-pillars.html.
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