October 3, 2023 • 50 mins
Get ready to redefine your understanding of success in entrepreneurship as we talk with Dr. Frank Cespedes, a revered author known for his impressive work on sales and strategy. He’s here to share his treasure trove of knowledge from the business world, academia, and real-life experiences. Together, we'll venture into the often-overlooked aspect of aligning your sales with your strategy and how this can shape your entrepreneurial journey.
Ever pondered on the importance of developing a personal brand or intrigued by the concept of omnichannel consumers? We've got you covered. Dr. Cespedes sheds light on these subjects, offering insight on how the pandemic has revolutionized digital marketing and why a strong alignment between strategy and sales can boost the value of your enterprise. Plus, we'll delve into change management, a critical factor for staying a step ahead of your competitors.
As we intertwine strategy and sales, we cannot overlook the intricacies of selling in diverse cultures and industries. Dr. Cespedes enlightens us on his fascinating research on sales and the importance of understanding different cultures when selling. We also tackle the challenges companies encounter when recruiting salespeople and the crucial role of training and performance reviews. To top it off, we explore how technology and effective management can enhance learning for salespeople. Don't miss out on this enriching episode and be sure to check out Dr. Cespedes' books for a deeper dive into these topics.
Links to Books:
Sales Management that Works
https://www.amazon.com/Sales-Management-That-Works-Changing/dp/1633698769/ref=sr_1_1?crid=TUTNRJJ9YIQH&keywords=sales+management+that+works&qid=1696314113&sprefix=sales+management+that+works%2Caps%2C158&sr=8-1
Aligning Strategy & Sales
https://www.amazon.com/Aligning-Strategy-Sales-Behaviors-Effective/dp/1422196054/ref=sr_1_1?crid=2ZH1UJVOSY1HC&keywords=Aligning+strategy+and+sales&qid=1696314179&sprefix=aligning+strategy+and+sales%2Caps%2C145&sr=8-1
Start for FREE
Disclaimer: This post contains affiliate links. If you make a purchase, I may receive a commission at no extra cost to you.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dustin Steffey (00:00):
Welcome to another week of chopping with
fire.
In just a moment here we aregonna have dr Frank Cespedes on
and we are gonna go over sometopics with respect to
Entrepreneurship and buildingyour business.
So stay tuned in just a momentas we have our guest on and
let's chop it up.
(00:21):
Welcome to chopping with fire,where we bring you relevant
(00:45):
experts in the topics ofbusiness, entrepreneurship,
self-development and, of course,smart investments.
Nominated by the people'spodcast awards in 2022 and 2023
as one of the top businesspodcasts Hosted by owner, doctor
(01:05):
and content creator DustinSteffey, we are blessed to have
our podcast in the top 50,having the way in five major
countries and counting, as wellas money raised for two amazing
causes Cystic fibrosis and, ofcourse, the boys and girls club.
(01:26):
With that being said, andwithout further ado, let's chop
it up.
All right, everyone.
(01:52):
We have dr Frank cesspiteesjoining us today with a little
bit of background, and I'm notgonna take the thunder from him.
He is the author of two amazingbooks, which I think we will
get into some of the topics inthose today.
One of those books is salessales management that works and
Another book that he's writtenis aligning strategy and sales.
(02:15):
I think both of these books areawesome for my aspiring
entrepreneurs or currententrepreneurs, so we're gonna
just dive right in.
Frank, how are you?
Frank Cespedes (02:25):
I'm good and Dustin, I want to thank you very
much for hosting me.
My pleasure to be here.
Dustin Steffey (02:30):
Well, I appreciate having you as well
too.
I have a fun soft spot forEducation and educators, so I'm
pretty excited to have you on.
Frank Cespedes (02:41):
Well, thank you.
I'm glad you don't have theattitude that those who can't do
teach.
That's a positive attitude.
Dustin Steffey (02:49):
I try.
Sometimes my attitude isn'tgood, but for the most part it
is.
So tell me, frank, just youknow, I know a little bit about
you, but my audience doesn'ttell me a little bit about
yourself.
Frank Cespedes (03:03):
My background is not terribly exotic, dustin.
I, you know, went to Graduateschool, got my degree PhD in
business, started teaching atHarvard's business school, made
my way up the ladder there.
After ten years with someothers, I Left, we we started a
(03:28):
business, built that business.
I ran it for ten years and Thenwe got lucky.
You know, when need be, I canspin this a different way, but
it was actually luck we.
We exited the business atexactly the right time.
Harvard called me up again,said how'd you like to be a
(03:48):
professor again?
And that's what I've been doingAgain for about the last eight
years.
So it's academia, the realworld, as they say, and then
back in academia.
Dustin Steffey (04:01):
And for those of you that don't know, harvard is
an Ivy League school.
Again, I I believe in educationfirmly.
I think Harvard is, in myopinion, a very, very quality
education, especially withrespect to business.
I've read a lot of businessreviews within Harvard IE, the
Harvard business reviews.
(04:22):
We read a lot of those.
So, again, very much soInterested in what you have to
offer today, frank.
Frank Cespedes (04:31):
Well, thank you.
Thank you very much.
What?
What would you like to talkabout?
Dustin Steffey (04:36):
Well, I think the big burning question that a
lot of entrepreneurs have whenthey're Starting at that is is
all right, I have all thesethings going at once.
I've got my license, I'vestarted my business, I want to
make money, I want to doEverything, and they get pile
driven right and then sometimestunnel vision, in my opinion.
(04:57):
So, honestly, when it comes tobusiness, I think we need to
tackle what the hard things are,which some of the hard things
include how do you get the righttalent to drive the business,
how do you get customers intothe door to actually sell the
product or service that you have?
And or how do you even like,how do you even know where to
start?
You know what I mean.
(05:17):
All questions that are insane,and For someone new that start
in business, it could beoverwhelming.
I'm not here to create aroadmap on how to start your
business, but you and I bothhave experiences in being
successful in business, and so Iguess the question that we're
gonna head to is how do wegenerate that success into
(05:40):
business, whether it be with theright people, in the right
training or getting people inthe door.
Frank Cespedes (05:46):
Yeah, well, I think you're making two
important points.
The first is the necessity forchoice and priorities.
One of the smartest things thatI've heard anyone say about
Early-stage ventures, start-ups,is from a fellow I know who's a
very, very successful venturecapitalist.
(06:09):
I know there are a lot ofentrepreneurs, you know they.
They have a.
They have an almost instinctivenegative response to investors.
But these are professionalinvestors and they are the
source of billions and billionsof dollars of startup capital in
our economy.
(06:32):
And what this Person once toldme is startups don't starve,
they drown.
And what he was getting at isthey don't starve, they don't
tend to starve for lack ofOpportunity.
Most entrepreneurs are actuallypretty good at understanding a
large Untapped marketopportunity.
(06:55):
They don't starve, but theydrown trying to do too many
things At the same time.
So I think the first commentI'd make is remember that and
you've got to choose.
You've got to prioritize notonly what you do internally but,
more importantly, what you doexternally, and this is your.
Your second Point, which I thinkis also right wherever else,
(07:18):
whatever else you prioritize.
If you're in a for-profitbusiness, you better prioritize
getting paying customers.
Now, I call that sales, but Idon't much care what jargon we
use for that marketing salesasparagus.
At the end of the day, it'sabout demand generation and
demand Fulfillment, and you knowthe books you mentioned are
(07:42):
about that.
They're about you know.
How do you think about Aligningyour sales with your strategy?
How do you think about issueslike hiring and and Training and
performance management?
And we might talk about any oneor more of those topics.
Dustin Steffey (08:00):
I guess, before we dive into those topics
chronologically, sitting hereand looking at it, I just wanted
to reinforce what you said,which is it is about one keyword
prioritizing.
So what is the priority toenable success within the
business that you're starting?
So that's what I want everybodyto keep in the back of their
(08:21):
mind is what is your priority?
And you said it best thepriority is if you're in a for
profit business, you need tomake money, and so how do you
make that money, especially in aworld right now where we have
social media, we have technology, we have so many levers that we
can pull to market your serviceor good?
(08:42):
How do we do that.
Frank Cespedes (08:44):
Yeah Well, let's begin there, because I think
there's a misunderstanding aboutwhat what technology means, not
only for entrepreneurs but forbusinesses in general, and I'm
going to cite a little data thatmay or may not surprise our
(09:08):
listeners.
But think about e-commerce.
E-commerce is not new.
It has been around for over 30years.
Just to give you a sense of itslineage, there was a company,
bookscom, that was selling booksonline nationally while Jeff
(09:28):
Bezos, the founder of Amazon,was still working on Wall Street
.
So this is not new.
But if you ask yourself what wase-commerce sales as a
percentage of total retail salesin the United States just
before the pandemic, the answerit was about 11%.
(09:51):
Now, when I ask that questionof many executives and I don't
give them the number and I saywhat do you think it was, I
routinely get estimates from 30%to 60%.
In other words, many people arenot a little bit out of touch
with this core fact about buying.
(10:12):
They are orders of magnitudeout of touch.
Now, what happened during thepandemic?
Obviously, when stores areclosed or held to 25% or 50% of
their capacity, when peoplelegitimately feel that if they
walk into a store they may catcha virus and bad things will
(10:33):
happen.
Clearly, there's going to bemore buying and selling that
occurs online.
But if you look at the data thehigh point of shutdown
conditions in the United Statesso far let's cross our fingers
and hope for the best.
But the high point so far wasthe second quarter of 2020.
(10:55):
E-commerce has a percentage ofretail sales in the second
quarter of 2020, about 16%.
In other words, it went up 5%even in those conditions and it
has come down since and it seemsto be stabilizing at about 15%.
The point I want to make isthis it is not a digital eats
(11:19):
physical world.
The most important thing aboutselling in any business, startup
or corporation, the mostimportant thing about selling is
the buyer, and the buyers areomnichannel buyers, to use the
current jargon.
They learn about you, yourproducts, your services, both
(11:43):
through salespeople and websitesand influencers and a host of
other ways.
But it's not a digital eatsphysical world.
It's an omnichannel world.
So let me stop there for asecond.
Dustin Steffey (12:05):
Yeah.
So let me recap a couple ofthings for a second too, just to
keep people with us.
So what you were saying isE-commerce sales hit a peak of
about 15% or no, hit a peak ofabout 16%, and that was during
the pandemic in the secondquarter of 2020.
So, with that being said, itstarted to normalize and
(12:26):
stabilize right now at about 15%currently.
To me, being business minded,that means that I have an 85%
opportunity to increase somesales E-commerce wise, but I
have to be smart in knowing whomy customers are and the
channels that they're using tomarket and be successful.
That's what that tells me rightNow.
(12:47):
Again, this is just my thoughts.
So, taking a look at it here,just so everybody knows,
e-commerce has been around forquite some time, so you had
already recapped it and saidit's been around for about 30
years, and so this isn't a newconcept.
What is new within this rightnow is how people are using
(13:08):
different levers withinE-commerce to market, ie social
media, ie their websites,whatever the case may be.
But still, the tried and trueway of marketing yourself out is
what your own personal brandand images and what you put out
into the world and how that isput out, whether it be with your
(13:29):
sales people, whether it bewith your website, et cetera.
That's kind of where we're atright now, and then we ended at
most consumers are omnichannelconsumers.
Frank Cespedes (13:41):
Yeah, I think in general terms, you've
paraphrased it accurately, butI'd point out two things.
I don't think the way tointerpret it is because it's 15%
.
I can make it 100%.
Buying for millennia has beenboth a social experience as well
(14:03):
as an economic transaction, anda once in a century pandemic is
not going to change that.
That's what you see in thenumbers.
Secondly, you're exactly right.
What omnichannel means is thatbuyers learn about you many
different ways and, conversely,you have many different levers
you can pull for businessdevelopment.
(14:25):
But here's the important thing,and this, what I'm about to say
was indeed accelerated by thepandemic Approaching companies.
Let me broaden it not justthrough a website, but digitally
, social media, all the otherthings you're talking about.
What the pandemic did was makethat very, very expensive.
(14:51):
As we speak, there is a jokethat marketing people in Silicon
Valley are telling each other,and the joke is where is the
best place to bury a body?
And the answer is page two ofany search engine, because
nobody goes there.
(15:12):
That's where we're going tofind Jimmy Hoffa.
So that route is increasinglyexpensive and, frankly, it is a
class of example of what aneconomist would call the law of
diminishing returns.
Again, I want to get back to myoriginal point.
(15:32):
It is not a digital eatsphysical world, but it is a
world where buyers and sellers,now out of necessity, must
communicate with each otherthrough multiple ways.
And the salesperson is not deadthere are.
The number of salespeople inthe United States has increased
(15:52):
steadily in the 21st century,even as the internet has
diffused and more people get itand more people have broadband.
So old time selling is not dead.
It continues to live alongsidethese newer media.
Dustin Steffey (16:12):
Let's talk about your book, align in Strategy
and Sales, because we're kind ofheading that way.
Anyway, we'll talk about thatbook first.
So in short, like if I werejust person who hasn't read it
and I'm looking at that title,I'm looking at Align in Strategy
and Sales, so I'm looking atwhat strategies can I implement
(16:32):
to gain more sales?
Essentially correct.
Frank Cespedes (16:36):
That, but it also works the other way.
If I have a strategy, how do Imake sure that the enormous
amount of money that companiesdevote to sales is aligned with
that strategy, as opposed tostuff that really doesn't
increase the value of theenterprise?
Dustin Steffey (16:56):
So then, we're talking about change management,
in a sense, and the ability tochange with the change in
environment.
Frank Cespedes (17:02):
Yeah, that's almost always part of any
business, almost always part ofboth strategy and sales, for a
very important reason that thatbook talks about at some length
Value in any business is createdor destroyed out there in the
marketplace.
(17:22):
It's not created or destroyedin your mind.
It's not created or destroyedin meetings.
It's created or destroyed inexchanges with prospects and
customers.
And the market has noresponsibility to be nice to any
company's strategy.
It is the responsibility of thecompany to adapt to the
(17:46):
realities of the market.
And that does mean change, andthe pace of change has
accelerated for some of thetechnology reasons, among others
, that we were just describing.
Dustin Steffey (18:01):
And so in my mind and in my studies too and
you can correct me if I'm wrong,I know I'm not perfect, but I
do have a sense of this I thinkthe biggest pitfall an
entrepreneur or business willjust keep it broad A business
falls into in general, is notbeing able to keep up with the
changing landscape of theenvironment that they're in.
(18:24):
So I think that most businessesthat I've seen that have not
succeeded excuse me, notsucceeded is because their
strategy isn't there toimplement for the changing
environment.
In my mind also, I feel as if,when we look at strategy in
(18:44):
general, some people and somebusinesses don't have a strategy
, and so therefore, that alsoplays a part in failure of
businesses.
Frank Cespedes (18:55):
Yeah, now I think you're right and I think
you're quite right todistinguish those causes because
while they're linked, they'reseparate.
On the change area, I thinkyou're exactly right.
I think partly it's humannature right, we don't like
change.
But in any market, when thepace of change in the market
(19:17):
outruns the pace of change inthe enterprise, you're going to
run into problems sooner orlater.
But then there is the necessity, if you're going to respond
productively as opposed tosimply reactively in ad hoc, you
need a strategy.
And the reality is that mostcompanies not some, but most
(19:39):
companies and most venturesdon't have a strategy right.
They have a goal.
They may have what we now calla purpose or a mission, they may
have values.
All of that is important, butit's not the same as a strategy.
I probably I don't have to behumble about this Because of the
(20:02):
research I've done, the companyI ran, I've worked with lots
and lots of companies.
I've probably been part of asmany strategy meetings as
anybody and the reality, whenyou cut through the rhetoric,
most companies, when they saystrategy, are basically saying
let's pick a big number and gofor it, and unfortunately it's a
(20:28):
little bit more complicatedthan that.
So I agree with you entirely,dustin.
I think you're exactly right.
The responsibility for changerests with the seller, not the
buyer.
But in order to make productivechange, it's important to have
a strategy and not confuse thatstrategy with slogans or purpose
(20:50):
or mission statements, etcetera.
Dustin Steffey (20:55):
So, piggybacking off of that and I think that's
a great relevant question,especially to ask you those
strategy meetings that you werea part of and strategy in
general, in my mind it should beliving and breathing right.
So strategy isn't just sit downfor a meeting for one time for
the year and then hope for thebest.
You're sitting down constantlyand that strategy should be
(21:17):
evolving, correct.
Frank Cespedes (21:19):
Yes, it should.
I'd make two points about this,and this, by the way, is very
often the situation I'm about todescribe, is very often why
entrepreneurs have anopportunity.
But again, you'll see the datain the book you mentioned.
But if you look at bigcompanies the so-called Fortune
500, what you see in many ofthose companies is, first, a
(21:43):
confusion between a strategymeeting and the annual capital
budgeting meeting.
Capital budgets are important,forecasts are important, but
they're not the same as astrategy.
Strategy is about the choices wemake.
What markets and segments do weand don't we serve?
(22:03):
Do we have an advantage inthose markets where we choose to
serve?
What are the implications forhiring, training, capital
expenditures, etc.
That's different than simplysetting a budget.
And secondly, a big company iswhat the data tells us is that
(22:26):
it's now between six and eightmonths that those companies
spend in their so-called annualstrategic planning process.
Now, notice this Six months.
During that period of time, themarket will do whatever the
market's going to do.
So, even if that company comesup with a great strategy, it may
(22:52):
be obsolete in market time.
That's where, if you're a moreflexible early stage venture
entrepreneur, you can and shouldhave an advantage, but you
still have the same challenge.
You still have to come up witha market relevant strategy.
And, in terms of living itevery day, when a company really
(23:17):
has a strategy, most people inthe company should be able to
tell you what that strategy isin 50 words or less.
The core components of anystrategy are A what are our
objectives with this market orsegment?
B what is our market or segment, what in business schools we
(23:41):
call scope.
And then C in the markets andsegments where we choose to
compete, what is the source Ofour advantage?
That shouldn't take more than50 words to articulate the
details behind.
That may indeed take more than50 words, but everybody in the
(24:01):
company should be able to sortof recite objective, scope,
advantage.
Dustin Steffey (24:08):
We will be right back after a quick break.
This week's episode is broughtto you by Buzzsprout.
The best hosting platform thatyou can be on for all your
podcasting means.
Again, buzzsprout has all thetools to create success for you
and your podcast.
Head on over to buzzsproutcomtoday to take a look at their
(24:33):
free trial offers Again.
That's buzzsproutcom.
Hello everyone, this is DustinSteffi here with Chopin with
Fire.
Today, I wanted to discussheading on over to your favorite
social media platform andgiving us a follow today.
Again, we are on a wide varietyof social media, including
(24:57):
Facebook, tiktok, instagram,linkedin.
We have a YouTube channel forour live YouTube videos and, of
course, our website,wwwchoppingwithfirecom.
Head on over to your favoriteplatform today to add us and
(25:20):
communicate with us, so that way, we can have some fun and talk
back and forth again.
We wouldn't be where we weretoday without our audience, so
let's get you guys on our socialmedia and plug in today.
So I'm going to simplify thisfor our listeners.
We just got done talking abouta very important topic when it
(25:43):
comes to entrepreneurship andbusiness, and that is having an
appropriate strategy in order tobe successful as a company or
venture.
The biggest takeaway that Ihave, for this is everybody that
is a part of that company orventure should be able to
identify what the objectives are, what the scope is, which is
(26:04):
business term and what thesource of development is.
In 50 words or less, or as wewould call it, in an elevator
pitch like pretty simplistic.
Frank Cespedes (26:15):
I think that's right yeah.
Yeah, and then obviously, butlet me point out something about
this because I think it's aninhibition both for big
companies and many entrepreneurs.
Again, you can see this in thebook you mentioned.
But if you look at the dataabout this, the vast majority of
(26:37):
organizations are not just poorat communicating their strategy
to their people, they areterrible at it.
There's a company calledEffectory that actually, for
over 25 years, sends out afabulous survey annually,
crosses industries up and downthe hierarchy and one of the
(27:01):
questions that they ask everyyear of employees is quote do
you understand your firmstrategy?
Fair right, I think we canagree.
It's tougher for people to dothings they don't understand.
The results are prettyconsistent.
Less than 50% of therespondents say I do, which
(27:21):
means more than 50% are saying Ireally don't have a clue.
But here's the reallyinteresting part.
The Effectory database is verygood.
You can slice it many ways.
The closer you get to thecustomer.
In other words, when you lookat the responses of people in
sales and service, thepercentage of employees who say
(27:44):
I understand my company strategygoes down.
It doesn't go up Right Now.
When you ask CEOs orentrepreneurs how come you're so
bad at communicating strategyby far the most common response
in my experience is that theysay well, we don't want to talk
(28:05):
about it too much, we're afraidthat our competitors will find
out.
And I always say the same thingto the founder or the CEO let's
get real.
You have much bigger problemsthan your competitors finding
out about your strategy if yourown people don't understand the
strategy.
(28:25):
That's a very bogus response,but it's one of the reasons that
companies are bad and noticethe implication Again,
especially if you're anentrepreneur.
If you can get just a littlebit better at this core element
of management and leadership,you've got an advantage.
That's what the research willtell you.
Dustin Steffey (28:49):
So if this information has picked my
listeners' interest again, wewere just taking a few snippets
out of the aligning strategy andsales book, which again, I
think has very relevantinformation in.
I think it has good data.
If you want to pick that up, Iwould definitely pick that up
and give it a read so you canget some ideas from that, from
(29:11):
that book, and just be able toimplement some strategies within
that.
I want to shift gears because Iwant to give equal amount of
time to the other book thatyou've written, which is Sales
Management that Works.
Frank Cespedes (29:24):
Okay, that's a book that is more tactical than
the first book you mentioned.
It's about really the coreelements in sales management
business development, includinghiring, training, performance
reviews and so on.
The listeners might find itinteresting why I wrote the book
(29:48):
.
The reason is the following Ofall the various functions in
business, sales is by far themost context specific.
In other words, sellingsoftware is different than
selling durables, is differentthan selling professional
(30:11):
services, etc.
It also differs not onlydepending upon what you're
selling, but to whom and whereyou sell.
Selling in the United States isvery different than selling in
Latin America or Asia or theMiddle East, etc.
It's also a culturallycontextual activity and yet, for
(30:37):
some reason, sales is that areaof business where so many
pundits feel comfortable makingthese huge generalizations that
are usually unsupported by anydata whatsoever beyond what in
academia we would call N equals1.
(31:01):
When I sold for Oracle 15 yearsago, this is what worked for me.
I'm sure it'll work for you.
After doing 30 years of what Ithink is reasonable research in
this area, I wanted to write abook that says look, this is
what research does and does nottell you about this core
(31:23):
activity in business.
Once I point that out to folkshow context specific sales is.
They tend to nod.
But it really has been strikingto me how many smart,
well-educated people forget that.
And it's a bit of a mysterybecause it's the one area where
(31:48):
everybody feels they cangeneralize about the activity
and generalizations are risky inthis area.
Dustin Steffey (32:00):
I think a good example of that is the company
that I was working for had manydifferent cultures within it,
right, and if you didn't have anunderstanding of how to
approach business, which witheach of the different cultures,
then you were not successful.
So a good example of this is wetalk about, like the Indian
culture which I mean that's verybroad, so I'll narrow it in so
(32:24):
like the Punjabi culture, right,they're very, they're very into
making money, and so one way ofbeing able to communicate with
with them specifically is to beable to talk about the very
analytical way of how to runtheir business appropriately to
create and generate that success.
And then other things that diveinto culture is like accepting
(32:47):
gifts from them If you do notand you didn't know that, like
it's kind of a slap in theirface.
So just knowing differentthings what I'm trying to get at
is knowing different thingshelps to create and generate
success.
Not one size, not one shoe fitseverything.
Frank Cespedes (33:05):
Yeah, I think that's right.
I think it's culturallyspecific.
I'm not sure Punjabi is is inany sense different in terms of
making money.
I get to meet a goodsalesperson who tells his
customers buy for me because youwon't make money.
But I think your larger pointis correct.
But it's not just that.
(33:25):
Let's stick with the UnitedStates.
Depending on what you'reselling and what kind of buyer
you're dealing with the, the,the, you know, the recipe for
success varies quitesignificantly.
Dustin Steffey (33:42):
Definitely.
And again, I think for thesales management that works book
.
There's significant details inthere, probably a lot of data as
well to show and illustratethis correct yeah yeah, that's
right and you know we might talkabout the hiring part because
(34:04):
it's.
Frank Cespedes (34:05):
It's one of the big, big decisions that any
entrepreneur makes, right whenyou do look to hire someone
who's going to be your businessdeveloper or maybe even build
your business development team.
That's a big deal, you know.
Think about software startups.
(34:25):
If you look at softwarestartups, once they've developed
most of their product, by farthe biggest ongoing operating
expense and the biggestdeterminant of what you know in
in entrepreneurial circles wecall burn rate right, burning
(34:46):
the cash you have available byfar the biggest determinant of
that is sales and the sellingcycle.
It's directly correlated withtime to cash, working capital
and funding needs and so forth.
So it's a big deal and it's ait's a very tough decision.
(35:07):
I'll just throw out a littledata about this that the
listeners might find useful.
There are challenges in hiringsalespeople that simply don't
exist to the same extent in anyother business function.
I'll give you an example.
If you look to hire someone infinance or accounting, you can
(35:30):
go to a college or universityand you can find people who
majored in those topics, right.
If you want to hire an engineer, you can go to a school, and
it's a little bit like walkinginto a food court.
What kind of engineering areyou interested in?
Electrical engineering, etc.
Same is true for programmers.
(35:50):
But the last time I looked,which was, you know, about three
and a half years ago when Istarted writing this book, of
the more than 4,000 colleges anduniversities in the United
States, less than 300 evenoffered a sales course, let
alone a sales program.
(36:10):
So this is a core area ofbusiness where the majority of
people start out knowing very,very little about what they're
going to get paid for.
And that leads to the secondfact that I'll mention.
Companies already spend a tonof money on sales and sales
(36:31):
training.
On average, companies spend 20%more per capita per person on
sales training than any otherbusiness function.
But the return on thatinvestment is notoriously
disappointing.
And it's disappointing for somesystemic reasons that you know.
(36:53):
We can talk about it if that'shelpful.
So this is a big decision forany company, but especially if
you're in an entrepreneurialearly stage company.
Dustin Steffey (37:06):
See, the biggest thing that I took from that is
and I can be one to tell you Iam completely business for all
of my degrees correct, and notone class was offered for sales.
In general, All of my sellingexperience has been with the
many different companies thatI've been a part of, and that
(37:29):
investment that each of thosecompanies had put in to upscale
me and my knowledge on saleswhether it be social styles,
whether it be understanding,understanding how to even
approach or talk to differentpeople Like those are things
that were not learned at auniversity level.
They were learned within themany companies that I've been a
(37:51):
part of that have made thatinvestment.
Where it's pretty daunting tome right now is you said they
spend about 20% per capita, butthe statistic that interested me
the most was the return oninvestment part, because you
were saying that the return oninvestment of these investments
that the companies are making isnot as lucrative as one would
(38:14):
think it would be.
Frank Cespedes (38:16):
Yeah, and we might talk about some of the
reasons for that, and they'repretty systematic.
One is and I say this as aneducator but there's an over
reliance on classroom trainingin sales.
Sales is a performance art.
It's about behaviors.
(38:36):
It's about what people say ordon't say.
Selling is important, buttalking about selling is not the
same thing as selling.
There's a classic amount of onthe job learning here.
The second thing is you've gotto understand some of the basics
about adult learning.
(38:57):
What I'm about to say appliesto other functions, but sales is
, in some sense, exhibit A forthis.
Sales people are not studyingfor the final exam in my course
or the training seminar.
That is not how adult learningworks.
Adults, and sales people inparticular, tend to pay
(39:19):
attention to information whenand where they need it, not
weeks or months earlier in aseminar.
And, by the way, this is anarea.
This is called just in timelearning.
This is an area where the newtechnologies can help, because
now it is very, very feasibleand, in fact, increasingly
(39:41):
inexpensive to get thatinformation to salespeople when
they want it, on their way tomake a call or during the actual
sales conversation, via thephone, the iPad, etc.
The third element here is whatthe learning people call
(40:01):
modeling behavior.
The way people in sales learnthe most is not from a professor
.
They learned some.
I hope not from a trainer.
Again, they learned some, butthey learn the most from the
best of their peers.
That's what modeling behaviormeans.
In other words, I've watchedsomeone who's a colleague do
(40:26):
this well and I say you know theway you dealt with that price
objection.
That was clever.
I'm going to use that.
The way you framed that valueproposition.
I hadn't thought of it that way.
And again, this is both amanagement but also a leadership
issue where technology can help.
(40:46):
Part of what you want to do isaccelerate that best practice
learning and again, technologycan help with this.
So there are systematic reasonswhy the return on that very,
very big investment isdisappointing, but there are
also systematic things thatsmart managers can do to make
(41:09):
that ROI better than it is.
But again, it's a little bitlike our public school system.
The issue is not are wespending a lot of money on
training in this area?
We are.
The issue is how we spend it.
Dustin Steffey (41:24):
I think another thing to bring up and you can
correct me if I'm wrong, becauseyou definitely have more
experience than I do is not onlyhow one learns or is able to
learn, because, I'm going to behonest with you, being inundated
by power points to learn isn't,isn't for me right, I'm more of
the hands on, like do it andthen it sticks right.
(41:45):
But the other thing to note, inmy opinion, is the ability to
have a manager that's able toreinforce some of the key things
that were learned and that areimportant.
I think and again, this is justbased off my experience I think
(42:05):
what happens usually iscompanies invest in training,
they train their workforce, butthen after that training, it's
kind of like put away right,it's not reinforced, it's not
brought back up, there's nocheckpoints, there's no
reminders, there's noaccountability I guess would be
(42:27):
the best word to use, unless youhave a different one but
there's no real accountabilityor knowledge checks to see where
the sales force is to reinforcethis to make that return on
investment better.
Frank Cespedes (42:40):
Yeah, no, I think that's right, and again,
I'd emphasize two things you'resaying.
Look, one thing we know for afact is that different people
learn in very, very differentways, so don't generalize.
I happen to share your distastefor the PowerPoint parade, but,
believe it or not, dustin,there are people that actually
(43:01):
learn that way.
There are other people thatlearn by reading, by narrative,
and then there are other peoplefor whom a picture is worth not
just a thousand words, but 10 or20,000 words.
So you just got to be open tothose different learning styles,
but, again, technology allowsus to approach people through
(43:23):
these multiple ways.
The second part, though, isexactly what you're talking
about follow up, and in businessand in sales in particular,
probably the most important formof follow up is the performance
Review, and this is, in myexperience, the most
(43:43):
underutilized lever foraffecting behavior in most
organizations, and, if I can beblunt, the biggest defenders
here, in my experience, do tendto be entrepreneurs, then, and
they shouldn't be.
This is a trainable skill, somuch.
Let's get back to what we weretalking about earlier in this
(44:04):
conversation.
The market buyers change.
So much of the really importantinformation about buying and
buyers in any market is not inthe CRM system.
It's in the brain, we hope, ofthe salesperson, and that
information only becomes visiblethrough a performance
(44:28):
conversation.
So notice, when managers don'tengage in this activity, not
only are they encouraging aculture of underperformance
right, most people look, ifnobody's talking to me about
this, I must be doing it right,even if they're not but they not
only perpetuate a culture ofunderperformance, they also
(44:51):
inhibit the flow of vitalinformation in the business.
And again, the business I ran.
It was four years before Ibrought in someone.
She was a wonderful retiredsenior HR executive, someone I
brought in to help train us onhow to do this better, and it's
a very, very trainable skill.
(45:12):
There's no excuse, in myopinion, for not engaging in
that kind of follow up.
Dustin Steffey (45:21):
Now that we wet the listeners appetite a little
bit, I do want to make a coupleof reminders.
One I will have links to thesebooks, because I think that
there is a wealth of knowledgemore than a wealth of knowledge
in both of these books.
So again, both the books areAligning Strategy and Sales, and
then the other book is SalesManagement that Works.
(45:43):
I will have links in theepisode description.
I suggest and highly encourageyou to pick those books up and
give them a read, because thisis just hitting the tip of the
iceberg with the wealth ofknowledge that you've already
offered today.
Frank, I wanted to take thistime to just thank you for
(46:05):
coming in and really just givingthat little push on really
changing the mindset a littlebit and really just kind of
diving in to the next book andreally just kind of diving in to
where the opportunity areas areto really create the success
when it comes to running yourbusiness, whether you be an
entrepreneur or whether you be aFortune 500 company, for that
(46:26):
matter.
So I really do appreciate that.
Frank Cespedes (46:30):
Well, dustin Flattery will get you everywhere
with me.
I appreciate you hosting me andthe very, very nice and kind
things you said about me and thebooks.
I obviously appreciate that aswell.
Dustin Steffey (46:44):
Again, guys, if you haven't done so already, I
would take a listen to thisepisode.
Maybe listen a few times.
Take a look at those booksAgain.
They are amazing books that aregoing to give you more
information than what we gaveyou today.
Frank, last thing that I wantto give you, because I think it
will be fun If you had one keypiece of information to give to
(47:05):
all the listeners.
So just pretend it's your classright now.
What is the most importantpiece of information that you
want to have as a message todayfor everyone?
Frank Cespedes (47:14):
Well, you know there's a.
We've been talking about books.
Let me cite a book I don't knowif you or any of our listeners
the author John Le Carré.
John Le Carré wrote the spynovels for so many years I think
he passed away last year but inone of his books one of his
(47:39):
characters says something that Ithink everybody in business
they should have this tattoo tosome prominent body part.
The character says the world adesk.
This is what he says.
A desk is a dangerous place fromwhich to watch the world, and
that's true Right.
(48:00):
Again, I'll get back to what Isaid at the beginning Value is
created or destroyed out there.
Right, and especially in aworld where we are flooded with
data.
There are people who I thinkand again, data is good, data
helps us bound the uncertainties.
But it's a fallacy to believethat you can manage any business
(48:23):
from the spreadsheet or simplyfrom the database, and I don't
care how big that database is.
A desk is a dangerous placefrom which to view the world.
You don't have to be a greatsalesperson if you want to be an
entrepreneur, but you have toenjoy customer contact.
You have to invite it andencourage it, not discourage it.
(48:47):
I guess that would be my finalcomment, dustin.
Dustin Steffey (48:52):
Frank again.
Wealth of knowledge, lots ofknowledge, bombs dropped today.
I really can't thank you enoughfor coming on.
I appreciate you, thank you,thank you.
Thank you again for choosingChopping with Fire as your
premier podcast for anythingwith regards to business,
entrepreneurship, selfdevelopment and smart investment
(49:15):
decisions.
If you enjoyed the episode asmuch as we did, please head on
over to one of our socialplatforms and leave us a comment
and or at us.
We do have a tip talk.
We do have a LinkedIn, we havea Facebook, instagram, youtube
as well, and also we do have awebsite.
Head on over towwwchoppingwithfirecom that's C,
(49:40):
h, o, p, p I N with firecom andtake a look at prior content
that we have posted.
Lastly, if you guys can, pleasehead on over to your favorite
podcast platform and leave us afive star rating and review.
We love to interact with ourfans and I would love to post
(50:03):
responses to your guys'scomments again.
This was another episode ofchopping with fire.
Welcome to another week of chopping with
fire.
In just a moment here we aregonna have dr Frank Cespedes on
and we are gonna go over sometopics with respect to
Entrepreneurship and buildingyour business.
So stay tuned in just a momentas we have our guest on and
let's chop it up.
(00:21):
Welcome to chopping with fire,where we bring you relevant
(00:45):
experts in the topics ofbusiness, entrepreneurship,
self-development and, of course,smart investments.
Nominated by the people'spodcast awards in 2022 and 2023
as one of the top businesspodcasts Hosted by owner, doctor
(01:05):
and content creator DustinSteffey, we are blessed to have
our podcast in the top 50,having the way in five major
countries and counting, as wellas money raised for two amazing
causes Cystic fibrosis and, ofcourse, the boys and girls club.
(01:26):
With that being said, andwithout further ado, let's chop
it up.
All right, everyone.
(01:52):
We have dr Frank cesspiteesjoining us today with a little
bit of background, and I'm notgonna take the thunder from him.
He is the author of two amazingbooks, which I think we will
get into some of the topics inthose today.
One of those books is salessales management that works and
Another book that he's writtenis aligning strategy and sales.
(02:15):
I think both of these books areawesome for my aspiring
entrepreneurs or currententrepreneurs, so we're gonna
just dive right in.
Frank, how are you?
Frank Cespedes (02:25):
I'm good and Dustin, I want to thank you very
much for hosting me.
My pleasure to be here.
Dustin Steffey (02:30):
Well, I appreciate having you as well
too.
I have a fun soft spot forEducation and educators, so I'm
pretty excited to have you on.
Frank Cespedes (02:41):
Well, thank you.
I'm glad you don't have theattitude that those who can't do
teach.
That's a positive attitude.
Dustin Steffey (02:49):
I try.
Sometimes my attitude isn'tgood, but for the most part it
is.
So tell me, frank, just youknow, I know a little bit about
you, but my audience doesn'ttell me a little bit about
yourself.
Frank Cespedes (03:03):
My background is not terribly exotic, dustin.
I, you know, went to Graduateschool, got my degree PhD in
business, started teaching atHarvard's business school, made
my way up the ladder there.
After ten years with someothers, I Left, we we started a
(03:28):
business, built that business.
I ran it for ten years and Thenwe got lucky.
You know, when need be, I canspin this a different way, but
it was actually luck we.
We exited the business atexactly the right time.
Harvard called me up again,said how'd you like to be a
(03:48):
professor again?
And that's what I've been doingAgain for about the last eight
years.
So it's academia, the realworld, as they say, and then
back in academia.
Dustin Steffey (04:01):
And for those of you that don't know, harvard is
an Ivy League school.
Again, I I believe in educationfirmly.
I think Harvard is, in myopinion, a very, very quality
education, especially withrespect to business.
I've read a lot of businessreviews within Harvard IE, the
Harvard business reviews.
(04:22):
We read a lot of those.
So, again, very much soInterested in what you have to
offer today, frank.
Frank Cespedes (04:31):
Well, thank you.
Thank you very much.
What?
What would you like to talkabout?
Dustin Steffey (04:36):
Well, I think the big burning question that a
lot of entrepreneurs have whenthey're Starting at that is is
all right, I have all thesethings going at once.
I've got my license, I'vestarted my business, I want to
make money, I want to doEverything, and they get pile
driven right and then sometimestunnel vision, in my opinion.
(04:57):
So, honestly, when it comes tobusiness, I think we need to
tackle what the hard things are,which some of the hard things
include how do you get the righttalent to drive the business,
how do you get customers intothe door to actually sell the
product or service that you have?
And or how do you even like,how do you even know where to
start?
You know what I mean.
(05:17):
All questions that are insane,and For someone new that start
in business, it could beoverwhelming.
I'm not here to create aroadmap on how to start your
business, but you and I bothhave experiences in being
successful in business, and so Iguess the question that we're
gonna head to is how do wegenerate that success into
(05:40):
business, whether it be with theright people, in the right
training or getting people inthe door.
Frank Cespedes (05:46):
Yeah, well, I think you're making two
important points.
The first is the necessity forchoice and priorities.
One of the smartest things thatI've heard anyone say about
Early-stage ventures, start-ups,is from a fellow I know who's a
very, very successful venturecapitalist.
(06:09):
I know there are a lot ofentrepreneurs, you know they.
They have a.
They have an almost instinctivenegative response to investors.
But these are professionalinvestors and they are the
source of billions and billionsof dollars of startup capital in
our economy.
(06:32):
And what this Person once toldme is startups don't starve,
they drown.
And what he was getting at isthey don't starve, they don't
tend to starve for lack ofOpportunity.
Most entrepreneurs are actuallypretty good at understanding a
large Untapped marketopportunity.
(06:55):
They don't starve, but theydrown trying to do too many
things At the same time.
So I think the first commentI'd make is remember that and
you've got to choose.
You've got to prioritize notonly what you do internally but,
more importantly, what you doexternally, and this is your.
Your second Point, which I thinkis also right wherever else,
(07:18):
whatever else you prioritize.
If you're in a for-profitbusiness, you better prioritize
getting paying customers.
Now, I call that sales, but Idon't much care what jargon we
use for that marketing salesasparagus.
At the end of the day, it'sabout demand generation and
demand Fulfillment, and you knowthe books you mentioned are
(07:42):
about that.
They're about you know.
How do you think about Aligningyour sales with your strategy?
How do you think about issueslike hiring and and Training and
performance management?
And we might talk about any oneor more of those topics.
Dustin Steffey (08:00):
I guess, before we dive into those topics
chronologically, sitting hereand looking at it, I just wanted
to reinforce what you said,which is it is about one keyword
prioritizing.
So what is the priority toenable success within the
business that you're starting?
So that's what I want everybodyto keep in the back of their
(08:21):
mind is what is your priority?
And you said it best thepriority is if you're in a for
profit business, you need tomake money, and so how do you
make that money, especially in aworld right now where we have
social media, we have technology, we have so many levers that we
can pull to market your serviceor good?
(08:42):
How do we do that.
Frank Cespedes (08:44):
Yeah Well, let's begin there, because I think
there's a misunderstanding aboutwhat what technology means, not
only for entrepreneurs but forbusinesses in general, and I'm
going to cite a little data thatmay or may not surprise our
(09:08):
listeners.
But think about e-commerce.
E-commerce is not new.
It has been around for over 30years.
Just to give you a sense of itslineage, there was a company,
bookscom, that was selling booksonline nationally while Jeff
(09:28):
Bezos, the founder of Amazon,was still working on Wall Street
.
So this is not new.
But if you ask yourself what wase-commerce sales as a
percentage of total retail salesin the United States just
before the pandemic, the answerit was about 11%.
(09:51):
Now, when I ask that questionof many executives and I don't
give them the number and I saywhat do you think it was, I
routinely get estimates from 30%to 60%.
In other words, many people arenot a little bit out of touch
with this core fact about buying.
(10:12):
They are orders of magnitudeout of touch.
Now, what happened during thepandemic?
Obviously, when stores areclosed or held to 25% or 50% of
their capacity, when peoplelegitimately feel that if they
walk into a store they may catcha virus and bad things will
(10:33):
happen.
Clearly, there's going to bemore buying and selling that
occurs online.
But if you look at the data thehigh point of shutdown
conditions in the United Statesso far let's cross our fingers
and hope for the best.
But the high point so far wasthe second quarter of 2020.
(10:55):
E-commerce has a percentage ofretail sales in the second
quarter of 2020, about 16%.
In other words, it went up 5%even in those conditions and it
has come down since and it seemsto be stabilizing at about 15%.
The point I want to make isthis it is not a digital eats
(11:19):
physical world.
The most important thing aboutselling in any business, startup
or corporation, the mostimportant thing about selling is
the buyer, and the buyers areomnichannel buyers, to use the
current jargon.
They learn about you, yourproducts, your services, both
(11:43):
through salespeople and websitesand influencers and a host of
other ways.
But it's not a digital eatsphysical world.
It's an omnichannel world.
So let me stop there for asecond.
Dustin Steffey (12:05):
Yeah.
So let me recap a couple ofthings for a second too, just to
keep people with us.
So what you were saying isE-commerce sales hit a peak of
about 15% or no, hit a peak ofabout 16%, and that was during
the pandemic in the secondquarter of 2020.
So, with that being said, itstarted to normalize and
(12:26):
stabilize right now at about 15%currently.
To me, being business minded,that means that I have an 85%
opportunity to increase somesales E-commerce wise, but I
have to be smart in knowing whomy customers are and the
channels that they're using tomarket and be successful.
That's what that tells me rightNow.
(12:47):
Again, this is just my thoughts.
So, taking a look at it here,just so everybody knows,
e-commerce has been around forquite some time, so you had
already recapped it and saidit's been around for about 30
years, and so this isn't a newconcept.
What is new within this rightnow is how people are using
(13:08):
different levers withinE-commerce to market, ie social
media, ie their websites,whatever the case may be.
But still, the tried and trueway of marketing yourself out is
what your own personal brandand images and what you put out
into the world and how that isput out, whether it be with your
(13:29):
sales people, whether it bewith your website, et cetera.
That's kind of where we're atright now, and then we ended at
most consumers are omnichannelconsumers.
Frank Cespedes (13:41):
Yeah, I think in general terms, you've
paraphrased it accurately, butI'd point out two things.
I don't think the way tointerpret it is because it's 15%
.
I can make it 100%.
Buying for millennia has beenboth a social experience as well
(14:03):
as an economic transaction, anda once in a century pandemic is
not going to change that.
That's what you see in thenumbers.
Secondly, you're exactly right.
What omnichannel means is thatbuyers learn about you many
different ways and, conversely,you have many different levers
you can pull for businessdevelopment.
(14:25):
But here's the important thing,and this, what I'm about to say
was indeed accelerated by thepandemic Approaching companies.
Let me broaden it not justthrough a website, but digitally
, social media, all the otherthings you're talking about.
What the pandemic did was makethat very, very expensive.
(14:51):
As we speak, there is a jokethat marketing people in Silicon
Valley are telling each other,and the joke is where is the
best place to bury a body?
And the answer is page two ofany search engine, because
nobody goes there.
(15:12):
That's where we're going tofind Jimmy Hoffa.
So that route is increasinglyexpensive and, frankly, it is a
class of example of what aneconomist would call the law of
diminishing returns.
Again, I want to get back to myoriginal point.
(15:32):
It is not a digital eatsphysical world, but it is a
world where buyers and sellers,now out of necessity, must
communicate with each otherthrough multiple ways.
And the salesperson is not deadthere are.
The number of salespeople inthe United States has increased
(15:52):
steadily in the 21st century,even as the internet has
diffused and more people get itand more people have broadband.
So old time selling is not dead.
It continues to live alongsidethese newer media.
Dustin Steffey (16:12):
Let's talk about your book, align in Strategy
and Sales, because we're kind ofheading that way.
Anyway, we'll talk about thatbook first.
So in short, like if I werejust person who hasn't read it
and I'm looking at that title,I'm looking at Align in Strategy
and Sales, so I'm looking atwhat strategies can I implement
(16:32):
to gain more sales?
Essentially correct.
Frank Cespedes (16:36):
That, but it also works the other way.
If I have a strategy, how do Imake sure that the enormous
amount of money that companiesdevote to sales is aligned with
that strategy, as opposed tostuff that really doesn't
increase the value of theenterprise?
Dustin Steffey (16:56):
So then, we're talking about change management,
in a sense, and the ability tochange with the change in
environment.
Frank Cespedes (17:02):
Yeah, that's almost always part of any
business, almost always part ofboth strategy and sales, for a
very important reason that thatbook talks about at some length
Value in any business is createdor destroyed out there in the
marketplace.
(17:22):
It's not created or destroyedin your mind.
It's not created or destroyedin meetings.
It's created or destroyed inexchanges with prospects and
customers.
And the market has noresponsibility to be nice to any
company's strategy.
It is the responsibility of thecompany to adapt to the
(17:46):
realities of the market.
And that does mean change, andthe pace of change has
accelerated for some of thetechnology reasons, among others
, that we were just describing.
Dustin Steffey (18:01):
And so in my mind and in my studies too and
you can correct me if I'm wrong,I know I'm not perfect, but I
do have a sense of this I thinkthe biggest pitfall an
entrepreneur or business willjust keep it broad A business
falls into in general, is notbeing able to keep up with the
changing landscape of theenvironment that they're in.
(18:24):
So I think that most businessesthat I've seen that have not
succeeded excuse me, notsucceeded is because their
strategy isn't there toimplement for the changing
environment.
In my mind also, I feel as if,when we look at strategy in
(18:44):
general, some people and somebusinesses don't have a strategy
, and so therefore, that alsoplays a part in failure of
businesses.
Frank Cespedes (18:55):
Yeah, now I think you're right and I think
you're quite right todistinguish those causes because
while they're linked, they'reseparate.
On the change area, I thinkyou're exactly right.
I think partly it's humannature right, we don't like
change.
But in any market, when thepace of change in the market
(19:17):
outruns the pace of change inthe enterprise, you're going to
run into problems sooner orlater.
But then there is the necessity, if you're going to respond
productively as opposed tosimply reactively in ad hoc, you
need a strategy.
And the reality is that mostcompanies not some, but most
(19:39):
companies and most venturesdon't have a strategy right.
They have a goal.
They may have what we now calla purpose or a mission, they may
have values.
All of that is important, butit's not the same as a strategy.
I probably I don't have to behumble about this Because of the
(20:02):
research I've done, the companyI ran, I've worked with lots
and lots of companies.
I've probably been part of asmany strategy meetings as
anybody and the reality, whenyou cut through the rhetoric,
most companies, when they saystrategy, are basically saying
let's pick a big number and gofor it, and unfortunately it's a
(20:28):
little bit more complicatedthan that.
So I agree with you entirely,dustin.
I think you're exactly right.
The responsibility for changerests with the seller, not the
buyer.
But in order to make productivechange, it's important to have
a strategy and not confuse thatstrategy with slogans or purpose
(20:50):
or mission statements, etcetera.
Dustin Steffey (20:55):
So, piggybacking off of that and I think that's
a great relevant question,especially to ask you those
strategy meetings that you werea part of and strategy in
general, in my mind it should beliving and breathing right.
So strategy isn't just sit downfor a meeting for one time for
the year and then hope for thebest.
You're sitting down constantlyand that strategy should be
(21:17):
evolving, correct.
Frank Cespedes (21:19):
Yes, it should.
I'd make two points about this,and this, by the way, is very
often the situation I'm about todescribe, is very often why
entrepreneurs have anopportunity.
But again, you'll see the datain the book you mentioned.
But if you look at bigcompanies the so-called Fortune
500, what you see in many ofthose companies is, first, a
(21:43):
confusion between a strategymeeting and the annual capital
budgeting meeting.
Capital budgets are important,forecasts are important, but
they're not the same as astrategy.
Strategy is about the choices wemake.
What markets and segments do weand don't we serve?
(22:03):
Do we have an advantage inthose markets where we choose to
serve?
What are the implications forhiring, training, capital
expenditures, etc.
That's different than simplysetting a budget.
And secondly, a big company iswhat the data tells us is that
(22:26):
it's now between six and eightmonths that those companies
spend in their so-called annualstrategic planning process.
Now, notice this Six months.
During that period of time, themarket will do whatever the
market's going to do.
So, even if that company comesup with a great strategy, it may
(22:52):
be obsolete in market time.
That's where, if you're a moreflexible early stage venture
entrepreneur, you can and shouldhave an advantage, but you
still have the same challenge.
You still have to come up witha market relevant strategy.
And, in terms of living itevery day, when a company really
(23:17):
has a strategy, most people inthe company should be able to
tell you what that strategy isin 50 words or less.
The core components of anystrategy are A what are our
objectives with this market orsegment?
B what is our market or segment, what in business schools we
(23:41):
call scope.
And then C in the markets andsegments where we choose to
compete, what is the source Ofour advantage?
That shouldn't take more than50 words to articulate the
details behind.
That may indeed take more than50 words, but everybody in the
(24:01):
company should be able to sortof recite objective, scope,
advantage.
Dustin Steffey (24:08):
We will be right back after a quick break.
This week's episode is broughtto you by Buzzsprout.
The best hosting platform thatyou can be on for all your
podcasting means.
Again, buzzsprout has all thetools to create success for you
and your podcast.
Head on over to buzzsproutcomtoday to take a look at their
(24:33):
free trial offers Again.
That's buzzsproutcom.
Hello everyone, this is DustinSteffi here with Chopin with
Fire.
Today, I wanted to discussheading on over to your favorite
social media platform andgiving us a follow today.
Again, we are on a wide varietyof social media, including
(24:57):
Facebook, tiktok, instagram,linkedin.
We have a YouTube channel forour live YouTube videos and, of
course, our website,wwwchoppingwithfirecom.
Head on over to your favoriteplatform today to add us and
(25:20):
communicate with us, so that way, we can have some fun and talk
back and forth again.
We wouldn't be where we weretoday without our audience, so
let's get you guys on our socialmedia and plug in today.
So I'm going to simplify thisfor our listeners.
We just got done talking abouta very important topic when it
(25:43):
comes to entrepreneurship andbusiness, and that is having an
appropriate strategy in order tobe successful as a company or
venture.
The biggest takeaway that Ihave, for this is everybody that
is a part of that company orventure should be able to
identify what the objectives are, what the scope is, which is
(26:04):
business term and what thesource of development is.
In 50 words or less, or as wewould call it, in an elevator
pitch like pretty simplistic.
Frank Cespedes (26:15):
I think that's right yeah.
Yeah, and then obviously, butlet me point out something about
this because I think it's aninhibition both for big
companies and many entrepreneurs.
Again, you can see this in thebook you mentioned.
But if you look at the dataabout this, the vast majority of
(26:37):
organizations are not just poorat communicating their strategy
to their people, they areterrible at it.
There's a company calledEffectory that actually, for
over 25 years, sends out afabulous survey annually,
crosses industries up and downthe hierarchy and one of the
(27:01):
questions that they ask everyyear of employees is quote do
you understand your firmstrategy?
Fair right, I think we canagree.
It's tougher for people to dothings they don't understand.
The results are prettyconsistent.
Less than 50% of therespondents say I do, which
(27:21):
means more than 50% are saying Ireally don't have a clue.
But here's the reallyinteresting part.
The Effectory database is verygood.
You can slice it many ways.
The closer you get to thecustomer.
In other words, when you lookat the responses of people in
sales and service, thepercentage of employees who say
(27:44):
I understand my company strategygoes down.
It doesn't go up Right Now.
When you ask CEOs orentrepreneurs how come you're so
bad at communicating strategyby far the most common response
in my experience is that theysay well, we don't want to talk
(28:05):
about it too much, we're afraidthat our competitors will find
out.
And I always say the same thingto the founder or the CEO let's
get real.
You have much bigger problemsthan your competitors finding
out about your strategy if yourown people don't understand the
strategy.
(28:25):
That's a very bogus response,but it's one of the reasons that
companies are bad and noticethe implication Again,
especially if you're anentrepreneur.
If you can get just a littlebit better at this core element
of management and leadership,you've got an advantage.
That's what the research willtell you.
Dustin Steffey (28:49):
So if this information has picked my
listeners' interest again, wewere just taking a few snippets
out of the aligning strategy andsales book, which again, I
think has very relevantinformation in.
I think it has good data.
If you want to pick that up, Iwould definitely pick that up
and give it a read so you canget some ideas from that, from
(29:11):
that book, and just be able toimplement some strategies within
that.
I want to shift gears because Iwant to give equal amount of
time to the other book thatyou've written, which is Sales
Management that Works.
Frank Cespedes (29:24):
Okay, that's a book that is more tactical than
the first book you mentioned.
It's about really the coreelements in sales management
business development, includinghiring, training, performance
reviews and so on.
The listeners might find itinteresting why I wrote the book
(29:48):
.
The reason is the following Ofall the various functions in
business, sales is by far themost context specific.
In other words, sellingsoftware is different than
selling durables, is differentthan selling professional
(30:11):
services, etc.
It also differs not onlydepending upon what you're
selling, but to whom and whereyou sell.
Selling in the United States isvery different than selling in
Latin America or Asia or theMiddle East, etc.
It's also a culturallycontextual activity and yet, for
(30:37):
some reason, sales is that areaof business where so many
pundits feel comfortable makingthese huge generalizations that
are usually unsupported by anydata whatsoever beyond what in
academia we would call N equals1.
(31:01):
When I sold for Oracle 15 yearsago, this is what worked for me.
I'm sure it'll work for you.
After doing 30 years of what Ithink is reasonable research in
this area, I wanted to write abook that says look, this is
what research does and does nottell you about this core
(31:23):
activity in business.
Once I point that out to folkshow context specific sales is.
They tend to nod.
But it really has been strikingto me how many smart,
well-educated people forget that.
And it's a bit of a mysterybecause it's the one area where
(31:48):
everybody feels they cangeneralize about the activity
and generalizations are risky inthis area.
Dustin Steffey (32:00):
I think a good example of that is the company
that I was working for had manydifferent cultures within it,
right, and if you didn't have anunderstanding of how to
approach business, which witheach of the different cultures,
then you were not successful.
So a good example of this is wetalk about, like the Indian
culture which I mean that's verybroad, so I'll narrow it in so
(32:24):
like the Punjabi culture, right,they're very, they're very into
making money, and so one way ofbeing able to communicate with
with them specifically is to beable to talk about the very
analytical way of how to runtheir business appropriately to
create and generate that success.
And then other things that diveinto culture is like accepting
(32:47):
gifts from them If you do notand you didn't know that, like
it's kind of a slap in theirface.
So just knowing differentthings what I'm trying to get at
is knowing different thingshelps to create and generate
success.
Not one size, not one shoe fitseverything.
Frank Cespedes (33:05):
Yeah, I think that's right.
I think it's culturallyspecific.
I'm not sure Punjabi is is inany sense different in terms of
making money.
I get to meet a goodsalesperson who tells his
customers buy for me because youwon't make money.
But I think your larger pointis correct.
But it's not just that.
(33:25):
Let's stick with the UnitedStates.
Depending on what you'reselling and what kind of buyer
you're dealing with the, the,the, you know, the recipe for
success varies quitesignificantly.
Dustin Steffey (33:42):
Definitely.
And again, I think for thesales management that works book
.
There's significant details inthere, probably a lot of data as
well to show and illustratethis correct yeah yeah, that's
right and you know we might talkabout the hiring part because
(34:04):
it's.
Frank Cespedes (34:05):
It's one of the big, big decisions that any
entrepreneur makes, right whenyou do look to hire someone
who's going to be your businessdeveloper or maybe even build
your business development team.
That's a big deal, you know.
Think about software startups.
(34:25):
If you look at softwarestartups, once they've developed
most of their product, by farthe biggest ongoing operating
expense and the biggestdeterminant of what you know in
in entrepreneurial circles wecall burn rate right, burning
(34:46):
the cash you have available byfar the biggest determinant of
that is sales and the sellingcycle.
It's directly correlated withtime to cash, working capital
and funding needs and so forth.
So it's a big deal and it's ait's a very tough decision.
(35:07):
I'll just throw out a littledata about this that the
listeners might find useful.
There are challenges in hiringsalespeople that simply don't
exist to the same extent in anyother business function.
I'll give you an example.
If you look to hire someone infinance or accounting, you can
(35:30):
go to a college or universityand you can find people who
majored in those topics, right.
If you want to hire an engineer, you can go to a school, and
it's a little bit like walkinginto a food court.
What kind of engineering areyou interested in?
Electrical engineering, etc.
Same is true for programmers.
(35:50):
But the last time I looked,which was, you know, about three
and a half years ago when Istarted writing this book, of
the more than 4,000 colleges anduniversities in the United
States, less than 300 evenoffered a sales course, let
alone a sales program.
(36:10):
So this is a core area ofbusiness where the majority of
people start out knowing very,very little about what they're
going to get paid for.
And that leads to the secondfact that I'll mention.
Companies already spend a tonof money on sales and sales
(36:31):
training.
On average, companies spend 20%more per capita per person on
sales training than any otherbusiness function.
But the return on thatinvestment is notoriously
disappointing.
And it's disappointing for somesystemic reasons that you know.
(36:53):
We can talk about it if that'shelpful.
So this is a big decision forany company, but especially if
you're in an entrepreneurialearly stage company.
Dustin Steffey (37:06):
See, the biggest thing that I took from that is
and I can be one to tell you Iam completely business for all
of my degrees correct, and notone class was offered for sales.
In general, All of my sellingexperience has been with the
many different companies thatI've been a part of, and that
(37:29):
investment that each of thosecompanies had put in to upscale
me and my knowledge on saleswhether it be social styles,
whether it be understanding,understanding how to even
approach or talk to differentpeople Like those are things
that were not learned at auniversity level.
They were learned within themany companies that I've been a
(37:51):
part of that have made thatinvestment.
Where it's pretty daunting tome right now is you said they
spend about 20% per capita, butthe statistic that interested me
the most was the return oninvestment part, because you
were saying that the return oninvestment of these investments
that the companies are making isnot as lucrative as one would
(38:14):
think it would be.
Frank Cespedes (38:16):
Yeah, and we might talk about some of the
reasons for that, and they'repretty systematic.
One is and I say this as aneducator but there's an over
reliance on classroom trainingin sales.
Sales is a performance art.
It's about behaviors.
(38:36):
It's about what people say ordon't say.
Selling is important, buttalking about selling is not the
same thing as selling.
There's a classic amount of onthe job learning here.
The second thing is you've gotto understand some of the basics
about adult learning.
(38:57):
What I'm about to say appliesto other functions, but sales is
, in some sense, exhibit A forthis.
Sales people are not studyingfor the final exam in my course
or the training seminar.
That is not how adult learningworks.
Adults, and sales people inparticular, tend to pay
(39:19):
attention to information whenand where they need it, not
weeks or months earlier in aseminar.
And, by the way, this is anarea.
This is called just in timelearning.
This is an area where the newtechnologies can help, because
now it is very, very feasibleand, in fact, increasingly
(39:41):
inexpensive to get thatinformation to salespeople when
they want it, on their way tomake a call or during the actual
sales conversation, via thephone, the iPad, etc.
The third element here is whatthe learning people call
(40:01):
modeling behavior.
The way people in sales learnthe most is not from a professor
.
They learned some.
I hope not from a trainer.
Again, they learned some, butthey learn the most from the
best of their peers.
That's what modeling behaviormeans.
In other words, I've watchedsomeone who's a colleague do
(40:26):
this well and I say you know theway you dealt with that price
objection.
That was clever.
I'm going to use that.
The way you framed that valueproposition.
I hadn't thought of it that way.
And again, this is both amanagement but also a leadership
issue where technology can help.
(40:46):
Part of what you want to do isaccelerate that best practice
learning and again, technologycan help with this.
So there are systematic reasonswhy the return on that very,
very big investment isdisappointing, but there are
also systematic things thatsmart managers can do to make
(41:09):
that ROI better than it is.
But again, it's a little bitlike our public school system.
The issue is not are wespending a lot of money on
training in this area?
We are.
The issue is how we spend it.
Dustin Steffey (41:24):
I think another thing to bring up and you can
correct me if I'm wrong, becauseyou definitely have more
experience than I do is not onlyhow one learns or is able to
learn, because, I'm going to behonest with you, being inundated
by power points to learn isn't,isn't for me right, I'm more of
the hands on, like do it andthen it sticks right.
(41:45):
But the other thing to note, inmy opinion, is the ability to
have a manager that's able toreinforce some of the key things
that were learned and that areimportant.
I think and again, this is justbased off my experience I think
(42:05):
what happens usually iscompanies invest in training,
they train their workforce, butthen after that training, it's
kind of like put away right,it's not reinforced, it's not
brought back up, there's nocheckpoints, there's no
reminders, there's noaccountability I guess would be
(42:27):
the best word to use, unless youhave a different one but
there's no real accountabilityor knowledge checks to see where
the sales force is to reinforcethis to make that return on
investment better.
Frank Cespedes (42:40):
Yeah, no, I think that's right, and again,
I'd emphasize two things you'resaying.
Look, one thing we know for afact is that different people
learn in very, very differentways, so don't generalize.
I happen to share your distastefor the PowerPoint parade, but,
believe it or not, dustin,there are people that actually
(43:01):
learn that way.
There are other people thatlearn by reading, by narrative,
and then there are other peoplefor whom a picture is worth not
just a thousand words, but 10 or20,000 words.
So you just got to be open tothose different learning styles,
but, again, technology allowsus to approach people through
(43:23):
these multiple ways.
The second part, though, isexactly what you're talking
about follow up, and in businessand in sales in particular,
probably the most important formof follow up is the performance
Review, and this is, in myexperience, the most
(43:43):
underutilized lever foraffecting behavior in most
organizations, and, if I can beblunt, the biggest defenders
here, in my experience, do tendto be entrepreneurs, then, and
they shouldn't be.
This is a trainable skill, somuch.
Let's get back to what we weretalking about earlier in this
(44:04):
conversation.
The market buyers change.
So much of the really importantinformation about buying and
buyers in any market is not inthe CRM system.
It's in the brain, we hope, ofthe salesperson, and that
information only becomes visiblethrough a performance
(44:28):
conversation.
So notice, when managers don'tengage in this activity, not
only are they encouraging aculture of underperformance
right, most people look, ifnobody's talking to me about
this, I must be doing it right,even if they're not but they not
only perpetuate a culture ofunderperformance, they also
(44:51):
inhibit the flow of vitalinformation in the business.
And again, the business I ran.
It was four years before Ibrought in someone.
She was a wonderful retiredsenior HR executive, someone I
brought in to help train us onhow to do this better, and it's
a very, very trainable skill.
(45:12):
There's no excuse, in myopinion, for not engaging in
that kind of follow up.
Dustin Steffey (45:21):
Now that we wet the listeners appetite a little
bit, I do want to make a coupleof reminders.
One I will have links to thesebooks, because I think that
there is a wealth of knowledgemore than a wealth of knowledge
in both of these books.
So again, both the books areAligning Strategy and Sales, and
then the other book is SalesManagement that Works.
(45:43):
I will have links in theepisode description.
I suggest and highly encourageyou to pick those books up and
give them a read, because thisis just hitting the tip of the
iceberg with the wealth ofknowledge that you've already
offered today.
Frank, I wanted to take thistime to just thank you for
(46:05):
coming in and really just givingthat little push on really
changing the mindset a littlebit and really just kind of
diving in to the next book andreally just kind of diving in to
where the opportunity areas areto really create the success
when it comes to running yourbusiness, whether you be an
entrepreneur or whether you be aFortune 500 company, for that
(46:26):
matter.
So I really do appreciate that.
Frank Cespedes (46:30):
Well, dustin Flattery will get you everywhere
with me.
I appreciate you hosting me andthe very, very nice and kind
things you said about me and thebooks.
I obviously appreciate that aswell.
Dustin Steffey (46:44):
Again, guys, if you haven't done so already, I
would take a listen to thisepisode.
Maybe listen a few times.
Take a look at those booksAgain.
They are amazing books that aregoing to give you more
information than what we gaveyou today.
Frank, last thing that I wantto give you, because I think it
will be fun If you had one keypiece of information to give to
(47:05):
all the listeners.
So just pretend it's your classright now.
What is the most importantpiece of information that you
want to have as a message todayfor everyone?
Frank Cespedes (47:14):
Well, you know there's a.
We've been talking about books.
Let me cite a book I don't knowif you or any of our listeners
the author John Le Carré.
John Le Carré wrote the spynovels for so many years I think
he passed away last year but inone of his books one of his
(47:39):
characters says something that Ithink everybody in business
they should have this tattoo tosome prominent body part.
The character says the world adesk.
This is what he says.
A desk is a dangerous place fromwhich to watch the world, and
that's true Right.
(48:00):
Again, I'll get back to what Isaid at the beginning Value is
created or destroyed out there.
Right, and especially in aworld where we are flooded with
data.
There are people who I thinkand again, data is good, data
helps us bound the uncertainties.
But it's a fallacy to believethat you can manage any business
(48:23):
from the spreadsheet or simplyfrom the database, and I don't
care how big that database is.
A desk is a dangerous placefrom which to view the world.
You don't have to be a greatsalesperson if you want to be an
entrepreneur, but you have toenjoy customer contact.
You have to invite it andencourage it, not discourage it.
(48:47):
I guess that would be my finalcomment, dustin.
Dustin Steffey (48:52):
Frank again.
Wealth of knowledge, lots ofknowledge, bombs dropped today.
I really can't thank you enoughfor coming on.
I appreciate you, thank you,thank you.
Thank you again for choosingChopping with Fire as your
premier podcast for anythingwith regards to business,
entrepreneurship, selfdevelopment and smart investment
(49:15):
decisions.
If you enjoyed the episode asmuch as we did, please head on
over to one of our socialplatforms and leave us a comment
and or at us.
We do have a tip talk.
We do have a LinkedIn, we havea Facebook, instagram, youtube
as well, and also we do have awebsite.
Head on over towwwchoppingwithfirecom that's C,
(49:40):
h, o, p, p I N with firecom andtake a look at prior content
that we have posted.
Lastly, if you guys can, pleasehead on over to your favorite
podcast platform and leave us afive star rating and review.
We love to interact with ourfans and I would love to post
(50:03):
responses to your guys'scomments again.
This was another episode ofchopping with fire.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.