Marina Gorbis's Blog, page 1513

The Washington Redskins Should Turn Controversy Into a Business Opportunity

The Washington Redskins are facing a lot of pressure from pundits, journalists, fans, and Native American groups to change their “culturally-insensitive” name. To be fair, it isn’t an easy business decision for the team to make. For one, the Redskins name is an integral part of its history. Plus, a new name could potentially weaken its brand. But if the issue continues to pick up steam, the organization will have a much bigger problem on its hands than it does now. So perhaps the best long-term decision the team can make is to swallow its pride. If the new name is great, and if it better represents the core values of its city and fan base, merchandise sales are sure to go up, and the team could pick up new fans in the process as well.

That Guy with a Thousand Inconsequential Objections

We all know him at work — he’s That Guy. That Guy finds a reason to object to anything that is said. No matter how inconsequential the matter he can’t help but say, “but…” Here’s a typical script:

Normal Colleague: “I think the new guy is really getting up to speed quickly.”

That Guy: “OK, but what do you mean by quickly?”

Normal Colleague: “He just seems to be doing a good job so far.”

 That Guy: “But why shouldn’t he? He’s just doing the easy stuff now.”

 Normal Colleague: “Fine. I’m just saying his work so far has been quite good.”

That Guy: “Yeah, but what does ‘quite good’ mean exactly’?”

Talking to That Guy is painful. The conversation never seems to move — it’s always stuck. In meetings he’s worse: he objects to the most minor details in presentations, frustrating the presenter and everyone else. His net impact on the meeting is generally negative, and he makes it 15 minutes longer than it needs to be. And I suspect that no right-minded person wants meetings to be longer than necessary.

You might not know it but there’s a special word for That Guy: he’s captious. To be captious is to raise petty objections.

What’s not easy to do is to give a theory of what constitutes “petty.” However, like pornography, I think most of us know it when we see it. Without having really clear criteria for them, we can identify easily petty objections. And very often, petty objections have a clear causal impact on people in meetings: they roll their eyes. Of course, sometimes people roll their eyes to what are in fact smart objections, but I think most of the time most people (not That Guy) know which objections are trivial and which actually matter. Ultimately, we have to rely on our own (fallible) judgment to decide what’s relevant and what’s trivial, on when someone is being captious and when he’s not.

What’s the prescription from this? Introduce the word “captious” into your office’s lexicon. Having a sharper way of describing That Guy can help you more easily spot him, and also hopefully discourage him (because he’ll know you know he’s captious).   Some students of mine went a step further and actually had hats made with “captious” printed on them so that if anyone did behave captiously, they could hat the cat in question.   But make sure the word is not abused: if any comment or objection is labeled as “captious,” then you run the risk of silencing smart ideas. Use the word, but use it wisely.

In any case, please don’t be captious yourself.

How Women Respond to Frustration at Work, and Why

One Monday morning, I rode the elevator with an attorney who works in my building. She was fuming. Apparently, she and a male colleague brought an idea to their senior partner meeting. They had both been over-the-moon-eager to make the pitch and spent the week preparing a full presentation with video clips. Then, five minutes into the pitch their hopes were dashed. The managing director didn’t like the idea and he was in a hurry to close the meeting. He shut them down with a blunt remark, leaving zero room for rebuttal. My friend was in a spiral. The experience ruined her weekend and she was still thinking about it days later. She felt humiliated and couldn’t let it go. You’d think that her colleague would be equally insulted by the shabby treatment.  Yet, according to her, he was barely fazed. He took the setback in stride, essentially brushing it off.

Everyone has bad moments and foiled presentations, but not everyone carries it around with them for days or weeks. One anecdote does not indicate a trend, of course, but other evidence suggests that there may be a gender divide in how men and women respond to frustration at work.

This is a common topic of discussion in my coaching sessions with female executives. They report feeling disappointed and sometimes defensive when a decision or debate at work doesn’t go their way. Similarly, my review of 360 feedback reports indicates that women harbor what my colleagues and I refer to as “retained angst.” That is, they second-guess themselves and take negative moments to heart for an extended period instead of reflecting on the incident and letting it go. On average, the managers we speak with say that they see more women than men “taking it personally” when the tide turns against them. In addition, in a 2013 survey of 270 female managers in Fortune 500 organizations, including McDonald’s, Procter & Gamble, and Walmart, and follow-up interviews with 65 top managers, my colleagues and I found that both male and female executives reported that women have a more difficult time letting go of bad experiences at work. They blame themselves, feel insulted, or harbor resentment for days at a time.

When we asked a senior HR Manager about this he said: “…from my vantage point, I’ve seen that women in business settings struggle with frustration and get defensive when they are challenged.  [The problem is that] this takes away their power.” He went on to agree that men are able to express their frustration without sacrificing their authority.

In our interview transcripts, we found a few common threads that help to explain why women may be more likely to feel frustrated and let it show.

1. Women have more to prove.  In the executive ranks of many companies women are still playing catch-up in terms of pay equity and promotion opportunities. With fewer female peers to pull them into upper management, the stakes to “get it right” in office interactions are high. Some women report feeling more scrutinized than their male colleagues. (Betty Spence, president of the National Association for Female Executives, calls this “skirtiny.”) As a result, they feel that they need to be perfect. They become stressed and upset when they don’t meet their own impossible expectations or live up to the scrutiny of others.

2. Men think of business as a game, while women want meaning. Many women and men despise the use of sports and battle analogies in business. And yet, many men told us they’ve internalized more than women that business is like a game—you win some and you lose some. One COO told us, “Women internalize things. Whereas men realize that sometimes you lose the battle but you can still win the war.” In other words, know they need to “live to fight another day.”

This difference may connect back to the idea that women, more than men, want to find meaning in their work. A groundbreaking survey from 2010 showed that meaning in work is a prime predictor of high satisfaction for working mothers. While men commonly cite their paycheck as the primary motivation, this study and others tell us that women may be looking for something more.

3. Men keep it inside.  Be it constructive criticism, verbal opposition to their ideas, or simply a perceived slight, both men and women can become frustrated by intense opposition.  That being said, my experience as a coach, as well as the interviews I conducted with my colleagues, tell us that women simply admit their feelings of frustration more readily than men. They vent, while men maintain a poker face.

This brings us back to our female tax attorney and her male business partner. Is it possible that he was more upset than he is willing to admit? When I asked him, he just gave a little smile. He’ll never tell.

The Six-Minute Guide to Making Better High-Stakes Decisions

When making big decisions, executives use familiar tools like discounted cash flow analysis far too often. That’s because the more uncertain a business context is, the less likely running some numbers and probabilities through a spreadsheet will be helpful. It’s much more useful to take a different approach: to build multiple qualitative scenarios, for example, or to develop a set of comparative reference cases.

This video introduces a methodology for helping you choose the best decision-support tool for your business situation. It walks through a set of decisions that McDonald’s might need to make, ranging from straightforward (locating a new U.S. restaurant) to highly uncertain (responding to a backlash against the fast food industry’s role in childhood obesity).

For much more, including details on the decision-support tools outlined in this video, read  ”Deciding How to Decide,” by Hugh Courtney, Dan Lovallo, and Carmina Clarke.

High Stakes Decision Making An HBR Insight Center




Learning From Bad Decisions in “Disaster Lit”
That Hit Song You Love Was a Total Fluke
When Making a Big Decision, Think: “Eddie Would Go.”
How Anxiety Can Lead Your Decisions Astray

Is It Time to Be Skeptical on China?

As someone who lived in China during the “Tiananmen massacre,” I’ve long been skeptical of the Communist Party’s long-term ability to lead the country forward.

An authoritarian state whose inability to compromise or recalibrate led to the bloody 1989 crackdown on peaceful protesters surely can’t hold on to power while also allowing capitalism to flourish.

But here we are on the eve of the 25th anniversary of the massacre. The Party is still in charge; the economy is still, by and large, going strong.

And yet … a new skepticism is in the air, and this time it’s not coming from the “class of ’89.” The question that Chinese and outside economists now are debating is whether China’s leadership has the guts to allow the kinds of reforms that are needed to sustain growth and foster innovation. Economic growth was 7.7% in the first quarter – an impressive rate compared with most other countries, but one that’s considerably down from recent levels. (From 1979 to 2010, the economy grew an average of 9.9%, reaching 15% in 1984.)

A simple version of the new skepticism is this: China’s development to date depended in large part on “late mover” advantages that are no longer available. Its rapid growth resulted in part from (1) cheap land and cheap loans that were parceled out to favored enterprises; (2) an inexpensive labor force; and (3) the low economic starting point that resulted from the Communist Party’s destruction of private enterprise during its first 40 years in power.

These advantages aren’t sustainable forever. The land has been doled out. Cheap credit has mushroomed into a worrisome debt overhang. Labor is now cheaper elsewhere. And the economy’s low bar isn’t so low any longer.

The only road forward, many argue, is to loosen the state’s persistent control over nearly every aspect of society. This need not involve a democratic transformation, but it would require that China’s leaders find ways to make officials at all levels accountable to the people. The rise of social media could help nudge China in that direction, but it is not clear its leaders will have the courage to loosen their grip on the levers of information.

Innovation surely depends on such change. As Google executive chairman Eric Schmidt told a reporter in Hong Kong yesterday: If China wants to avoid the middle-income trap, it needs to develop “openness [and] free speech” because progress requires “debates about everything.”

On Saturday November 9th, the Party’s Central Committee will gather in Beijing for its latest decision-making plenum. Communist Party Secretary Xi Jinping, who took power a year ago, could use the occasion to introduce significant policy adjustments. An obvious one would be to reduce the role of state-owned enterprises, which dominate critical sectors of the economy and take a disproportionate share of capital investment. But 30 years of uneven economic reforms have created a new elite, including many Party members, who would fight any reforms that threaten their economic interests.

Add that to the inherent difficulties of sustaining the first wave of growth and the country’s looming demographic and environmental challenges, and this would seem to be a great time to be a skeptic about the Party’s ability to manage.

And yet…

China’s Next Great Transition
An HBR Insight Center




Do You Really Want to Bet Against China?
Which Management Style Will China Adopt?
China’s Impending Slowdown Just Means It’s Joining the Big Leagues
Rural China Offers Big Opportunities, Too

A Role for Specialists in Resuscitating Accountable Care Organizations

Among the current remedies for U.S. health care are Accountable Care Organizations (ACOs) — networks of doctors, hospitals and usually payers banded together to rein in costs by providing  higher quality, better coordinated care, with primary care doctors central to the process. Whether ACOs are going to cure our ailing health care system is an open question.  If they are going to help at all, they will require resuscitation themselves. What ACOs need are specialists to bring them back to life. And just as primary care doctors are being held increasingly accountable for the quality and cost of care they provide, bringing specialists into ACOs means that they also will be accountable.

Although ACOs have been put forward by public and private payers as an alternative care delivery model that incorporates better approaches to provider reimbursement with higher quality, we worry that early enthusiasm for ACOs is giving way to emerging frustration with their limited accomplishment to date and a sense of their inevitable failure.

The basic design of an ACO is primary-care-based — from their patient-attribution rules, which define which doctor is financially responsible for the care of a patient, to their global risk-bearing contracts, wherein providers take on financial risk for a population of patients with per-member-per-month spending targets.  A lesson learned in the 1990s, but apparently now forgotten, is that specialist incentives and behavior play a much larger role in care redesign than is currently accounted for by most ACOs. Specialists, not primary care providers, are responsible for the majority of spending in medicine.  In cardiology alone, for example, the country spent $273 billion in total direct costs in 2010 and will spend an expected $818 billion in 2030.  As primary-care-based ACOs, or for that matter any health care organizations operating under global-risk contracts, begin to form around the country, they must address the challenge of managing the cost of specialty care  through a combination of disease prevention and reduction of specialist utilization.

If we have learned anything in the years since managed care, it is that managing the cost risks cannot be delegated to primary care providers alone.  Any innovative care redesign must include all providers and cannot pit generalists against specialists. Poorly equipped for their role as gatekeepers to specialty care, primary care providers have been viewed by patients as barriers to specialized and presumably appropriate care. Specialists, on the other hand, have not been made accountable for cost, appropriateness, or for that matter, quality. In our current ACO decade, this misalignment persists despite the fact that specialists such as cardiologists, surgeons, and hospitalists are increasingly employed by health systems.

In current care-delivery payment models, the act of referring to specialists sets off a chain of nearly inevitable steps.  Specialists, to meet patient and referring providers’ expectations, feel obligated — and are even legally compelled — to provide a full-service evaluation. Furthermore, incentives compel specialists toward procedure-oriented (and thus expensive) workups, sometimes looking for low-probability events and performing unnecessary tests.  Reshaping the critical, perhaps precarious, relationship between primary care providers and specialists will depend on the natural progression of two powerful additional forces.  First, as we inevitably learn more about disease processes and develop increasingly specific therapies, new technologies, an aging population, and expanded coverage will lead to greater demand for specialist and subspecialist care.  Second, primary care providers will need increasingly to screen patients critically to determine who requires expensive diagnostics and targeted treatments from a specialist and who does not.  Without the generalist in this crucial role, specialists will be quickly overused and overwhelmed.

To start, better and more flexible partnerships between primary care providers and specialists are needed. Electronic health records and handheld devices can allow direct connectivity across provider types and care settings. Computerized clinical decision support with embedded evidence-based practice guidelines can fill in information gaps. Health information technology will support these new partnerships and foster team-based care. Physician leaders, properly trained in health economics, system management, measurement, and data analysis, as well as project execution — skills currently wanting — can set standards without limiting creative collaborations or subordinating partnerships to financial targets. Generalist-specialist partnerships that have these infrastructure elements and leadership traits will be preferred by payers as these will help drive down costs. Foundational to these partnerships are appropriate measures of quality that evaluate the care received by the patient. Existing measures often focus on documentation, inputs, and narrowly defined actions that only disguise the persistent delivery of volume without providing any real measure of value. In an ACO, we should instead measure the quality of every provider and identify and communicate about care variation in a way that is credible to the providers and encourages their collective participation.  If properly implemented, quality measures will lead to group awareness of practice differences and self-directed practice change and will capitalize on the intrinsic drive of all providers to achieve better performance.

Another requirement is that metrics be affordable to collect and case-mix-adjusted (to account for variation among patients) and that they be used at regular intervals with accompanying feedback to the providers on their performance. They must measure value not so much by capturing whether something is done but by determining whether the right thing is done at the right time. Newer metrics achieve this by assessing whether providers can make the right diagnosis, order the appropriate set of tests, and prescribe affordable, effective therapies.  Simulations, with sophisticated online evaluations linked to real practice data, offer the greatest promise in this area. Rapid feedback on simulated patients, obtained at regular intervals for generalists and specialists, will foster continuous learning and professional purpose. Experimental data have shown that quality scores, measured with such tools, improve rapidly and that these improvements translate into lower costs and better health outcomes. Research shows the complexity of the interaction between quality and costs: poor quality is linked to higher costs from overuse, unnecessary use, or incorrect use, and while the highest quality seems to cost more, the expense is potentially offset by savings that come from eliminating poor quality.

Finally, in order to financially align partners who are measured and held accountable, we must adopt broad disease-based spending targets. Providers’ ability to stay within spending targets, like their performance on quality metrics, should be evaluated for variation to rein in outlier spenders for a defined set of patients. With disease-based spending targets, costs will be seen to be shared by the primary care providers and specialists who are co-managing patients and populations within a given disease.

The future of ACOs will focus on the delivery of health care as a provider-team effort rather than a network effort or an insurance initiative.  Bringing together providers around performance metrics with disease-based spending targets will create incentives to produce health rather than more services (and costs). Putting patients at the center and eliminating the financial incentives that rewards high volume care will require a new leadership standard for both generalists and specialists. The term ACO may already be stale, but a system that holds primary care and specialty providers jointly accountable for cost and quality remains critical to American health care.

Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at healtheditors@hbr.org, and sign up to receive updates here.

Leading Health Care Innovation

From the Editors of Harvard Business Review and the New England Journal of Medicine




Make Physicians Full Partners in Accountable Care Organizations
Employee Engagement Drives Health Care Quality and Financial Returns
Why Can’t U.S. Health Care Costs Be Cut in Half?
Bringing Outside Innovations into Health Care

Control Is for Beginners

My daughter’s voice teacher recently told another student to stop practicing.  ”What?!” I almost yelled.  ”What happened to the theory of 10,000 hours of practice for mastery?”  But she explained that, at times, over-practicing can stifle music, just like over-training can stifle athletes and over-engineering can create products too complex to use.  There is a time to stop rehearsing, stop waiting for perfection, stop waiting for control and just go for it.

We need to balance grabbing opportunities as they present themselves — even if we’re not ready and have to ramp up as best and as fast we can — and practicing a lot so that when the opportunity appears, we’re prepared.   At Bell Labs, we were all about practicing; we called it experimenting.  We experimented, learned, applied, and iterated until it was flawless; AT&T wouldn’t release anything into the market until it was absolutely perfect.  When I was designing the system for which I received a patent, I wanted to get prototypes in front of potential customers for feedback before we got too far down the road. How naïve of me! Of course we couldn’t show customers something that wasn’t perfect — it would affect their expectations and maybe (horreur!) negatively impact the brand.  Needless to say, by the time the system was perfect enough to get into the market, we had lost most of our competitive advantage.

In its quest for perfection, for example, AT&T acquiesced creating and leading the cellular industry.  Even though Bell Labs invented cellular telephone technology in 1946, received the patents for it, and piloted mobile telephone service from the 1940’s through 1980’s, AT&T didn’t offer it on a broad commercial basis because, among other things, it didn’t meet the same “perfect” quality standards as wired telephone service. In 1994, AT&T bought McCaw Cellular, getting back into the cellular telephone industry, 50 years after having created the technology. As my daughter says, “Sometimes, perfection is the enemy of accomplishment.”

So how do you get it right? That depends on what you mean by “right.”  Maybe we can learn from musicians who practice spontaneity: jazz musicians.  My daughter’s voice teacher, Kim Nazarian, has taught me a lot. One of the founders of the Grammy-winning jazz vocal group The New York Voices, Kim   teaches her students to be in the flow, the conversation of the music.  Yes, she sometimes practices not practicing, but that doesn’t mean she isn’t a gifted and successful jazz singer. This isn’t a paradox — if you know what you’re doing and you’re competent, spontaneity becomes its own skill.

Another musician I’ve learned from is Carl Størmer, founder of Jazzcode.  Carl was a fellow-storyteller at this year’s BIF-9 conference. As he shows us by jamming with two people he’d never practiced with before, sometimes you just need to let go.  A Jazz musician needs to stop controlling and start trusting his band members’ competency and artistry.  This trust, the willingness to let go and allow for space, lets band members take risk (that’s what a jazz solo is!) and try something new and different — while being supported by their band-mates. Without that support, you get a chaos of sound. With too much control, you don’t get jazz. Carl’s wife, Ane, sums up this attitude with her own adage: “Control is for beginners.”

When we don’t give our people the space to take calculated risks, learn, apply, and iterate, we are really risking our future.  While there is a risk to improvising and spontaneity, control brings its own insidious dangers. In our push for perfection, we over-engineer. We add so many bells and whistles that it takes a Ph.D. to use the product. Just because we can doesn’t mean we should.  Just because we can practice to perfection doesn’t mean that’s best.

Spontaneity and relinquishing control provide enormous advantages, even if it takes a certain kind of non-practice to feel comfortable with it.  Jazz musicians know that.  Innovators should learn that as well… because sometimes, control really is for beginners.

Harry Potter Found a Four Leaf Clover

Harry Potter was a blockbuster hit. But why? What characteristics made it so special? Well, according to social-science research, nothing at all. Most big blockbusters are flukes, and luck played a much larger role in their success than many of us would like to believe. Chalk it up to the effects of social influence.  Since our decisions tend to be influenced by the tastes, choices, and preferences of other easily-influenced people, the hit-making business can be very random and unpredictable. Don’t let anyone convince you otherwise.

How Foreign Backlash Against NSA Spying Hurts US Firms

Spying has been going on centuries — but as foreign outrage against the NSA’s activities in Europe, Mexico, and Brazil shows, we’d rather not hear about it. Apart from Edward Snowden and his media allies, no one knows if there are more revelations to come — and whether the backlash against US interests will grow.

The reaction of America’s corporate leaders will show whether their mindsets are as global as their companies’ operations. The knee-jerk patriotic reaction of some CEOs — and the resort to cynicism by others — reveals that enough are close to failing this test. Assuming US national security policy doesn’t change, US corporate strategies at home and abroad will have to adjust to the foreign backlash.

It’s not hard to succumb to cynicism about European outrage. The NSA’s director has more than implied that Europe’s spy agencies themselves provided his organization with data, Meanwhile, nations of people more than willing to post revealing information about themselves on Facebook suddenly object to “American” intrusions into their privacy. Furthermore, it looks like newspapers in France and Spain have exaggerated the scale of the NSA’s activities. And, for ten years or more, haven’t Europeans been carping about this or that American policy? Isn’t this just more European political theater?

These responses are wrong. There’s more at stake here, on the surface and deeper. According to the latest annual data from the US Department of Commerce, the affiliates of American firms sold $2.5 trillion worth of goods in the European Union. The profits on those sales exceeded $550 billion, which is more than three times the total profits made by US affiliates in the three billion person-plus markets of the Asia Pacific. Europe may be slow growing, far too regulated, and irritating but it still contributes hugely to the bottom line.

The fallout from the NSA scandal is already starting to crimp US corporate expansion plans in Europe. Analysts had expected AT&T to acquire Vodafone Group, whose cell phone operations cover many EU states. Accusations that AT&T gives the NSA data on customers’ telephone calls is raising red flags in those European countries, like Germany, where privacy is taken seriously. Regulators and legislators are already making noises about this deal. If AT&T does go ahead–and even if it prevails and acquires Vodafone — there will be strings attached and much more oversight from European government agencies. Potential regulatory risk has suddenly soared for AT&T.

For many foreign companies and governments, there is a certain justice in AT&T paying a price for its links to the US government. After all, it was Huawei’s apparent links to the Chinese military that so enraged one US Congressional committee that they recommended that no US public agency or firm should buy Huawei’s telecoms equipment. That effectively shut Huawei out of the US market.

Many US firms work with the US government in sensitive areas and want to do business abroad — a point not lost on those American trading partners that have nationalistic industrial policies. The price of fat US government contracts, burnishing patriotic credentials in Washington DC, and cooperation with the US security apparatus has just gone up markedly for American firms. Is being seen to be American firm becoming a huge liability abroad, just like being a state-backed Chinese firm?

In addition, US business wants the ongoing EU-US trade talks to streamline regulations on the other side of the Atlantic. The NSA scandal has given those regulators seeking to protect their turf another excuse to resist change. No one knows what revelations about US firms and their relationship to its government will come next, so regulators will claim that they must preserve their discretionary powers to protect European citizens. A tough trade negotiation just got tougher.

Given that so many firms keep data on their customers, ostensibly to serve them better, there is a risk that any eventual EU-US trade deal will involve provisions on data storage and transfer that fragment markets further on national lines and raise the cost of operating globally. Some have even argued that the US-written rules governing the internet could be rewritten. Finally, there is the risk that the European Parliament might throw out any trade deal with the US, just like they did a major anti-counterfeiting treaty in which US firms had a large stake. Political insanity is not the exclusive preserve of Capitol Hill.

Forward-looking US CEOs with big global ambitions must ask themselves whether the current blend of knee-jerk nationalism, aggressive US security policies, and us-versus-them corporate strategy — which often links American firms at the hip with Washington D.C. — is really in their interests. Full disengagement from Washington DC isn’t plausible; but is being seen as an extension of a troubled hegemon desirable?

Spying, terrorist threats, and whistle blowers aren’t going away. After all, the reaction of the French Trade Minister wasn’t to condemn the NSA but to say that Paris should ramp up its espionage efforts. Isn’t doing business at home and abroad hard enough without taking on the risks that come with mixing profits with nationalism? At times like these, CEOs of truly global companies should be credible brokers urging calmer heads to prevail — and their credibility rests partly on not being too close to any government.

The Trend that is Changing Sales

Over the past several decades the structure of sales organizations has remained largely the same. They have been primarily based on outside field salespeople who make face-to-face sales calls with prospective customers and current clients. In turn, the field salespeople have been supported by inside sales representatives who helped them complete their daily tasks.

Today, the traditional sales organization structure is undergoing a significant change. Many sales organizations are transitioning from a field sales model to an inside sales model, where the inside salespeople work independently and are directly responsible for closing business, working primarily by phone and email. In order to understand the magnitude of this trend, in-depth interviews and extensive surveys were conducted with over 100 vice presidents of sales at leading high technology companies and business services providers. The resulting research provided detailed insights about the evolution of sales organizations.

The key finding: Over the past two years, 46% percent of study participants reported a shift from a field sales model to an inside sales model, while 21% reported a shift from inside sales to a field sales model. More than twice as many study participants reported moving to an inside sales model.

There are three key factors that determine whether a sales organization will utilize a field or inside sales model. They are the sales organization’s stage of development, the complexity of the products that are sold, and to a lesser extent, the sales leader’s perception of inside and outside sales model effectiveness.

  Sales Organization Development Stage

Every sales organization can be classified into a “Build,” “Compete,” “Maintain,” “Extend,” or “Cull” stage based upon its development. The Build stage is when the sales organization is first establishing itself.  If successful, it will proceed to a high-growth Compete stage and then to Maintain stage that is contingent upon predictable success. As the sales organization ages, it will enter either the Extend stage and enjoy longevity or the Cull stage, where it declines and is forced to reduce its size. The ratio of outside or inside salespeople changes as the organization moves from the Build to Compete to Maintain development stages.

The challenges sales organizations face is dependent upon the stage of their development. The top sales challenge in the Build stage is creating sufficient sales coverage to push the product into the market. The Compete stage challenge revolves around quickly scaling the sales organization so it can compete effectively against larger established competitors. The focus shifts to maximizing sales productivity by lowering the cost of sale and increasing the average sales price in the Maintain stage. The Extend stage challenge is to attain widespread customer adoption so their solution becomes the de facto standard. The Cull stage challenge is to revitalize a demoralized and marginalized sales force. These challenges directly influence the sales organization’s structure and whether a field or inside sales model will be deployed.

  Sales Cycle Complexity

The complexity of the sales cycle determines the evolution of the sales organization and at what point outside field or inside-based sales models will be implemented. Sales cycle types can be classified by complexity as Enterprise, Platform Cloud-based or Point-specific. Each of these sales cycles vary in complexity depending upon the number of individuals and departments involved in the selection process, the size of purchase, and sophisticated nature of the solution offered.

Enterprise sales typically are large capital expenditure purchases that involve long sales cycles. Multiple departments of a company and all levels of the organization (C-level executive, mid-level management, and lower-level personnel) are needed to approve the solution’s functionality and its purchase. A point-specific sales cycle is usually targeted to solve the business problems of single department within an organization and the purchase decision is made by a small number of decision-makers usually at the lower-level of the organization. The Platform Cloud-based sale provides a turnkey business solution for the customer over the internet and is sold directly to the business users of an organization. There is a preferential field and inside sales model strategy for each of the sales cycle types.  For example, a field sales model is preferred for enterprise sales cycles and an inside sales model is preferred for Platform Cloud-based sales cycles.

  Sales Leaders Perception of Field and Inside Sales Models

While the goal of this study was to gather quantifiable metrics based on surveys and interviews with sales leaders, there is another aspect of sales model decision making that cannot be ignored. Ninety-eight percent of study participants responded that the characteristics between inside and outside salespeople are significantly or somewhat different.

Most sales leaders believe that outside salespeople have superior sales skills and the most accomplished sales professionals are in the field as evidenced by the sales leader comments below. This in turn can influence their decision and whether they implement a field or inside sales model.

“Field Sales is more strategic, meeting with C-level executives and developing strategic business innovation to help them grow their business versus inside which is more quantity and not as in depth majority of the time.”

  “Inside Sales is a transactional engagement and the focus is on opening opportunities.  Outside teams are solution and relationship based.”

  “Outside sales requires far more emotional intelligence, situational awareness, and planning. Our inside sales, while equally demanding, requires persistence, research, and back end work.”

Furthermore, many sales leaders have a personal bias toward deploying outside salespeople over inside sales. In some cases, this inclination was based on their own experience from many years ago when they were in field sales. However, this historical disposition is being offset by the changing nature of how customers buy today. Customers are smarter and information is not only easier to find, but available in greater detail than ever before. In addition, technology has become a way of life and completely disrupted the buying process. Via the Internet, customers can research products, prices, and opinions.

This situation is driving more sales leaders to consider and then deploy an inside sales model. For example, study participants were asked to rank the influential factors that are responsible for the migration from field to inside sales. Sixty percent responded that it was due to the increasing pressure on business performance and profitability. Fifty-four percent said it was due to technology advancements. Forty-seven percent felt that buyers more readily accept the remote selling process and thirty-four percent believed it is because of societal changes such as a mobile workforce and personal online purchasing habits.

Study participants also cited the following advantages of an inside sales model compared to field sales model. Eighty-four percent believe it is easier to onboard new salespeople and share best practices. Seventy-nine percent responded that inside sales allows the organization to scale faster. Increased call activity and selling volume was cited by seventy-eight percent of responders. Seventy-six percent acknowledge that inside sales provides a better strategy to penetrate small businesses and mid-markets.

Today, there is a changing perception among sales leaders about the strategic role inside sales performs. This change is due to the benefits that sales leaders believe the inside model provides in terms of scaling activity, growing the organization, and attacking specific markets.