Symptoms vs. root causes: a story of organizational performance, design and leadership
One of the pervasive issues in business is the common tendency for leaders and teams to address some of the presenting symptoms of an issue, as opposed to all of its root causes.
Addressing symptoms may provide short term relief, but the issue soon re-emerges. To sustain results, leaders must address issues deeply and holistically, at three interconnected levels: business performance, organization design and leadership consciousness.
Scenario: revenue down, sales and marketing spend up
Let’s look a fictional example, based on an amalgam of several real companies. A global organization was experiencing a common problem - in the face of a rapidly changing market, revenue was falling short of target, while spend on sales and marketing was over budget and increasing. A cross-functional team of senior Sales and Marketing leaders was formed to address this critical issue.
Initially, the usual suspects were blamed. The broader economic picture remained uncertain, and new industry regulations were impacting customers. Customers weren’t buying as much as projected, and competition had intensified. The company’s products and pricing policies were out of line with customer needs and competitive offerings. Sales leaders felt they weren’t getting sufficient support from Marketing, and that they were having to generate their own leads and do half of Marketing’s job. Marketing leaders felt that the Sales leaders were fixated on their traditional transactional selling model, and were ignoring the cool solution selling tools and programs Marketing was making available to them.
Level 1: business performance - financial and operating analytics
On reflection, the team recognized this approach would never solve the issue. Clearly, these were just some of the presenting symptoms, but there was much more at play. As a first step, the team needed to get a clear understanding of what was actually happening in terms of financial and operating metrics.
The team broke the financial metrics down to a more granular level, so they could get a clearer picture of revenue and sales / marketing spend by product offering and customer segment. They then dug into key operating metrics like customer satisfaction, number of sales calls per salesperson, leads generated per marketing campaign, and many others. The team worked to identify patterns, correlations and linkages between these operating metrics and the financial metrics.
This analysis provided much greater, shared clarity around what was actually happening to deliver the current revenue and sales / marketing spend results.
Level 2: organization design - architecture and culture
As the team dug into the analytics of financial and operating performance, a complex set of underlying organizational factors began emerging with greater clarity. Every one of these was known by at least one of these senior leaders, but none had previously recognized and synthesized the full set of factors impacting the performance of both Sales and Marketing, and thus revenue and profitability.
It became clear pretty quickly that external environmental, demand and competitive issues weren’t really to blame. Several competitors were in fact achieving record revenue results, with more cost-effective sales and marketing spend.
The problems rested primarily in the Sales and Marketing organizations themselves - and as it emerged, in the interaction between Sales and Marketing. As the team dug in further, it became apparent that Sales and Marketing had fundamentally different perspectives. Each had developed different, and somewhat incompatible, ways of working. As a team member remarked, the system was so badly flawed, it was essentially broken.
This divide between Sales and Marketing was manifest in every aspect of their architecture and culture, including:
Different perspectives on the target customer, and what customer needs to address
Different perspectives on the positioning and value of the company’s products and services
Different perspectives on the roles of Sales and Marketing, particularly at the interfaces
Core functional skills (transactional selling and corporate branding) that were not aligned
Financial and operating goals set in isolation and not aligned
Compensation and economic incentives designed to reinforce the current system
Day-to-day behaviors and role models that celebrated the current way of doing things
Processes that were either not codified, or were being ignored
A belief in every department in Sales and Marketing that they were unfairly under-resourced.
The team recognized that they had been aware of these issues for a long time, but had not really addressed them, relying on short-term “patches”. They realized they needed to fundamentally rethink the architecture and culture of both Sales and Marketing, individually and as an integrated system.
In essence, they had recognized that the system was currently performing exactly as it had been designed. The only way to enhance the performance of the system was to change its design.
Level 3: leadership consciousness - mindsets and skillsets
As the team explored these systemic organizational issues, yet another reality became clear. The way the system was designed reflected the mindsets and behavior of its designers.
As they dug into who had designed each of the elements of the existing Sales and Marketing organizations, the team came up with a surprisingly long list: the current and former EVPs of Sales and Marketing, the current and former Sales and Marketing leadership teams, several current and former specialists within Sales and Marketing, current and former leaders of other businesses and functions, the current and former CEOs and COOs, current and former board members, and the company’s founders.
The team recognized that the current models reflected the individual and collective beliefs, values, mindsets and behavior of all of these people, past and present. Their collective consciousness was deeply imprinted in the architecture and culture of the Sales and Marketing organizations.
They also realized that they had just accepted these mindsets and behaviors as irrevocable - that’s how Bob is, or that’s how Mary has always been. They now saw that this was an erroneous belief - one with major implications for the performance and success of the whole company. The team began to recognize that a fundamental shift in consciousness was needed - amongst themselves, and amongst all leaders in and adjacent to Sales and Marketing.
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While feeling a bit daunted at the extent of change needed, the team also felt exhilarated. They now had a clear picture of what was happening, and why. They understood deeply what needed to be done to improve the situation - beginning with making foundational changes in themselves, individually and as a team. Rather than an impossibly complex undertaking, they now felt they were at the beginning of an exciting journey, that would comprise many steps, and would ultimately lead them to a fundamentally better place.