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The Bottom Line

Evan Davis gets to the heart of the big finance stories at The Bottom Line.

In this week’s The Bottom Line, there was a lot of talk about the demise of the traditional salesperson and how they’ve become obsolete in our online, low-cost world. And there’s a lot of truth in that. In my “civilian” life as a consumer, I rarely deal with salespeople these days. In the past week, I’ve bought a holiday, books, insurance, baby clothes and a DVD, all without even speaking to a living soul. Like many others I find that convenient, cheap and, whilst I might miss some human contact, I don’t miss the traffic jams or the surly young man who doesn’t even know how to smile or make eye-contact when I give him my money.

But in my working life, as a management researcher looking at how firms create and implement strategies, it’s a different story. In particular, B2B (that is, business-to-business) selling is very different from B2C (business-to-consumer) selling. That’s not to say the traditional salesperson has been left untouched by the tsunami of web-based innovation. The firms I study are keen, where they can, to reduce the numbers of costly and, let’s be honest, often hard to manage road-warriors who burn expenses and are often inflexible. Because of these drawbacks, they’ve shed their traditional “order-takers” and replaced them with call-centres and on-line channels, just like in the consumer world.

What’s left, in many B2B sales operations, is a small, better paid and more important sales force. In particular, those salespeople who survived the shake-out now tend to have different titles (almost no-one is called a ‘sales rep’ these days) and have different roles. There are three of these new, super-salesperson roles worth mentioning here.

The first is the technical specialist. Many products that companies or organisations buy are very technically complex. IT, pharmaceuticals and capital equipment are obvious examples, but lots of outsourced services, like maintaining the buildings and recruitment, are more complex than you might think. In these cases, the old-fashioned salesperson has never had much of a role.

Technical specialists have the job of selling these complex products and services and to do it well they need to be well-educated, well trained and at least as much as a consultant as they are a sales rep. These people aren’t under threat of replacement by a website or a call centre and in fact most companies have trouble getting enough good technical specialists. To quote one executive I met “Getting geeks is easy; getting reps is easy; getting geeks who can sell is very hard.”

The second species of salesperson for the modern world is the key account manager or KAM. As is the way of things, companies sometimes re-label ordinary reps with this grand title in order to make them feel more important, but a real KAM is a very different beast. Their task is to make sure large, profitable accounts stay that way in the long run. They spend little of their time actually selling and most of it as a sort of project manager or, as one KAM told me, an orchestra conductor.

In key account selling, contact between buyer and seller is complicated. Our techies talk to their techies, our lawyers speak to their lawyers, our accountants speak to theirs and so on. The job of the KAM is to make sure this happens, that nothing falls through the cracks and that the customer remains happy and a source not just of profit but of market knowledge too. This takes a very different skill set from old-fashioned selling and many more reps aspire to KAM than can actually do it. Like technical specialists, good KAMs are worth their weight in gold.

The final species of super-evolved salesperson is less common and found in markets that are technical and where the buying process is complex. In this sort of market, certain customers become experts and influence the rest of the market. In pharmaceuticals, for example, these might be professors in medical schools. In corporate IT, the IT directors of big multinationals fulfil this role. The industry jargon for these influencers is Key Opinion Leaders (KOLs) and the über-reps that work with them are typically called KOL managers.

Their job begins like a technical specialist, persuading the KOL that their product is best through a very detailed scientific sell. But the KOL manager isn’t measured by his sales figures. Their goal is influence and success is measured by getting the KOL to publish, speak and otherwise endorse the product so that the more mainstream customers will follow. Like the other two kinds of advanced salespeople, good KOL managers are priceless. This is especially true since KOL management is often a team task and a good KOL manager has to combine the technical skills of a specialist and the management skills of a KAM.

So, as with many things in management, the picture is more complex than the headline. The traditional salesperson is fast becoming obsolete, but there’s more to it than that. The best salespeople have become specialists, KAMs and KOL managers. In doing so, they’ve become more important, better paid and much more employable.

Further reading

An introduction to business studies

Myth, reality and requirements in pharmaceutical Key Account Management
by Brian D Smith
in Journal of Medical Marketing 2009

An Exploratory Study of Key Opinion Leadership Management Trends amongst European Pharmaceutical Companies
by Brian D Smith
in Journal of Medical Marketing 2009

About the author

Dr Brian D Smith is a Visiting Research Fellow in The Open University’s Marketing and Strategy Research Unit. He is the author of over 100 books and articles and runs PragMedic, a specialist strategy consultancy.

Subscribe to Brian Smith's posts

 

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Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

In 2005, whilst addressing an audience of Oxford Entrepreneurs, Sir Alan Sugar remarked that “there’s nothing stopping anybody in this country from doing exactly what I have done; it’s no secret that I started with absolutely nothing” and indeed looking at what we know of his life now, admittedly a bit more after the Money programme, we know that his life is the stuff of dreams. Many entrepreneurs want to be him and many others want to be like him, and yet many others despise him.

All of this makes up a good story, but to me they necessarily raise some important questions: how good of a role model is he when it comes to inspiring young, inexperienced entrepreneurs? Has he got traits that can be emulated or learned? Or indeed what lessons do his life, his achievements and failures provide for wannabe ‘Sugars’? Here, I take a closer look at the personal and business attributes that have made Sir Alan Sugar and ask whether these attributes befit the future generation of British entrepreneurs.

Sugar at his best

He’s already the most talked about entrepreneur in Britain and his life story, as we have just seen in the Money Programme is well worn: Hackney-born and destined for a life of destitution he decided he could change his fate. Whilst still at school he boiled beetroots for the local greengrocer, made ginger beer to sell to his neighbours and bought photographic film, which he cut into camera-sized rolls and sold to friends. He had an instinct for a business opportunity and by the time he was 13, he was making more money than his Dad, a garment factory worker.

Later, his opportunistic flair lead him towards home computing and electricals, and made him very rich. He was a controversy-courting chairman of Tottenham Hotspur which he labels as a ‘waste of time’. His company, Amstrad, was sold to BSkyB for £125million. With his interests focused on construction, property (in Florida, Spain and Britain) and aviation, his personal wealth is now valued at around £790 million. Sir Alan is also known for his least talked about profile as a social entrepreneur. Through the Alan Sugar Foundation he gives generously to charity.

In 1993 he was the driving force behind the Excalibur Scholarship Scheme, recruiting 21 other UK companies to raise £1m to allow graduates from the old Eastern Bloc to study in Europe. In 1997, Gordon Brown asked him to join the ‘You can do it too’ scheme to promote the values of enterprise amongst alienated young people. He now devotes substantial time to the task.

Sir Alan, it seems, was born with flair to spot and act on opportunities. By being good at selling, spotting good opportunities and making key business decisions when it matters he is a self-made, big-time entrepreneur. Behind this façade, however, he is more known for his relentless energy, aggressive salesmanship, unabated self-belief, drive for new challenges and routinely sets himself new targets. Clearly these are qualities and characteristics of behaviour that are associated with entrepreneurial success and that appear frequently in studies of entrepreneurship. For example, persistence and perseverance, need for achievement, self-confidence, and self-belief is amongst the most frequently noted.

By being good at selling, spotting good opportunities and making key business decisions when it matters he is a self-made, big-time entrepreneur

A commonly quoted research study of new venture start-ups, that has stood the test of time over the past quarter-century, was conducted through the Massachusetts Institute of Technology by Jeffrey Timmons and colleagues. They identified fourteen important entrepreneurial characteristics of successful enterprise owners, which includes most of those identified in Sir Alan.

Nonetheless, Timmons admits that few entrepreneurs would possess all traits but felt that strengths in one might compensate for weaknesses in others. Many of these characteristics are self-explanatory (such as high personal drive and energy, self-confidence and setting clear goals) and some appear to be linked.

Whether these basic qualities are present from birth or develop over time still remains, however, an open question. Also, whether these qualities are unique to entrepreneurs, like Sir Alan, is also not clear but seems unlikely.

One point that is clear in looking at the life profile of Sir Alan is that entrepreneurship and entrepreneurial behaviour is quite diverse and is influenced so strongly by context that it is difficult to see how one personality could embrace all its facets, especially through all phases of the life cycle of one or more enterprises.

Either way, there seems to a strong indication that the decision to start an enterprise as a career choice is influenced by personal attitudes, attributes and behavioural preferences as well as background factors such as family, and social histories and traditions.

Just playing the game Sugar!

The Apprentice has certainly made Sir Alan a TV celebrity overnight, but is he acting out or is that the real him? What does any of this mean for him as an entrepreneur or businessman?

Surely, as is often the case with many celebrities, one would believe that Sir Alan Sugar's portrayal as Mr Grumpy on The Apprentice is an act. However, he denies it. In one of his interviews to the press about the show, he was quoted saying that “What you see on screen is me, there's no question of that, but it is the side of me the BBC chooses to show. There is more light-hearted banter, which hits the cutting-room floor because it doesn't put bums on seats. It's a one-way portrayal, not the whole of me.”

Altogether, Sir Alan takes his role on The Apprentice very seriously as he attempts to portray what to him is the real thrust of business life to date. He is a champion of entrepreneurship and the show attempts to teach those who are young and inexperienced about the basic errors in business, the key survival skills and why at times it is important that you get the simple thing done before you move to something more sophisticated. According to Sir Alan, the younger generation of business person has this fast-track-to-success aspiration, to leapfrog to getting an airline like Richard Branson, forgetting all the drudge work that can instantly cripple them.

Whatever the spotlight he is in, the media exposure has done wonders to the ‘Sir Alan’ brand. Not only has his business and products brands benefitted from free promotion but Sir Alan's increase in popularity has lead to him appearing in several television shows, including a special celebrity edition of Who Wants to be a Millionaire?

In 2005/6 he became the face of Premium Bonds on British television advertisements. He also appeared on Room 101 in 2005 and also on Friday Night with Jonathan Ross in April 2006 and The Apprentice won him a BAFTA in 2007.

You are fired! Sugar

Sugar's path to success has been all sweet, and certainly his rough and gruff character and attitude seems to provoke all kinds of critics and controversies, which he seems to thrive upon.

One of his most lamented controversies has been around his attitude to women and child care, and his grudge over flexitime work policies. Sir Alan Sugar questioning Katie Hopkins, one of the participants on The Apprentice, about her childcare arrangements annoyed many people. In his defence, however, in several interviews to journalists following this whole saga he explained that this was an issue taken out of context and extrapolated into headlines.

In fact, he avers that he shares great sympathy for women but firmly believes that some of the employment laws in this country are counter-productive. Accordingly, he argues that such laws prevent employers ask the real questions to women employees, like: where they live, whether they have children, have they made provision to have their children looked after. It gets blown out of proportion by the media. He similarly retains a contemptuous attitude towards business qualifications, such as MBAs and believes that the real learning is in doing the business.

Such attitudes have been perceived to be his negative traits by his peer entrepreneurs and businessmen. In fact a survey conducted by the Alliance and Leicester amongst entrepreneurs concluded that many see him as a bad business role model and many admitted that they have nothing new to learn from him. Such criticisms and controversies, however, do not seem to bother him much. In fact, as far as Sir Alan is concerned any publicity is good publicity.

When Sugar means business

Is Sir Alan a better entrepreneur or manager? He always claims that there is more to successful enterprise. To me, however, this statement is a bit incomplete. What is this ‘more’ that he refers to? Allegedly, I believe he is suggesting that being just a good entrepreneur or salesman in business is not enough. A successful business demands more skills and resources, albeit, the skills of a good manager. Let us explore this a bit.

Henry Mintzberg, a management guru has spent his academic career analysing and writing about the roles of managers in action. He believes that in doing his job, a manager performs the following roles: interpersonal roles – where the manager takes up roles as figurehead, leader, liaison and disseminator; informational roles – where the manager acts as a nerve centre, a disseminator and a spokesman from the organisation to the outside world; decisional roles – where the manager becomes a strategic decision maker and takes up roles such as being the entrepreneur, the disturbance handler, the resource allocator, and the negotiator.

Note that this expert suggests that being an entrepreneur is just one of the functional aspects of what a manager does amidst the great quantity of work that he does to sustain a successful organisation. Sir Alan’s ‘more’ suddenly seems to be making a bit more sense.

Sadly, in this discussion, we do not know enough about what Sir Alan really does to manage his businesses to analyse him according to Mintzberg’s theory. However, he does leave a trail of clues, thoughts and evidences which suggest that he believes in good management practices or at least on a set of managerial skills that work well within his organisational contexts. This facet of his skills very often gets hidden amidst his scruffy or controversial façade.

For instance, his blunt statements on the sort of people he doesn't like which open The Apprentice each week ("I don't like schmoozers, I don't like cheats" - and some choicer dislikes which push the programme back past the watershed) are not management textbooks' language, says very little about his verbal communication skills but make his expectations very clear to those under his authority.

He believes in a team culture. At various instances in The Apprentice he seems to disdain candidates who are not team players. He keeps telling his apprentices that without the help and support of other people, not only among their own team, but also in partnership with other businesses and business advisers, an entrepreneur is a loner and will not survive.

Yet he says the leap from lone-wolf businessman to becoming leader of a team – otherwise known as a manager – is one of the hardest but most important lessons an entrepreneur will ever learn. Sir Alan can also command loyalty. Witness his two long standing lieutenants and co-stars, Nick Hewer and Margaret Mountford. Some even say that he does listen and will respond positively to criticism, respecting those who offer it.

Sugar’s empire has so far been immune to the effects of the credit crunch and market downturn. He has an acute understanding of the liabilities of his business and managing the costs that can cripple his empire. In a recent interview, he was quoted saying: my wealth of experience one has gone through the valleys and mountains of these things before. The one we're in at the moment will bottom out and we'll rise again.

I've tailored my business to be immune from doom and gloom by not overstepping the mark…” These are just a few clues as to what Sir Alan’s ‘more’ means and we can keep exploring this forever but that’s not the point. The point is that there is more to successful enterprise!

Sugar's X Factor

So what are the stuffs that Sugar is made of? Deciphering his X factor is no easy task for anyone but we can certainly learn a lot in the process of doing so. His success in business seems to be characterised by a good masala, an intricate mixture of spices that makes up a good curry, of skills and attributes that have got him where he is. In essence he seems to have it all the hard-knuckled entrepreneurial personality, media savvyness, unwavered by critics and controversies and clear managerial acumen.

He is without doubt a born entrepreneur who trusts his finely tuned instincts and he has no time for nonsense business. In all, he takes pride in his self-belief that it takes one skill to spot an opportunity yet another to turn it into your advantage, a first lesson for any aspiring entrepreneur anywhere.

Courses

• Business Organisations and their Environments
• Investigating Entrepreneurial Opportunites

Take it further

• What  makes an entrepreneur
• You and your money
• Competitive advantage

Blogging about

Money Programme

Get the facts behind the big business and finance stories from around the world – and down your street, in The Money Programme.

In Last Orders for Guinness we see a company grappling with declining sales. Guinness has chosen innovation, in the shape of Guinness Red, as a strategy to reverse its fortunes, but what other avenues could it explore?

One possible strategy is to look to new territories for salvation. Guinness is very popular in Europe, in the US and in parts of Africa, particularly Nigeria. That still leaves sizeable swathes of the world with potential for growth. But there’s a big stumbling block with this strategy: distribution.

If you brew beer centrally, in Dublin for instance, how do you actually get it to market? Well, tankers sail it across to Britain, and when the beer arrives it’s loaded into lorries and distributed across the country.

"getting the product to the consumer can be difficult"

But what if this ‘distribution network’ didn’t exist? If Guinness wants to sell to a developing economy, and the infrastructure doesn’t exist in the way that it does in Europe, then they would have to think again about how to service the market. It’s relatively easy to build and operate a brewery, but getting the product to the consumer can be difficult.

Consider the South African market, for example. One reason why SABMiller have a virtual monopoly there is because they’ve got a well established distribution chain going into the townships. It’s difficult for other companies to replicate and therefore compete with them in this environment.

One way to obtain access to a distribution network is to join forces with a company that’s already built one. For example, in 2004 the Belgian company Interbrew and the Brazilian company AmBev merged, creating InBev. This hook-up allowed InterBrew to use Ambev’s distribution channel to sell beers such as Becks or Stella Artois to Brazil. Likewise, Ambev gained access to the European market for its Brazilian Beers.

There are other, more creative ways, to gain distribution capability. There’s one company in Denmark, for example, that uses a meat distributor in Italy to reach its target market: restaurants in Italy. Guinness may have to think outside the box in a similar fashion if it decides to expand overseas.

Take it further

• Join the discussion - what should Guinness do to save itself?
• Video extras - do things look black for Guinness?
• Competitive advantage - how can companies ensure they've got a lead over their competitors?
• Last orders for Guinness - after years of falling sales, Guinness fights back with new stouts and adverts
• When there’s nowhere to go but each other’s arms - the global brewing business is going through another of its spasms of consolidation
• 'Strategic alliances in international distribution channels' by Rajiv Mehta, Pia Polsa, Jolanta Mazur, Fan Xiucheng and Alan Dubinsky, published in the Journal of Business Research.
• Transforming Your Go-to-Market Strategy: The Three Disciplines of Channel Management by V Kasturi Rangan and Marie Bell, published by Harvard Business School Press
• Gaining and Sustaining Competitive Advantage by Jay Barney, published by Prentice Hall

About the author

Geoff Mallory is a Lecturer in Strategic Management and Director of the Postgraduate research Degrees Programme at the OU Business School. He has taught organization theory and strategy in a variety of countries and contexts.

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