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How a CEO can kill a company in 5 easy steps

Rob Enderle | April 3, 2017
Columnist Rob Enderle writes that he has witnessed first-hand executives repeating the same company-killing mistakes over and over.

Salespeople are only one aspect of sales performance and the only time more people equals more sales is where demand exists that is being unmet by the existing sales staff and you can’t address that additional demand with sales staff profitably. In short it is a far more complex calculation than simple staffing, otherwise everyone would have as many salepeople as they could manage and they don’t.  

 

3. Adding products increases success

Another mistake is thinking that adding more products incrementally increases sales and profits. It can, but only if the products have synergy in the sales process otherwise they can tend to cannibalize existing sales or have little or no impact other than to reduce the productivity of the salesperson. Adding products comes with costs. One of them is they then compete for the salesperson’s time.  

Salespeople will tend to favor products that they know and products that they are well-compensated for. Good salespeople optimize their time focused on those two vectors and they don’t care about profits (unless this is also part of their commission plan). This means if they know product A and are being well-compensated for it, they will sell product A over any other product that they know less well or are less well-compensated for.   Now, if you’ve given them a new product, C, and give them a huge bonus for selling it they will, but likely at the cost of then not focusing on the old product A.

This is one of the reasons why, after an acquisition, either the acquisition fails or the company takes an unexpected sales hit. They try to force the new products into the existing sales staff who either have no desire to sell them or is so excited about the new revenue sources they don’t sell the products they were selling and they aren’t yet very good at selling the new products.  

 

4. Not identifying and protecting the key company assets

In every company, there are a few human and intellectual property assets that sustain its existence.   This ranges from keystone products to people who are unique in terms of skills and impact that the firm either can’t live without. It is the rare new CEO who even tries to figure out what these things are, which is one of the reasons why so many turnaround CEOs fail. They sell off the key asset in order to make a fast-tactical financial gain, don’t act to retain the key asset, or make changes massively reducing their value. Often, they just take the asset and related revenue for granted and treat it like a cash cow until the value goes away and then they wonder where the related revenue went.  

 

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