Sales Is Toxic to Innovation
Having had the good fortune to participate in business development and sales in both startups and large companies (Intel and Microsoft), I have arrived at the conclusion that sales is largely detrimental to successfully bringing innovative ideas to market. There is a critical transition from business development to sales, and if made prematurely it will at best delay success and at worst result in the failure of the endeavor.
Before continuing, let’s clarify the definitions of “business development” and “sales.” Business development is the process of growing the company’s business. Sales is the process of growing the company’s revenue. Revenue is an outcome of business development, but it is not the focus. The focus is establishing from where the revenue will eventually come.
There is a bit of paraphrased old wisdom in military planning that no plan survives contact with the enemy. In the world of innovation, we can paraphrase that wisdom as “no new idea survives contact with the expected customer base.” There are many reasons for this. The idea may have addressed a need at a moment in time, but the implementation of the solution might have taken long enough to develop for the market to have moved on. I have personally experienced this working for a startup that was designing a chip to be used in telecom equipment to help telecom carriers implement a converged “everything over IP” network. In a meeting with the CTO’s office of a major carrier, they point-blank said that that vision was three years in the past and they had moved on to an “everything over Ethernet” strategy. In other situations, the original idea simply does not find sufficient market interest to be viable.
How do we get from problems with market acceptance to sales being toxic? First it is critical to understand that the premise is not that sales people are toxic. Nothing could be further from the truth. However, sales people are paid to do one thing: generate revenue. When customers reject the product, a good sales person tags them as “no opportunity” and moves on to find customers that will generate revenue and generate it soon. They are not incentivized to gather customer feedback and alter product direction.
The toxicity of the sales process manifests in two manners, both related to the need to generate revenue in a short timeframe. The first is missed opportunity to pivot the company to address a more profitable market need. This occurs because the sales people move on to the next prospect, searching for customers who can use the product as it is because that is what can be sold today. This can overlook the possibility of a feasible product change that could turn those “no opportunities” into huge opportunities.
The second manifestation comes in the form of customer feedback that pulls the product in a direction that is good for the customer, but not the company. For example, customers like multiple vendors for the same product. Take cloud infrastructure as a service (IaaS) as an example. Large enterprises have an openly stated goal of no vendor lock-in. Suppose there is a well established IaaS vendor in the market. New cloud vendors look to enter the market providing differentiated services such as platform as a service (PaaS). The customers view PaaS as another vendor lock-in threat and tell the sales people that what they want is IaaS. The sales people report back that in order to generate revenue in a short timeframe the new cloud vendors must deliver IaaS. There is no allowance in the sales process to invest the time it would take to sell the customers on the benefits of PaaS, and the vendors pivot to IaaS. Now the customer has multiple vendors from which to choose and the vendors are forced to compete at a commodity level. Good for the customer, not for the vendor.
This is why sales is toxic to innovation. Innovative products need to be nurtured in the market. They need to be introduced to customers who are open to new ideas and can accept the potential risks to gain an advantage in their market, but who might not represent large revenues in the near term. However, allowances need to be made for products for which the intended market does not materialize, but can still find application in other areas. These activities cannot flourish under the pressure of revenue goals and assigned quotas. Sales is a critical part of a company’s growth, but bring it in too early and it can poison the soil and make it challenging for new things to grow.