Art of Sales: Entrepreneurship and Success
“Your ability to sell is the single most important skill in determining your success or failure as an entrepreneur.” – Mark Cuban, American businessman and investor.
Lou Shipley, a senior lecturer at Harvard Business School and a three-time technology CEO, outlines the transformative power of sales education for entrepreneurs and talks about why the art of sales is an indispensable asset on their journey to success.
Lou specializes in tech entrepreneurship, sales management, go-to-market strategies, and building effective teams for startups and early-stage companies. Additionally, Lou serves on multiple boards and contributes as a senior lecturer at MIT Sloan School of Management.
Senior Lecturer at Harvard Business School
Lou, you’ve steered many businesses toward successful acquisitions and substantial increases in revenue and workforce size. What indicators lead you to believe that a particular business holds promise and potential for success?
When evaluating potential business opportunities, I prioritize the concept of disruption. It intrigues me whether a business idea has the potential to disrupt a thriving market and subsequently evolve into an enterprise within the industry that is being revolutionized.
Remarkably, companies with the potential to create substantial markets often end up disrupting multiple industries, each with its own unique approach to transformation. It’s important to note that no one particularly enjoys being on the receiving end of disruption.
However, if you find yourself at the helm of pioneering a transformation in a new industry, it can be an incredibly rewarding and engaging experience. To illustrate, consider my first startup, Avid Technology, specializing in digital video editing. We embarked on a journey to disrupt three industries simultaneously: the traditional broadcast industry, the conventional film industry, and the analog audio industry.
The methods employed to disrupt audio differed from what we did in the broadcast and film sectors.
Around 90% of startups fail despite having the right intentions. What, in your opinion, is the missing piece of the puzzle in such scenarios?
There are a couple of pivotal aspects to consider. The fundamental part of the equation. In the companies I’ve been involved with, the founders have consistently demonstrated a keen understanding of these pain points.
Next, being a founder can be challenging because, when you start a company, you juggle various roles, from product development to sales, customer service, and financial management. However, as a company expands, the emphasis shifts towards the team you assemble, which becomes significantly more vital than what you, as an individual, can accomplish. Your primary role becomes that of an orchestrator of talent.
Another crucial factor is coachability, which is frequently lacking in founders. Understanding the distinction between being a founder and a CEO is essential. If you don’t grasp the importance of coaching to guide you in this transition, you will likely encounter difficulties and potential failure.
So, while the journey begins with identifying disruption and addressing customer pain points, it ultimately hinges on having coachable founders and CEOs who excel at building exceptional teams.
As a senior lecturer at Harvard Business School, you’re in a unique position to educate aspiring entrepreneurs about the intricacies of sales. What motivated you to pursue an educational position at Harvard Business School?
Sales is a widely misunderstood concept on a global scale, and this negative perception of sales largely results from salespeople not fully understanding the essence of their role. Historically, even esteemed institutions like Harvard Business School did not emphasize sales education.
In my time there, when I graduated in 1990, sales were virtually absent from the curriculum, with most topics falling under the umbrella of marketing. However, in the real business world, questions invariably revolve around sales figures, as they form the foundation for budgeting and financial planning.
It’s somewhat ironic that Harvard, a renowned business school, took a while to recognize the complexity and significance of sales. Today, there’s a shift, with Harvard offering several distinct sales courses.
Approximately 400 students are expected to enrol in these courses this year, highlighting the growing acknowledgement that sales is a multifaceted discipline. Different perspectives are essential, whether you’re a founder, scaling an organization, or leading a Fortune 500 company.
This recognizes students’ preferences and the need to address the intricacies of building the top line in business.
Could you describe the methods involved in the present approach to teaching sales?
In the past, sales education was centered on theoretical concepts and basic strategies, but now the approach has shifted towards a more experiential and practical framework. Case studies, role-playing scenarios, and interactive simulations were integrated to provide students with hands-on experience in navigating complex sales challenges.
Harvard Business School’s approach to teaching sales has witnessed substantial evolution over the past three decades.
Traditionally, sales have been considered a peripheral topic, but now it has gained recognition as a critical pillar of business success, and I wanted to contribute to changing the school’s perspective by creating real-world case studies that help students develop practical skills in the area.
Salespeople frequently encounter various stereotypes and biases. In your opinion, what do many overlook when it comes to sales?
I always stress the importance of respecting and understanding sales. We’ve discovered that the most effective entrepreneurs prioritize equipping their sales teams with the right tools and have a good understanding of how sales work. Getting this initial qualification right helps avoid forecasting inaccuracies and potential problems down the line, such as misunderstandings with the board, affecting the CEO or founder’s credibility, and even putting their position at risk.
One of the biggest mistakes that I’ve seen entrepreneurs make is not really understanding how to do sales – they have a great product or a great idea, but they don’t know how to sell it.
For the past ten years, you have been effectively scaling startup companies. Can you share with us what sales strategies work well for startup companies?
Startups often have limited resources and may not have the established brand reputation of larger companies. By adopting consultative sales and relationship selling, founders can differentiate themselves from competitors and foster strong customer relationships, crucial for growth in the early stages.
These strategies also align well with the entrepreneurial spirit of innovation and customer-centricity that drives many startups to success.
Principles of the Consultative Sales Approach:
● Actively listen to the customer’s needs, concerns, and pain points. Ask open-ended questions to gather comprehensive information about the customer’s challenges and requirements.
● Rather than immediately pitching a product or service, conduct a thorough needs assessment. Strive to understand the customer’s goals and objectives before recommending solutions.
● Based on the information gathered during the needs assessment, offer tailored solutions that address the customer’s unique needs.
● Communicate the value and benefits of the recommended solutions. Focus on how the proposed product or service will address the customer’s pain points and deliver tangible benefits.
Principles of Relationship Selling:
● Prioritize the customer’s satisfaction and success above all else. Aim to understand the customer’s needs and preferences and continuously seek ways to enhance their experience.
● Regular customer engagement, even after the initial sale, and maintaining communication through follow-ups, customer check-ins, and ongoing support.
● Trust is a foundational aspect of relationship selling. You must be reliable, consistently deliver on promises, and be transparent in your interactions.
Both consultative sales and relationship sales prioritize understanding the customer’s needs and providing personalized solutions. While consultative sales focuses on the initial sales process and problem-solving approach, relationship selling extends beyond the sale to maintain strong customer connections and foster loyalty.
The combination of these features creates a customer-centric sales approach that is highly effective for startups seeking sustainable growth and customer retention.
Considering the prevailing AI trends, do you think there’s potential for AI to replace salespeople?
While AI may impact how we interact with potential customers, it’s unlikely to fully replace the value of personal relationships built through live communication. The introduction of PCs, the Internet, mobile phones, and the cloud triggered similar worries, yet these advancements invariably boosted efficiency and productivity rather than causing massive job losses.