Almost 30 years ago, Andy Grove, the then CEO of Intel, reflected on a near-death experience of his company precipitated by what he later named a “strategic inflection point.”
As a first mover in the memory chip industry, Intel had practically 100 percent of the market it had built since its founding in 1969. But Japanese competitors were gradually and remorselessly making inroads into Intel’s leadership with high-quality, low-priced, mass-produced parts. It was imperceptible at first but by 1985 Intel was in serious trouble. Finally, after an extended period of denial “wandering in the valley of death” and hemorrhaging money, the company decided to do the unthinkable: It exited the business it helped to create.
The decision was made to focus on what was a then niche business – microprocessors to serve the emerging personal computer industry. The executive team met with entrenched resistance internally. Intel and its culture, was defined by what it made – memory chips.
The sales team, in particular, could not let go of the belief that they needed a “full product line” to do a good job in front of customers.
It was a wrenching change of direction but Intel survived and flourished by taking painful and radical action.
In his book Only the Paranoid Survive, Grove chronicles his strategy of focusing on a new way of measuring the nightmare moment every leader dreads – those “strategic inflection points” when massive change occurs and a company must, virtually overnight, adapt or fall by the wayside.
An inflection point is reached when the old strategic picture dissolves and gives way to the new view of the world; the future begins to look significantly different than the past. It’s at such points that business leaders and managers realize: Things are different. Something has changed.
Corporate giants such as Kodak, Nokia, and Blackberry failed to heed the lesson of Intel, even though it was written on the proverbial wall in large letters. They either did not to see the signs or, more likely, chose to rationalize them away until what they made faded into irrelevance.
It’s safe to say we have experienced such an inflection point on a global scale. The business world has just tilted on its axis.
While it’s become something of a truism that the global COVID pandemic simply accelerated trends that were already in place, fundamental aspects of life have changed. Things really are different.
The perfect storm created by a combination of the pandemic, enforced national lockdowns, and the availability of digital technologies that made it possible for businesses to react, readjust, survive and often flourish in a radically altered global environment has changed fundamental aspects of life, perhaps permanently.
Technology has given people liberating options. Many are rethinking how they live lives. A global pandemic without apparent end has provided workers with the impetus to evaluate their careers, long-term goals, and working conditions. The Great Resignation (as economists have coined the extraordinary employee exodus from work) is a reflection of the deep dissatisfaction with previous work/life situations.
Technology is also transforming industries and institutions – education online, health care through telemedicine, robotic surgery or home health monitoring. The “Amazonification” of commerce – already well under way before the pandemic – has changed people’s buying habits and their service expectations. Delivery tomorrow, or even today, is the new norm. Sophisticated B2B and B2C e-commerce platforms have helped to create a new era of small business entrepreneurs.
The next normal
According to a study by McKinsey, the management consultancy, what started out as a crisis response has now become the next normal and it has profound implications for how buyers and sellers will do business in the future.
For example, both B2B buyers and sellers say they prefer the new digital reality, and more than three quarters say they now prefer digital self-serve and remote human engagement over face-to-face interactions—a sentiment that has steadily solidified, even after lockdowns ended.
Self-serve and remote interactions have made it easier for buyers to get information, place orders, and arrange service, and customers are enjoying the speed and convenience. Only about 20 percent of B2B buyers say they hope to return to in-person sales, even in sectors where field-sales models have traditionally dominated, such as pharma and medical products.
B2B sales leaders have moved from an initial reluctance to adopt digital in reaction to the widespread shutdowns in the early stages of the pandemic to a growing conviction that digital is the way to go.
And B2B customers are buying online in a big way. A significant indicator that digital sales have come of age is the comfort B2B buyers have in making large new purchases and reorders online. The prevailing wisdom was that e-commerce was mainly for smaller-ticket items and fast-moving parts. Not so anymore. Notably, 70 percent of B2B decision makers say they are open to making new, fully self-serve or remote purchases in excess of $50,000, and 27 percent would spend more than $500,000.
Globally, B2B decision makers say that online and remote selling is as effective as in-person engagement, or even more so—and they’re not just talking about selling to warm leads. Sellers also believe digital prospecting is as effective as in-person meetings to connect with existing customers.
With the massive shift to digital, video and live chat have emerged as the predominant channels for interacting and closing sales with B2B customers, while in-person meetings and related sales activities have dropped precipitously.
The study goes on to say that e-commerce and videoconferencing now account for 43 percent of all B2B revenue, more than any other channel.
Significantly, survey respondents believe these pandemic-induced patterns are likely to become permanent. Almost nine in ten decision makers say that new commercial and go-to-market sales practices will be a fixture.
As with Intel all those years ago but on a universal scale, something radically transformational has just happened. Only those organizations agile enough to accept and embrace the new brand and marketing realities of a hyper-connected world will flourish and dominate.
What a tremendous opportunity.
[This is an edited version of the Foreword for “Agile & Resilient: Sales Leadership for the New Normal”, by Michelle Richardson and Russ Sharer.]