According to the article's opening passage,
"Ram Charan is known for his platinum clients and his relentless schedule. The business professor-turned-management consultant says he's worked seven days a week for 30-plus years, advising executives at the likes of General Electric Co. and Verizon Communications Inc. on such topics as improving results and execution."
As a reference, I've pasted two Yahoo-sourced stock price charts for Verizon, GE and the S&P500 for the past 5 years, and beyond.I don't know the timeframe in which Charan has advised the two firms. If it's within the last five years, they should get their money back.
As this chart clearly shos, neither firm has outperformed the S&P in total return over the period. GE barely mirrored the index, but still fell short. With dividends, maybe it was close for GE, but surely not sufficiently better to justfiy the excessive senior executive compensation the firm pays.
Verizon has barely earned a total return that is even 1/5 of that of the index.This second chart shows a longer term of performance for GE, Verizon, and the index.
Again, not knowing when he worked with the two firms, if it were prior to five years ago, that isn't necessarily so impressive, either.
As far back as 2000, both firms began to fade, in performance terms.
With that as some empirical perspective on performance at two of the firms the Journal alleges Charan has 'helped,' let's move onto the interview. It opens with this passage,
"Recently, Mr. Charan turned his attention to sales, particularly from one business to another. He doesn't like what he sees. In "What the Customer Wants You to Know," published last year by Portfolio, he argues that companies need to "reinvent" the way they sell, to focus on their customers rather than product features. Mr. Charan talked to The Wall Street Journal about the problems with sales and how to fix them."
I think this would be news to most marketing professors in the better business schools around America. Sales management and process has been taught since I was in undergradate school, back in the late 1970s.
Beginning to quote Charan in the interview, the article relates,
"Mr. Charan: The sales function has traditionally been about execution. Most sales people are very good at connecting with the purchasing customer. They get training to know the product. And they beat the competition on price.
Now the world has changed. Copying a product became very quick. You now have competition on the Internet to beat down prices.
It has become very hard to differentiate yourself in the eyes of the customer, for business-to-business sales. So salespeople should not sell the product any more. They should find out what the customer needs, which will be a combination of products and services and thought leadership.
WSJ:Can you explain this new approach?
Mr. Charan: Salespeople need to work backwards from what the business need of the company is. Let's say I'm going to sell you this BlackBerry. I come to you and I say, "I've done some homework on your company. I think you're going to need 1,000 BlackBerrys. And in order to make your BlackBerrys fruitful, I'm going to need some information. How many users are in selling, how many in manufacturing, how many in research, how many in finance, how many on the road?"
With that information, I can design something that is useful to them. That information is proprietary. If you don't trust me, I will not get that information. Salespeople need to learn the business of the customer. They need to learn how to ask the right questions. They need to have analytic skills to diagnose a customer's business. They need to figure out who makes the decisions in a company."
Hasn't Charan, or, for that matter, the Journal's Phred Dvorak, ever heard of 'consultative selling?'
It's a little marketing and sales thing that's over 40 years old. IBM salesmen used it to sell the original 'big iron' mainframe System 360s and 370s.
Dvorak continues,
"WSJ:Don't most companies do this already?
Mr. Charan: No. They say how their products will reduce customers' costs. They don't touch on improvement of revenues, margins or brand image."
Honestly, I simply do not believe this. Just look at this post which I recently wrote about Tennant. This passage,
"As a result, the cleaned area would dry in about 30 minutes -- a pressing concern for institutions such as casinos that otherwise have to rope off cleaned areas for as long as 24 hours, Mr. Swenson says,"
clearly indicates that Tennant focused on improving their customers' revenues through value-added product features.
Finally, Dvorak closes his interview with Charan, having apparently sat there simply nodding his head and being totally accepting of Charan's contentions, with these questions and answers,
"WSJ:How does the sales force have to change?
Mr. Charan: The old salesperson: gregarious personality, very sociable. Plays golf. Goes to ballgames. Quick to link with people. Highly motivated. Long hours. Very perceptive in reading other people. The more successful ones know how to close the deal. It's still useful.
Going forward, the salesperson must build trust with the customers' people that's deeper than before and sustained over time. You cannot design a solution without information from the customer. And if the customer does not trust you, he or she will not give you information.
I would be very surprised if John Chambers, CEO of Cisco, thought his salespeople filled their order book just by taking customers to baseball games. Or Larry Ellison's. High-value, big-ticket institutional sales between companies have always been a consultative selling proposition.
WSJ:What else has to change?
Mr. Charan: In the old game, one person could do the selling. In the new game, you need a team from your company. The reason you need a team is the solution you're going to create is going to come from different parts of your company."
Again, large, complex, long sales cycle, big-ticket business-to-business sales have always employed extensive teams to win a customer's business.
It was hard for me to read this Journal piece with a straight face. Is Charan really so clueless that he is ignorant of better sales practicies in business stretching back decades? And was his interviewer, Dvorak, similarly ignorant?
How did this article make it into the Wall Street Journal's "Managing" column? It's just completely fallacious in its portrayal of the best practices of consultative selling in American corporations.
What is it with Charan? Can only he invent "new" concepts? So whatever strikes his fancy is new and worthy of a book or new fad, even if he's overlooked existing, long-used practices which happen to be exactly what he is preaching as "new?"
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