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Summit 2015 Highlights: The Economics of Alignment

May 13, 2015 | By Drew Zalucky

  • SiriusDecisions believes alignment between sales, marketing and product management is key to a high-performing organization
  • Benchmark data from 400 b-to-b organizations – from 2006 to 2014 – analyzed how organizations have grown and achieved alignment
  • Results show the ranges of impact on revenue growth that various factors, including alignment, have on b-to-b organizations

Since its inception, SiriusDecisions has championed the idea that the alignment between sales, marketing and product management is the hallmark of a high-performing organization. But, as SiriusDecisions co-founder John Neeson explained today to delegates at Summit 2015 in Nashville, some organizations’ leaders still need convincing.

During his talk, John presented recent findings from a SiriusDecisions study that marketing, sales and product leaders can use to help make the case for better alignment within their organizations. “We took benchmark data for 400 b-to-b organizations, dating from 2006 to 2014, and analyzed how those organizations have grown and how have they aligned,” John said. “We also reviewed questions answered by 300 b-to-b sales, marketing and product leaders, and asked them why alignment is so hard.”

The results of this analysis indicated the ranges of impact on revenue growth that various factors, including alignment, have on b-to-b organizations. These sources of growth include:

  • Market growth. This growth factor, which drives between 48 percent and 79 percent of growth, stems from the overall growth rate within an organization’s target markets, rather than organization-specific factors. This type of growth is highly dependent on market conditions and does not help an organization outperform its competitors.
  • Competitiveness and efficiency. These factors have driven between 12 percent and 34 percent of growth for b-to-b organizations. Competitiveness deals with relative pricing, product positioning and technological innovation, while efficiency relates to profitability, sales and marketing spend, and financial performance.
  • Alignment. The study findings indicated that cross-functional alignment, which unlike other growth factors is wholly within the control of the organization, is responsible for between 5 percent and 36 percent of b-to-b growth.

While achieving alignment can be difficult, staying aligned requires ongoing consistency and focus. The study indicated that organizations that maintain this focus achieve up to 19 percent faster revenue growth – and 15 percent higher profitability – than other companies.

John also described the key elements that drove high alignment quotient scores for the b-to-b organizations included in the study. These factors include interlocking processes, measurement systems, service-level agreements between functions, Demand Waterfall® performance, and the impact of alignment on sales pipeline.

In addition to presenting the study findings, John introduced a framework showing how b-to-b organizations can systematically progress toward achieving higher growth and profitability based on six key factors that support alignment – technology, processes, measurement, organization, go-to-market and strategy – and the following four phases of alignment:

  • Foundation. This phase includes the alignment of sales, marketing and product around strategy, goals, process and measurement.
  • Scale. The second phase deals with ensuring repeatable processes, along with organization and technology interlock.
  • Comprehensive. At this phase, alignment is applied further with technology architecture, process hierarchy, and a move into a prioritization of strategy around specific growth areas.
  • Efficient. Finally, the company must maintain growth with alignment while driving efficiency.

Through this process, organizations can better adapt to the changing business landscape (e.g. change in leadership or the business model itself) and even shifting economic conditions. As John noted, companies with strong alignment see a much more stable and predictable pattern of revenue growth than those with inconsistent alignment. In fact, companies that are not aligned may even see their growth rates decline over time.

John also linked the theme of alignment to Magic Johnson’s Summit keynote address: While Magic is one of the best basketball players of all time, his all-time records were set for assists, not scoring. As an agent of alignment on the court, Magic made his fellow players, and ultimately his team, better.

“There are no heroes in alignment,” John said to the Summit delegates. “There are only high-performing teams. I hope that on Monday morning, when you return to your companies, you will become catalysts for better alignment.”

Drew Zalucky

Drew Zalucky is an Editor at SiriusDecisions and has nearly 10 years of professional experience in editorial, publishing, management consulting roles and independent journalism.

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