Colin (00:02.039)

Hello and welcome to The Growth System, the podcast that looks at B2B growth through a systems thinking lens. I'm Colin Shakespeare.

Chris (00:10.188)

And I'm Chris Bayless and today we're talking sales and marketing alignment.

Colin (00:15.298)

Now, I'm sure everyone in the audience has been there. You're sitting in yet another sales and marketing weekly alignment meeting and you're watching your team leaders all nod in agreement and celebrate the collaborative efforts that you've all just been supposedly excelling at. And you glance at the numbers in your laptop and a familiar knot forms in your stomach. So despite all the smiles and back slapping, something seems off. And I think we've all seen this script before marketing.

comes in and proudly presents a record number of MQLs and sales continues to struggle to hit the targets and grumbles about lead quality. And if you've been there, you've probably wondered, is that truly what sales and marketing alignment actually looks like? I been in this situation a few times where you remember like last quarter's product launch or the new campaign where...

Marketing's huge quantity of hot leads barely make it past the first sales call. Now this surface level, superficial cooperation actually masks a deeper disconnect. That's what we're going to go into today. You find yourself questioning what real sales and marketing alignment actually should look like in a high growth tech company. So as you prepare for your upcoming board meeting, you realize you're not alone in this struggle. It's a challenge.

comment to pretty much every B2B Org.

Chris (01:43.747)

So today we are going to lift the lid on exactly that. We are going to be talking alignment and we're going to discuss what it should really look and feel like. And as normal, how systems can help us with solving some of those problems and perhaps seeing the situation a little more clearly.

Colin (02:02.114)

So Chris, as always, we should get things started by actually defining the problem and what the negative organizational impacts are. I think most people listening have probably got an idea, their own idea of what alignment looks like. But what are we actually talking about when we, what sales and marketing alignment actually is and I guess what it isn't.

Chris (02:25.944)

Okay, absolutely. Well, let's, you know, let's start there. I think what we actually mean by sales and marketing alignment and that is to make a distinction between the superficial alignment you talked about and genuine alignment. And I think that distinction is really important because I think what most people

see alignment as, you know, believe alignment is, is that superficial situation where everyone sat around a table? You know, the norm very much is, is that and, you know, two teams that are friendly, meet regularly, have conversations about campaigns and performance and, but fundamentally, you know, that

That isn't it. Just sitting around a table and being nice to other people in the opposite team is not alignment when you're fundamentally operating in a totally different way. You know, when you have completely separate chains of command up to senior management, separate goal setting processes, in many cases, maybe even completely separate IT systems, or at least, you know, an imperfect view of the customer data that exists within the business within those sort of set of systems. And in many ways,

Colin (03:11.252)

You

Chris (03:34.004)

know, we know everyone wants the same thing, you know, even when you're in that latter scenario that I described, you know, there is this still this sort of surface level belief that everyone is trying to get to the same place. But in reality,

you're not acting as one harmonious team in trying to go out and achieve that objective. And I think that that is the important thing is that when you have that separation in the reality of the operation, you can never have true alignment, but you know, we're gonna, we're gonna get on and unpack that. So, you know, it's very much the picture you painted at the start. If you're a superficially aligned team, you know it, you can probably feel it in your gut.

Colin (04:15.854)

Indeed. So let's talk about the costs. I guess is one way of sort of hammering home what we're talking about here. Now I've read in a LinkedIn ebook, I think it's the art of winning, that in the United States alone, marketing and sales waste an estimated one trillion dollars annually due to lack of coordination. Now I'm instinctively suspicious of a figure like that.

Chris (04:36.394)

Wow. That's a stat.

Colin (04:43.928)

But we can at least infer that the costs are staggeringly high. I don't know if I would say it cost a trillion dollars to the US economy. But how would you break down the impact of this superficial alignment or just lack of alignment?

Chris (04:58.25)

Well, you know, I think that trillion dollars probably sets it up because I'm sure somebody far cleverer than you and I has done some maths on that situation and has come up with a number but ultimately, the cost, you know, is an impact you can see and feel on the bottom line. I think in a similar vein, you know, doing some some research, I was reading a study commissioned by Marketo, you know, that they put some numbers on this not quite the same as those numbers but

Certainly some numbers that tally with my own experience and that's the well aligned teams close 67 % more deals and the marketing functions in those businesses deliver a 209 % more ROI. So times that by the number of companies in America. Can I see that getting to a trillion? Yeah, probably. You know, we are talking significant swings here between truly aligned.

and superficially aligned teams. I guess if you think about that in the context of your average year on year growth goal, the impact is wild. Better alignment means that you are most likely gonna smash your targets. And...

I know, I see lots of different numbers on revenue. I actually don't know what the size of the US economy is as contributed to, you know, by the private sector, but the Marketo report suggested properly aligned teams do about 10 % more revenue than similar businesses that aren't by their definition. The report focused on pretty large enterprise accounts.

I've seen other reports that suggest 20 % revenue uplift just from nailing down the processes for sales and marketing handoffs. So wherever you look, the opportunity is massive if you get it right. And whether that's a trillion dollars or a 20 % revenue uplift or, you know, a 67 % improvement in close rate, I think we can all agree that if it's any one of those numbers or indeed somewhere in between, that's a figure we can all get on board with delivering our own business if that's possible.

Chris (07:11.306)

So yeah, the opportunity is massive.

Colin (07:16.686)

Just going back to that sort of issue of what the sort of size of the US private sector overall is, apparently, I sort of checked that while you were talking, it's apparently close to $24 trillion annually. It's about close to 90 % of GDP actually. So maybe the trillion dollars is potentially, yeah. So what I'm interested in here is, so we've got all these slightly confusing stats about

Chris (07:34.86)

conservative then, probably.

Colin (07:44.832)

the impact of fixing this problem essentially. But let's actually dig into that. So where does the actual performance uplift come from?

Chris (07:57.154)

It was a good question for me. It starts actually a long way away from the sales and marketing team. you know, think that the sales and marketing alignment is, is like the, you know, it's the pinch in the pipe, but, the pipe extends far beyond those two teams. And I think it's a reflection on the complexity of the, of the average B2B buying journey, you know, not a sales process, I should hasten to add, the actual buying journey that the prospects go on.

And depending on what you read, the stats suggest, I don't know, 50 to 70 % of the journey happens before contact is made with the seller. That the average buyer uses six interaction channels to consume kind of information about their purchase journey. Now, again, you see wildly different figures of these things, but yeah, again, similar to the last set of stats we were talking about.

A lot of the journey, a lot of the journey, majority of the journey, statistically speaking, has happened before they speak to a seller as an individual org, and they use a lot of channels on which to kind of research and consume information. And the upshot of this is that there are untold opportunities to deliver disappointing experiences, inconsistent experiences, and

I know, again, going back to the many reports that say the same thing, let's say two thirds of buyers report that they get rubbish journeys, that they get inconsistent information over different touch points, that information they leave in different touch points does not appear in other touch points or, you know, it's just that all of these

Colin (09:34.328)

think that's one of the most frustrating things, sorry, as a customer of many companies, that's probably one of the most frustrating experiences you can have, having to repeat the same information over and over again in a B2B buying journey that could be really fatal, right?

Chris (09:37.56)

Yeah.

Chris (09:51.676)

100%. You know, in the CS world, we talk about kind of omni-channel being a thing, know, being the next evolution of multi-channel, of having kind of the same information everywhere. And you know what, the CS guys, I think are getting there because of the nature of those interactions in the sales and marketing world, which is nowhere near that kind of omni-channel approach to data, at least most organizations are not. And...

It just leaves opportunity on the table because all of those interactions are data points that can be used. You can just understanding what is happening during that buyer journey. And okay, we're not going to talk on this episode specifically about bits of tech and processes for doing that. But we all know that there's plenty of technology out there that can tell us what buyers are up to a domain level out there in the ether that we can generate.

lots of supposed intent data from those touch points that when we do things like cookie denonymization, domain denomization, triangulation, all of that stuff, essentially there are loads and loads of data points that can be used to craft compelling bio journeys and to really understand individual bio behavior. But in reality, so seldom do we actually have those things in production in a way that everyone understands within the organization.

Chris (11:14.54)

I think there's actually a significant point here to make about personalization too, not in the dynamic sense per se, like we're personalizing an email, but of course that is data driven too and can be driven by those same data points I just touched on. more in the segmentation sense, I think in B2B particularly high value long sales cycle B2B, ABM is becoming a really significant part of the mix.

Lots of people talk about it. Lots of businesses say they're doing it. Probably emphasis on the word say. Very few are doing it well. And Joe, actually I'm starting to see a bit of a rhetoric coming back from marketers and from rev ops people saying that ABM doesn't work or certainly that it isn't what it's cracked up to be. And of course, if you take a step back,

The reason it isn't working for lots of businesses is they haven't got the alignment bit right. You know, they haven't got that data journey connected. They haven't got that communication happening and no alignment means no insight and no insight means no personalization. you know, whether you're talking about that an industry level or a single company level, it kind of amounts back to the same thing. If you haven't got the journey stitched up and you're not having a kind of

collective collaborative ownership between sales and marketing of the prospect, you're leaving this stuff on the table. know, that information isn't there, that insight isn't there, it's not accessible to everyone. And that's what creates those disconnected journeys and those poor buying experiences.

Colin (12:48.664)

think it's a prerequisite for doing something like ABM, right, to have this sort of alignment and have this sort of buyer's journey, as you say, stitched up. And that's a mistake that is made a lot. And then we have this sort of false feedback that, it's not all that was cracked up to be, but actually you haven't really re-imagined what your organization needs to look like in terms of its design.

the interconnections and processes, cetera, in order to deliver on it. So you get this kind of false anecdotal evidence that it's not what it's cracked up to be, right?

Chris (13:27.594)

Absolutely. mean, think that slight diversion, but I think the biggest problem with ABM is the know, ABM is not marketing. It's sales and marketing collaboration. It's one team, but so often it's an initiative owned by marketing that isn't participated in by anyone else in the business. And then, you know, lo and behold, it doesn't work, but you don't need to be doing ABM to need market insight.

Colin (13:35.586)

Ha

Chris (13:51.369)

And for me, this kind of insight level cooperation between sales and marketing is often one of the telltale signs that alignment actually isn't there in reality. You know, a business that doesn't have a common view of the ICP.

information is fragmented, it doesn't flow where it needs to go, you know, that's a major issue. And it's an issue that you can't solve by having superficial meetings once every two weeks with your different colleagues and, know, with a cup of coffee and nodding along to a, you know, to a presentation. It takes real deep collaboration and deep understanding of what you're actually trying to do. And so often that's just not there. And we'll talk about the impact that has later on, no doubt.

So I think in a nutshell, the reason misalignment costs money is that it leaves opportunity on the table. It leads to poor and inconsistent follow-up, inefficient processes, fractured relationships. And what all of those things do is strangle pipeline. yeah, that's where that trillion dollars I suspect will now continue referring to. That's where that ultimately that loss comes from.

Colin (14:52.29)

Hahaha

Colin (14:58.412)

Yeah, I think we've certainly touched on the main points about what the issues with misalignment are. And I've seen firsthand in several organizations how misalignment can create really serious problems, especially in these fast growing B2B environments that we tend to work in, where sales and marketing are supposed to be working hand in hand. There may even be talk of ABM.

But as we spoke about in last week's MQL's episode, the misalignment, or misalignment, guess, drives problems with this. So why don't we talk a bit about why this happens or at least what some of the sources of the misalignment are.

Chris (15:44.088)

Yeah, good, good idea. So I think we've naturally focused on alignment on the ground, you know, the operational impact for sellers and marketers, because frankly, that's where the pain most obviously manifests itself. But it isn't actually where the pain comes from, in my experience, at least. And, yeah, I was doing some research for the show and trying to

I guess just look at that sort of broader perspective on what's going on here and check that it really aligned with my personal experience and looking across a few kind of actually fairly heavyweight reports from people like Boston Consulting Group and I think someone I haven't actually read anything, I think it was called the Center for Management and Organizational Effectiveness or something. And they talked about exactly this, this sort of referred pain, if you like, and their view.

And it's one I say that I mostly agree with is that all too frequently, this lack of alignment comes from a lack of sort of organizational strategic alignment at a senior management team level, both horizontal alignment at the board level between board representatives for different functions, but also from a clear kind of understanding of the role that teams play in delivering against these organizational objectives, you know, through the tiers of management.

And I think particularly within, you know, within mid-level management. And I think that's a really, really key thing that if you have a lack of clarity at the top, the Chinese whispers effect takes place. And, you know, if there's not clarity and alignment up here, you know,

why would you expect it to get any better as it disseminates down through the many departments and tiers within those departments within an organization? So I think that really is the sort of head of the snake. And we've got an entire episode coming up about goal setting. So I'm not going to dig into that too much now, but basically most organizations are rubbish at setting clear strategic goals and chunking those down through the org in a way that makes clear sense to everyone.

Chris (17:56.712)

And I think crucially not just makes sense to everyone, but actually holding them accountable for the right actions in their role, in their department, in their function, in a meaningful way that delivers results. Because I think it's very, yeah, we hold people accountable. We give them a massive flaming at the end of the year when they've missed it by whatever percent. Well, no, that's not accountability. We need accountability.

Colin (18:20.11)

You

Chris (18:24.832)

in the day to day and the week to week to the incremental process of delivering actions against those strategic objectives, not the crack on and we'll see you in 12 months and we'll work out how it went kind of accountability. So I think, yeah, this means that for me sales and marketing misalignment starts at board level and it works its way down. When you haven't got that kind of true horizontal alignment of goals and plans at the top,

then everything seems to kind of ladder up to a big revenue target. And what happens at that board level is that plans get created in silos. No one has a kind of systems view of the world. And of course, what happens with these kind of siloed plans that come from this perhaps slightly woolly set of organizational objectives is you get a load of sub goals and targets made.

And this is really where the problem starts. This is the actual problem in action is big ideas, big plans in silos get chunked up into small goals and they flow downhill. And particularly, I think this is true in sales because personal remuneration is also driven by these goals. And guess what? People do what they're measured on. If you pay them extra to do what they're measured on, they're really going to focus on doing what they're measured on.

And you know, that, for me is like the horse is bolted at that point. You've got this misalignment at board level. They've all set these plans. They all, the plans all seem to sort of ladder up to the right place. Everyone gets targeted for the year and they crack on with it. And at that point, the misalignment most likely has already happened. It just hasn't been felt. So I think that that's a really key point. I think the final point I want to make here in, I said the reason that I only

partially agree, I mean, I do fully agree with the Boston Consulting Group, I just don't think it's the whole story, is that it misses the key element, and that's the human element. And specifically, I'm going to call it the organizational culture created by leaders. Now, culture does a lot of things, but in the context for this problem that I'm kind of just using the word culture, it creates the paradigm through which

Chris (20:49.74)

the teams view their goals. It creates the paradigm through which they view interdepartmental relationships to view the personal effort that they put in. And senior leaders kind of drive culture and a lot of them drive a culture of goal fixation or, you know, for delivering for the team above all else. And when you have this kind of goal fixation, you know, let's, we'll do us kind of

you know, let's ask the sales team rally behind our numbers, you know, we'll we'll show them that we can nail it, you know, we the marketing team will rally behind our numbers. You know, let's let's go team. Well, actually, interdepartmental alignment is the first thing to suffer there. Because as soon as you're in a sort of you do you kind of world, that's driven by this kind of, you know, goal fixation paradigm, this kind of achievement orientated kind of view of the world.

then it's not going to end with harmonious relationships. I think that that's a scenario that I think a lot of people can probably relate to.

Colin (22:02.102)

Yeah, I've certainly been in the room where we've had very senior leadership literally saying to people to be, you know, selfish with their time and selfish with literally saying like I've heard the words used like fanatical or maniacal even hyper focus on just the goal that they have been set or sometimes that their team has been set like literally fanatical or maniacal. think the two of the ones that came up the most, which

Chris (22:18.487)

Wow.

Colin (22:31.982)

immediately gets my sort of eyes rolling.

Chris (22:32.376)

and that.

Chris (22:36.751)

You can tell me offline who that was. I'd be interested.

Colin (22:39.112)

Yeah, I will. I think it's someone you've met actually. Yeah, not naming any names on the air, so to speak. So it seems to me a lot of this boils down to, again, to misaligned metrics and goals. And what you started saying about culture there and misalignment starting at board level got me thinking about not just horizontal alignment in this context, which you kind of focused on there, which is obviously very important.

But I guess vertical alignment in terms of metrics and goals. Let me explain what I mean there. So I read, and this is born out by my experience, read in I think a HubSpot blog that, again, it's one of these stats that they pull out, you're not quite sure what lies behind it, but 82 % of CMOs actually have goals now that are directly tied to revenue and profit, which is kind of what we're talking about, aligning metrics and goals. But the thing is C-suite.

progress is slow to trickle down and that's partly a cultural issue. We've got this, you know, this attempt by the C-suite to align themselves and yet that alignment is quite slow to trickle down. just because the CMO has a revenue goal, tried to his or her comp doesn't really mean the rest of the team or rest of marketing, let's say have revenue goals or that they see that as something that they would want. I think as it stands, marketers are typically

Chris (24:02.786)

Mm-hmm.

Colin (24:05.708)

sort of risk-averse and where as salespeople will see a quota carrying role as an opportunity to make money, marketers tend to see it as a risk to their job, essentially. So before I get into a rant, a fanatical or maniacal rant, what's the, since this is what we're here for, what's the systems view here? Like what's actually going on in a systems context and how does that help us to view and

unpack and solve the problem.

Chris (24:37.29)

Yeah, I mean, I think that's really interesting what you were saying about the sort of trickle down effect of revenue targets. And I think the big difference between sales and marketing is is that kind of personal compensation, personal remuneration around those revenue targets. Marketers tend to get revenue targets without

remuneration for hitting them. They're just goals. So I think that creates an interesting dynamic. But I think that sort of goal alignment piece is definitely something we'll touch on in a second. So for those that listened to episode one, we talked about the components of a system being purpose, elements, and interconnections. And alignment,

is really all in the interconnections with perhaps a healthy dose of intended purpose steering those kind of interactions in the wrong or maybe indeed the right direction as we've just touched on. So what you have going on here is a whole tangled mess of interconnected systems issues which I'm going to do my best to outline as succinctly as possible.

Essentially companies and particularly sales teams, it has to be said, can be described as goal seeking systems, a type of system that makes all of its decisions around achievement of a particular goal. This is actually a pretty common systems type.

It's not by any means exclusive to companies. That's a really simple example of a goal seeking system might be the thermostat in your house. You you set it, the heating's on, you set it to 18 degrees or whatever. And it's always trying to regulate the house to that temperature. It's always trying to hit 18 degrees. That is its purpose. It's a goal seeking system. And the goal in sales teams and in companies in general typically is revenue.

Chris (26:37.608)

profitability, everything else can be to some degree be considered a sub-goal. And as I touched on earlier, what happens in these kind of goal-seeking systems is that initially a senior management team, later on layers of management below them have to decide on the sub-goals that will ladder up to the ultimate goal of making the right amount of money.

So you've got this kind of goal seeking system. The goal gets set as revenue, often completely arbitrarily, but that's a different conversation. And then you've got a whole group of people that have got to decide what sub goals they're going to set to make things ladder up. And when you do that, you get exposed to... So in systems, we have this kind of concept of systems traps, common things that very often happen in systems that create negative outcomes.

And what you get here in a goal-seeking system is exposed to a common systems trap, which is often called the wrong goal trap. Quite self-explanatory, perhaps. The clue definitely is in the name on that one. But the important point to note here is that the most common way of falling into this particular systems trap is to set goals that measure effort and not system health. So a simple example of this is activity goals in sales teams, particularly things like BDR teams.

And the goal might be to make 100 calls a day. This becomes a system goal or a subsystem goal, which isn't actually an issue in itself. It only becomes a trap if it doesn't deliver the desired performance. The danger with goals like this is that if a BDR team is measured on effort and

when the result doesn't kind of materialize, the temptation is to think that more of the same effort is the solution. So maybe the goal gets moved to 110 calls a day or whatever. And it's because the sort of the view of the world that the sales director, BDR director, know, scale of organization dependent is viewing is

Chris (28:56.234)

is really through their own subsystem of goals, their sort of subset that they're using. So that is their sort of fixed boundary. And this is an example of what's described in systems theory as bounded rationality, which is essentially making decisions based on the information you have in one part of the system without a kind of a view of or an understanding of the impact that it's gonna have on the greater system.

Another example of this is something we actually spent a lot of time talking about in the last episode, that the upstream system to the BDR team is typically marketing, throwing all those pesky MQLs over the fence that we talked about. And marketing exists within their own bounded rationality, trying to achieve their own goals. Go back and have a listen to kind of hear our thoughts on that. We spent way too long talking about it, probably, so it's all there. But I think you can probably start

to fill in the gaps here when you start seeing, well, we've got bounded rationality in one subsystem, driving a set of activity goals, output and effort goals, you've got the same happening in another system. Those systems are in themselves goal seeking systems, and they're all trying to hit that number. Everyone's great, all are all trying to do our numbers. Except it doesn't necessarily actually work in terms of delivering on the revenue goal.

Now, there's more we can go out here, but perhaps the final systems trap to mention in this context, and it's what really creates this lack of attainment of the actual intended goal, is what is sometimes described as the drift to low performance trap. So simply this is where previous poor performance in the system is allowed to impact the standards we set for performance.

And this creates what we call, we talk a lot about loops in systems theory, a negative reinforcing loop. And what that negative reinforcing loop does is like, well, actually we didn't quite do it. maybe we'll initially, well, you will actually typically get a system behavior that we missed it. So we're going to jack the number up for next time. Then we miss it next time. And it becomes quite clear that it's not going to happen by the end of the year. So we've removed the overall boundary and the goal drops. And it's that kind of

Chris (31:22.314)

erosion effect on goals when you take that longer range view that kind of creates this slow drift downwards of just not quite doing the right thing. Everyone responds to the goals in their subsystem, they re-profile things and you know what you've got here is that kind of mid-year you know forecast downgrade that sort of profits warning that what you're seeing with that is a drift to low performance at work.

you know, the, the last period wasn't what we wanted it to be. So let's set a more realistic goal for the next period. And slowly we drift away from where we want to be. I think there's kind of the irony here is that you may actually achieve that lower goal that you've then set as you're drifting towards this lower goal set and celebrate it. Wow. Fantastic. You know, we've hit the goal for the quarter. Brilliant. But the problem is you were actually measuring the wrong thing in the first place.

And because you're measuring the wrong thing, you're measuring the wrong kind of effort being deployed in the wrong direction, even though you might be hitting those effort goals, overall system performance is still eroding in the background. And that, I guess in a nutshell, is, I guess, that sort of systems view of the world when starting to kind of zoom out and say, what's going on here? And I think goals have a lot to do with it.

Colin (32:49.07)

Yeah, it really touched a nerve for me actually when you were talking about sort of measuring on effort and activity goals, particularly for BDRs, particularly from the sort of early part of my career. I think I'll save my customary rant on that until one of those episodes. So I think I guess the question that's actually on everyone's lips right now is what

is the answer then, like what can we actually do to drive organizational alignment and unlock this massive latent source of revenue, like if you're American, a share of that trillion dollars.

Chris (33:28.482)

Okay, well, I think it's pretty obvious what the answer isn't, and that's more meetings. So let's kind of stick in the sort of world of systems theory here, and I will, well, it could be, we can have some more meetings, but it's probably not going to generate different results to the one you've got, but systems might have the answer here. So let's stay.

Colin (33:39.106)

Some people will be disappointed about that.

Chris (33:53.9)

And I will try and straddle the line of the of academic component of this and try my best to apply it into what we can actually do. So I guess what we need to look at is the overall system at work, the purposes, the real emergent properties it creates, and crucially the kind of elements and interconnections within it that are gonna solve this problem for us. In a system, there are always leverage points.

There are levers that you can pull in key areas that impact system performance. Now it has to be said that these levers don't come with instructions, sadly, which means that you can pull them in either direction. And it's not entirely clear at face value, at least what the impact of either direction of that lever being pulled is going to be. So very easily these levers can have negative effects as well as positive ones.

Incidentally, actually, this is what's called the fixes that fail systems archetype for those that want some further bedtime reading. in most systems, what's interesting to me at least, is that the levers are actually pretty consistent. There are, I don't know, 10, 11 types of lever to extend that analogy that you can use.

Chris (35:22.468)

I think that maybe that's good news because actually an understanding of those levers means that in the business context at least, we know what we should be looking at to solve problems like this, even if actually using the same levers for different problems is counterintuitive, it's kind of not as hopefully I will describe. In this case, the leverage points that we're talking about, the levers that we're talking about are goals. They are access to information,

And what is a bit of another tangled web of interrelated concepts, which you could probably loosely call paradigm shift. Probably is as bad as it sounds, but I'll do my best. So let's talk about goals first. In many ways, they're the easiest to understand, although as I think has probably already become apparent from well,

indeed probably everyone's personal experience and indeed what we were saying earlier on, is they're the hardest to get right. So we talked about businesses being in teams, subsystems being goal seeking systems. And therefore in a goal seeking system, I guess it stands to reason that changing the goals will be the highest leverage point. System goals are many and various. And I think this is a really important point to note.

from those macro goals of we are going to do X million pounds revenue this year to micro goals like we're going to send this many emails and even, and this is missed almost always, personal goals. The personal goals of individual contributors within your system do act upon the system. And those personal goals will often be wildly divergent to kind of the stated goals of the organizational super system.

You know, my goal when I go to work is to be happy, to progress, to gain knowledge and, you know, be interested in what I'm doing. might be to get promoted. It might be to attain information so I can, you know, take that somewhere else. It might be to attain experience so I can go get a better job with the company I actually wanted to work for.

Colin (37:37.678)

Hey.

Chris (37:42.52)

I think I'm in too deep at this point, but, but, but ultimately those are system goals, or at least they're goals of elements within your system and they all have an impact. So getting these things right with so many goals at play is difficult. You know, you can really see how things go wrong. And that's, you know, as we said, you've kind of got this bounded rationality that's existing within teams and individual managers and

And it's those teams and individual managers that are sort of driving the goal setting and driving how incentivized everyone is to achieve them. Now, as I said earlier, we're going to do a whole episode on goal setting, but the key things to remember for me are these. In a system, it's not just the goals that are important, but it's the removal of goal conflict. In a way, this is

the answer to achieving better sales and marketing full stop, the less gold conflict that you've got in the system, the less misalignment you're going to have. It's two sides of the same coin. And therefore the greater performance you're going to have in the system. So gold conflict is when we say actually goals are the lever, really gold conflict is the lever or the removal thereof. And people, in my experience,

And I know you kind of gave an example earlier on about some things not being as well vertically aligned. I think in my experience, typically we're much better at vertical alignment than we are at horizontal alignment. You know, how lower goals ladder up to higher goals with a department, you know, say a revenue goal for the business turns into a team revenue goal turns into a individual sales target. You know, all of that stuff is

People don't always get it right, but it's it's easier to do vertical alignment because it's all happening in our nice little silo in our chain of command with the people that we speak to every day that are fundamentally doing similar things to us. Cause it's all in a sort of, you know, a contiguous kind of process. what businesses are far worse at, I think is understanding horizontal goal conflict and sell the marketing teams are particularly bad in this respect, I think.

Chris (40:07.202)

And this is really a key point that marketers have a habit of setting goals using funnels, which is, I don't know. mean, it makes sense. It's a bounded rationality point. You look at it in isolation and it makes perfect sense. We're applying a mathematical process to how we're going to start orientating our budget and our effort. And intrinsically, there's actually nothing wrong with it. The problem is very often going back to the head of the snake.

someone tells marketing how much money they would like to make this year. We call this a revenue forecast. So often it is based on nothing other than something in senior management that got told to an investor or I don't know how much someone wants to take out to buy their new house in the south of France on the board of directors. Not sure, but very often these numbers come from the ether and then they get applied to the reverse funnel. So we want to make this much extra money.

We then ask as marketers, how many new customers does that equate to based on our average transaction value? And so it goes up from there. We'll apply some conversion rate metrics. We'll work that back up the funnel. Somewhere near the top, we're going to work out how many MQLs we need, those pesky things again. How many clicks? How many impressions? Right the way up to the top to how much money do I need to spend to buy those things? And you know,

Colin (41:22.926)

You

Chris (41:34.092)

marketers and big companies are smart people. I'm not saying they're not, they're using real conversion rate data. They are applying a reasonably scientific method to the task that they've been set. The task that they've been set is not up to them in the main. But of course what happens at least every time I've seen this happen is that the numbers at the top are quite frightening because it's all been a bit disappointing in the conversion rates further down historically.

you know, those things where you'd like three of a thing to turn into one of a thing, maybe it's been five of a thing. So they get scaled upwards. We could do a whole episode. picking that sort of particular set of problems, but I'll try to stay on track. And that's just to say that a massive number of leads now needs to be thrown over the fence at some poor sods in the BDR team. And they need to turn those into meetings and opportunities. And because

Colin (42:16.48)

You

Chris (42:30.614)

we have existed in our bounded rationality as marketing, as soon as those MQLs get lobbed over the fence, job done, know, jobs are good. And, you know, were sales planning on using the resource in this way? Do they even have enough resource in the first place to make sure that all of those leads in inverted commas can be dealt with in the right way? Will that actually be the most effective use of a very expensive resource?

You know, that scenario I've just sort of painted a picture of is horizontal goal conflict in action. One team's bounded rationality leads to logical decisions within the boundary of their subsystem and it creates problems elsewhere. And this happens daily everywhere in almost every company to some degree. Allow me a brief sort of diversion into the academic world of systems again.

Colin (43:26.689)

Yeah.

Chris (43:29.624)

One of the main principles or features, I guess, of human systems is the principle of self-organization, which is the ability for systems to dynamically adapt to feedback loops, to learn, to change structure, ultimately to respond in that very human way we do to outside inputs or feedback loops as systems people like to say.

This is a really, really important point because it's one of the contributors to the drift to low performance trap we discussed earlier. And indeed, it's a massive contributor to a drift towards high performance as well in the other way, but that's not a system strap. Data comes in, decisions are made, activities are adapted, that's self-organization. This principle of self-organization can be both a strength and a weakness depending on the inputs being received and...

how valid they are to achieving the intended purpose of the system, making money. And one of the things that kind of drives this self-organizing principle is access to information. think this is the second leverage point that I mentioned that has a massive impact. Another brief diversion, if you'll forgive me, but there's a study that's often talked about in the system world that's related to

houses in the Netherlands, bear with me, and specifically where the electricity meters, I know this isn't sounding any better, where the electricity meters are located within the house. Essentially, they looked at two control groups, two sample groups, where a set had their electricity meters in the basement and another set had their electricity meters in the front hall. And what they discovered was that

the ones that had their electricity meters in the basement used 30 % more electricity than the ones that had the electricity meter in the hall. And of course, the plan I'm trying to make here is in relation to access to information. The ones that couldn't easily see the meter, so looked at it less often, you know, didn't want to go down to a dark and dingy basement and open the little plastic flap and, you know, see what was going on, didn't modify their behavior as frequently or as effectively. So they...

Chris (45:51.404)

gradually consumed more by not course correcting. And I think actually, I believe I'm right in saying is this specific study is the reason that we all have these little smart meter things in our house now with a little display in the UK at least that tells us, you know, in real time, how much energy we're using. Because it's basically mid winter, it's not a good, it's not a good thing to look at, it? Particularly not just before payday. But the reality is,

Colin (46:06.272)

I've turned mine off, it's too scary.

Chris (46:20.162)

Timely information delivered in the right way enables you to be reactive on a far shorter delay. Now, I won't get into talking about delays. I feel I've already disappeared too much down the system's rabbit hole in this period, but let's just say that the connection back to business is pretty clear. Surfacing the right information to the right people in the right place enables us to make better decisions more frequently.

and to leverage that self-organizing behavior of the system to our advantage rather than to our detriment. And I think that, you know, the purpose really here of alignment is so that everybody in the business is rowing in the same direction at the same speed towards the big goal. And this means that all the little goals

to not conflict with each other to achieve this. And easily accessible information on the performance of goals is a big force multiplier in helping us achieve the little goals. It also ensures that when the little goals aren't working, we can see that they're not working in the sense that they are not impacting the big picture. So timely information is also a question of what information we're surfacing and that is

absolutely paramount that information gives us the micro and the macro view and does its best to connect the two. So the big question is, of course, in sales and marketing, what goals should we be measuring throughout the org? How do we kind of straddle that fine line between accountability for individual action and effort and what we actually want revenue performance? So removing goal conflict is enabled

by better access to information to a significant extent. If you get that right, you manage to kind of straddle the line between effort and outcome through the removal of goal conflict. mean, ultimately you're on a fast train to growth there. That is a huge enabler. Final point, because I think we are getting there time-wise and perhaps I've left the most complicated to last. So we'll do my best here to get through it quickly, but...

Chris (48:42.136)

The third lever I mentioned was paradigm shift. It sounds really fluffy. It's an often misused phrase we hear in popular business culture if that is such a thing. in systems, changing the paradigm is one of the points of greatest leverage within a system. As we define a paradigm in systems as being like the mindset out of which the system, so it's goals, structure, rules, delays, arises. So mindset.

know, the view of the world. In a business environment, I think the paradigm is perhaps a composite of culture, the personalities of the leadership team, the belief of the leadership team and that what they're doing is right, that they're following the right path. And these things filter through every decision that we make. They are, I guess, in some ways, like the implied rules of the game.

They are the sort of guardrails in which we operate and make decisions. And shifting the paradigm and changing the rules of play by creating a culture of learning, making room for broader self-organization around data, improving transparency, creating greater kind of psychological safety for individual contributors to express ideas and make decisions. I mean, ultimately, I guess, and maybe this is a point

we should have made earlier, switching the rhetoric from being aligned as two teams to being one team. And driving all of these things from the top is a surefire route to ensuring that your business is not one that only has superficially aligned sales and marketing.

Colin (50:33.846)

Okay, I'm going to stop you there Chris, because we are pretty close to the time. Maybe just have some final thoughts. I'll you what, I'll go first again with final thoughts with this week since you're probably needing a drink of water and possibly a lozenge after that. But it was, that was great. So just some outtakes from me. First one is quite a small one. You touched on this sort of accessibility of information and surfacing the right information to the right people at the right time.

Chris (50:47.66)

That's a good idea. Sorry.

Colin (51:05.474)

I guess it's something we didn't really go into in this episode, but it's a point worth making here at the end that if you are working in sort of data silos and disconnected tech and marketing are working off HubSpot and sales are working off Salesforce and those aren't integrated, then you are not going to achieve alignment. Essentially, you are not going to be able to surface the right information to the right people.

at the right time. And I guess that's not so much an outtake from the show as a sort of disclaimer at the bottom. In a much, I guess, broader way of thinking about this, I've studied human systems for decades now through some history, prehistory, social sciences, bits and bobs of economics, how governments work.

Chris (51:32.375)

Mm-hmm.

Chris (51:38.422)

section.

Colin (51:58.382)

geopolitics etc as you know because I'm always banging on about it particularly over dinner and drinks and much like you in systems Chris and thinking about doing the research for this and talking about it today really gets me thinking about some of those problems in terms of misalignment and to draw it back down to what we're talking about today what it makes me realize is the problems we have in the b2b world around misalignment

Chris (52:03.531)

Yeah, you're on.

Colin (52:26.998)

are so eminently solvable compared to say problems of let's say geopolitical misalignment like in the B2B world actually we're quite spoiled in how easy to solve these problems are but the devil comes into the detail and particularly around this sort of paradigm shift the mentality shift I think is the key area there. And lastly I think I said this before but really a lot of this

Chris (52:29.624)

Mm-hmm.

Colin (52:57.426)

seems to boil down to as well misaligned metrics and goals. And I'm really glad that later in the season, we are going to really dig into that and give those things, I think, an episode each to really look at how metrics and goals shape the organization. That's really important aspect of this to consider. But I'll leave it there for this week. Go to your final thoughts.

Chris (53:03.223)

Mm-hmm.

Chris (53:20.247)

Okay, well.

I don't think I've got three this week, but maybe two interconnected ones. I think something you said there actually really hit a chord with me because something we didn't mention and maybe implied through the superficial alignment piece is that the first step in solving a problem is admitting you've got a problem. It's sort of alcoholics anonymous, alignment anonymous. We should start a focus group.

Colin (53:45.422)

they've taken the name AA.

Chris (53:52.338)

but you know, actually understanding that your organization isn't actually properly aligned is a really, really important step before you can go fix a problem. I think the second outtake I'd have is just keeping in mind always that true sort of, sort of human truism that people do what they're measured on. So get the measurement right and you'll get the behaviors right. So as, as you said,

Goals are maybe not the be-all and end-all of alignment, but they're a bloody good place to start if you want to fix something that's misaligned. you know, understand when a fix needs to happen, try and pull the goals lever in the right direction, and you're going to start seeing behavior change. And probably the third one, which I guess relates to that is when trying to change these things, you've got to change them from the top.

and you have got to understand that it's an iterative process. You won't get it right when you start pulling the levers, but measure, persevere, you know, and you will get there. And when you do get there, sounds like there's a trillion dollars on the table, which is probably a pretty good place to end.

Colin (55:07.574)

Yeah, trillion dollars. Yeah, important to remember that alignment is not like everything in this world is not set and forget. I think that's just about all we've got time for this week. Just wanted to say before the end, the growth system is brought to you by RevSpace. We are an applied growth consultancy that connects B2B organizations with the future of growth. We offer consultancy, education and applied delivery services.

Don't forget to follow and rate the podcast. It really helps us to bring the content to a wider audience. And we'd really appreciate a moment of your time to tell us what you think. That's all we've got time for this week. Looking forward to catching up with you again next week. Bye bye.

Chris (55:50.85)

Thanks for listening.