Thursday, January 15, 2009

Grounded qualification corollary #1 - don't companies know why they win or lose?

Yesterday's post spurred some interesting comments, including Dave Stein's observation that "80% of B2B deals are lost for one of two reasons: inadequate (or no) qualification or inadequate (or no) planning."

I wanted to elaborate on one point, which is that grounded qualification is built on a deep understanding of why a company won and lost each opportunity, both in the past and going forward.

Which begs a question: "Don't companies already know why they win or lose?"

This question has two answers: sometimes they don't know at all, and sometimes they think they know the reasons but are wrong. Let's take each of these in turn.

We don't know why we won or lost.
This situation is influenced by many factors in today's working world. First, there is little time for reflection built into sales professionals' (or sales managers') days. Everyone carries long to-do lists, attends too many meetings and is measured to death. (See this post for the implications of this culture on innovation and creative thinking.) There is also a culture of looking ahead: "let's not rehash the past," especially if it the outcome was negative.

We think we know why, but we are wrong. This point gets to a cognitive bias called the "actor-observer bias." According to the Wikipedia definition, this means people "tend to attribute their own behavior to their circumstances (i.e., situation causes), but tend to attribute the behaviors of those [they] observe to their dispositions (i.e., person causes)." In sales campaigns we will attribute a successful outcome to our superior strategies or tactics (rarely luck), and blame failures on ignorant or biased prospects or factors out of our control (product was deficient, price was too high, etc.). We are so satisfied with these rote explanations that we don't probe deeply into the reasons, nor do we ask the prospects to explain their actions.

If we recognize that (1) we need to reflect on and learn from each deal we pursue, and (2) question our assumptions and dig for the deeper reasons we won or lost, we are on the way to understanding our position in the marketplace--a tool we can use to be more selective in our pursuits, address our weaknesses, and generate more business at lower sales costs.

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