January 2015
Volume 8, Issue 1
IN THIS ISSUE . . .
In This Issue . . .
Commercialization of Innovation - The Critical
Role of Sales Force
(Michael Ahearne) ...............................2
B2B Leadership Board Update: B2B
Marketing: Now is the Time
(Fred Wiersema)..................................4
From the Membership: Frameworks Tools and
Cases: Building Better Linkages between
Marketing, Sales, and Innovation to Drive
Profitable Organic Growth
(Ralph Oliva) ......................................5
IPSS Update: Spring Lineup (Raj Grewal).....7
H
appy New Year and welcome to our
first newsletter of 2015!
As we enter the New Year, we wish
to share some exciting developments at the
ISBM for B2B.
Our feature article, from newlyinducted ISBM Fellow Mike Ahearne
(congratulations, Mike!), discusses
the critical role the salesforce plays in
Gary L. Lilien
Raj Grewal
commercializing B2B Innovation. This is a
central area of Mike’s research, and a key research priority for the ISBM as well.
We encourage you to read Mike’s comments carefully and consider some of the
important research issues cited there.
Fred Wiersema reports on the exciting developments of the B2B Leadership
Board. The three initiatives cited there: B2B Analytics, B2B Buying, and B2B
Innovation all have exciting plans for 2015. And note the link between Mike
Ahearne’s comments and the issues are central to B2B Innovation.
Ralph Oliva’s From the Membership column reports on the recent, successful
ISBM Members’ meeting, “Building Better Linkages between Marketing,
Sales and Innovation to Drive Profitable Organic Growth.” The column
highlights the theme of linking successful commercialization of innovation to
the salesforce. Ralph also extends an invitation to academics to attend the next
ISBM members meeting (March 17-18, in Tampa), where the focus will be on
“Analysis, Analytics and Answers in B2B”, linking to our B2B Analytics theme.
Note, there is a special rate ($200) for academics to attend this meeting; when
you register, please select the “academic rate”.
Raj Grewal reports on two upcoming IPSS’ courses: Structural Equation
Modeling for B2B Research, given by Hans Baumgartner, beginning March 24th
and Personal Selling and Sales Management given by Mike Ahearne beginning
March 4th. Please bring these offerings to the attention of your PhD students.
CONTACT INFORMATION
Research Director
Gary L. Lilien, ([email protected])
Associate Research Director
Rajdeep Grewal, ([email protected])
Executive Director
Ralph Oliva, ([email protected])
Institute for the Study of Business Markets
Smeal College of Business
The Pennsylvania State University
484 Business Building
University Park, PA 16802
USA
+1-814-863-2782 • WWW.ISBM.ORG
On behalf of the ISBM, we would like to wish you all a happy and successful
2015!
Gary L. Lilien
Research Director
Institute for the Study
of Business Markets
Raj Grewal
Associate Research Director
Institute for the Study
of Business Markets
As always, we hope you find this issue a valuable resource to connect with the ISBM community
(practitioners, faculty, and students) around the world. If you would like to suggest or contribute
items, please let either of us know. This issue and past issues or our newsletter can be found at
http://isbm.smeal.psu.edu/research/newsletter
PAGE 2
Commercialization Of Innovation - The Critical Role of
Sales Force
A
ccording to the 2012 McKinsey
Report, 86% of CFOs and 72%
of other C-level executives cited
growth as their single biggest strategic
challenge (see Figure 1). To meet this
challenge, companies continue to spend
more on R&D in the hope of bringing
newer, better, more innovative products
to the market (2013 Global Innovation
Michael Ahearne
Study, Booz & Co.). Research shows
that many companies feel comfortable generating ideas for
new products and have developed processes and infrastructure to nurture these ideas along (Jaruzelski and Dehoff,
2012). Yet, when it comes time to actually sell these products, the same discipline does not hold. Many companies
have not established a formal process to commercialize their
technology.
typically roll off the product once it is launched to the field
and move back upstream to a product in an earlier phase of
development. Basically, the product is thrown over the wall
to sales, which is left responsible for managing the commercialization process. The consequences, as we’ve mentioned
before, are alarming.
Extensive research exists to determine how ideas are generated in the innovation process (Hellmann and Perotti,
2011), yet much is unknown about what it takes to
commercialize innovation (See Figure 2).
Source: Jaruzeiski and Dehoff. “How the Top Innovators Keep Winning.” Strategy+Business, Winter 2010
Re-examine the Commercialization Process
Data shows that most innovations fail in the marketplace.
In fact, as per estimates from a report by Innosight, 65% of
new products launched by established companies failed in
2010. The amount of money spent on failed launches was
estimated at $260 Billion in 2010. Companies pay a great
deal of attention to the idea-generation and development
process with a clear vision to achieve growth, yet, when
it comes time to actually selling innovation, they seem to
miss out on the vital link between the themselves and their
customers – the salespeople.
The selling of new products is fundamentally different
from the selling of existing products. Common wisdom
does not really hold true about how salespeople sell new
products. For instance, we would expect salespeople to be
enthusiastic and put forth their maximum effort when they
perceive the innovation to be promising. However, prior
research, conducted independently by both Neil Rackham
and myself shows that salespeople with the best results often
have less enthusiasm for the new products than those whose
results were mediocre. This research further demonstrates
that when experienced salespeople view the new product
as superior, they tend to exert less effort on it, as they may
believe that the product can ‘sell itself ’ (Ahearne et al., 2010
– See Figure 3).
Many companies do not have a blueprint for successfully
commercializing their new products. Product managers,
who nurse the product through the development cycle,
continued on page 3
PAGE 3
Commercialization Of Innovation - The Critical Role of
Sales Force (cont)
(cont.)
To conclude, research to address these critical questions is
much-needed in order to bridge the gap from a successful innovation ‘creation’ to actually making profits for the firm.
REFERENCES
Agrawal, Ankur, Kaustubh Joshi, and Ishan Seth. “The
CFO’s Role in the Pursuit of Growth.” 2012 McKinsey
Global Survey. June 2013. Available from mckinsey.com, accessed Jan 10, 2014.
Ahearne, Michael, Adam Rapp, Douglas E. Hughes, and
Rupinder Jindal (2010), “Managing Sales Force Product
Perceptions and Control Systems in the Success of New
Product Introductions.” Journal of Marketing Research, 47
(4), 764-776.
In terms of motivating salespeople to sell new product,
the conventional view suggests that the use of top-down
behavior-based controls (using a high level of direction and
close monitoring of salespeople’s actions) is the best way to
support the sales of a new product. Contradicting this view,
my research provides evidence that outcome-based controls
(rewarding the results rather than close supervision) work
far better for experienced salespeople who are adaptive and
skilled at calibrating the new product-related efforts to the
customers’ requirements (Ahearne et al, 2010).
We must, therefore, re-examine the process of commercialization of innovation, with a focused approach towards
understanding why and how salespeople approach innovation. This requires theoretical clarity regarding the processes
that salespeople go through when they approach their
customers to sell innovation. Customers go through a very
different buying process when they are buying something
new. The mindset of the customer is different for innovation. For instance, uncertainty about what the innovation
can do causes them to sit on the fence when making
purchasing decisions. The first step in gaining more clarity
on the successful commercialization strategies by salespeople is to determine the foundation of such barriers that
may exist in the mind of a customer towards buying
innovation.
Hellmann, Thomas, and Enrico Perotti (2011), “The Circulation Of Ideas In Firms And Markets,” Management Science,
57(10), 1813-1826.
Innosight. “The Imperative of Disruptive Innovation.” Innosight website, accessed Dec 5, 2013.
Jaruzelski, Barry, Loehr, John, and Richard Holman. “The
2013 Global Innovation 1000 Study: Navigating the Digital
Future,” Booz and Co. Winter 2013. Available from booz.
com, accessed Mar 8, 2014.
Michael Ahearne
Professor and C.T. Bauer Chair in Marketing
& Executive Director, Sales Excellence Institute
University of Houston
[email protected]
Breaking the Myths, And Moving Forward
We must assess the current models of buying and selling,
and challenge them to uncover what is specific and different
for innovation. As the salespeople navigate through the various stages of a selling cycle, what are the components that
need to be handled differently when dealing with innovation? How do salespeople accelerate the adoption of innovation and move it from the ‘Introduction’ to the ‘Growth’
stage of a conventional Product Life Cycle?
Induction of newest ISBM Fellow, Michael Ahearne.
(left to right) Gary Lilien, Michael Ahearne, Ralph Oliva
PAGE 4
B2B Leadership Board Update:
B2B Marketing: Now is the Time
T
en years ago, a small group of
ISBM affiliates1 discussed how
much B2B markets had been
evolving and what implications this
could have for academic researchers
in B2B marketing. We looked at
a number of topic areas in need
of attention and concluded that
Fred Wiersema
pursuing a few carefully selected
research thrusts (rather than one single “big idea”)
held considerable promise to advance B2B knowledge
and practice, while energizing young scholars in B2B
marketing.
The B2B domain has continued to evolve since that
time: the challenges have become more distinct, and
opportunities for research-practice synergies have come
into sharper perspective. The ISBM created its B2B
Leadership Board in 2011 which then identified three
priorities areas for practice-based research: B2B Innovation
(in particular the interface with marketing and sales), B2B
Buying Behavior, and B2B Customer Analytics. Research
thrusts are now underway in each area, and 2015 promises
to be a very productive year. Following is a synopsis of
each thrust, starting with the most recently launched one.
B2B Customer Analytics
(Program Director – Hari Sridhar, Penn State)
One noteworthy development in B2B over the past ten
years is firms’ greater access to data. B2B customer and
market data have typically been scarce or hard to collect,
thus discouraging scholars from addressing B2B issues.
Today’s good news: it is becoming more common to find
that “data are everywhere.”
Interviews with forward-looking ISBM member firms
indicate that they are aggregating information at a fast clip,
yet generally lack customer analytics expertise to make
good use of the data. ISBM’s CAP (Customer Analytics
Program) was set up in 2014 with the dual goal of (1)
enabling B2B firms to extract business value in areas
that lend themselves to a scientific approach to customer
analytics, and (2) giving researchers access to rich company
data in order to enhance the body of academic knowledge.
Various pilot CAP projects are currently underway with
ISBM member firms, and plans for CY 2015 call for
expansion of these CAP efforts as follows:
•
Further formalize ISBM-CAP with corporate
support. This will allow us to develop the requisite
modus operandi and support infrastructure to pursue
collaborative projects that focus research on suitable
business problems. A formative meeting with
founding member firms and founding researchers is
planned for March 2015.
•
Implement a variety of B2B customer analytics
projects, assess the projects’ merits for both companies
and researchers, expand the talent pool and scale the
effort beyond the pilot projects.
B2B Buying Behavior
(Program Director: Raj Grewal, UNC-Chapel Hill)
Over the past ten years, B2B buying behaviors have
continued to evolve. A previous ISBM newsletter2
summed up several of the dynamics involved. For
example, ISBM member firm interviews showed concern
about buyers scrutinizing more (often unfiltered and hard
to control) information about products and suppliers than
they did in the past; and about operating in new markets
that expose suppliers to buying practices they are less
familiar with.
These and other B2B buying challenges remain underresearched, prompting the ISBM to organize a formative
conference with a small group of researchers in March
2014 to determine key themes and issues in need of further
inquiry. In 2015 we expect to:
•
Finalize a paper with findings and research priorities
emanating from the formative meeting on B2B buying
and submit for publication.
•
Issue a call for proposals to support and stimulate
research on key topics identified in the paper.
•
Focus in particular on B2B buying-related challenges
in emerging markets, the area we identified that was
most in need of research both from the academic and
practice side.
B2B Innovation
(Program Director: Raji Srinivasan, U-Texas, Austin3)
B2B innovation (and its interface with marketing
and sales) continues to be of great importance to B2B
companies. To guide the ISBM’s initiatives in this area
1
With Gary Lilien presiding, the group included Raj Grewal, Bernie Jaworski, Wes Johnston, Don Schultz, Robert Spekman, Raj Srivastava, Bob Thomas and Fred
Wiersema.
2
http://isbm.smeal.psu.edu/research/newsletter/research-newsletters/research-newsletter-vol-7-iss-1-may-2014-pdf/view
3
Raji has taken over this role from Abbie Griffin, University of Utah, who guided the ISBM’s innovation initiatives previously and will remain involved in a key,
supporting role.
continued on page 5
PAGE 5
B2B Leadership Board Update:
B2B Marketing: Now is the Time
we first recognize that “innovation”, however defined,
requires multi-functional coordination, going well beyond
marketing. Thus, a multi-disciplinary approach to the topic
is needed.
•
Establish a B2B Innovation Board with a group
of founding scholars from multiple disciplines to
determine research priorities and associated set of
activities
Second, while firms often gravitate to incremental
product-extension based innovation, the most promising
innovations are likely to come from innovations “beyond
the lab.” Third, the potential contribution of marketing
and sales to B2B innovation effectiveness may be greater at
the ideation stage and at the commercialization stage than
at the intermediate new product development process stage,
where most research to-date has focused. With this in mind,
our plans for 2015 are to:
•
Organize a B2B Innovation Symposium for Fall 2015,
bringing together a select group of practitioners and
researchers in the innovation space, to share learnings
and explore further initiatives.
Now is the time. You’ll be hearing more about these
exciting developments.
Fred Wiersema
ISBM Fellow and
Chair, B2B Leadership Board
[email protected]
From the Membership:
Frameworks Tools and Cases: Building Better
Linkages between Marketing, Sales and Innovation to
Drive Profitable Organic Growth
T
Ralph Oliva
The 31st
ISBM Member’s Meeting
was held at Penn
State on September
9 and 10, 2014,
focusing on the
processes and
linkages B2B firms
can use to foster
organic growth.
Fariborz Ghadar, Director of the
Center for Global Business Studies at
Penn State, set the stage with research
he had just completed on “The Global
Tectonics” – the slow moving, inevitable trends that B2B marketers
should know about. These will inevitably drive the future environment for
their firms1. Ghadar’s work covers a
broad spectrum of trends, but points
especially to global population (and
how fast it is aging), urbanization, and
global water stress. He challenged the
1
audience to make themselves aware
of the key trends that will affect their
businesses and to take a long-term,
proactive view rather than the tactical
more reactive view he sees most commonly employed.
Frances Mayfield of Kimberly-Clark
Professional (KCP) set a theme that
was recurrent throughout the meeting—how to move from selling
products to selling more complete
solutions. KCP is moving from selling commodities such as toilet paper,
paper towels and the like to making
industrial workplaces healthier, safer,
and more productive. Their attempts
to implement various “Voice of the
Customer” approaches were not serving them well – providing only tactical
insights. They recognized that they
needed to involve marketing, sales, and
R&D within a structured process of
listening to customers. They selected a
process (“SCORE” from StandPoint)
that provided the structure for engaging all of these groups with customers. Frances cited results at higher
levels of value for customers coming
from this process as well as stronger
working links across KCP. The KCP
key question is one many B2B firms
share—what is the best way to engage
multiple firm functions in voice of the
customer engagements?—a possible
area for fruitful research.
Ron Pierantozzi, from Cameron and
Associates shared a process he terms
“Discovery Driven Planning.” In his
work with firms such as Air Products,
he noted that it was difficult to align
marketing, sales, and R&D when
working on projects with high risk and
uncertainty. He outlined an approach
bringing “real options” thinking to the
process. The process sparks thinking
beyond the direct net present value of
a project (which may be negative at
the outset) and to consider the
Fariborz Ghadar and Erik Peterson (2014) Global Tectonics: What Every Business Needs to Know, Revisited, The Center for Global Business Studies, Penn State.
continued on page 6
PAGE 6
From the Membership:
Frameworks Tools and Cases: Building Better
Linkages between Marketing, Sales and Innovation to
Drive Profitable Organic Growth (cont.)
project’s “options value” and “abandonment value”. This approach represents another research opportunity –
how best to apply options analysis for
new B2B projects.
Eric Galler, Director of 3M Global
Marketing Excellence, shared insights from research that examined
593 new product launches, comparing those deemed “successful” with
those “unsuccessful”, to identify the
biggest “difference makers.” These
seven difference makers, in order, are
(1) Ensure customer value equation
leads thinking, (2) Develop dedicated,
cross-functional teamwork, (3) Define
customer target and success drivers
early (4) Enlist professionally facilitated insights research (5) Obtain early
customer feedback on concepts/prototypes (6) Maintain iterative engagement with customers through launch
(7) Leverage insights from customer
research to maximize launch communications. The predictive nature of his
work and its possible extension beyond
3M represents a potentially important
research opportunity.
Brian Melinat, who directs Dell’s
approach to social media “listening,”
discussed how his team understands
and interprets the myriad of social
media conversations about Dell.
They’ve boiled things down to a single
metric: the “Social Net Advocacy
Pulse” (or SNAP). They study 25,000
daily conversations about Dell around
the world and aggregate this information into an overall SNAP score that
they share with marketing, customer
support, sales, product development,
M&A leaders and others. A possible
research challenge that emerged from
his talk was how social media listening
could be linked to more direct customer questioning metrics like customer
satisfaction and net promoter scores.
Mike Ahearne from the University of
Houston, who was inducted at the
meeting as an ISBM Fellow, discussed
the role of the salesforce in fostering
commercialization of new offerings.
His research showed how marketing needs to be supporting the sales
team not just on their first sales call,
but on their second, third, and fourth
sales calls – where different types of
discussions and challenges need to
be addressed. He challenged current
practice where many marketers think
only about basic features and benefits
messages that are appropriate for the
first sales call, but have greatly reduced
or even negative impact in subsequent
sales calls where customers’ information needs have changed. The effectiveness of different messaging strategies over the sales life cycle offers some
important research opportunities
Frank Cespedes from Harvard shared
core insights from his new book Linking Strategy and Sales. Frank cited
three core elements essential for better
alignment: shared vision, linking price
and value, and continuous improvement. For each of these core elements
he provided a diagnostic series of
questions, allowing firms to assess how
well they are doing on each of these
elements, with a discussion guide for
making things better and stronger.
More research into both the diagnostic
and predictive ability of these questions would be welcome.
Raz Khan, Senior Director of Strategic
Initiatives at Tyco, shared how Tyco is
implementing a process based on Eric
Ries’ book, The Lean Start Up. Tyco
wanted to create a new mind set inside
the firm to link marketing, sales, and
R&D in a “lean environment,” to
speed innovative offerings to market.
Tyco has created innovation workshops, and is energizing the process
with a Growth Board that includes C
level officers from marketing, sales,
R&D, and finance to accelerate the
launch of new ideas. A research challenge here is to determine if and how
lean start up thinking can be adapted
to and implemented in large organizations.
Wesley Johnston from Georgia State
University addressed an evolution he is
tracking on how CRM can be used as
a tool for process integration, linking
together sales, marketing, and R&D.
He provided a rich ethnographic
dialog on how this process is evolving
across firms he has studied, leading
to a research question: how can we
build better approaches to fulfilling the
promise of CRM as a tool for driving
linkages?
In all, this was a provocative meeting,
offering up numerous ideas to test in
practice and many topics for fruitful
future research.
Coming up Next: Analysis, Analytics
and Answers: B2B – March 17-18,
2015 Tampa
For our next meeting, we’re assembling
researchers, thought leaders, and member cases to delve into the state of the
art and practice on customer analytics in business markets. There will be
cases from Emerson, Parker Hannifin,
GE, along with insights from Deloitte
and ZS Associates. Please mark your
calendar and plan to join us in Tampa
in March!
Note: Academics with a focus on B2B
are encouraged to attend ISBM Members
meetings at a special academic rate.
Ralph A. Oliva
Executive Director
Institute for the Study
of Business Markets
Professor of Marketing
[email protected]
continued on page 7
PAGE 7
From the Membership:
Frameworks Tools and Cases: Building Better
Linkages between Marketing, Sales and Innovation to
Drive Profitable Organic Growth (cont.)
THE 21ST ANNUAL ISBM WINTER MEETING
March 17-18, 2015
Grand Hyatt Tampa Bay, Tampa, Florida
Frameworks, Insights, Practical Cases...
Analysis, Analytics, Answers: B2B
Identify Points of Focus
Tune Value Propositions
Target Adjacent Markets
Drive Organic Growth. More...
IPSS Update
I
want to join the students in thanking Sundar Bharadwaj for
teaching the ISBM PhD Seminar Series (IPSS) seminar on
Marketing Strategy in Fall 2014; the course was extremely well
received.
IPSS will have two courses this Spring semester: Mike Ahearne will
teach the course Personal Selling and Sales Management and Hans
Baumgartner will teach the course Structural Equation Modeling
in B2B Research. This is the first time teaching in IPSS for both
Mike and Hans and I want to welcome them to IPSS Faculty and
thank them for their time and support. The details on the course are
available from http://isbm.smeal.psu.edu/research/ipss.
Please bring these PhD seminars to the attention of your promising
B2B PhD students. Students should register for the courses online at
http://isbm.smeal.psu.edu/research/ipss/app_ipss.pdf. Additionally if
you have any other feedback or suggestions, please do not hesitate to
contact me.
Raj Grewal
Director - IPSS
[email protected]
COMMENTS... IDEAS...
We would love to hear from you. If you wish to
comment on any of the articles (or have thoughts
for future articles), please pass them on. Your
suggestions will make the newsletter better and
more responsive to your needs.
Please email your correspondence to:
Newsletter Editor
Lori Nicolini ([email protected])
Institute for the Study of Business Markets
Smeal College of Business
The Pennsylvania State University
484 Business Building
University Park, PA 16802
USA
+1-814-863-2782 • WWW.ISBM.ORG