How important is commercial leadership? According to a McKinsey & Company survey of more than 200 commercial capabilities at 200+ clients, businesses with superior commercial capabilities consistently deliver revenue growth almost 2 percent higher and earnings growth almost 5 percent higher than peer companies in the same industry.
Effective leadership in areas such as strategic marketing, go-to-market design, channel partner management, sales and account management, and marketing enablement of sales is crucial, especially in startup companies looking to drive growth. But finding someone with the skills and experience to provide that critical commercial leadership is not easy.
Here are three proven ways to fill your commercial leadership void and pros and cons of each.
GROW – Promoting an internal rising star sends the powerful message that people who show commitment, drive, and leadership are rewarded for their efforts.
- You have significant insight to the outcome since you know the individual well and are confident of the results.
- A good cultural fit is a likely outcome since the person is already a member of your team.
- If you have the talent pool, going the internal route is usually the least expensive.
When I first got promoted from salesman to sales manager, I had the good fortune of working for a regional manager who was invested in my development. If you have that combo it can be a real multiplier.
- To build leadership bench strength and support new leaders, you need to maintain a working training and mentorship structure.
- When you promote from within, you create a hole somewhere else in the organization that may take time to fill and often means the promoted individual gets pulled back into his or her former role.
- You risk “in-breeding” and lack of innovative thought.
It is also often a challenge for someone recently promoted to lead former peers. In my first sales management role, I had three peers who I thought were great until I was responsible for them. I quickly learned that only one was truly effective, leaving me the challenge of how to deal with the other two.
BUY – Many companies opt to scan the competitive landscape and recruit their new commercial leader from another company.
- You immediately bring in someone who can provide new, innovative ideas along with potential competitive intel and an expanded contact list. Such a move can give you instant credibility within the industry and with your current and potential investors.
- A newcomer to your organization is often able to initiate needed changes much faster than someone who has been with you for years.
- A seasoned hire will also require less training since they know the tasks and responsibilities of a commercial leader.
This was the rationale for me being hired to lead the Microsoft Healthcare & Life Sciences business. The company wanted my deep healthcare connections and made the tradeoff that I could acclimate to the company culture.
- It’s not a given someone from the outside will be a fit for your organization. One study revealed that 30 percent of sales executives recruited to a new company fail within 18 months of starting their new job. Three quarters of the failures were the result of the new leader’s inability to establish a cultural fit and half were caused by the failure of the individual to build teamwork with staff and peers.
- Onboarding a new executive is often a challenge. When I was recruited to Microsoft, I went through an amazing interview process and I had high expectations for the on-ramping process. Before too long, however, I was on my own with a PC. They have since revamped their onboarding program, but integrating new executives is a typical problem for most companies.
- Finally, “buying” someone from another organization is probably the most expensive option for filling the void. Expenses could include a recruiter; outbidding the candidate’s current organization; and relocation costs.
RENT – Many start-up or growing companies don’t have the “bench strength” to promote from within or the financial resources to recruit from competitors, but they still need the benefits that a strong commercial leader provides. In those cases, many have opted to go down a third road – contracting on an interim basis with an experienced advisor to acquire the commercial leadership they need.
- Outside commercial leaders can ensure you understand your market, buyer and selling motion and thereby help lay down the fabric of what you need when it comes time to build your own team. One of our clients, entering a completely new geographic market, used this strategy to help drive the early decisions needed for ultimate market success. By hiring us as an advisor they focused first on market entry strategies/activities and were in a better position to attract a full-time commercial leader shortly thereafter.
- Contracting for a commercial advisor can provide the benefits of the more expensive hiring option while minimizing the risks of “organ rejection” when bringing in a new executive.
- A specialized consultancy focused on commercial leadership brings expertise gained from working with multiple companies. This breadth of experience brings valuable insights and can provide the credibility necessary to develop investor relationships.
- A finite engagement with an advisor can be as long or short as you need it to be with no hard feelings when it comes time to end the relationship. You get the leadership you need without the long-term commitment or internal restructuring required with the other two options.
- The downside to temporary leadership is dealing with the ramp up on your business. If your business is super specialized, you need to make sure you have baked that into your selection and onboarding of the advisor so their ramp is manageable
- There can be internal resistance toward a contract organization. Trust issues can be real but can be managed if dealt with from the top of your organization.
- True advisors are impartial and often have insights and feedback that can be hard to hear. Ensure you have built a communication mechanism into your contract relationship from the beginning.
We’ve been involved in all three options for filling the commercial leadership void. We’ve coached newly promoted individuals, helped hire new CCOs, and performed as Acting Chief Commercial Officers. There is no right or wrong way to proceed since all three options can be effective. The only wrong path is failing to do anything. Strong commercial leadership is crucial to growing your business and maintaining financial viability.
Our advice? Determine what is situationally best for your organization and do it with gusto.
 Commercial excellence: Your path to growth, by Russell Groves, Kun Lueck, and Stefano Redaelli, McKinsey & Company, Marketing and Sales, October 2018
 Research: 40% of New Executives Fail Within 18 Months, by Eric Douglas, Business2Community, October 18, 2018