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The Mother of All Procurements

Transformative sales are primarily business-to-business and business-to-government transactions. They involve multiple people, with multiple perspectives, often multiple companies, and frequently cross multiple cultural and country borders. The transformative sales cycle can run from days to years. Undertaking this level of sale requires significant investment in time and resources.

The $200 billion defense contract that Lockheed Martin won in 2001 may well be the largest transformative sale in history. Granted, few companies will ever compete for a sale of this magnitude. However, even though this is an extreme example of a transformative sale, it does share common characteristics with all transformative sales.

This contract grew out of the U.S. Defense Department's Joint Strike Fighter (JSF) program, which was conceived in the early 1990s. The Pentagon decided to replace the aging fighter fleets in all branches of the nation's military with a next-generation jet that could be built on a standardized product platform and that combined the features of a stealth aircraft with state-of-the-art supersonic capabilities. In 1995, the United Kingdom jumped into the project when it decided that the fighters in the Royal Air Force and Navy also needed replacing and that the JSF program would be the most economical way to accomplish that task. Today, at least six other countries, including the Netherlands, Italy, Denmark, Norway, Canada, and Turkey, are considering participation.

The contract to design and manufacture jets for the JSF program was so large that it caused a fundamental reconfiguration in the aerospace industry. In fact, the winner of the contract would become the nation's only fighter jet manufacturer. Now-retired Lockheed aeronautics executive James "Micky" Blackwell called it "the mother of all procurements" and suggested that the JSF program would eventually be worth $1 trillion to whichever company won it. [1] In 1996, when the Pentagon announced that Lockheed Martin and Boeing had each won a $660 million prototype development contract and would be the only companies allowed to compete for the program's final contract, one competitor, McDonnell Douglas Corporation, sold itself to Boeing. Northrop Grumman, another spurned competitor, tried to merge with Lockheed Martin; after the government blocked that deal, Northrop Grumman declared it would no longer compete as a prime_contractor in the military aerospace market and joined the Lockheed team as a partner.

In October 2001, the final contract, the largest single defense deal ever, was awarded to Lockheed. It called for the eventual delivery of more than 3,000 aircraft to the U.S. military alone, and the Congressional Budget Office valued it at $219 billion over 25 years. That seems to be the tip of the iceberg: The company will easily export another 3,000 planes, and the life of the contract could extend into the middle of this century. Revenue generated by this sale may not hit the trillion-dollar mark that Micky Blackwell targeted, but based on sales of past generations of fighter jets, industry analysts think that it could easily reach three-quarters of that figure.

We've already mentioned the first two characteristics that all transformative sales share with the JSF contract. Transformative sales involve large financial investments and long sales cycles. Case in point: JSF's several hundred billion dollar price tag and the years that it took to award the final contract.

Another common characteristic of the transformative sale is that it requires multiple decisions at multiple levels in the customer's organization. It frequently involves multiple organizations working with the customer. In the purchase of many products and services, the buying decision is clear and entails little risk. The customer clearly understands the problem, clearly understands the solution, and can easily sort through the pros and cons of each alternative. There really is not much that can go wrong that would not be anticipated.

In the transformative sale, there is no single buying decision or single decision maker. The buying process is actually a long chain of interrelated decisions, impacting multiple departments and multiple disciplines that can ripple throughout a customer's organization. In the JSF program, this chain of decisions stretched beyond the horizon. It included a huge number of decisions with serious implications for the future, such as the decision to pursue a single platform fighter that can be modified for vastly different uses and the decision to award the entire contract to a single prime_contractor.

The difficulty of coping with the long decision chain is compounded by another common characteristic of the transformative sale: multiple decision makers. Shelves of books are devoted to helping salespeople find and close the decision maker, that one person who can make the decision to buy on the spot. In the case of a commodity sale, there often is just such a person—a purchasing agent or a department head with a budget or senior executive who can simply sign a deal.

In the transformative sale, however, the search for this mythical buyer is fruitless. There is no single decision maker; often, even the CEO cannot make a unilateral decision and must defer to the board of directors. Certainly, there is always a person who can say yes when everyone else says no, and, conversely, there is always someone who can say no when everyone else says yes. Today, the majority of decisions, quality decisions, are the result of a consensus-building effort—an effort that the best of sales professionals orchestrates. Therefore, the transformative sale has multiple decision makers, each seeing the issues of the transaction from his or her own perspective and each operating in the context of his or her job responsibilities and their own self-interest. The decision makers in a transformative sale may be spread throughout an organization and represent different functions and frequently will have conflicting objectives. They can be spread throughout the world, as in the case of a multinational corporation, buying products and services that will be used throughout its organization. They may also represent multiple organizations, as in the JSF contract, where the different sectors of the military, the executive branch, and the Congress were all involved in the sale, as well as the governments and military forces of other nations.

The transformative sale, however, is not a run-of-the-mill transaction. The customer's situation is often a rarely encountered or a unique occurrence. The advent of e-commerce brought about just such a situation. Suddenly, an entirely new distribution channel became available to corporations, institutions, and governments. Many organizations floundered as they tried in vain to understand this new world. Should they go online or not? What would happen if they did? What would happen if they didn't?

Organizations that did make a decision to expand online were faced with a second set of critical decisions. The solutions themselves were based on newly developed technology, and customers had few guidelines for judging between them. The results, as anyone who watched the rise and subsequent fall of the e-commerce revolution knows, were widely varied. But one thing is certain: For each successful online expansion, there were hundreds of equally spectacular failures.

If you examine the JSF program, you find that the Pentagon invested years in exploring and defining the problems of its existing fighter fleets. It determined the two companies most likely to create the best solutions to those problems and paid them $1.32 billion to develop prototypes. Only then did they make a final decision.

A final characteristic of the transformative sale and major consideration for sales success is that customers require outside assistance or outside expertise to guide them through complicated decisions. They cannot do this by themselves. You should begin to consider this question: To what degree do you and your team provide this expertise? To help organize your thoughts, consider that your customers need this expertise in one or more of three major areas.

First, they may require outside expertise to help Diagnose the situation. They may not have the ability to define the problem they are experiencing or the opportunity they are missing. In many cases, they may not even recognize there is a problem. So consider: To what degree do you and your team assist the customer in completing a more thorough Diagnosis'?

Second, even if your customers could accurately diagnose their situations, they may not be able to Design the optimal solution. They may not know what options exist, how they would interact, how they might integrate into their current systems, and other such considerations. To what extent do you and your team enable customers to design comprehensive solutions?

Finally, even if your customers could Diagnose their problems completely and Design optimal solutions, they may not have the ability to implement the solutions and Deliver the expected results to their organizations. To what degree do you and your team provide implementation support to assure that the maximum impact of your solutions is achieved?

In summary, the characteristics of transformative sales involve long sales cycles. They require multiple decisions that are made by multiple people at multiple levels of power and influence, each of whom approaches the transaction from his or her own perspective. Finally, they involve complicated situations and sophisticated and expensive solutions that are difficult for the customer to understand, evaluate, and implement.

In addition to the elements of the transformative sale itself, the two environmental forces that we introduced at the beginning of this chapter—commoditization and increasing complexity—also have a direct effect on sales success. To round out the portrait of the world in which we sell, we take a closer look at each.

[1]Brendan Mathews, "Plane Crazy: The Joint Strike Fighter Story," Bulletin of the Atomic Scientists (May/June 1998).


The topics covered herein concern solution sales, consultative sales, and consultative selling.

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