I don’t know anyone that works for Goldman Sachs. Until two days ago, like everyone else, I had no idea who Greg Smith was, and I still know almost nothing of derivatives.
But Mr. Smith’s very public resignation (posted in the New York Times) provides lessons for every sales organization, every sales manager, and every salesperson. All should read Mr. Smith’s letter. At its core is the heart and soul of what it means to sell and what it means to serve your clients. His indictment of Goldman reads like a manifesto for those who would sell well, who would be consultative, and who aspire to being a trusted advisor.
On the Morality of Capitalism
What makes capitalism work is that there is a free exchange between parties. One party creates enough value for the other party that the receiving party is willing to exchange their money for the value created. It starts with the creation of value, not the claiming of value.
This is what we do in sales. We create value for our clients.
Smith’s resignation is based on his belief that Goldman has reversed the order, deciding that they should claim value without creating any. Because their products are complex and difficult to understand, I can see how this might be possible. Smith says:
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym. (Underlined and bold are mine)
Lesson One: There is nothing morally wrong with trying to make the largest profit possible, despite protestations to the contrary (and please don’t send me comments to the contrary from your Apple iPhone or iPad). But it is morally wrong to profit by selling your clients something that is wrong for them. It is malpractice. It is unethical. And being asked to do so is cause for resignation.
There is simply no way to create value for your clients by selling them something that is wrong for them because you profit from having done so.
Serving Your Clients
Sales organizations are built to create value for their clients. They are not built to bilk or milk their clients.
Smith goes on to say:
I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
Lesson Two: The path to profits runs directly through your client’s success. This is why business acumen is so important in business-to-business sales: you generate profits by helping your clients generate results. Period.
If you focus on profits instead of clients, the profits slip away. If you focus you time, your attention, your focus, and all of your passion on helping your clients succeed, the profits naturally follow. No grown up believes differently.
The Currency We Trade In Is Trust
In sales, the currency we trade in is trust. We are trusted to create value when our clients give us their time. We are trusted with information that allows us to understand their business and how we can help them. We are trusted to act as part of their management team, and we are trusted to deliver the outcomes that we commit to achieving for and with our clients.
Without trust, you have nothing.
One more quote for good measure:
If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
Lesson Three: The deepest fundamentals in sales are trust and relationships. You may have the greatest value-creating idea in the world, but without your client’s trust, you will never have an opportunity to use that idea. It will create no value for your client, and so it will create no value for you.
Smith is correct. Once the trust is gone, your clients will look elsewhere for help. And they will choose someone that is less clever but worthy of their trust.
I am a devout and devoted capitalist. I believe you should create so much value that no one will oppose you claiming value. Even it the profits you generate are obscene! But the value creation comes first. By first ensuring that you create value for your client, you ensure that you can capture value. You shouldn’t try to do otherwise. You shouldn’t work for anyone that asks you to do otherwise.
Is it ever right to capture value without creating value?
What are the implications for sales organizations that reverse the order of value creating and value claiming?
What are the implications for salespeople that would claim value before creating any?
Is it wrong to generate massive profits? What if you create massive value?
Why is trust the currency we trade in in sales?