Many B2B companies are now facing unprecedented challenges, with the rules of the game having been turned upside down in the market over the past year. Previous approaches to market development and customer management that were tried and proven over time are no longer working, forcing companies to completely rethink the way they operate. However, many of them do not really know where to start. In times of such turbulence, it can be helpful to take a look at fundamental concepts such as those offered by organizational theory.
The essential features of contingency theory
Contingency theory is a concept originating from modern organizational theory (see box). The fundamental idea behind it is that there is no generally applicable and optimal organizational structure or form. It is rather the case that each company needs to adapt to its specific environment and circumstances in order to achieve success. The ultimate goal is to bring about the best possible fit between the situation and the company. Assessing this fit is something that must be done on a regular basis, as changing environmental conditions render it necessary to make adjustments to the company itself to again achieve an optimal fit (see figure).
Achieving success with contingency-focused sales
The concept presented not only is helpful in the selection of a suitable organizational structure, but also offers valuable implications for sales. The better companies succeed in bringing their customer management and market development in line with relevant environmental factors, the more successful they will be. However, they can only keep this going if they regularly adapt their sales approach to changing conditions.
The three steps to a contingent solution
The following three steps can help companies put their sales approach to the test and identify where to get started in terms of optimizing it:
- Take a look at the big picture: Analyze the market in which your company operates and ask yourself the following questions: Can you identify any changes in your customers’ procurement behavior and in what they need? Are new regulations in your industry impacting the way you do business? Are there country-specific differences in market development that need to be taken into consideration?
- Identify gaps: Take a critical look at how well you are using your current sales organization to address the changes you have identified. Where do you find gaps in your customer management or your service promise? In what areas are your competitors better at meeting the challenge of changing customer needs? Is your sales team lacking important skills that are critical to effective customer management?
- Ensure a good fit: In the next step, you set priorities in terms of where action needs to be taken and derive measures to close gaps you have identified. Focus on finding solutions that resolve your specific challenges and steer clear of topics that happen to be attracting a lot of hype. Depending on your starting point, this could mean taking steps to fine-tune your sales responsibilities or engaging in large-scale restructuring of your sales organization. This process is difficult but also crucial for achieving the right fit.
Note: Only those who are prepared to constantly reinvent their sales approach will be able to achieve lasting success in the market.
| Contingency theory
Contingency theory was developed by British and American social scientists starting in the 1960s. Tom Burns and George M. Stalker, as well as Alfred Kieser and Herbert Kubicek, had a pronounced influence on the development of the theory. The research focuses on relationships between specific variables of the respective situational environment as well as organizational structure and its efficiency. The concept aims to identify differences between organizational structures and explain them in terms of differences of context and situation. In the 1970s, this led to the development of the contingency theory of leadership, which was significantly shaped by Fred E. Fiedler. Contingency theory illustrates the relevance of situational influences in particular and calls into question the existence of a method of management that is universally valid.
Burns, T. & Stalker, G. M. (1961). The management of innovation. London: Tavistock.
Fiedler, F. E. (1964). A Contingency Model of Leadership Effectiveness. Advances in Experimental Social Psychology, 1, 149–190.
Kieser, A. & Kubicek, H. (1992). Organisation. Berlin: De Gruyter.
Lawrence, P. & Lorsch, J. (1967). Differentiation and Integration in Complex Organizations. Administrative Science Quarterly, 12, 1–47.
Weibel, M. (2014). Vertrieb im Industriegütergeschäft aus Anbietersicht : Untersuchung erfolgskritischer Faktoren nach Geschäftstypen. Wiesbaden: Springer Fachmedien.