Executive Summary:

Identifying the dominant theory in use is essential for understanding why certain initiatives succeed while others fail. By clinically diagnosing the indicators of Theory E (centralization and surveillance) versus Theory O (decentralization and capability building), executives can stop operating blindly and start engineering intentional growth.

9 part series on strategies for implementing organizational changes in Sales. Access the rest below:

Diagnosing the Cognitive Architecture

For a sales leader, identifying the dominant theory in use is essential for understanding why certain initiatives succeed while others fail. This diagnostic process involves examining the organization’s processes, decision-making patterns, and the “implicit contracts” held with the sales force. You cannot manage what you have not accurately diagnosed.

Indicators of Theory E Dominance

A sales organization following Theory E is often visible through its centralization of power. The decision-making process in a Theory E sales organization is highly centralized.

• Top-Down Directives: Decisions regarding pricing, territory assignments, and quota settings are made at the executive level and cascaded down without significant input from the field. The CXO often takes a direct role in approving significant deals or shifts in strategy.
  
  
• Communication Styles: Communication is primarily top-down, focusing on the “what” and the “when” rather than the “why”.
  
  
• Surveillance: In a Theory E environment, the CRM is frequently used as a tool for surveillance and reporting rather than for opportunity development.
  
  
• The Chess Board Metaphor: The “chess board” metaphor is apt here: departments and sales units are rearranged or combined to maximize strategic positioning and financial efficiency, often without regard for the underlying relationships or team dynamics.
  

Indicators of Theory O Dominance

Conversely, a Theory O sales organization emphasizes the “muscles” of the business—the skills, behaviors, and cultural norms of the sales team.

• Decentralized Decision-Making: In Theory O, the decision-making process is distributed. Decision-making is decentralized, and frontline feedback is actively sought to refine sales processes and market strategies.
  
  
• Leadership Role: Leadership is consultative, with sales managers acting more as mentors and coaches than as directive enforcers. The leader’s role is to foster an environment where “the people who know the most about something are the ones making decisions about it”.
  
  
• Responsiveness: This decentralization allows the organization to be highly responsive to customer needs and market changes, provided that the culture supports open communication and trust.