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Anyone in sales will tell you that social networks are critical. The more contacts you have, the more leads you'll generate and, ultimately, the more sales you'll make. But that's a vast oversimplification. Different configurations of networks produce different results, and the salesperson who develops a nuanced understanding of social networks will outshine competitors. The salesperson's job changes over the course of the selling process. Different abilities are required in each stage of the sale: identifying prospects, gaining buy-in from potential customers, creating solutions, and closing the deal. Success in the first stage, for instance, depends on the salesperson acquiring precise and timely information about opportunities from contacts in the marketplace. Closing the deal requires the salesperson to mobilize contacts from prior sales to act as references. Managers often view sales networks only in terms of direct contacts. But someone who knows lots of people doesn't necessarily have an effective network because networks often pay off most handsomely through indirect contacts. Moreover, the density of the connections in a network is important. Do a salesperson's contacts know all the same people, or are their associates widely dispersed? Sparse networks are better, for example, at generating unique information. Managers can use three levers--sales force structure, compensation, and skills development--to encourage salespeople to adopt a network-based view and make the best possible use of social webs. For example, the sales force can be restructured to decouple lead generation from other tasks because some people are very good at building diverse ties but not so good at maintaining other kinds of networks. Companies that take steps of this kind to help their sales teams build better networks will reap tremendous advantages.

When a company launches a new product into a new market, the temptation is to ramp up sales force capacity immediately to gain customers as quickly as possible. But hiring a full sales force too early just causes the firm to burn through cash and fail to meet revenue expectations. Before it can sell an innovative product efficiently, the entire organization needs to learn how customers will acquire and use it, a process the authors call the sales learning curve: The company--marketing, sales, product support, and product development--and its customers transfer knowledge and experience back and forth. As customers adopt the product, the firm modifies both the offering and the processes associated with making and selling it. The more a company learns about the sales process, the more efficient it becomes at selling, and the higher the sales yield. As the sales yield increases, the sales learning process unfolds in three distinct phases--initiation, transition, and execution. Each phase requires a different size--and kind--of sales force and represents a different stage in a company's production, marketing, and sales strategies. Adjusting those strategies as the firm progresses along the sales learning curve allows managers to plan resource allocation more accurately, set appropriate expectations, avoid disastrous cash shortfalls, and reduce both the time and money required to turn a profit.

In recent years, sales leaders have had to devote considerable time and energy to establishing and maintaining disciplined processes. The thing is, many of them stop there--and they can't afford to, because the business environment has changed. Customers have gained power and gone global, channels have proliferated, more product companies are selling services, and many suppliers have begun providing a single point of contact for customers. Such changes require today's sales leaders to fill various new roles: company leader, customer champion, process guru, organization architect, and course corrector. Company leader: The best sales chiefs actively help formulate and execute company strategy, and they collaborate with all functions of the business to deliver value to customers. Customer champion: Customers want C-level relationships with suppliers to understand product strategy, look at offerings in advance, and participate in decisions made about future products--and sales leaders are in the best position to offer that kind of contact. Process guru: Although sales chiefs must look beyond the sales and customer processes they have honed over the past decade, they can't abandon them. The focus on process has become only more important as many organizations have begun bundling products and services to meet important customers' individual needs. Organization architect: Good sales leaders spend a lot of time evaluating and occasionally redesigning the sales organization's structure to ensure that it supports corporate strategy. Often, this involves finding the right balance between specialized and generalized sales roles. Course corrector: Sales leaders must watch the horizon, but they can't take their hands off the levers or forget about the dials. If they do, they might fail to respond when quick adjustments in priorities are needed.

Many companies today are faced with large, complex selling situations--they sell expensive equipment that affects many parts of a customer's company, they work on sales that may take several years to consummate, or they arrange mergers with other organizations. These major sales need special handling: They are more complex than smaller transactions, their potential profit is larger, and they have a more lasting effect on both buyer and seller. In this article, first published in 1976, the authors develop a systematic approach that companies can use not only to facilitate the sale but also to ensure the long-term account relationship. Their eight-step procedure shows how to open a contact, "separate the suspects from the prospects," develop a profile of a company's needs and key personnel, justify the purchase to the buyer, make the sales pitch, coordinate company resources, close the sale, and maintain the account. Before they can engage in strategic selling, most companies will have to revise the makeup of their sales forces according to the kind of sales they want to make, which may include different types of nonrecurring sales. To help solve these more complicated selling problems, the authors provide organizational guidelines for companies to use in their specific operations. Among these are creating a senior sales force to service a multitude of major accounts, assigning a field sales manager to one or two accounts for regional sales management, and having top executives take charge of the large sales.

Traditional, high-pressure selling techniques were intended to talk the buyer into making a purchase--which often meant driving him to a decision rather than allowing him to reach it freely and independently. In this classic article from 1947, HBR editor Edward C. Bursk makes the case for replacing high-pressure selling with a milder approach, in which the salesperson does not so much "sell" the prospect as let him follow his natural inclinations to buy. Bursk draws from his own business experience to support his points. He begins with a discussion of the advantages of low-pressure selling, the heart of which is the seller's sincerity. He then analyzes the reasons for the method's effectiveness. It's most clearly demonstrated by the customer-problem approach, in which the salesperson learns about the buyer's problems and, in effect, helps him solve them. Bursk concludes by addressing the practical questions facing sales managers, who bear the brunt of implementing the new technique. Low-pressure selling requires salespeople who are intelligent, analytical, subtle, and flexible--qualities rarely found in practitioners of the high-pressure selling method. Managers must not only craft a compensation plan that balances stability of income with strong incentives, but select and train low-pressure salespeople with care.

Despite millions of dollars spent on combating the high turnover rate among insurance agents, the rate--approximately 50% within the first year and 80% within the first three years--had remained steady for the more than 35 years preceding the publication of David Mayer and Herbert M. Greenberg's 1964 article. The authors devoted seven years of research to studying the problem of the ineffectiveness of large numbers of salespeople. They discovered flaws in the established methods of selection and revealed the two basic qualities that any good salesperson must have: empathy and ego drive. Empathy, in this context, is the central ability to feel as other people do to sell them a product or service; a buyer who senses a salesperson's empathy will provide him with valuable feedback, which will in turn facilitate the sale. The authors define the second of the two qualities, ego drive, as the personal desire and need to make the sale--not because of the money to be gained but because the salesperson feels he has to. For sales reps with strong ego drives, every sale is a conquest that dramatically improves their self-perception. In the dynamic relationship between empathy and ego drive, each must work to reinforce the other. Why did the executives that Mayer and Greenberg studied continue to hire salespeople who did not have the ability to perform well? The companies were hindered in the preselection process by flaws in the prevailing forms of aptitude testing. Test takers could easily give answers they knew the test givers wanted to hear, in part because the tests sought to identify particular psychological traits rather than the personality type most capable of selling.

When is a buyer not really a buyer? How can the best product at the lowest price turn off buyers? Are there anonymous leaders who make the actual buying decisions? As these questions suggest, the reality of buying and selling is often not what it seems. What's more, salespeople often overlook the psychological and emotional factors that figure strongly in buying and selling. By failing to observe these less tangible aspects of selling, a vendor can lose sales without understanding why. In this article, first published in 1982, Thomas V. Bonoma sets up a procedure for analyzing buying decisions and tells sellers how to apply the resulting framework to specific situations. Steps in the procedure include the following. First, identify the actual decision makers. Though it may come as a surprise, power does not correlate perfectly with organizational rank. The author outlines five bases of power and offers six behavioral clues for identifying the real decision makers. Second, determine how buyers view their self-interest. All buyers act selfishly, but they sometimes miscalculate. As a result, diagnosing motivation is one of the most difficult management tasks to do accurately. The author suggests several techniques to determine how buyers choose their own self-interest. Third, gather and apply psychological intelligence. There is no formula for placing sound psychological analyses magically in the sales staff's hands. However, the author offers three guidelines--make sure that sales calls are highly productive and informative, listen to the sales force, and reward rigorous fact gathering, analysis, and execution--to help managers increase sales effectiveness.

Advertising has always targeted a powerful consumer alter ego: that hip, attractive, incredibly popular person just waiting to emerge (with the help of the advertised product) from an all-too-normal self. Now, in cyberspace, consumers are taking the initiative and adopting alter egos that are anything but under wraps. These online personae, called avatars, range from simple but personalized cartoonlike characters used as pictorial signatures in instant messaging to fully developed characters in virtual worlds. And they represent a huge population of "shadow" customers who can be analyzed, segmented, and targeted. The experience of living through another self is most powerful in so-called massively multiplayer online role-playing games, which enable thousands of people to interact simultaneously within the same three-dimensional virtual world. In such settings, participants effectively become the avatars they've created, looking out through their eyes and engaging with other such beings. In this article, which expands upon an item in "The HBR List: Breakthrough Ideas for 2006" (HBR reprint R0602B), the author examines early efforts to market real-world products in virtual worlds. He argues that companies need to look quickly beyond the market itself and think about the potential customer, which may be the avatar rather than its creator. Of course, the human behind the avatar controls the money in the real-world wallet. But the avatar, as a distinct creation of the user's psyche, can influence its creator's purchasing behavior and even make its own purchases of real-world products in the virtual world, deliverable to the user's real-world door. At the least, avatars offer a window into people's hidden preferences and a means for achieving sustained consumer engagement with a brand. The marketing initiatives of the few pathfinding companies working in this area point toward some methods that might be used in the future.

Under Jack Welch's leadership, General Electric's managers applied their imaginations relentlessly to the task of making work more efficient. Jeffrey Immelt succeeded Welch as CEO on September 7, 2001, just in time to see the world change. Corporate scandals and terrorist attacks shook the global economy. In this fundamentally altered context, Immelt knew that GE could not simply cling to its status quo. Harvard Business Review offers the first deep look under the hood of Immelt's GE. In a conversation with editor Tom Stewart, Immelt was quick to point out that he is not leading a revolution; productivity is still important. But the new focus is on achieving organic revenue growth--and plenty of it. Immelt has set the audacious goal of increasing annual revenues from GE's existing businesses at two to three times the rate of global GDP growth. Hitting that target will depend on deep cultural change and, in Immelt's words, "making it personal" for every one of his managers. He's not afraid to pull the necessary levers. He has overseen changes to the company's famed talent management process (now, the highest potential executives are the ones who exhibit "growth leadership traits"); established new performance metrics; invested in new marketing capabilities and R&D resources; and created new mechanisms to flag promising ideas. Immelt expects positive results from each of these moves, but the real payoff comes from combining them in a process design he calls "Execute for Growth." It's vital, he believes, to cast growth as a process because that allows him to tap into a traditional strength of the organization--its process orientation--and put it in the service of the new goal. Meanwhile, investors are reassured to the extent that GE's recent stellar organic growth seems like the reliable and repeatable output of a well-designed process.

The desire to achieve is a major source of strength in business, and it is on the rise. The authors' consulting firm has seen a steady increase in the extent to which achievement motivates managers. There's a dark side to the trend, however. By relentlessly focusing on tasks and goals, an executive or company can damage performance. Overachievers tend to command and coerce, stifling subordinates. Psychologist David McClelland identified three drivers of behavior: achievement, meeting a standard of excellence; affiliation, maintaining close relationships; and power, having an impact on others. He said the power motive comes in two forms: personalized, in which the leader draws strength from controlling people, and socialized, where the leader derives strength from empowering people. Studies show that great charismatic leaders are highly motivated by socialized power. To look at how motives and leadership style affect a group's work climate and performance, the authors studied 21 senior managers at IBM. The leaders who created high-performing and energizing climates got more lasting results by using a broad range of styles, choosing different ones for different circumstances. Rather than order people around, they provided vision, sought buy-in and commitment, and coached. If you're an overachiever seeking to broaden your range, you can study your actions and ask your team, peers, and manager to give you honest feedback. You can adopt specific new behaviors, such as engaging your team in a discussion of how to achieve goals, rather than issuing a set of directives. The company as a whole can play a part, too: Organizations must learn when to draw on the achievement drive and when to rein it in.

During the past 15 years, companies have flocked to a handful of cities in India and Eastern Europe for offshore service functions. As a result, the most popular sites are now overheating: Demand for young professionals is outstripping supply, wages and turnover are soaring, and overburdened infrastructure systems are struggling to serve the explosive growth. The happy news is that the tight labor markets in the well-known hot spots are the exceptions, not the rule. Many attractive alternatives are emerging around the world. According to a McKinsey Global Institute study, more than 90% of the vast and rapidly growing pool of university-educated people suitable for work in multinationals are located outside the current hot spot cities. For instance, Morocco is now home to offshore centers for French and Spanish companies requiring fluent speakers of their home languages. Neighboring Tunisia has used its modern infrastructure, business-friendly regulations, and stable, low-cost workforce to attract companies such as Siemens and Wanadoo. Vietnam offers university graduates who have strong mathematics skills; speak French, English, German, or Russian; and do not demand high wages. The problems facing the hot spots, coupled with the emergence of many more countries able and willing to provide offshore services, mean that picking a site has become more complicated. In choosing a location, companies will have to focus less on low wages and much more on other ways that candidate cities can fulfill their business needs. They will have to be much more rigorous in articulating precisely what they require from an offshore location. That means evaluating their unique needs on a range of dimensions and understanding how alternative locations can meet those needs for the foreseeable future.

Companies that introduce new innovations are the most likely to flourish, so they spend billions of dollars making better products. But studies show that new innovations fail at a staggering rate. While many blame these misses on lackluster products, the reality isn't so simple. The goods that consumers dismiss often do offer improvements over existing ones. So why don't people purchase them? And why do companies keep peddling products that buyers are likely to reject? The answer, says the author, can be found in the brain. New products force consumers to change their behavior, and that has a psychological cost. Many products fail because people irrationally overvalue the benefits of the goods they own over those they don't possess. Executives, meanwhile, overvalue their own innovations. This leads to a serious clash. Studies show, in fact, that there is a mismatch of nine to one between what innovators think consumers want and what consumers truly desire. Fortunately, companies can overcome this disconnect. To start, they can determine where their products fall in a matrix with four categories: easy sells, sure failures, long hauls, and smash hits. Each has a different ratio of product improvement to change required from the consumer. Once businesses know where their products fit into this grid, they can manage the resistance to change. For some innovations, major behavior change is a given. In those cases, companies can either wait for consumers to warm to the product, make the improvement so great that buyers get past their apprehension, or try to eliminate the incumbent product. Firms can also make products that are compatible with incumbent goods, seeking out those who are not yet users of the existing product or finding true believers.

Before the breakup of the Bell System, U.S. telephone companies were permitted by law to ask for security deposits from a small percentage of subscribers. The companies used statistical models to decide which customers were most likely to pay their bills late and, thus, should be charged a deposit, but no one knew whether the models were right. So the Bell companies made a deliberate mistake. They asked for no deposit from nearly 100,000 new customers randomly selected from among those who were considered high risks. Surprisingly, quite a few paid their bills on time. As a result, the companies instituted a smarter screening strategy, which added millions to the Bell System's bottom line. Usually, individuals and organizations go to great lengths to avoid errors. Companies are designed for optimum performance rather than for learning, and mistakes are seen as defects. But as the Bell System example shows, making mistakes--correctly--is a powerful way to accelerate learning and increase competitiveness. If one of a company's fundamental assumptions is wrong, the firm can achieve success more quickly by deliberately making errors than by considering only data that support the assumption. Moreover, executives who apply a conventional, systematic approach to solving a pattern recognition problem are often slower to find a solution than those who test their assumptions by knowingly making mistakes. How do you distinguish between smart mistakes and dumb ones? The authors' consulting firm has developed, and currently uses, a five-step process for identifying constructive mistakes. In one test, the firm assumed that a mistake it was planning to make would cost a significant amount of money, but the opposite happened. By turning assumptions on their heads, the firm created more than $1 million in new business.

Of all the meetings top executives attend in a year, none is more important than the strategy off-site, where the most essential conversations for the future of the business occur. Yet, it is the rare management team that can say its strategy off-site truly changed the way the business is run. At best, participants do some vague direction setting and work on team-building skills; at worst, they write off the retreat as a waste of time and resources. It needn't be like that. From their two decades of experience designing and facilitating strategy off-sites in companies large and small around the world, the authors have distilled a set of best practices that businesses can use to make the most of this annual opportunity. Essentially, the problem with most strategy off-sites is that they're insufficiently structured. People think that if you schedule a meeting, invite top leaders (and, perhaps, an outside expert), and block off units of time to discuss big subjects, the rest will take care of itself. In reality, formlessness leads to aimlessness. Oddly enough, only rigorously designed meetings give rise to truly candid strategy discussions. That rigor starts before the meeting, when the scope of the matters discussed must be limited, the participant list drawn up accordingly, the relevant materials (and only those) sent out and absorbed, and a detailed agenda established. During the meeting, the pace and quality of the conversation can be managed through attention to politics and by using carefully tailored frameworks, decision points, and group exercises. After the meeting, an action plan ensures clear accountability and follow-through. If you and your executive team spend four days a year rafting down rivers together, you'll eventually get good at rafting down rivers. Spend four days a year having well-designed strategy conversations together, and you will transform your annual off-site from a meaningless junket into a genuine turning point for your business.

Just five or six years ago, the term "green building" evoked visions of barefoot, tie-dyed, granola-munching denizens. There's been a large shift in perception. Of course, green buildings are still known for conserving natural resources by, for example, minimizing on-site grading, using alternative materials, and recycling construction waste. But people now see the financial advantages as well. Well-designed green buildings yield lower utility costs, greater employee productivity, less absenteeism, and stronger attraction and retention of workers than standard buildings do. Green materials, mechanical systems, and furnishings have become more widely available and considerably less expensive than they used to be--often cheaper than their standard counterparts. So building green is no longer a pricey experiment; just about any company can do it on a standard budget by following the 10 rules outlined by the author. Reliable building-rating systems like the U.S. Green Building Council's rigorous Leadership in Energy and Environmental Design (LEED) program have done much to underscore the benefits of green construction. LEED evaluates buildings and awards points in several areas, such as water efficiency and indoor environmental quality. Other rating programs include the United Kingdom's Building Research Establishment's Environmental Assessment Method and Australia's Green Star. Green construction is not simply getting more respect; it is rapidly becoming a necessity as corporations push it fully into the mainstream over the next five to 10 years. In fact, the author says, the owners of standard buildings face massive obsolescence. To avoid this problem, they should carry out green renovations. Corporations no longer have an excuse for eschewing environmental and economic sustainability. They have at their disposal tools proven to lower overhead costs, improve productivity, and strengthen the bottom line.

Board directors suffer from conflicts of interest just as managers do and, so, can't be trusted to act in shareholders' interests. The solution is to make directorship a high-profile public service.

A recent study shows that even criminals benefit from being mentored. So why are so few rank-and-file employees paired with their more seasoned colleagues?

Offering customers too many product choices may decrease their sense of well-being.

Labor churn should be taken into account when assessing the costs of doing business in China.

Top management teams whose members don't trust one another perform worse when they're handed unilateral decisions than when they slug it out to reach a consensus.