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Customer-centric leadership
Presentation
Christoph Senn
Axel Thoma
Response
Marc Beckmann (BTM alumnus)
2012 conference Bringing Technology to Market:Leading-edge research fo r B2B pract ice
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ESMT / ISBMResearch ImpactingPractice ConferenceApril 27-28, 2012
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Customer-Centric LeadershipThe Rise of the Customer General Manager
Christoph Senn([email protected])
Axel Thoma
George Yip
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New Business Reality
Business-to-business relationships are undergoing majorchange in terms of power balance and collaboration
Customers steadily gain procurement power, are sourcing globallyand strategically, and are concentrating their supplier base
Single company customers grow beyond the size of single countrymarkets
Research* indicates that these customers on average make up30% and more of multinational companies annual sales
Customers become critical financial assets for suppliers becauseof the associated risk with current revenues and value in terms offuture revenue streams
Customers are expecting their preferred suppliers to deliver muchmore than consistent products, services, or prices across theworld preferred suppliers are expected to co-create valuebeyond cost and quality improvements.
*Capon and Ch. Senn, Global Customer Management Programs: How to Make ThemReally Work, California Management Review, 52/2 (2010): 32-55.
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Need for Action
The challenge: Who in the firm is orchestrating joint valuecreation and risk reduction with strategic customers?
Symptoms of failure to manage customers as assets:
You have no one dedicated to bringing the customer strategy intoyour own organization.
One or more of your local market or business units frequently
kills business that would be beneficial to the entire company. You are convinced that you are producing and delivering superior
value but your top customers just do not seem to see it the sameway.
You lack joint definitions and key performance indicators of whatvalue is both for you and your strategic customers.
You have not established a solid and regular strategic dialogueabout co-creating value at the top levels of both firms.
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ESMT / ISBMResearch ImpactingPractice ConferenceApril 27-28, 2012
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Our Research
Over a decade of research, studying customer managers, theperspectives they apply and the results they achieve
Research Stream 1: Exploratory research with 51 multinationalfirms to understand how supplier firms define the scope and depthof their customer asset management activities and how theyportray the customer managers interface role
Research Stream 2: 41 key informant interviews in 11multinational firms to study customer managers activities andskills pertaining to creating value and reducing risks with their keycustomers
Research Stream 3: Case research with 6 multinational firms to
(1) to explore customer asset management activities at theprogram-level (2) to understand customer asset management atthe managerial level and (3) to develop a taxonomy of customerasset management perspectives from the cases
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Key Research Insights (1/3)
Depth of Customer Asset Management
Low(Sales Perspective)
Medium(Relationship Perspective)
High(Network Perspective)
Sc
opeofCustomerA
ssetManagement
V
alueCreation
Value Focus Current share-of-walletand its predicted growth
Future share-of-wallet,customer lifetime value
Wallet dynamics of theextended value network
ValueIdentification
Account reviews withprocurement quarterly
Consultative probing ongoing
Joint strategic dialogueacross the network ongoing
ValueSpecification
Account plan internallydeveloped and agreedupon
Value proposition craftedfor and offered to thecustomer
Business case jointlydeveloped and validatedwith the customer
ValueRealization
Hand-off tooperations/fulfillment
Value-adding oversightregarding operationalexecution
Marshalling resourcesand orchestrating activityinternally and externally
RiskManagem
ent
Risk Focus Current share-of-wallet Customer relationshipand its lifetime value
Total value networkdynamics that could affectthe business
RiskAssessment
Anecdotal information oncompetitiveencroachment
Comprehensive analysisof future trends affectingbuying behavior
Joint and fully transparentexamination of network-wide vulnerabilities
Risk Reduction Extended contracts,preferred pricing,executive outreach
Higher switching costsdue to higher integration,top-to-top engagement
Shared governance overintervention measures
Customer managers either adopt a sales, relationship, ornetwork perspective resulting in different outcomes
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ESMT / ISBMResearch ImpactingPractice ConferenceApril 27-28, 2012
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Key Research Insights (1/3)
Depth of Customer Asset Management
Low(Sales Perspective)
Medium(Relationship Perspective)
High(Network Perspective)
Sc
opeofCustomerA
ssetManagement
V
alueCreation
Value Focus Current share-of-walletand its predicted growth
Future share-of-wallet,customer lifetime value
Wallet dynamics of theextended value network
ValueIdentification
Account reviews withprocurement quarterly
Consultative probing ongoing
Joint strategic dialogueacross the network ongoing
ValueSpecification
Account plan internallydeveloped and agreedupon
Value proposition craftedfor and offered to thecustomer
Business case jointlydeveloped and validatedwith the customer
ValueRealization
Hand-off tooperations/fulfillment
Value-adding oversightregarding operationalexecution
Marshalling resourcesand orchestrating activityinternally and externally
RiskManagem
ent
Risk Focus Current share-of-wallet Customer relationshipand its lifetime value
Total value networkdynamics that could affectthe business
RiskAssessment
Anecdotal information oncompetitiveencroachment
Comprehensive analysisof future trends affectingbuying behavior
Joint and fully transparentexamination of network-wide vulnerabilities
Risk Reduction Extended contracts,preferred pricing,executive outreach
Higher switching costsdue to higher integration,top-to-top engagement
Shared governance overintervention measures
Customer managers either adopt a sales, relationship, ornetwork perspective resulting in different outcomes
CustomerGeneral
Managers
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Customer General Managershave the mandate, mindset, and capabilities to act asvalue orchestrators at the supplier-customer interface,
purposely aligning and engaging both organizations tocreate mutual value and lower risks
Key Research Insights (2/3)
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Key Research Insights (3/3)
Only Customer General Managers fully realize relationship,knowledge, economic and leadership advantages
CGM asBusinessShaper &
Driver
RelationshipAdvantage
EconomicAdvantage
KnowledgeAdvantage
LeadershipAdvantage
Orchestrating multi-level relationshipsand strategic dialogue to win andkeep share-of-mind and trust whichhelp marshal critical resources andobtain timely decisions
Managing the supplier-customerpartnership as dyad in a larger valuesystem that needs to be competitivein economical terms to win againstother entities in the system
Obtaining deep insights intocustomer strategies and business
drivers and translating them intovalue creation and risk reductionmeasures
Rallying support and developingteams for a particular customerasset while fostering customer-
centric thinking and behavior acrossthe organization
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Recommendations to
Management (1/2)Management should address the following three dimensionsto leverage Customer General Managers
Mindset: Acknowledging that not all customers are equal andthose that are of strategic importance to the firm need to betreated as a firms most important assets.
Context: Shaping an environment (i.e., firm culture, values,
objectives) that is conducive to creating value and reducing riskstogether with strategic customers.
Competence: Developing the skills to orchestrate value creationand risk reduction skills that are distinctively different fromtraditional sales roles in terms of strategic, relationship, and
commercial acumen.
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Recommendations to
Management (2/2)The three dimensions of mindset, context, and competencecan be fostered with existing, successful practices
Siemens: Top executive relationship management process for theformulation of customer strategies and initiation of validated valueprojects.
DHL: Customer management guide that clarifies rules of
engagement and conciliation in case of conflicts such as, Whohas the right to set prices for a strategic customer.
Philips: Emphasis on sustaining a constantly evolving CustomerGeneral Manager talent pool, attracting high potentials by makingthis function an essential career step towards a senior
management function within the firm.
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Products
Customers
Geographies
Country GeneralManagers
Business Unit/DivisionManagers
Customer GeneralManagers
Conclusion:
Managing All Critical Firm Assets