By Kunal Bhatia, Senior Global Account Director, Johnson & Johnson
Over the course of this year we’ve experienced tremendous change. Whether it’s the way we work, the way we socialize or the way we get around, the COVID-19 crisis has fundamentally changed pretty much everything. Having shifted mostly to the virtual arena, negotiation is no exception.
As both a global account director AND the parent of young children, I can’t overstate the importance of negotiation skill. Whether it is negotiating a multimillion-dollar contract, compensation particulars with a potential employer or appropriate screen time with your children, strong negotiating acumen is critical for survival.
While virtual negotiations might be perceived as time and cost efficient, if they’re not done right they can hinder social awareness, social interaction and cooperation. Having worked in different countries, cultures and roles, I’m cognizant that myriad nuances must be taken into consideration to promote smoother, less contentions negotiations. However, I have observed that the need to be a skilled negotiator is agnostic of culture, industry, profession and job level and that certain negotiating principles are near universal.
Here are my top five.
#1: Make the first offer. There is a widespread belief that it is wise and strategic to let the other person make the first offer. However, there is virtually no research that supports this claim. In fact, research shows a strong and powerful positive effect of making the first offer.
Admittedly, it does takes courage to make an offer, especially in situations of ambiguity or when you’re in a low-power position. However, first offers have a strong anchoring effect, which exert a strong pull throughout the rest of a negotiation. Even when people know that a particular anchor should not influence their judgments, they are often incapable of resisting its influence. As a result, they insufficiently adjust their counter-offer away from the anchor.
#2: Focus on differences. Conventional wisdom says that we negotiate to overcome the differences that divide us, so we look for win-win agreements by searching for common ground. Common ground is generally a good thing, yet some of the most overlooked sources of value arise from “differences” among the parties.
Differences of interest, priority or hierarchy-of-needs can open the door to unbundling different negotiation elements, leading to outcomes that potentially give each party what it values the most, possibly at the least cost to the other.
#3: Zoom-in on interests, not just issues. Three elements are at generally play in a negotiation:
• Issues: on the table for explicit agreement
• Positions: where each party stands on the issues
• Interests: each party’s underlying concerns.
Don’t just negotiate the issues. Great negotiators understand that the dance of opposing positions is only the surface game, and they focus instead on probing behind their counterpart’s positions to identify their full set of interests at stake. Before any negotiation begins, seek to understand the interests and positions of the other side, and weigh/measure them against your own interests and positions.
#4: Listen. There’s a widely held assumption in the business world that negotiation is mostly about talking and that the best negotiators are the best conversationalists. That view overlooks perhaps the most crucial aspect of the negotiation process: listening. In the words of de Callières, “one of the most necessary qualities in a good negotiator is to be an apt listener.” Your attention should be focused on the words and actions of the other side, your own words and actions, and the effect of your words and actions on the other side.
#5: Help your counterpart sell. The person on the other side of the table might agree that your offer is reasonable, but they will still reject it if they can’t sell it to others in their organization. Your job as a negotiator is not simply to convince the person with whom you’re negotiating but also to help them be an effective ambassador for you when they speak to their boss, their board, their partners or others who have a stake in the outcome. Keep an eye on all of the people who can influence the negotiation on their side and help craft a narrative that will allow your counterpart to get the buy-in he or she needs.
These are some key principles that have helped me negotiate large and complex contracts at work and also keep the peace with my young children at home. One bonus tip from personal experience: To be a good negotiator, you must practice patience.
Patience is difficult, especially when you have a deal that is constrained by a time limit imposed by a leader or a contract expiry. But if you’re impatient or time constrained by a deal that isn’t moving fast enough, you may make unnecessary concessions in order to get it over the finish line. This can have long-term consequences.
It can also be counterproductive, as the other side may be less satisfied with a concession made easily in quickly, as they will perceive it as being of low value. Practicing patience, whether with your customer’s Procurement team or with your children, encourages flexibility and provides time for the other side to accept otherwise-tough choices.
Ulrik Monberg has nearly 20 years of experience in selling and delivering complex digital transformation projects to large international enterprises. He has held various positions in management consulting companies in Scandinavia and the Middle East and is the co-founder of Arpedio, the Danish software firm (and SAMA global technology partner) that helps B2B companies grow their customer relationships and manage complex sales.
Harvey Dunham is Managing Director for Strategy for the Strategic Account Management Association.
Harvey Dunham: So good day, everyone. My name is Harvey Dunham from SAMA. I’m the managing director of marketing and strategy for SAMA and really delighted today to have with us all Ulrik Monberg, who’s the CEO of Arpedio, a company based in Denmark that builds tools, basically, to be able to manage a strategic account and really understand the relationship and manage the relationships with those accounts.
And there’s been a lot of questions and a lot of discussion in the SAMA community about relationship management, the importance of relationship mapping and how to do it. And I thought it would be great to get the perspective of someone who’s built a tool to enable that. And Ulrik comes into this role with many years of management consultancy before he started up his own company and knows large accounts and the complexity of large accounts and has come up with what I think is a simple solution that’s very powerful and elegant in its simplicity, because it allows you to take something complex, the relationship of these large multinational firms, and boil it down to its essence so that you can actually do things about it. So, Ulrik, so happy you could join us. Thank you very much for giving us your time and I look forward to discussing this with you.
Ulrik Monberg: Hey, Harvey. Super happy to be here and really looking forward to just discussing one of my topics closest to heart: how we actually work with this complex stakeholder management so important for the strategic accounts.
• How your customers’ finance teams are dealing with the pandemic (2:08)
• Engaging the Finance team beyond Procurement (5:12)
• Don’t be afraid to bring your own finance people to customer conversations (11:07)
• Underrated: How risk factors into Finance’s analysis of your products and solutions (22:00)
• The four key aspects of cash flow (25:14)
• During discovery process, seek to learn your customer’s KPIs and how they are measured so you can express your benefits in their terms (32:11)
Harvey Dunham: Hello everyone. My name is Harvey Dunham. I’m the manager of strategy and marketing at the Strategic Account Management Association, and I’ve been here for four years, but that’s after a 35-year career with Schneider Electric, where I started in sales, I ended as a global solution VP, and, along the way, I was a SAM and a leader of SAM programs in three different businesses. So the topic we want to discuss today is one that I know is very important to Schneider Electric and to every company that’s practicing strategic account management.
And that subject is the importance of quantifying and validating the value that a SAM is delivering to the customer. And I’m delighted to say that Chris Ferguson is joining us. Chris is the VP of business development and delivery at The Summit Group, and he leads Summit’s practice in quantification and the monetization of value. In his career, he’s worked as an investment banker, and he’s held executive roles both in sales and in finance for startup companies and Fortune 500 companies. So he’s really got the insight, from the sales perspective, from the finance perspective, from the company perspective of how important value quantification is and what it means to run a business.
Chris Ferguson: Thank you, Harvey. We really appreciate our partnership with SAMA.
Harvey Dunham: Maybe before I jump right into the value quantification discussion, there’s a point I’d like to address because it’s so topical and timely, which is the pandemic. Maybe if you could just give our audience some insight into what are finance teams doing right now in the face of the pandemic, and how are they helping their companies navigate through this?
With coronavirus spreading across the globe at lightning speed, no one is immune — from the disease or its effects. SAMA’s Director of Customer Solutions, Chris Jensen, was a sector head at global logistics company DHL on the morning of Sept. 11. He spoke recently with SAMA’s editor-in-chief, Nicolas Zimmerman, to share what he learned from the experience about helping customers through crisis.
Nicolas Zimmerman: So Chris Jensen, we’re in a kind of crazy, unpredictable time right now. Things are changing seemingly by the hour. We should I think timestamp this. Today is, what is it, March 21st, I believe March 21st, 2020. And we’re talking because when most people think of a “Black Swan” event, that kind of changes everything overnight, most people think of 9/11. So if you could, can you put us in place and tell us sort of where you were on, say, September 10th, 2001, and give a little bit about your background too?
Chris Jensen: Absolutely. Thanks, Nicolas. So September 10th was a Monday, and I at the time was sector head for the engineering and manufacturing sector at DHL global forwarding at the time.
I was 41 years in my entire career with DHL. But at that time, I was the sector head there and I was also managing a couple of strategic accounts, Caterpillar and John Deere, namely. But also, had a team of individuals that were also working with their customers. I had been in that role for about three years at that time. And before that I was a SAM on a couple of customers starting in 1994. And before that I was at a variety of the sales, district, sales, field sales, and then before that, operations — almost every kind of level inside of one of the biggest logistics forwarding companies in the world.
So on the 10th was a normal day in the office. We always had our sales calls team meetings, you know, business as usual. If I remember at the time it was actually quite busy. Coming into September, the beginning, of the quarter there a little bit, and so kind of…totally business as usual.
Is there any single skill that has a bigger impact on our personal AND professional lives than decision making? I would argue no. And yet, how much time do we actually spend thinking about how we go about making decisions (large and small)?
As someone working with your company’s largest and most important accounts, you are responsible for making decisions that affect your company’s bottom line, your colleagues’ livelihoods, and your own personal and professional reputation.
While you wouldn’t have gotten to where you are today without some inborn decision-making acuity, there isn’t a person alive who wouldn’t benefit from examining how they go about making decisions and then seeing where they can tinker with their process.
“Making better decisions isn’t one skill but rather a series of tools and frameworks,” writes Shane Parrish, a former intelligence analyst and the founder of the consistently brilliant Farnam Street blog. “What distinguishes consistently good decision makers from poor ones is a series of diverse mental frameworks and tools (as well as relevant specific information).”
This post is about decision making, but if you are interested in consistently amazing, enlightening and thought-provoking articles on everything from learning more quickly to being more creative. Parrish has a voracious, omnivorous mind, so it’s no wonder why 261,000 people (including coaches, athletes and CEOs) subscribe to his newsletter.
We fail to learn. “We all know the person that has 20 years of experience but it’s really the same year over and over,” Parrish writes. “If we don’t understand how we learn, we’re likely to make the same mistakes over and over.”
Looking good, not doing good. We are programmed to do what is easy over what is right. Writes Parrish: “We unconsciously make choices based on optics, politics, and defendability. We hate criticism and seek the validation of our peers and superiors.”
When approaching any decision, Parrish recommends a simple formula: intelligent preparation (which, if you work in strategic accounts, is probably second-nature) paired with looking at your decision through any number of time-tested, multidisciplinary frameworks. He goes on to list five of his favorite:
The map is not the territory. “The map of reality is not reality. Even the best maps…are reductions of what they represent.”
Circle of competence. “If you know what you understand, you know where you have an edge over others. When you are honest about where your knowledge is lacking you know where you are vulnerable and where you can improve.”
First principles thinking. “Reasoning from first principles…is a tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remains are the essentials. If you know the first principles of something, you can build the rest of your knowledge around them to produce something new.”
Thought experiment. “Thought experiments can be defined as ‘devices of the imagination used to investigate the nature of things.’ They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions.”
Second-order thinking. “Second-order thinking is thinking farther ahead and thinking holistically. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well. Failing to consider the second and third order effects can unleash disaster.
By Harvey Dunham, Managing Director of Business Development, SAMA
When the holidays approach, and my thoughts drift toward the special circumstance of having three generations of the Dunham family together in one place, I allow myself the occasional indulgence of waxing philosophical. Lately, I’ve been thinking about this question: What is the higher purpose of a strategic account manager?
Is it, as Milton Friedman would surely espouse, simply to create profit for your company’s shareholders? To make rich guys richer, in other words? As someone with a long career in sales — first as a fresh-out-of-the-Coast Guard salesman for Schneider Electric and then later as a district manager, strategic account manager and eventually country president — who is gracefully (I think) approaching retirement, my answer has aged and settled over time. And if you asked me now, “What is the higher purpose of the SAM?” I would say this:
The very best SAMs are entrepreneurs who not only create jobs but quite literally create the future.
Is it hokey? Maybe. But like I said, the holidays put me in a sentimental frame of mind. But I’m thinking about a conversation I had not too long ago with a strategic account manager whose name and company I won’t mention because it’s not nearly as important as the work he’s doing. The context of the conversation was this man’s final review before being conferred the official designation of SAMA Certified Strategic Account Manager (CSAM).
The purpose of the final review (and, indeed, of the CSAM program itself) is to demonstrate that the candidate has not only completed all of his or her coursework but is applying what they have learned to their actual strategic customers. (Lest this turn into a sly advertisement for SAMA certification, I won’t say more.) For his final review, the candidate, who works for a global pharmaceutical company, enumerated four initiatives he is currently working on for his customer, a large institutional customer.
We live in turbulent times, and there are all kinds of reasons – especially for those inclined to look for them – to be cynical. But here is a guy with a crystal clear vision of what he is doing and why he is doing it — to create a better existence for doctors and nurses, for the families of patients and, most importantly, for patients themselves. Here is a guy who is pouring his heart and soul into creating a better future for people who are suffering through the most painful and difficult human experiences.
As I was listening to this exemplary strategic account manager recount how his solution is directly helping patients suffering from cancer, I felt an incredible pride for the work that SAMA does training and educating strategic account managers — who are literally out there making the world a better place.
It got me thinking about my own proudest moments as a strategic account manager. In some ways, it was just another deal — the kind a SAM closes, pats himself on the back for, has a few beers with the team to celebrate and then forgets about because there’s always more work to be done. I’d been brought into reanimate a relationship that had been transactional before it had fallen off a cliff. Long story short, we went from selling a few random products into this giant manufacturer to being the single-source supplier in our category.
Overnight, we went from darkness into light. Like most sales guys with more than a few notches in my belt, I find bragging abhorrent. I only mention this career highlight because it represents the moment I realized that I wasn’t just selling products — I was creating jobs, sometimes hundreds of them, that helped sustain families. All those millions (or even billions) of dollars’ worth of products had to be loaded into a truck, installed, tested and commissioned — you get the picture.
The SAM job is a difficult one. No doubt about it. If you’re doing it right, you aren’t sitting around waiting for someone to identify a need before springing into action. You’re starting with a blank piece of paper, developing initiatives that create real value for you AND your customer, and then you’re marshaling the resources — internal and external — to bring it all together.
So while being a SAM (or KAM or GAM) is undoubtedly one of the hardest jobs there is, I believe it’s also one of the most rewarding. And that’s why I try to inspire the SAMs I interact with to aspire to be not just good SAMs but great ones. Because great SAMs are actively creating a better tomorrow, one deal at a time!
At SAMA we strive to be innovative in how we deliver value to our customers, and that means experimenting with different formats and media for learning, training and networking. That’s why we have partnered with Edmund Bradford, a former global account manager who is now an author, educator and game designer. He is the managing director of Market2Win and developer of SAM2Win, the world’s first online game that teaches strategic account management.
SAMA Assistant Director of Knowledge & Training Dave Schweizer recently sat down with Edmund to discuss the SAM2Win training/simulation, which SAMA will offer beginning in November.Their interview has been lightly edited and condensed. You can listen to the entire interview here:
Dave Schweizer: Thank you for joining us, Ed. So what exactly is the SAM2Win program?
Edmund Bradford: As far as I know, it’s the only game in the world that actually teaches strategic account management, rather than selling. I think the best way to think about it is it’s kind of like a flight simulator for account managers and teams based on over 30 years of research and experience from myself and my colleagues, both practitioners and academics. In the simulation, we have five global companies all competing for the business of one complex global account. Each company typically has about one to five players, who act as the account manager or act as an account team if they’re playing as a team. And the participants or the teams play against each other — not against the computer — with all the fun and irrational behavior that generates from that. And simply, the winner is the company that makes the most profit at the end.
DS: In the simulation, participants can make certain decisions. What kind of decisions can they make, and how do they enter those?
EB: We pose three big questions to the participants. The first big question is “Where should we compete in the account?” In other words, which sales opportunities are the best for the future? We want them to be future-oriented in this. So, “Where should we compete in the account?” Sales opportunities, in other words.
Second question is “How do we beat the competition?” Which, in other words, really means, “How do we craft superior value propositions that fit current and future needs of customers and that will also beat any other competitor offers out there?”
And finally, the third question that they need to think about is, “When do we want to see the results?” So do we have lots of time in front of us, or do we need some results here in this particular period that will affect the kind of decisions the account makes? So it’s sales opportunities within this account, how to invest to generate the best customer value, share of wallet and profit (both for now and for the future) and how to invest to outsmart the competition.
We also look at the decisions, and analyze those decisions and provide feedback on how they’re making those decisions. So we give course correction guidance as we go through the simulation.
DS: How are the outcomes of each decision calculated?
EB: We typically run about five decision rounds in the simulation. When each decision round closes, our software engine compares all the decisions made by the different companies, and the companies that grow the fastest are those that invested most effectively in creating the best value propositions and the best sales opportunities.
So it’s all about getting your strategy right, getting the tactics right for how you are generating value and making sure that your decisions and your thinking are better than the competition. It looks at all the decisions from all the teams and says, “Who’s making the best decisions from the customer point of view and, therefore, from a customer point of view, where would you place your business?”
DS: Sounds like a very complicated thing to develop.
EB: I would say probably 10 years of real experience of creating and supporting account programs in companies went into it. Even before we put the software together, there was a lot of research and experience that went into it because we really wanted to get it right.
DS: That’s very impressive. So what knowledge can the participants expect to gain from the simulation?
EB: Well, there’s a huge amount, both in terms of knowledge and skills. First, they learn how to apply a good needs-based segmentation to the account. One of the first real wins is for them to go back to their account plans, get back to their strategic account analysis and say to themselves, “How should we divide up this account? Maybe there are cross-division, cross-country needs, which are similar. We just need to find that ‘golden vein’ of needs that run across the whole account.”
Second, we teach some great tools about how to pick the best sales opportunities for the future. So “Where should we focus our spend effort to generate the best long-term relationship with the account for the future?”
Third, it’s about developing superior value propositions — understanding what value actually means, crafting value propositions that are superior to anything the competitors are providing and making sure that we communicate that to customers.
Fourth, I think it’s about just getting better strategic customer analysis. For example, in the simulation, there’s a big procurement piece. With our good mutual friend David Atkinson, we’ve put a lot of good thoughts into the simulation around understanding procurement and how to align our account strategy with the procurement strategy — seeing how we’re positioned in the eyes of Procurement, both as a supplier and also in terms of our category of spend.
Those are the big knowledge areas, but I would also say: learning the art of strategic focus. So many account plans have this idea that we’re going to compete everywhere, against all competitors, in all sales opportunities, equally all of the time. And every time there’s an RFP coming up, we’re going to leap on it with all our resources. And the trouble is there’s not enough time to understand what the genuine needs are, and so that leads to shallow value propositions, very poor co-development of value and then stressed, unhappy and dissatisfied customers.
DS: Fantastic. How much time per week should participants expect to allocate for this program?
EB: You’re talking really about two days of effort over 16 weeks, and that equates to roughly about one-and-a-half hours per week. So it’s not nothing, but neither is it going to take over your life.
DS: How else do participants benefit from the simulation?
EB: Well, I’m glad you asked, Dave. First, it’s about account leadership skills, particularly around strategic thinking and execution. Participants become good at sort of rising above the details to understand the future, to not get buried in all the data. They become basically good at sort of, you know, seeing the companies play, understanding their future, recognizing their company’s place in that future and learning how to get there. So they are proactively aiming their company at a good place in the future rather than being dragged into bad places by the customer or by the competition.
Second, I think the benefit is that players are free to fail. The simulation allows an opportunity to experiment and take risks in a safe environment. And the nice thing is that no one gets sacked from playing the simulation. You learn from the mistakes and think about how you can apply the lessons learned to real life.
Third, players become very good at thinking about the issues and putting account plans together.
An unexpected result that I’ve seen: When we get people from different functional backgrounds, we see better alignment because – whether they’re coming from Finance or Logistics or Marketing – playing the simulation, they get a better understanding of what account management is all about. People end up sharing a common language. Some of the best games I’ve seen have been from cross-functional teams from the same organization.
DS: Do you have any tips on how to win?
EB: Do you watch “The Great British Bake Off”? Well, if so, you know Paul Hollywood. He’s asked, “Any final tips before the competitors go out there and bake their cakes?” I’m a little like Paul: I don’t want to give too much away. But I’ll say two things. Number one: Do your homework. Number two: If you’re losing, it’s probably because you’ve misdiagnosed the real problem. I’ll just leave it at that.
Boston Consulting Group recently released a three-part series on digital maturity in the manufacturing sector. SAMA reached out to series co-author Jonathan Van Wyck, a partner and managing director at BCG, to ask him what suppliers can do to make themselves indispensable to their strategic customers’ digital transformation journeys. This conversation has been lightly edited for length and clarity.
SAMA: I think people may have a narrow view of what we’re talking about when we talk about digitization. Can you lay out the full scope of what we mean by digitization?
JVW: When we think about digital transformation broadly, we think about a couple of different avenues. There’s one leg of it that’s saying, “How do you reengineer the customer experience, leveraging digital technologies, to support the projects and products you are offering?” The second is, “How do you actually leverage digitization as an opportunity to drive new growth and launch new solutions and new businesses?” And then there’s digitizing your internal operations, which is taking the internal lens and asking, “How do I take my manufacturing process, my supply chain, my customer service and support, and my sales processes, and leverage digital technologies to reengineer — either at a lower cost or to drive more effectiveness — those internal processes?” We have a framework off the shelf on that if that’s helpful to share.
SAMA : Can you talk about what you set out to study and what you learned?
JVW: What we’ve been seeing is that everybody’s talking about digital operations, and everyone feels a high degree of conviction that this is the future. But when you take that and contrast it with the progress that we see with our clients, there’s a disconnect. What we’ve found is that they’re taking almost a project-based approach to digitization, where they’re working with individual vendors who have a cool technology to pilot it in a specific location. Or they have an internal project around some component of digital — a plant scheduling tool or something like that — but they’re not able to drive it at scale and really capture the full benefit.
So we took a step back and started thinking about what we have learned from doing this with a bunch of companies to sort of bridge that gap between what we talk about as the opportunity versus the reality of where companies are — and then move from point solutions and individual projects or applications to actually driving value at scale.
SAMA: So what you’re saying is, there are a lot of pilot projects out there that can prove themselves out, but the companies, for any of a number of reasons, don’t manage to scale the solution and really capture the full value.
JVW: Exactly. When you look at past industrial revolutions, I’m sure it took the same stages in development. But the challenge here is that the way of working is so fundamentally different from traditional approaches. We’re talking about another revolution in terms of the types of talent, way of working from an agile standpoint — but also building the infrastructure to be able to support these use cases. I see our third paper as the most critical one. It’s about the organization and way of working to drive this at scale, which is ultimately what I think is the issue.
It’s not like companies don’t have great ideas, and it’s not like companies don’t have an idea of what the right use cases are. It’s really about, “How do you actually build the organizational capability, the funding model and the talent to be able to do this?”
SAMA: I’m thinking about the manufacturing environment, in which great plants are typically run by very seasoned people who have been doing this forever. And to do a pilot project, you’ve got to bring in data scientists and a bunch of under-30 digital natives who can actually make it happen.
JVW: Also, company processes are oriented towards waterfall I.T. projects and are not set up to support this type of innovation. Because a traditional funding model is, “Submit a capital request with your full plan, the milestones all laid out, the exact financial investment that you’re looking for from the company, and then we’ll have a meeting with our senior leadership and debate it, probably cut your funding a little bit, and then approve it.” Whereas here, you don’t actually know the challenges, and actually laying out a full roadmap and waterfall set of milestones is actually counterproductive to what you actually need to do to experiment quickly, which is to assume that 25 percent of what you do is really going to work. So you do the 75 percent that will fail very cheaply, and then rapidly scale the 25 percent that does work. You just don’t know all that stuff in advance, and so it doesn’t fit with traditional processes.
So there’s a challenge from a talent standpoint, but I don’t think it’s just about hiring more people under 30. It’s about thinking about your internal processes and, in some cases, modifying your approach to how you drive digital operations. And this applies more broadly, not just within operations but to your traditional funding, project management and approval.
SAMA: So to a certain extent, you have to invest and pray and then say, “OK. How can we take this 25% percent [that’s actually working] and really put more effort into those and get more benefits faster?”
JVW: You just need to set it up to say, “We’re going to have an outside-in view of what the opportunity is. And we’ll have a long list of use cases, roughly mapped to that opportunity, and an idea of what that’s likely going to cost.” And then in your next meeting, a month later, you’re going to have a much more refined view. And then a month later, it will be even more refined.
So it’s a journey from more ambiguity to more specificity, but you just can’t shortcut that journey and have the specificity at the beginning.
That’s really challenging for companies that are used to having that specificity, which in reality is false specificity because projects overrun 80 percent of the time and take longer, et cetera. It’s a mindset shift.
SAMA: In my career, we had a hurdle rate that you had to exceed. If your project didn’t have better than a two-year ROI and proven, financially sound waterfall, you didn’t even submit the project because it was never going to get funded. Is that mentality bumping up against how you have to approach the digitization project?
JVW: There is a set of infrastructure that needs to be put in place to support use cases: You need to set up a cloud infrastructure. You need to build a data lake. You need to invest in a certain number of technologies, et cetera.
The challenge is where I’ve seen companies burdening those first set of use cases with the cost of all that infrastructure, even though that infrastructure could support 100 use cases.
This problem can be unlocked by doing it at scale and having conviction around the strategic relevance for your overall company and the total value on the table, versus taking it piecemeal and starting with three or four use cases in one factory.
SAMA: In a normal plant environment, there’s a plant manager, there’s a division leader, there’s probably some subject-matter experts, et cetera. But with this kind of thing, it sounds like you need to go above that traditional manufacturing decision-making process and get C-level buy-in?
JVW: Typically it’s at the C-level.
SAMA: From the supplier perspective, do you see them being a catalyst by bringing some of these ideas forward, or is it all internal to the customer itself?
JVW: I think the more stakeholders you can involve in the ideation process, the better. I’m a big proponent of involving suppliers, but I like to first recommend that companies internally align on what the pain points are and a high-level view of what a solution could look like before they go down that path.
SAMA: Are there any kind of best practices that you see good suppliers doing to really help this process work?
JVW: Recognizing that the process needs to start with the pain points and value levers. Don’t lead with your technologies, but facilitate a workshop around a specific process that’s relevant to them. That can be really powerful. It’s also about being open to collaboration and sharing of data. Because one of the other challenges I see is that it’s so hard to share data across companies.
SAMA: Are there any observations on who typically leads that so-called ecosystem to create a common data lake? Do you sometimes see a supplier that takes that on for the manufacturing company to help pull all these disparate entities together?
JVW: It’s typically a manufacturer, but wherever the supplier has the scale I don’t see why they couldn’t take the lead in their specific swim lane.
SAMA: We teach our customers to say, “It takes a village to solve the problem, and if you can become the leader of that village, there’s a lot of value.“
JVW: I think that’s the next frontier: How do you digitize the value chain and start working with your suppliers and working with your customers to take waste out of the system looking holistically? Whoever can lead that ecosystem is in a pretty interesting position.
SAMA: Say I’m the strategic account manager for 3M going into a factory and trying to bring value to them. Any advice you’d give?
JVW: First, I think it’s so much easier to do that if you have a business model or an offering where you’re a solution provider versus an individual product provider. That’s one piece. And then the other piece is, map out the customer journey associated with your product or solution, and what that looks like — where the frictions or pain points are along that journey. If you don’t have that, then you’re not going to be able to add value to your customer. Having that approach embedded into the strategic account playbook becomes really valuable because it allows you to have a different level of discourse with your customers.
SAMA: Say you’re a SAM who just got assigned to a new customer. Is there a typical spot that you might want to start inside your customer, or is that really company by company, organization by organization?
JVW: It is very case by case. Some organizations will have a manufacturing strategist. Some may have a digital organization already set up. Some may be decentralized, with the plant manager driving the decision making. Some may be more centralized. That’s why you need to be able to map the organization of your customer and understand where the decision makers are.
SAMA: Typically, when this first meeting happens, is the customer expecting the supplier to bring people that have subject-matter expertise?
JVW: Yes, you can also look horizontally — because you may not have the whole scope of technology required to solve this pain point.
You need to be humble in recognizing that you may not have the capabilities to solve the entire pain point, and so you may need to work with your peers to build a solution that you can then bring to your customer.
And if you’re the one actually orchestrating that, it can be really value-additive, versus just bringing your customer a specific technology.
Say for example that you have the best programmable logical controllers, and then maybe you partner with the analytics provider who does the analysis on top of that, and then — oh by the way — you partner with a robotics company. I haven’t seen many suppliers do this effectively, but that could be very differentiating to be able to offer as the supplier. And then, by the way, you’re the one with the overall solution, versus [just being] one piece of it. That’s a much more powerful position to be in from a margin standpoint.
You can find BCG’s how-to guide to digitization here. Parts two and three can be found here and here.
The academics Thomas Steenburgh and Michael Ahearne set out recentlyto uncover why companies are so much more successful at developing innovations than they are at commercializing them. To get answers, they undertook a thorough review of the academic literature, conducted one-on-one interviews and led several formal studies with B2B companies. You can read a summary of their results in Harvard Business Review here.The following interview took place earlier this year between Steenburgh, of the University of Virginia’s Darden School of Business, and SAMA’s editors.
SAMA: Why did you set out to investigate new product sales specifically? Why are they so important?
Steenburgh: My observation is that if you look at where companies spend their money, new products always take a lot of energy. If you look at the types of organizational structures they use, they’ll have market development boards, product boards. No money gets put into sales. And yet the sales process for new products is totally different because you’re asking people to do a very different thing. We know most new product launches fail, so we wanted to find out: Why does it work that way?
There’s a McKinsey study that asked leadership teams about their confidence across a range of processes. Their confidence in developing beta testers is very high. But developing pilot users post-launch? No confidence. So as soon as you go to commercialize your new product, you have no idea what the customer wants? It’s craziness.
SAMA: Was there anything in your findings that surprised you?
Steenburgh: Probably the biggest challenge sales reps have when selling new products is emotional — managing your emotions, managing your perception of the product. My experience with salespeople is they have thick skins. But it turns out that with new products there are a lot of challenges that need to be addressed that you don’t have with existing products.
SAMA: Like what?
Steenburgh: The only training that gets done these days is product training: features and benefits. One manager told us, “When I talk to my reps, they know the product well enough, and they know the market well enough. But when I ask them, ‘Why aren’t you going in and selling the product?’ It’s because they don’t want to appear stupid.” The market is moving quickly, and they have a psychological need to be the expert in the market, and they just didn’t feel confident in their own abilities.
SAMA: You’re asking the customer to be a guinea pig, especially if it’s a brand new product. The reps are asking themselves, “Do I really want to risk my reputation with this customer I’ve worked so hard to create a relationship with?”
Steenburgh: We looked at differences in behavior between reps who were successful with new product sales versus ones who weren’t. One of the things the successful ones do is they anticipated that the challenges in the buying process would occur later in the sale, and they developed a plan to manage customer expectations at that time. Also, the reps who are really good at selling new products are much better at figuring out which customers to target and which to avoid.
SAMA: In your HBR article, you write that the best companies customize their training to meet individual needs and tie assessments to performance. Can you talk about why this is so critical?
Steenburgh: We did a couple of studies with companies where they did competency mapping, and it’s interesting. It depends on company sophistication. Some companies don’t do anything. Some will develop competency maps but never tie anything back to behavior. The better companies create job descriptions from the competency maps, and then they measure their reps through competency assessments and use this to drive continual improvement. They may try to look at quantitative performance metrics like revenue, profitability and customer satisfaction, and tie it to the competency assessments to give them a better sense of how to write job descriptions.
A step further would be to create company-wide training based on those findings. For example: I see reps need to have a growth mindset, so can I institute some training that speaks to this? Now, the very best companies go one step further and say, “I’m going to put this into my daily coaching process.” They measure reps individual by individual and then develop a coaching process that helps people in the dimensions that matter — and I know what dimensions matter because I tie the competencies back to performance.
We studied five companies and mapped competencies back to what actually worked in the market, i.e., what created the most revenue from new products, and if I were to advise companies on how to use this, I would tell them this: Use some kind of competency assessment, and introduce individual coaching to help reps become more open minded, to cultivate a growth mindset, to develop more long-term thinking and to become more adaptable. But it has to be a constant coaching process.
SAMA: In my own career, I found that solutions needed to be sold at a much higher level at the customer.
Steenburgh: Selling new products is very analogous to making the switch from selling products to selling solutions. It’s change management. A lot of companies think they can solve this primarily through incentives, but incentives alone won’t fix it. The behavior change is too big. Salespeople get excited at the beginning [when selling new products], but they don’t have the structure or support to make it work in the long run.
SAMA: And these are smart companies! Yet I see company after company that invests 5 or 6 percent in R&D every year – an enormous amount of money – but when it comes time to roll something into the marketplace, especially in B2B, the product just kind of “escapes.”
Steenburgh: I think the main difference with B2C is you don’t have as complex a decision-making unit. If you buy a car, that’s a complex decision, but it’s typically just two people. In B2B, you have a lot of players and that just makes it much more complex.
SAMA: Where do soft skills fit in?
Steenburgh: It’s definitely the emotional side, the psychological side, that doesn’t get addressed in these sales. The easy thing for me to do is product training because that’s what I know. It’s easier to talk about “speeds and feeds,” but it’s much harder to go out to the customer and talk about how a new product will change the game because there will be way more “window shopping.”
What I mean by that is that customers have an incentive to engage with you to learn about what’s going on in the marketplace. That’s not your incentive as a seller. If I call on 100 customers, five will be interested. It feels good, but 95% of them are going to be wasting my time. It’s seductive when you’re selling new products to be getting good feedback, but it evaporates in the long run. So it’s the soft side you need in order to read people, to figure out which customers will be genuinely interested and to handle rejection.
One thing that jumped out at me in our research is that businesses feel strongly about having great processes on capital approvals and project approvals for developing new products. But when it comes to having the right organizational structure in place to support bringing new products to market…having the right H.R. support network in place, for instance…they don’t feel so confident.
SAMA: 3M has always fascinated me because they are one of the few traditional B2B manufacturing companies, and they say that every year they aspire for 30 percent of their next year’s revenue to come from new product sales. Have they figured out something no one else has?
Steenburgh: There are companies that do it better than others, but I think it’s mostly a management challenge. If 3M makes that their mantra, then by putting that number out there it attracts a certain type of talent and it reinforces that there’s no escape, so to speak. It absolutely has to be part of the culture.
SAMA: We get asked a lot about the Challenger sales model and whether it can co-exist with SAMA’s more co-creative approach to creating value. What we’ve learned is that the Challenger is good — if you’re on the outside looking in. But if you’re the incumbent, you’re almost playing on the customer’s desire to stay with the status quo, where it’s better to not use that confrontational/challenging approach. It speaks to this whole not to sell the new product, less risky not to disrupt the customer.
Steenburgh: What you’re asking the reps to do is be a change agent externally in a situation where they have no control. They’re all leading without authority. So if you think change management is difficult internally, just imagine the external challenge.
One of the things we say in the article is that SAM can be a great place for establishing the right learning processes on the sales side. We know that co-creation of value is important, but mostly on the product development side. What we’ve seen is that if you can use some of those SAMs to help learn about the internal sales processes that they can be very helpful in designing a process for new product selling. It’s like a coach for the mainline rep. Management is much more likely to take a long-term view of strategic accounts than for mainline accounts. With new product selling, it’s going to take me a long time to sell. I need consistency, need to know how the buyer buys, and I need to know I’m not going to be jerked around. I can give the product the time it needs. Those relationships matter. The long-term focus mattes. It’s the right part of the organization to establish a beachhead.
SAMA: And based on the relationships they have, the customers are more willing to take that risk as well.
Steenburgh: That’s right. There’s that trust. It should be an easier leap for the customer to make on a new product if I’m a strategic customer, because what it means is that — if the vendor is really sophisticated — we’re having high-level quarterly meetings. The SAM might even have the CEO’s ear, or someone on the executive board. So if something goes wrong, I know I can raise the alarm and something is going to happen. Whereas, if I’m not a strategic account, if this thing breaks what am I going to do?
But it can cut both ways. If you have a great relationship, you don’t want to put it at risk. You need to have the culture of, “This is what we do. We’re going to work with you to get this right, and we’ll both be on the cutting edge together.” Those are the types of relationships you want to develop for new product sales.
SAMA: At SAMA we very much believe in competency assessments and their necessity for turning good SAMs into great SAMs. And we’ve seen research showing that the best SAMs can outperform their peers by a factor of three or more.
Steenburgh: I don’t have public data around individual performance, but I recall a study or a book showing the effectiveness of Net Promoter Scores across a wide variety of industries, and the results showed that the difference between average and below average is a 2x bump in revenue and profitability. And then the difference between average and superior was a 6x jump. In other words, the difference between poor performers and the very best performers was a factor of about 12. People that are really effective in this, they’re off the charts.
Want to learn how SAMA’s tailored, competency-driven trainingcan transform your good strategic account managers into great ones? Click here to learn about our training philosophy, our Certified Strategic Account Manager (CSAM) program, and to see a schedule of upcoming training academies.
As soon as I was appointed strategic account program vice president for Schneider Electric, the global energy management and automation firm, my boss asked me a simple question, “Eric, what is the main preoccupation keeping you awake at night?” I didn’t even take one second to think about it, the answer was so obvious: “For sure, the internal alignment of the company!”
Even if your program is very mature and well structured, it will always be a challenge to transform a great account strategy in the SAM’s computer into an operational plan capable of mobilizing all the energies of your company to be at the disposal of the performance of your account. Rather than a strict process, I propose guidelines and an eight-step methodology. If you tick all of these eight boxes and respect the chronology, you’ll be on your way to your goal.