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SAMA training and certification, Strategic account management process

Creating joint solutions: Drive execution and communicate value (Part 3)

By Phil Styrlund and James Robertson

In the first two posts of this series, we discussed how larger business forces are pushing companies to rethink how they work with their customers, and how the most advanced companies are responding by systematically plumbing their customers for insights they can use to jointly create new sources of business value. In this post, we move on to the fun part: creating joint solutions, driving execution and communicating the value.

Create joint solutions

In this crucial phase, the company and customer:

Agree on and apply an approach to creating joint solutions that leverage the enterprise resources, capabilities, enablers and strengths of each organization
Collaboratively engage in structured ideation and brainstorming to identify “beyond-the-product/-service” enablers and generate potential solutions
Screen solutions and enablers for inclusion, exclusion or further development considering their relevance, impact and feasibility
Align, engage, and commit relevant resources to develop the prioritized solution(s)
Value engineer to optimize the solution for impact and differentiation considering solution components and enablers that can be added, eliminated, elevated or reduced
Prototype and test the solution with emphasis on agile development — testing early and failing fast, at the lowest cost

At the outcome of this phase, both organizations have co-created a joint solution relevant to the prioritized opportunity and have agreed to move ahead to build and validate the business case, communicate compelling value and to pilot and then implement the solution, joint initiative or new business model.

Our proposed approach for creating joint solutions starts with a prioritized customer “CareAbout,” aligns relevant products and services, and integrates enterprise capabilities beyond the core product/service that impact what the customer and/or end-user cares about most.

A structured approach for creating joint solutions

Central to successfully creating joint solutions is the ability of each organization to leverage its enterprise-wide capabilities. Value enablers are defined as any asset, capability, company strength or resource beyond the core product or service offering. While the idea of drawing on relevant cross-business, enterprise resources to co-create solutions with strategic customers sounds logical, fundamental and simple, in our experience it’s not always easy — and not common practice.

For many co-creation initiatives, this is where the “rubber meets the road”: when the joint solutions team engages and requests relevant resources, beyond the product, from across the business. To facilitate access to solution enablers and support their integration into new, “beyond-the-product” offerings, we suggest the following:

Ensure executive-level support and communication of the “grander why,” i.e., why creating value with strategic. customers is central to your company’s strategy and success
Engage and align the “critical crowd,” i.e., relevant internal stakeholders — early in the process — well before you make a specific request to invest their time and resources.
Build a comprehensive list and categorize enabling capabilities around core value themes such as reducing cost, improving efficiencies, growing revenue and elevating the customer experience.
Identify customer and company gaps in capabilities, i.e., value enablers, that are missing yet critical to co-creating value. Determine if these are capabilities you can build, buy or source from elsewhere.
Identify and engage “owners” of key value enablers using the customer’s voice to articulate why these capabilities/resources are important, the impact on the customer’s business, the value to the company, the cost of inaction, the joint solutions roadmap and “what matters next.”
Leverage relevant enablers to co-create solutions using structured brainstorming and creative design thinking to generate concepts and potential solutions.
Move forward to prototype, test and refine your solution.

Communicate value and drive execution

In this phase, the company and customer:

Develop their business case and compelling customer value proposition
Establish and execute their plan to deploy the joint solution/initiative
Agree on a governance framework, project plan, scorecard and review cadence to drive joint initiatives forward, faster
Reflect to capture lessons learned, build on what’s working, and assess opportunities to adjust strategy and scale solutions

Quantifying and communicating compelling, differentiating value to key stakeholders within the customer’s organization, and to the customer’s customer, is fundamental and essential to the practice of co-creating value.

Ultimately, if the value of your solution is not recognized, believed in and accounted for, your company will not be able to capture and realize the value co-created in the joint solutions process.

Value propositions are a well-established, yet often poorly practiced, concept in sales and marketing. Through research we’ve established that fewer than 10 percent of customers see their suppliers “creating real value, and being worthy of a long-term strategic relationship.” As one customer commented on their supplier’s value proposition, “This sounds like brochure-speak.”

We need to ask ourselves the question, “Why do value propositions seldom resonate?” Based on our research and work with clients, we’ve established that when compelling value propositions DO resonate, it is because they:

Focus on what matters most to the customer
Clearly articulate the differentiating value of your solution compared to the best alternative
Are quantified in the customer’s currency
Provide evidence of impact and proof of your company’s ability to deliver

A compelling value proposition will include these characteristics.

We suggest a simple value creation framework to collaboratively develop your compelling, relevant, quantified and differentiating value propositions. The framework provides a non-prescriptive structure for communicating thought and enables authentic articulation of your joint solution’s impact on the customer’s top “CareAbouts.” This framework, structured around four words — them, us, fit and proof — assures relevance and resonance by aligning what you bring (i.e., your solution) with the customer’s major needs and priorities.

Them: What do they care about? We need to truly understand what our customers care about. What keeps them up at night? What are their key issues and concerns? What is important to them? How are they measured, paid, and rewarded?

Us: What do we have? Here’s where you articulate relevant products, services, and value enablers. What pertinent capabilities and assets can you bring, beyond and/or wrapped around core products and services?

Fit: How does what you have impact what’s important to the customer and customer’s customer? Quantify and describe the impact of your solution on the key issues, concerns and value drivers of your customer and customer’s customer. Articulate your solution’s difference compared to the next best alternative.

Proof: Prove it! Provide the examples and evidence of the value you will bring and demonstrate proof that you can deliver and execute.

Applying this framework guides us to create, articulate and quantify customer-centric value propositions that resonate and enable the company and customer to realize value created through the joint solutions process.

Like what you’ve just read and want learn more? The Summit Group facilitates SAMA Academy’s CORE 2 workshop, “Co-creation and quantification of value.” Click here to learn more about SAMA Academy, to see a list of upcoming workshops and to register.

This is the final installment of a three-part series. Read parts one and two.

Customer buy-side perspective, Strategic account management process, Strategic account manager skills and competencies, Value co-creation

How to create financially quantified value propositions in six (actionable!) steps

By Malcolm McDonald, Emeritus Professor of Marketing, Cranfield University School of Management

Our definition of a value proposition is “the translation of the supplier’s offers into monetary terms that demonstrate their contribution to the customer’s profitability.” The key phrase here is “customer profitability,” because if you can prove that dealing with you will make your customer richer, they will buy from you.

Even a cursory glance at the pricing example below from global engineering group SKF illustrates the dramatic impact that is possible as a result of preparing financially quantified value propositions.

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SAMA Research, Strategic account manager skills and competencies

From strategic account management to strategic ecosystem leadership

By Kaj Storbacka and Elisabeth Cornell

Digitalization is both a source of disruption and an enormous opportunity. We argue for the latter. Never has there been a better opening for SAM programs and strategic account managers to take on a bigger role in securing the future of their organizations.

The implications of digitalization are forcing SAM programs — and the SAMs who drive them — to redefine themselves on multiple dimensions. While many traditional SAM traits will remain, the overarching trajectory will see SAMs having to become even more strategic than they are currently.

The practical manifestations of becoming more strategic will take three distinct shapes:

SAMs will take alignment to the next level by becoming drivers of strategic development cross-functionally and inter-organizationally.
Strategic account management will be liberated from the shackles of the seller-buyer dynamic by transforming from account management to ecosystem or stakeholder management.
SAMs will develop new processes and skill sets that will make the future one of leadership, rather than of management.

The role and responsibility of the SAM are transforming from advanced, consultative, insight-based selling focusing on one customer relationship towards orchestration of mutual value creation in a larger ecosystem of organizations. To simplify, one could argue that strategic account management is becoming strategic ecosystem leadership — no longer SAM but SEL.

The elevated SAM’s new and important roles are summarized in diagram below.

From aligning to driving: strategizing

Traditionally, SAM has been viewed as a set of management practices that aim at inter- and intra-organizational alignment: Inter-organizational alignment to jointly (with the customer) develop a value proposition and a process for the delivery of the value proposition…and intra-organizational alignment to create a collaborative, flexible and committed customer-centric culture that enables value creation for the customer and value capture for the firm.

The goal of aligning functions and processes between selling and buying organizations is not disappearing, but the new digital reality means that it is no longer enough. Increasingly, SAMs will need to assume the role of “change champions” who drive change and strategy development.

Being a change champion can take several forms, but key to them all is to not fall into a trap of becoming an administrative and commercial coordinator – someone who spends her/his time on aligning, without having a development trajectory aiming for new value creation. A change champion may drive development in three different ways:

Driving strategy for the selling firm. The strategic account manager needs to be involved not only in executing strategy but also, increasingly, in driving strategic initiatives within his or her own organization. The SAM program should be a vehicle for top management to identify new business and renewal opportunities and to shape the firm’s strategy by providing deep understanding of strategic customers and the overall market.
Driving strategy for the customer. The strategic account manager needs to focus on helping the customer create value in new ways. Sometimes this takes the form of challenging various influencers in the customer organization and suggesting modifications to its present ways of running things. This implies new types of processes and skill sets, where strategic account managers are tasked with becoming “value innovators and transformation agents” by helping customer organizations to strategize.
Driving market development. As markets become more dynamic and malleable, and strategies are less market-driven and more market-driving, the SAM becomes a key market shaper and can, for instance, push the market boundaries by finding customers who are early innovators and then engaging them as lead customers in a process of collective learning. Additionally, facilitating dialogue with customers and other actors in the ecosystem can challenge dominating assumptions about the market, reexamine existing market boundaries and expand market boundaries.

Becoming a driver of strategic development has two consequences. First, it will heighten the importance of value quantification and verification. To drive customers’ strategy or how the market develops, the SAM will need to tap into available data to show the potential for reconfiguring resources in the ecosystem to enable value creation relevant to influencers inside the ecosystem. Using data analytics will be the basis for credibility creation – a necessary foundation on which to build the case for change.

Second, SAM practices will need to be modified to better fit with the idea of driving change. Account planning will need to look beyond the buyer-seller dynamic to become increasingly collaborative. Value propositions will need to be made based on deep insight into influencer and stakeholder situations, and new tools will need to be applied to engage influencers and stakeholders in a collaborative process of co-creation. Digitalization provides tools and techniques for these modifications.

From account to ecosystem: orchestrating

A dramatic development that supports the elevation of SAM is the expansion of the “unit of analysis” – moving focus from the seller-buyer dynamic of strategic accounts to the larger ecosystem. If global accounts that involve hundreds of individuals are viewed as complex, then widening the perspective to include entire ecosystems makes them exponentially more so.

Increasingly, companies face situations where no single firm possesses all the resources or capabilities required to deliver the value required by strategic accounts. As solutions become more complex and components of the solutions become more digital, they are increasingly created and delivered by a “competency system,” or ecosystem — a combination of collaborating industry players.

The consequence is that strategic account management needs to be emancipated from the shackles of the seller-buyer paradigm so that it can focus on generating a better understanding of how resources in the broader ecosystem can be reconfigured to increase resource density for the strategic account. To put it succinctly: SAMs need to become industry players, ecosystem architects and ecosystem orchestrators – all roles that require a new set of skills and new tools.

In an ecosystems view, success is less dependent on the resources that a firm controls than on the resources to which the firm can connect. This flips traditional strategic account management on its head. Rather than start with what the firm controls and look for ways to leverage it, tomorrow’s SAMs will need to begin with the opportunity and then assemble the required resources in its wake. Key will be the ability to orchestrate actors and resources in the larger system to allow the firm to assemble and flexibly reconfigure resources so that value can be created for the entire ecosystem.

To seize opportunities that lie outside the grasp of any one firm, SAMs need to assemble partners, create alliances and enter into joint development efforts in which influencers and stakeholders are guided towards a common vision.

From management to leadership: facilitating

The key to being successful in driving strategic development in a customer organization or in an ecosystem of stakeholders is a simple realization: Change will never happen unless you can engage other individuals in the process. It requires leadership that facilitates others – customers, suppliers, other business partners and sometimes even regulators – to engage in a common change journey.

Moving from a firm-centric view to an ecosystems view implies an acceptance of complexity and uncertainty – and a corresponding loss of control. A successful strategic account manager encourages novelty and innovation not by directing but by allowing; not by stabilizing but by disrupting stifling patterns. In fact, in order to become a driver of change, one must decouple leadership from the individual and distinguish between “leadership”and “leaders.” SAM leadership should be seen as an emergent, interactive and distributed process of learning, influenced and enabled by the SAM process and strategic account managers.

Hence, we are not arguing that strategic account managers need to become better leaders, but rather that they will need to engage in processes of leadership that are characterized by facilitation and rotating leadership:

From self-centric to allocentric innovation. Orchestration of resources and activities in the ecosystem will require strategic account managers to switch from a self-centric, firm-based view to an allocentric (“other-centered”) view in which value is created for the whole market system by integrating resources from an ecosystem of organizations. To seize opportunities outside the firm’s grasp, the SAM will have to facilitate processes that help to assemble partners, create alliances and enter into joint development efforts.
Learn from jazz (i.e., rotating leadership): Part of orchestration relates to improvisation and allowing others to play their solos. Even if a jazz band has a leader, his/her roles are very different from the traditional orchestral conductor. The latter stands alone, high on the podium, and controls the performance with his baton, based on a score. By contrast, in jazz the leader is one of the players. And leadership rotates during solos, as everybody else builds a platform enabling the soloist to shine. Research has shown that rotating leadership — where organizations take turns leading the inter-organizational collaboration in distinct phases — and consensus leadership — where organizations work together, agree to common objectives and follow shared decision making — are associated with higher innovation outcomes than collaborations dominated by a single actor.

Strategic account management traditionally has been a set of primarily managerial practices: to make account-specific plans, execute them and follow up. Simultaneously, the more advanced programs have engaged in activities geared towards impact without authority, acknowledging that SAM programs on the one hand have an element of conflict management in them, but also that strategic account managers can exercise considerable power if they play the game well.

The managerial part of SAM is not going to disappear, but the leadership part will need to be elevated. This does not mean that strategic account managers will need to become more “leaders” than they are today, but rather that the SAM process will need to be designed in such a way that it enables distributed leadership in a collaborative process. Digitalization provides tools for this. Cloud-based collaboration also can, at its best, enable work to be organized more in projects and less in functions, and can enable the formation of flatter organizations. This would facilitate more people to be engaged in leadership.

An exciting time

To reap the benefits of digitalization, we need to ensure that digitalization is not used to engage in more administrative work or building more elaborate account plans. The name of the game is increasingly about added value, co-created between many stakeholders in the ecosystem. And this co-creation puts demands on strategic account managers’ abilities to navigate inside their own company as well as inside the customer’s and other stakeholders’ organizations.

For those who are ready for this new role, these are exciting times! Want to go deeper? Read the entire SAMA research report on which this post is based here.

Kaj Storbacka is professor of Markets and Strategy at the University of Auckland Business School’s Graduate School of Management. Elisabeth Cornell recently retired after nearly two decades at SAMA, most recently as senior knowledge content developer.