customer centric leadership senn thoma yip

7/30/2019 Customer Centric Leadership Senn Thoma Yip

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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

([email protected])

George Yip

([email protected])


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Page 2

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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Page 3

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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Page 4

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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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



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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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Page 9

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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Page 11

Products

Customers

Geographies

Country GeneralManagers

Business Unit/DivisionManagers

Customer GeneralManagers

Conclusion:

Managing All Critical Firm Assets

customer centric leadership senn thoma yip

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