mba final project
TRANSCRIPT
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How to successfully implement strategic account management
Christopher John Cowley
MBA distance learning final project
Student ID: A001215635
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Words:6498
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1. Executive summary
This is a strategic management project, focused on practical implementation of
strategy. The research purpose is to develop a best-practise strategic account
management (SAM) implementation framework to be used by Varian Medical
Systems Inc. This framework will be used to execute the SAM strategy in local
entities around the world.
A small, heterogeneous sample of primary qualitative and quantitative data was
collected from a population of global organizations which have adopted SAM in their
Australian entities. Qualitative data collected by interview to develop the framework
and questions for quantitative data collection. Quantitative data was collected to
increase confidence in results.
Although the research was limited, data gathered is well supported by literature
review. This gives confidence in the independent variables identified as primary
contributors to successful SAM implementation. Adopting the developed framework
will increase probability of successful SAM implementation in local entities.
Delivering performance and changing organizational culture; identified as primary
beneficiaries of successful SAM implementation. Using the developed framework
Varian can deploy best-practise SAM in its domestic marketplaces. This will drive
revenue through the delivery of customer value.
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2. Contents
1. Executive summary................................................................................................2
2. Contents................................................................................................................3
3. Introduction...........................................................................................................6
3.1. Background.....................................................................................................6
3.2. Previous research............................................................................................6
3.3. Research gaps.................................................................................................7
3.4. Research purpose...........................................................................................7
3.4.1. Figure 1. Star Model.................................................................................8
4. Project outline.......................................................................................................9
4.1. Orientation......................................................................................................9
4.2. Data collection and analysis............................................................................9
4.3. Key findings.....................................................................................................9
4.4. Key implications..............................................................................................9
4.5. Conclusion.......................................................................................................9
5. Orientation..........................................................................................................10
5.1. Literature review...........................................................................................10
5.1.1. Table 1. Star-model categorization of the 10 task of the strategic
execution process................................................................................................10
5.1.2. Strategy and capabilities........................................................................11
5.1.3. Structure................................................................................................11
5.1.4. People....................................................................................................12
5.1.5. Process...................................................................................................13
5.1.6. Incentive.................................................................................................14
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5.1.7. Culture....................................................................................................14
5.2. Case study: Varian Medical Systems.............................................................15
5.2.1. Table 1. Attributes of Varian vs. Elekta...................................................16
5.2.2. The research problem............................................................................16
5.2.3. Research questions................................................................................17
5.2.4. Significance of the project......................................................................17
6. Data collection and analysis................................................................................19
6.1.1. Table 2. Five research methods related to conditions............................19
6.2. Sampling and data collection........................................................................20
6.3. Qualitative data analysis...............................................................................21
6.3.1. Figure 2. Category structure...................................................................22
6.3.2. Strategy..................................................................................................22
6.3.3. Tools.......................................................................................................23
6.3.4. Processes................................................................................................23
6.3.5. Structure................................................................................................24
6.3.6. People....................................................................................................24
6.3.7. Incentive.................................................................................................26
6.3.8. Culture....................................................................................................26
6.3.9. Performance...........................................................................................26
6.3.10. Communication....................................................................................26
6.4. Quantitative data analysis.............................................................................27
6.4.1. Table 3. Likert scale of respondent opinion............................................28
6.4.2. Table 4. Quartile and median for data...................................................28
6.4.3. Table 5. Top 25% most important attributes..........................................29
6.4.4. Table 6. Performance positive response................................................31
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7. Key findings.........................................................................................................32
7.1. Figure 3. The SAM implementation framework............................................33
7.2. Table 7. SAM implementation categories.....................................................34
8. Key implications...................................................................................................38
9. Conclusion...........................................................................................................39
10. References.........................................................................................................40
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3. Introduction
3.1. Background
This is a strategic management project, focused on practical implementation of
strategic account management (SAM). The research purpose is development of a
best-practise SAM implementation framework. The framework will be used by
Varian Medical Systems Inc. (Varian) to execute the strategy in local entities around
the world. Initial understanding of the topic is based on experience of SAM
implementation at Varian in Australia, and learning of strategy execution through
strategic management study.
3.2. Previous research
SAM is a customer-centric strategy to managing customer relationships for Business
to Business (B2B) companies. Browne and Peacock (Peacock and Browne 2014b, p.
8) define SAM as:
The process of selecting a portfolio of strategic customers and developing those customers,
over the long-term, to drive financial performance and shape strategy. SAM helps build
strategic relationships, understand customers deeply and align capabilities with customers’
needs to create long-term joint value.
Executing strategy entails figuring out specific techniques, actions and behaviours for
a smooth strategy-supporting operation. Then following through to get things done
and deliver results (Thompson 2012, p. 330). Strategy most often fails simply
because it is poorly executed (Bossidy and Charan 2011). Even a great strategy can
be sabotaged by poor implementation (Kotler et al. 2012, p. 64). A recent survey of
+400 global CEOs found executional excellence the number one challenge facing
corporate leaders. Translating strategy into results continues to be a challenge for
many organizations. (Gilligan and Wilson 2009, p. 11; Sull, Homkes, and Sull 2015).
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3.3. Research gaps
Many companies fail to implement SAM successfully. representing failures of
execution, not strategy, but in the end they do not reap the benefits of SAM
(Woodburn and Ryals 2008, p. 20). Implementation must be built on principles of fair
process; engagement; explanation; and expectation clarity (Kim and Mauborgne
2014). The problem is how to overcome the significant challenges of SAM
implementation into Varian’s domestic marketplaces?
Thompson et al argue (Thompson 2012, p. 331) there is no definitive recipe for
successful strategy execution; the specifics of how to execute strategy must be
customized to fit a situation, and management’s judgement about how to best
proceed. Nevertheless, can a framework be established to increase the odds of
successful SAM implementation?
3.4. Research purpose
The project will create a framework to guide successful implementation of SAM into
Varian’s local entities. It uses the star model of organizational design (Figure 1) as an
initial conceptual framework for the research (Kates and Galbraith 2010). The star
model is a deliberate framework for configuring structures, process, rewards and
people to create an effective organization capable of achieving strategy. Taking a
subjective view of organizational culture (Saunders, Lewis, and Thornhill 2009), the
study explores and forecasts the impact of SAM on organizational culture and
performance.
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3.4.1. Figure 1. Star Model
Source: (Kates and Galbraith 2010, p. 3)
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4. Project outline
After introduction the report has five sections:
4.1. Orientation
Completes a literature review of SAM and strategy execution to establish current
understanding of the research. Second, a detailed description of Varian and the
significance of the project.
4.2. Data collection and analysis
Describes the methodology of collection, and provides analysis of qualitative and
quantitative data collected.
4.3. Key findings
Provides a broad summary of the project key findings. Recommends a SAM
Implementation framework.
4.4. Key implications
Explains how the findings relate to literature. Recommends actions for successful
SAM implementation.
4.5. Conclusion
Addresses unresolved issues and demonstrates project purpose achievement.
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5. Orientation
5.1. Literature review
Literature review addresses:
(1) issues of generalizability because data collection only occurs in Australia, to
ensure the framework developed will be applicable in other countries;
(2) develops questions to be answered in the case study research; and
(3) establishes if other categories need to be created not currently captured in
the star-model?
Thompson et al (Thompson 2012, pp. 331-2) define ten basic managerial tasks of the
strategic execution process (appendix 10.1). Table 1 categorizes the ten tasks into
the star-model. Culture is included to assist categorization of the literature review.
5.1.1. Table 1. Star-model categorization of the 10 task of the
strategic execution process
*Not part of the star-model
Source: (Kates and Galbraith 2010, p. 3; Thompson 2012, p. 332)11
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5.1.2. Strategy and capabilities
Strategy is a set of capabilities at which an organization must excel to achieve its
strategic goals (Kates and Galbraith 2010, p. 3). Thompson et al (Thompson 2012, p.
4) define strategy as:
The competitive moves and business approaches that managers are employing to
compete successfully, improving performance, and grow the business.
Why choose SAM to achieve strategic goals? Companies do not implement SAM
unless there are powerful positive or negative drivers, external negative drivers are
the most powerful (Woodburn and Ryals 2008, p. 20). Changes in market,
competitors and technology lead to market consolidation. A smaller number of large
customers hold increasing power over vendors (Peacock and Browne 2014b, p. 21).
The shock of how poorly a company manages their large customers is often a
compelling reason for SAM implementation (Peacock and Browne 2014b, p. 5).
Is SAM a winning strategy for B2B companies? 70% of companies reporting customer
relationships repaired or saved through SAM in the last two years. However, a
majority also admit their SAM programs fall short of being fully functional and
effective (SAMA 2014, pp. 4,7). Companies adopt SAM because it creates long-term
joint value, captured in the form of profits. Strategic accounts are twice as likely to
grow 11% or more than other accounts. (Raynor and Ahmed 2013; Peacock and
Browne 2014b; SAMA 2014).
When a company chooses a deliberately different strategy its organizational
capabilities must change. If a company does not place its capabilities into
implementing the chosen strategy then the strategy will become ineffective (Muh.
Darmin Ahmad et al. 2013; Lafley and Martin 2013; Kates and Galbraith 2010).
5.1.3. Structure
Regardless of initial structure, cross-functional collaboration is essential for success.
Good strategy execution requires a team effort. All managers have strategy
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executing responsibilities, and all employees are active participants in the strategy
execution process (Thompson 2012, p. 330). Adapting organizational structure to
support SAM in strategy execution has positive influence on performance (Čater and
Pučko 2010). In designing a customer-centric structure, keeping the organization
clear and simple for customers and employees is essential. The organization must
have alignment and flexibility to agilely respond to customer needs and deliver real
value (Kates and Galbraith 2010, pp. 3-5). An integrated customer-centric structure
able to maintain strong networks across the businesses is the ultimate structure.
One in which, customers get what they want (Woodburn 2006, p. 20) Such
collaboration and networking requires the right structure and the right people.
5.1.4. People
A company is nothing without its people, and the job of leaders and managers is to
manage the complexity created by the implementation. (Kingsmill et al. 2005; Kates
and Galbraith 2010; Forsyth 2012). With education, role modelling from leaders, and
demonstrating success, SAM finally sinks into company DNA. Becoming “the way we
do things here” (Kotter 2014, p. 26). From literature review 3 sub-categories
developed: (1) communication; (2) leadership; and (3) Education.
5.1.4.1. Communication
Communicating why Varian is implementing SAM is essential to cross-functional
collaboration. People who understand the company strategy and why it’s been
implemented are motivated to become enthusiastic leaders themselves as they
overcome implementation obstacles (Kotter 2014, pp. 79-81). Successful strategy
execution requires every person in Varian works together, contributing to the effort
of implementation (Muh. Darmin Ahmad et al. 2013, p. 198; Harrington and Kendall
2006). The most prominent problem inhibiting execution is the company’s strategy
and objectives not being clearly communicated, understood and internalized by
everyone at the company (Muh. Darmin Ahmad et al. 2013, p. 198; Harrington and
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Kendall 2006). Simply, people will not listen unless the situation is put into context
that seems relevant to them (Kotter 2014, p. 121).
5.1.4.2. Leadership
A transformational leader with clear vision, sense of urgency, committed to
development of people is essential. Coupled with a focused, professional team
determined to execute their leader’s strategy a huge impact can be achieved in a
short period of time (Alldredge et al. 2003, p. 54; Kotter 2014, pp. 79-81).
Conversely, the biggest obstacle to strategy execution is poor leadership. (Čater and
Pučko 2010). Leadership is a moral and skill-based exercise in creating a vision,
empowering and inspiring people to want to achieve the vision. Enabling them to do
so with energy and speed (Kotter 2014, p. 60). Leaders must be continual learners to
meet their own development needs and cultivate skills critical to successful
leadership (Barrett, Beeson, and Board 2002).
5.1.4.3. Education
Implementing SAM is a process of continual learning to develop and hone skills
critical to success. Education also provides the perfect medium for cross-functional
learning and sharing, which leads to collaboration. The entire business must be
educated in SAM fundamentals. They must understand why SAM is being
implemented and what it will mean to them. This is not a one-off event and a
continual learning program must become a part of the SAM process (Peacock and
Browne 2014b, pp. 89,90).
5.1.5. Process
Process discipline is essential in implementing SAM. More than half of managers
want more structure in the processes coordinating activities across the company
(Sull, Homkes, and Sull 2015, p. 61). A lack of clear programs and plans; no routine
and integrated systems to control, are significant problems inhibiting strategy
implementation (Muh. Darmin Ahmad et al. 2013, p. 198). The processes put in place
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have to be deliberate. Implementation doesn’t happen by itself, what happens
naturally is entropy (Lafley and Martin 2013, p. 147).
5.1.6. Incentive
This category is modified from reward to incentive because successful SAM
implementation requires the right behaviour to be encouraged, and the wrong
behaviour to be discouraged. Continual learning implies continual teaching, to
educating acceptable behaviour. This requires suitable rewards and punishments to
achieve changes in behaviour desired (Schein 2010, p. 19).
Most compensation schemes were originally devised to encourage sales functions.
SAM is about achieving long-term strategic objectives with customers. Compensation
structures should be focused on longer-term, team-based incentives to influence
future performance. However, companies are nervous about changing sales
incentive programs they have used for years. Nevertheless if a change in behaviour is
genuinely required the reward system must also change. (Woodburn and Ryals 2008,
p. 23; Aguinis 2013, p. 11; Peacock and Browne 2014b, p. 92; Woodburn 2006, p. 7)
In 2008 SAMA found the biggest internal barrier to successful SAM was too much
focus on short-term objectives at the expense of long-term opportunities (Peacock
and Browne 2014b, p. 96). In 2014, SAMA found the situation unchanged. Managers
responsible for SAM implementation feel hindered by legacy polices of sales
incentive programs. (SAMA 2014, pp. 16,24).
5.1.7. Culture
The human mind needs cognitive stability, consistency and meaning. An
organization’s culture is its basic assumptions learnt through shared experience to
meet the mind’s needs. These shared experiences have proved to cope with external
environment and internal relationships.(Schein 1984; Schein 2010). At Varian, most
employees are Engineers. They experience strong socialization and shared
experience during education and training. This builds strong beliefs and values in
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company’s technology, products and customer service. There is real pride in
company products and technical capability. These assumptions are considered valid
because they have successfully provided stability. The organization’s culture is deep,
pervasive, and complex. To challenge such stable and proven assumptions is to
trigger anxiety and activate defence mechanisms. Yet implementing strategy
challenges and changes basic assumptions, the culture around which the
organization is built. (Schein 1984; Schein 2010; Waterman, Peters, and Phillips
1980). Good or bad, the organization’s culture will change when strategy is
implemented. However, although culture is an essential part of an organization
leaders cannot design culture directly (Kates and Galbraith 2010, p. 3).
5.2. Case study: Varian Medical Systems
Varian’s primary business is sale and support of medical linear accelerators,
associated products and software to public and private health providers. Customers
use Varian products and software to deliver radiation oncology treatment to cancer
patients. Like DEC (Schein 2010, p. 40), Varian was founded by physicists and
engineers and is dominated by an engineering mentality. It’s proud of the quality of
its products and ability to service them. Varian’s strength is its ability to assist
customers efficiently and effectively deliver radiation oncology for optimal treatment
outcomes. (Wilson 2014).
Varian’s main competitor is Elekta Medical Systems (Elekta). Elekta offer a similar
suite of products and service, in similar marketplaces to Varian. Elekta’s strategy is
offering of lowest price for products that at least match the features and
performance of Varian (Thompson 2012). Table 1 offers comparison of the
companies.
In Australia, Varian is the market leader with approximate 65% market share,
serviced by a team of seventy-five employees, predominantly Engineers. The
company was frequently accused of arrogance by customers; reaction to the proud
company culture. In 2008 VMSA suffered its first significant loss since creation in
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1999. Outsold by Elekta, this unappealing situation repeated in 2009. These losses
became the compelling reason to consider significant change in how business was
conducted. After discussion with external business consultants, SAM became the
emergent strategy to address the loss in market share. SAM was implemented with
impressive results. Achieving double-digit revenue growth which outstripped five-
year growth plan expectations (Peacock and Browne 2014a, p. 43). The Australian
experience was successful. However, it highlighted significant challenges of
implementing SAM.
5.2.1. Table 1. Attributes of Varian vs. Elekta
Attributes Varian Elekta
2014 US$ sales revenue 3 billion 1.5 billion
Employees6500 3800
Founded 1950 1972
Strategy differentiation best-cost providerMarket listing USA Sweden
Source: (Wilson 2014; Savander 2014)
5.2.2. The research problem
Varian must build on its reputation to deliver a quality supply chain, continuing to
consistently conform to customer expectations in every country it operates (Slack
2012, p. 386). It has reorganised from a centralized functional structure, to a de-
centralized matrix of function & geography. To deliver customer expectations, Varian
first needs to better understand customer objectives. The new matrix structure
encourages customer centric focus. Managing Directors in each country tasked to
determine strategy in their domestic market. The new structure creates a hospitable
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environment to support SAM implementation (Thompson 2012). Strategy execution
is concerned with translating decision into action. The research problem is how to
successfully implement SAM into local entities? The objective is development of a
SAM implementation framework for use in Varian’s domestic marketplaces.
5.2.3. Research questions
To fully understand the research problem, the following research questions are
posed, developed from the star-model and thoughtful literature review:
(1) Why do organizations introduce SAM to their business practises?
(2) Under what structure does SAM implementation thrive?
(3) How does implementing SAM affect processes?
(4) What is the relationship between performance reward and a customer-
centric organization?
(5) How do people respond to SAM implementation?
(6) How does implementing SAM impact the culture of an organization?
5.2.4. Significance of the project
Today’s customers are well informed about products and services before they even
approach Varian. Consolidation is creating larger customers with greater buying
power and demands. The strategic reality for Varian is they are viewed as:
(1) a valued, strategic partner helping to make money and drive revenue; or
(2) a transactional, commodity supplier of costs to be reduced (Peacock and
Browne 2014b, pp. 4-7).
Customers want a single point of contact, products customized to meet their needs;
an integrated bundle of services and products (Kates and Galbraith 2010). Varian
must nurture their customers and other stakeholders: employees; suppliers;
distributors to earn sufficient profits for the shareholders (Kotler et al. 2012, p. 64).
These elements create need for establishing strong customer relationships to
understand customer value and deliver results, keeping competition away. Aligning
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Varian capabilities with customer needs creates a win-win partnership; valued by
both parties. (Vitasek, Manrodt, and Kling 2012). For Varian successful SAM
implementation will provide significant competitive advantage in an increasingly
challenging marketplace.
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6. Data collection and analysis
Case study research helps comprehension of complex social phenomena. While it
cannot convey what decision to make, it can existentially connect the researcher to
the social phenomena. This ensures research retains a holistic perspective, focused
on the real-world. Case study research use is dependent on 3 elements: (1) type of
research questions; (2) extent of control the researcher has over actual events; and
(3) degree of contemporary focus. Table 2 relates these 3 conditions to the five
major research methods.(Yin 2013; Breslin and Buchanan 2008).
6.1.1. Table 2. Five research methods related to conditions
Source: (Yin 2013)
Having determined the research problem and developed research questions from
literature review, table 3 suggests data collection and analysis is most appropriately
achieved by case study and survey to develop the best-practise framework (Breslin
and Buchanan 2008). Therefore as advocated for business and management
research, a small case study sample of primary qualitative and quantitative research
data was collected (Saunders, Lewis, and Thornhill 2009, p. 145). Qualitative data
was collected by interview of executives responsible for SAM implementation in
Australian entities of global organizations. Quantitative data was collected by
questionnaire, developed from literature review and qualitative data analysis.
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Secondary data is sourced from literature review and the primary researcher’s own
observation during Varian’s SAM implementation in Australia (Saunders, Lewis, and
Thornhill 2009). The research follows AIB Guidelines with consent forms attached in
Appendix 10.2. The data is de-identified, referencing industries rather than specific
companies. Inductive data analysis was used to answer the research questions and
develop the SAM implementation framework.
6.2. Sampling and data collection
Sampling is from the population of global organizations, which have adopted SAM in
their Australian entities, because these are similar in structure to Varian. This
heterogeneous selection of companies from diverse industries creates a purposive
sample of five case studies. The companies selected represent the industries of: (1)
Animal Health; (2) Medical Devices; (3) Oncology Systems; (4) Pharmaceuticals; and
(5) Finance. Limiting factors in sampling include: geographic access; competitive
position with Varian; and willingness to participate in research. The five case studies
are at different stages of SAM implementation, which may impact results.
Qualitative data was first collected to test the conceptual framework and develop
the template for quantitative data collection. This data collected from interview with
a purposive sample of six interviewees selected from a homogenous group
management within each company. Those sampled were “SAM champions”
responsible for the decision to introduce SAM into their strategy, and/or SAM
implementation in their organizations (Saunders, Lewis, and Thornhill 2009). Based
on Varian experience, the sample was chosen because SAM champions were
considered the most likely source of meaningful feedback from the small sample.
The interviews followed AIB Guidelines, employing a structured format for
consistency; interviewees asked the questions listed in appendix 10.12.Interviews
were held at the interviewee’s place of work. Each interview was started with
introductions; a description of roles of both interviewee and interviewer; and
explanation for the study. The interviewee was asked for permission to voice-record
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the interview. Voice recordings later transcribed for data analysis. This process was
employed to: achieve consistency in approach across all interviews reducing impact
of bias; and place the interviewee at ease.
Quantitative data was collected to increase confidence in results. Cancelling out
method effects and reducing errors introduced from interviewer bias or observer
error in qualitative data collection. Data was collected using online questionnaire.
The questions designed to test attributes of each category developed from
qualitative data analysis and literature review (show in appendix 11.4). De-identified
data was collected from employees affected by SAM implementation within the case
study organizations. To ensure current and accurate sample frame a modified form
of self-selection sampling was adopted. Each qualitative data interviewee asked to
send the questionnaire to a cross-functional group of employees affected by SAM
implementation within their organization. This selection process was implemented
to increase the homogeneity of the quantitative data sample whilst ensure it
remained relevant to the study. The potential participants were invited to complete
the questionnaire (appendix 11.5), and given two weeks to complete the survey.
6.3. Qualitative data analysis
An inductive research approach was adopted to develop the framework. However,
the nature of qualitative data collected has implications for analysis. Beginning the
search for a hypothesis with predefined variables is sensible, because the complex
nature of qualitative data requires it to be categorized before it can be meaningfully
analysed. Doing so avoids potentially unstructured initial research. Instead
developing credible associations to achieve the research objective (Silverman 2011;
Saunders, Lewis, and Thornhill 2009). This is why, deducted from experience and
literature review, initial category classification was based upon the star model (Kates
and Galbraith 2010). Secondary data from literature review was used to create
definitions (Table.6), for each parent-, child- and sub-category, used to unitise the
data. The categories were modified during data analysis as dependant and
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independent variables were established and relationships recognized in SAM
Implementation (Saunders, Lewis, and Thornhill 2009, pp. 479-87). This process
created a new category structure (figure 2). The analysis and relevant quotes from
interviews below support the new categories.
6.3.1. Figure 2. Category structure
6.3.2. Strategy
In all cases implementing SAM was reaction to a compelling negative reason for
strategy change, often the result of a previous over reliance on product selling. “We
had a complete communications breakdown with our biggest customer”. The selling
focus was wrong for B2B businesses. “We had a big piece of business that we
weren’t successfully pitching for”. Varian “had a problem with the way we were
selling generally, focus on price rather than value and saw that as a stumbling block”.
“Hard feedback” from customers is the compelling reason SAM becomes the reactive
element in emergent strategy. (Thompson 2012, pp. 10-1). An important element to
strategy is communicating it to the business. The “constant push to have all areas
understand why you are doing things this way”.
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6.3.3. Tools
Implementing SAM requires “changes to business planning tools”, although
availability of the right tools is not essential at the start of implementation. All the
case studies acknowledged need for better tools to: segment and manage accounts;
measure customer satisfaction; and understand customer differential value
proposition (DVP). Astutely, one interviewee observed; “they are just tools at the
end of the day, there is still a process that we need to go through to find out what’s
the best fit for us”.
6.3.4. Processes
Process discipline is vital to creating a better process to “methodically manage
strategic accounts”. All interviewees recognized the need for “a discipline of process
and a different mindset” to create a “more structured approach to managing the
larger accounts”. Process could be better. “How we implemented it probably wasn’t
the greatest”. One case study had “just employed a lean person so we can actually
start to look as process changes”. Qualitative analysis identified three process sub-
categories: (1) segmentation; (2) strategic account review; and (3) DVP.
6.3.4.1. Segmentation
Segmenting accounts is essential to understanding how customers are to be
strategically managed. Often “the sales process is a very long process” of review to
understanding when customer segmentation “drops into the contestable bucket”.
6.3.4.2. Strategic account review
Quarterly strategic account reviews are recommended. This necessitates “sitting
down on a regular basis and going over each of the accounts and seeing what
worked and what didn’t work.” “We aim to meet with all business leaders each
quarter, same as our external customers”.
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6.3.4.3. DVP
DVP is about understanding the value delivered to customers, and making sure the
customer understands this value too. This requires the value to be recorded; “need
to document measured outcomes”. Varian must be “more aware of DVP” for each
customer.
6.3.5. Structure
Whether intended or not, implementing SAM changes organizational structure,
because SAM changes the focus of roles. “Asked Regional Managers to pull back
from being the key people going to the customers, Account Managers (AMgr) will
take care of these accounts now”. Successful SAM requires the whole business
structure to understand SAM. “From an organizational perspective we got everyone
involved”. Collaboration between teams “for everyone to see the importance of
their own role in managing the account”, and “everyone to be on the same page”.
Involving all managers develops the organization’s understanding and mission
(Aguinis 2013, p. 63).
6.3.6. People
Analysis identified 4 key sub-categories: (1) leadership; (2) selection; (3) education;
and (4) consultant.
6.3.6.1. Leadership
Leadership is sub-divided into two elements: SAM champion; and executive
sponsorship. All the interviewees were obvious SAM champions. Their passion clear
from preparation for the interviews: one interviewee had written answers; another a
PowerPoint presentation. They affect an “organizational change lead by one of the
key managers”. SAM champions must attract executive sponsorship. The “challenge
to bring the executive leadership team into this conversation, which took a long
time”. From one executive sponsor interviewed; “I was passionate about it after
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6.3.6.2. Selection
Identifying the right people as AMgrs is vital to success. As one interviewee said
“Need the right people with the right attitude to make changes and move forward”.
AMgrs have varied backgrounds, not necessarily sales. In one case a marketing
employee identified as having the right skills to “fit into the key account role”. AMgrs
selected must become “trusted advisors” to the customer’s business.
6.3.6.3. Education
Developing the entire business’ understanding of SAM in the inclusive environment
of workshops develops acceptance. Cross-functional training helps the business
come to a common-sense conclusion; “why wouldn’t we do it?” “We quickly learnt
that we are not armed with the right skills and communication for what these
customers wanted to have”. In one case study, where SAM is well established; the
AMgr “can sit down with anybody functionally, internally and starting talking about
the value of this to the customer, and they all understand that and contribute to
that”. This is driven by a deeper understanding of the “importance of customer
relationships” by those educated in SAM. Shared learning creates shared experience,
creating a “client engaged organization”. Implementing SAM is a continual learning
process for the entire business. “Continue to try to learn by doing”.
6.3.6.4. Consultant
A consultant is a subject matter expert who provides training and valuable external
critique. “Challenging our thinking, making sure we are doing all the things we had
agreed to do, consistently challenging our thought process going forward”. The
consultant often engaged in independent third-party interview with customer C-
suite; to identify the customer value the business delivers. This process often
provides the reason for change companies need. A reality check one interview
recognized because “the results were not flash”.
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6.3.7. Incentive
During interview the question “what changes were made to your rewards &
remuneration plan to support SAM?” was often met with pause before answer. “No
real change” a common theme. Only one case study had modified existing sales
incentive schemes to support SAM; they “went from a defined measurement of
growth, to a now more customer based measure”. Incentives need to recognize SAM
as a whole of business strategy; “Rewarding performance for those that are involved
even beyond their day job, not just sales team, looking at recognizing results more”.
Incentive schemes must drive the right behaviour of AMgrs, and the entire business.
6.3.8. Culture
In all cases SAM changed organizational culture. “The psychology of the team
improved and they became solution-focused”. SAM becomes “part of our DNA now”.
Attitudes change to working with colleagues; “collaboration between the teams”
becomes come practise. Culture changes as people collaborate to find better ways to
cope with changing external environment. (Schein 1984; Schein 2010).
6.3.9. Performance
Performance is improved with SAM implementation. The customer-centric strategy
of SAM focuses on delivering customer value, which generates revenue. “Good sales
results in some tough times”. Improved customer relationships deliver results; “In
twenty-two years I’ve been with the company I have never seen the relationship at
the level it is at now”. In this example, the relationship becoming so strong the
customer decided not to go to tender.
6.3.10. Communication
From qualitative analysis a new category for the framework was created. Successful
SAM implementation requires good communication. “A lot of communication and
engagement with your own organization”. Communication channels and language
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change when SAM is implemented. “Changed the DNA of the language internally of
our organization”.
6.4. Quantitative data analysis
From sixty-eight participants a response rate of 48.5% was achieved, thirty-three
respondents completing questionnaires. Being greater than 30, this sample size
provides a mean sampling distribution close to normal distribution (Saunders, Lewis,
and Thornhill 2009, p. 211). The largest sample (45.45%) was from Varian, followed
by the medical devices sector (21.21%). Account or Sales manager roles were the
majority of respondents (39.39%). This included ‘Other’ roles (6.06%) which on
analysis were deemed to fit this role. Customer support the second largest
responding role (30.30%).
Ranked categorical quantitative data was collected, coded for analysis, and checked
for errors. The responses are shown in appendix 10.6. Appendix 10.8 represents
average; mean; standard deviation; upper and lower quantile statistics for each
question. Respondents also provided further free text comments on SAM
implementation (appendix 10.7). Exploratory data analysis was first used to: (1)
display the data; (2) identify salient features; and (3) interpret salient features (de
Mast and Kemper 2009).
Microsoft Excel was used for data analysis to assess the strength of relationship
between importance and performance of each variable. This analysis ranked
questions in three different ways:
(1) by order of importance;
(2) by order of the difference in mean importance and mean performance; and
(3) by calculating the positive responses, ranked from most positive to least
positive.
Positive responses are defined as the sum of “Strongly Agree” and “Agree” responses
to each question using the Likert scale defined in table 3. Table 4 shows upper and
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lower quartile and median calculated for each data order. It is important to
remember when interpreting data; the Likert scale uses lowest score to represent
highest ranking attributes.
6.4.1. Table 3. Likert scale of respondent opinion
Likert scaleDefinition of
respondent opinion
0 don't know
1 strongly agree
2 agree
3 neutral
4 disagree
5 strongly disagree
6.4.2. Table 4. Quartile and median for data
Percentage of results
Quartile Order of Importance
Difference in Mean
Difference in
PostivesBottom 25% Lower quartile 1.66 -0.48 3%
Median 1.78 -0.19 14%Top 25% Upper quartile 1.94 0.04 21%
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6.4.3. Table 5. Top 25% most important attributes
Importance PerformancePeople Leadership Executive Sponsor 11 Executive management support and sponsorship is
essential to the successful implementation of strategic account management
1.16 1.72
Communication 16 Understanding the value my company delivers to each customer is essential in strategic account management
1.34 2.03
Process 7 Measuring customer satisfaction is essential to strategic account management
1.47 2.14
Communication 1 I know why my company introduced strategic account management
1.59 1.78
People Leadership SAM Champion 10 A champion driving strategic account management implementation is essential to success
1.62 1.86
People Education cross-functional learning
4Implementing strategic account management means the whole company needs to understand the basic principles of strategic account management
1.62 2.32
Tools 6 A customer relationship management system is essential for strategic account management
1.66 2.07
Tools 8 A customer value proposition tool is essential for strategic account management
1.66 2.14
Parent categoryMean Score
QuestionQuestion
No.Sub-categoryChild category
From ranking by order of importance (appendix 10.9) we see the lower quartile of
order importance contains the top 25% most importance attributes (table 5). The
most important attributes are: (1) leadership; (2) communications; (3) cross-
functional education; (4) process and (5) tools. Executive sponsorship is the most
important (mean score 1.16), and with best performance (1.72), which proposes
companies recognize the need for c-suite buy-in to SAM. Tools feature significantly in
the top 25%, however having the rights tools available when implementing SAM was
the least important attribute (mean score 2.78), and worst performance (2.66).
Considering the qualitative analysis this suggests necessary tools only become
apparent to organizations as their SAM skills develop. Meaning lack of tools should
not slow down, or prevent SAM kick-off. Incentive was the worst performing
category, placed 2nd (2.54) and 3rd (2.44) worse performance attributes measured.
Supported by qualitative analysis, this suggests companies are not incentivising their
AMgrs appropriately.
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From ranking by descending order of difference in mean (appendix 10.10) we
observe:
(1) In none of the highest ranking of importance attributes do companies
mean performance outperform mean importance; and
(2) 50% of the highest ranking of importance attributes feature in the bottom
25% mean difference order. Meaning 50% of the most important attributes
have the worst performance gap measured. The important categories with
the worst performance gap are people (50%) and process (50%).
Recommendations are companies will achieve the greater success by investment in:
(1) Securing executive sponsorship (people category, question 11);
(2) Cross-functional learning of SAM to ensure the whole business understands
the basic principles of SAM and customer value (people category, questions
4, 13, 16);
(3) Changing incentives schemes to reward SAM activates (incentive category,
question 19) ; and
(4) Adopting process to measure customer satisfaction (process category,
question 7).
From ranking the descending order of difference in positive (appendix 10.11) we see
there are 8 attributes in the upper quartile with differences greater than 21%. The
worst performance gap was in question 19; regarding incentive schemes (48%),
suggesting current schemes are inadequate. Question 17, process related, measured
37%, suggesting the discipline of keeping up to date account plans is deficient.
Question 13 measured a 25% gap in cross-functional learning. Question 18 again
indicates poor incentive programs with a 25% gap. Question 8, tools related
measured 22%, indicating tools to measure customer value are missing in businesses
implementing SAM.
Question 24, related to profit performance measure a 23% gap. Further analysis was
undertaken because this attribute had not featured in previous results (table 6). This
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analysis suggests employees understand the positive impact on customer
satisfaction and revenue, although they are less clear on profit impact. This maybe
because many companies are reluctant to widely share profit information deemed
market sensitive. Companies may consider sharing this information with employees
so there is a better understanding of the implementation results.
6.4.4. Table 6. Performance positive response
Performance Postive response
Implementing strategic account management has increased our customer satisfaction performance
73%
Implementing strategic account management has increased our revenue performance
61%
Implementing strategic account management has increased our profit performance
42%
100% of respondents believed understanding customer differential value and
executive sponsorship essential to SAM. 97% of respondents: (1) knew why their
company had introduced SAM; (2) identified a SAM champion essential to success;
and (3) believed measuring customer satisfaction essential to SAM. These results
denote the importance of those attributes in SAM implementation to the employees
surveyed. The quantitative analysis suggests there are five keys areas for
improvement in SAM implementation:
(1) leadership; specifically executive sponsorship;
(2) The cross-functional education of the entire business;
(3) Availability of tools and the processes discipline to use them to manage
accounts, measuring customer value and satisfaction;
(4) communicating reasons SAM is being implemented; and
(5) having the incentives to promote a customer-centric organization.
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7. Key findings
Good culture is the result of good performance. Successful companies earn their
performance by putting significant resources in to creating customer value and
generating higher revenue (Raynor and Ahmed 2013). Revenue and customer value
are the measures of performance. However, improving performance often requires a
major negative event to break resistance to change. Only when there is realization
performance is no longer adequate, will major changes like SAM implementation
become possible.
The research developed dependant and independent variables (table 7) defined
with:
(1) nine parent categories;
(2) child and sub categories;
(3) definitions for each category;
(4) answers to relevant research question; and
(5) additional commentary.
Culture and performance are two dependant variables in SAM implementation.
Good performance is the result of good execution; proficient management of the
seven independent variables to deliver desired performance. To successfully
implement SAM, Varian’s managers must understand, act on, and communicate
appropriately these variables. Specific concerns to be addressed by Varian are:
(1) SAM champions must secure executive sponsorship to execute strategy;
(2) new incentive programs which reward delivery of customer value and
creation of long-term revenue and profit must be developed;
(3) shared learning develops team ability to perform and change culture.
Providing opportunity for Varian to overcoming its cognitive defence
mechanisms with dignity; reaching realization change is the less threatening
option to status quo;
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(4) communication of why, what, how and who of each variable change is a key
success factor in strategy execution. The open and honest communication of
necessary changes to deliver performance is the ‘glue’ connecting strategy
execution variables together. (Rubinstein 2013; Herrmann 1996; Stevenson,
Elliott, and Jones 2002; Conger 1998); and
(5) SAM demands competent customer management achieved with process
discipline across the business to ensure customer value is delivered and
measured. Tools need to be adapted or new tools adopted to understand and
deliver the customer value.
Figure 3 depicts the nine categories in a SAM implementation framework; the
purpose of this research.
7.1. Figure 3. The SAM implementation framework
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7.2. Table 7. SAM implementation categories
Parent category
Child category
Sub-category
Definition Research question and comments Variable
Strategy Why a company chose SAM to stop or prevent losing in the marketplace (Lafley and Martin 2013, p. 3)
Why do organizations introduce SAM to their business practises?Negative environmental drivers create the most compelling reasons for implementing SAM
Independent
Recommended tools:
(1) Cranfield University (Woodburn 2006) audit and questionnaire tools recommended to support SAM Implementation.
(2) To support SAM processes:a. Peacock and Browne segmentation tools (Peacock and Browne 2014d)b. A CRM as a tool to capture customer related information.c. Valkre Render software to understand customer DVP (Alderman 2014)
IndependentTools A device designed to assist an organization’s people deliver performance (Stevenson, Elliott, and Jones 2002, p. 743)
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Parent category
Child category
Sub-category
Definition Comment Variable
Clear programs and plans; routine and integrated systems to control, monitor and review the SAM program and its implementation (Muh. Darmin Ahmad et al. 2013, p. 198)
How does implementing SAM affect processes? SAM requires process discipline to successfully implementation
Independent
Segmentation Continual review to understand current customer relationship
Customer relationship is a dynamic variable. Independent
Strategic Account Review
Quarterly update of customer accounts by AMgrs to business and executive managers.
Must be a cross-functional review. Includes assessment of segmentation and DVP.
Independent
Differential Value Proposition
Define the value Varian brings to the customer’s business.
DVP agreed with customer to define actions the business must then execute and deliver
Independent
Structure Formal organization and informal networks created around function, products, geography and customers to execute strategy (Kates and Galbraith 2010)
Under what structure does SAM implementation thrive?Regardless of existing structure, it will change with SAM implementation.Varian’s global restructure creates an environment better suited to adopt SAM.Varian’s global restructure creates a customer-centric environment better suited to adopt SAM.
Independent
Process
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Parent category
Child category
Sub-category
Definition Comment Variable
People Energized, motivated and empowered to act with a sense of urgency to implement SAM effectively, and understanding why (Kotter 2014, pp. 79-81)
How do people respond to SAM implementation? Positive response from people requires the People child- and sub-categories to be addressed.
Independent
Sam champion Transformational leader able to energise people and engage the whole business in SAM implementation
There must be one leader ultimately driving implementation. They lead by example in the need for continual learning to meet change.
Independent
Executive Sponsor
Senior management license for the SAM Champion to execute changes. Provides credibility to the project.
Executive sponsorship of SAM is essential to enabling the breakdown of internal silos and barriers to implementation
Independent
Selection Choice of the right people to become AMgr. AMgr manage by influence across the entire business. Customer advocates within the business. Customer’s trusted advisors.
Independent
Cross-functional
The whole business learning together. Shared learning overcomes cross-functional silos and increases the entire business acceptance of SAM.
Independent
Continual learning
Program of continual education and learning. Change process is continual which means the learning process must be too.
Independent
Provides:
1. training program delivery;
2. independent customer interviews. Show customers we are serious about changing our engagement with them; and
Education
Leadership
Consultant SAM subject matter expert. Independent
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Parent category
Child category
Sub-category
Definition Comment Variable
Incentive System of rewards and punishments designed to align company and employee needs into a win-win partnership, essential for business to be successful (Fandray 2001, p. 38; Vitasek, Manrodt, and Kling 2012; Schein 2010, p. 19)
What is the relationship between performance reward and a customer-centric organization? Incentive schemes need to be modified from existing sales oriented programs. Focus on long-term sustainable revenue achieved by delivering customer value.
Independent
Culture Organizational culture is basic assumption learnt together through shared experience, which have worked in coping with external environment and internal relationships to meet the mind’s need for stability (Schein 1984; Schein 2010)
How does implementing SAM impact the culture of an organization?Good culture is an outcome of a good organization. It’s an indicator, not a driver of performance.
Dependent
Performance Actions and behaviours of people which increases company revenue by delivering customer value. (Landy and Conte 2009, pp. 317,8; Raynor and Ahmed 2013)
Performance should be measured in revenue and customer value (Net Promoter Score). Performance is the result of execution.
Dependent
Communication The open and honesty exchange of: why; what; how; and who is going, to perform work to deliver performance (Rubinstein 2013, p. 14; Herrmann 1996, p. 133; Stevenson, Elliott, and Jones 2002; Conger 1998)
The glue that holds the developed framework together. A significant change to business such as SAM implementation will only succeed with clear and consistent communications.
Independent
Source: 1 (Lafley and Martin 2013, p. 3); 2 (Stevenson, Elliott, and Jones 2002, p. 743); 3 (Muh. Darmin Ahmad et al. 2013, p. 198); 4 (Kates and Galbraith
2010); 5 (Kotter 2014, pp. 79-81); 6 (Fandray 2001; Vitasek, Manrodt, and Kling 2012; Schein 2010); 7 (Schein 1984; Schein 2010); 8 (Landy and Conte 2009;
Raynor and Ahmed 2013); 9 (Rubinstein 2013; Herrmann 1996; Stevenson, Elliott, and Jones 2002; Conger 1998)
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8. Key implications
SAM increases revenue and delivers customer value. To achieve this performance
Varian should implement SAM in its local entities. The challenges and issues Varian
faces are similar to other industries, and in other countries. Following the framework
and specifically addressing the concerns: leadership; process; tools; education;
communication; and incentive will increase the probability of success. Varian should
also be cognisant of the following implications deducted from findings:
Successful SAM implementation is a change management process. Requiring
continual education of all functions.
There will be fundamental changes in organizational culture.
The framework is a management tool. A reminder of the variables to be
managed during SAM implementation and operational process. The local
environment will influence change decisions.
Communications of the results achieved (revenue, profit, and customer
satisfaction) back to the business is an underrated factor to successful
implementation.
The framework could be adopted for any strategy execution or change management
situation, in any business. Today our world is fast paced; with the consequence
management has become an unceasing process of change management. Businesses
require constant attention to keep pace with their perpetually evolving
environments. The framework guides the continual tuning of variables to deliver
performance in customer value and revenue generation.
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9. Conclusion
Using the framework will increase probability of successful implementation.
Delivering performance and changing organizational culture, the primary
beneficiaries of SAM implementation. Although research was limited in sample size
and homogeneity, data gathered was well supported by literature review. Giving
confidence in the seven independent variables identified as primary contributors to
successful SAM implementation.
Critics may argue the validity of dependant and independent variables offered in this
hypothesis. Further research could scientifically verify the analysis. Generalizability
concerns of the analysis are addressed because the findings are constant with
literature review. Risk the selection process potentially introduces bias is
acknowledged. It is considered acceptable to ensure useful relevance of data
collected from the small sample size. This should not impact external validity of the
research.
The research purpose was achieved with development of the SAM implementation
framework. Using the framework, and addressing the identified concerns, will
increase the probability of successful deployment of best-practise SAM in Varian’s
domestic marketplaces.
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