Creating joint solutions: The WHAT and the HOW of becoming and remaining relevant

By Phil Styrlund and James Robertson, The Summit Group

As a SAM, you are the orchestrator of co-creation as you align the assets of your firm with the priorities of your customer. Co-author Phil Styrlund will present a keynote on May 22 as part of SAMA’s 2019 Annual Conference (May 20-22 in Orlando, Fla.). In it, Phil will speak to the need for a heightened level of business and personal relevance in order to be able to influence people in all aspects of your life.

If relevance is the why, then this blog series on creating joint solutions with customers is the what and the how.  In it, Phil and his colleague James Robertson will provide a comprehensive overview of the critical components, approaches and roadmap to making co-creation a central part of the relationship with your strategic customers. This is part one of a four-part series.

Persistent, disruptive forces impacting profitable growth are intensifying and, as a result, companies in many industries face slower growth and accelerating commoditization of product and service margins.

Given marketplace complexity and dynamic shifts in how customers buy, traditional business models are threatened, and new strategies and capabilities for driving growth must be more intentionally developed. In this series of posts,  we will outline a pragmatic yet powerful framework for co-creating solutions with strategic customers.

Traditional sources of growth such as internal research and development of products and services, pricing, and branding — in other words, the capabilities within the firm’s direct control — remain important, but they are no longer sufficient to sustain growth. Increasingly, leading firms are engaging with customers and partners along their value chain to co-create new sources of value by deepening insights, aligning goals, developing joint solutions, leveraging mutual capabilities and executing together.

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Figure 12: Sources of growth, both traditional/internal and new/external

Successful joint solution creation requires an iterative, non-prescriptive, collaborative operating system by integrating a framework, principles and tools, and distinguishing competencies that enable business alignment, customer-driven insights, collaborative relationship development and co-creation.

Companies should not underestimate the barriers to successfully developing joint solutions with customers. The legacy products, competencies, organizational structure, mindset and culture that enabled success in the past are likely to get in the way of collaboratively creating joint solutions and rethinking how value is created with customers. Creating joint solutions is a team sport. For many organizations, the level of collaboration and trust required — both with strategic customers as well as internally across the enterprise — is highly challenging. Yet the rewards for developing this capability can be substantial, with leading companies reporting growth at up to three times the market rate and double the progression of their business with other customers.

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The easy growth is over. As marketplace change accelerates, complexity increases, commoditization intensifies and technology disrupts previously successful business models, companies seek new strategies to invigorate and sustain profitable growth — to survive and thrive in this “new normal” environment. Considering the seismic shifts that continue to impact how companies go to market and grow, creating joint solutions with customers has emerged as arguably the most compelling and powerful strategy for companies to accelerate and sustain profitable growth.

Beyond accelerating and sustaining growth, creating joint solutions enables companies to:

  • Use the customer to guide, shape and accelerate company change and transformation. Possibly the “grandest why” is to leverage the customer as the central source of navigation for your company’s strategy and culture shift from “inside-out” to customer-driven.
  • Distinguish how they engage with customers, creating value through the co-creation process, not only by what they sell. Done right, co-creation is a differentiating competitive strategy that’s hard to imitate.
  • Elevate and sustain relevance by dialing up their agility to align with and collaboratively create solutions that impact their customers’ most critical clinical/technical, business and financial priorities, unmet needs and “CareAbouts.” Importantly, customer expectations are shifting fast — and there is little tolerance for “telling me what I already know” or not being highly relevant. 
  • Strengthen, expand and deepen strategic relationships, moving well beyond “preferred supplier” status to being seen as trusted co-innovators and business advisors.
  • Create and sustain mutual value beyond the product by developing new revenue streams, developing new business models, reducing costs and improving efficiencies. Paradoxically, leading companies find that as they create value beyond the core product, sales of core products and services increase.  Also, by quantifying and communicating value beyond the product, companies counter commoditization and price pressure. While price remains important, it need not be the only factor.
  • Innovate more effectively by bringing new-to-company ideas, capabilities and insights that result in new products, services and solutions.
  • Mitigate risks inherent in traditional innovation by reducing market access and demand uncertainty.
  • Accelerate entry into new markets.
  • Expand value and impact by replicating, cascading and scaling to other customers and new accounts.

As one respondent to the most recent SAMA “Report on Current Trends and Practices in Strategic Account Management” put it: “Only a true customer-focused approach that unites and aligns our company’s resources on co-value creation for both parties can differentiate us and sustain our growth in the medium to longer term. It’s also an approach that can dissolve internal barriers along the way, if strongly led by the CEO downwards.”

Ultimately, creating joint solutions is about increasing customer value and accelerating and sustaining profitable growth, which fuels the lifeblood of business. As compelling as the logic may be, though, creating joint solutions can be one of the toughest strategies to execute.

Creating joint solutions is the collaborative development and deployment of new products, services, solutions, processes and/or business models that impact mutually prioritized opportunities to create value, differentiation and profitable growth for the company, the company’s customers and the customer’s customer. 

Phil Styrlund is the founder and CEO of The Summit Group. James Robertson is the company’s president.

Customer success 2.0? Sounds a lot like SAM.

By Bernard Quancard

President & CEO

SAMA

I recently came across an article in the January 2018 McKinsey Quarterly titled “Introducing Customer Success 2.0: The New Growth Engine.” I am pleased to say that McKinsey & Co.’s view of managing customers differently completely aligns with SAMA’s view of strategic account management. Welcome aboard!

McKinsey reports that companies — especially in the software industry — are increasingly turning to so-called customer success managers (CSMs) to be their companies’ most powerful assets in coordinating internal resources to make their customers successful and fuel organic growth.

The CSM role is not new. As the McKinsey article details, software companies established the function in the mid-2000s to take a more proactive approach to customer retention as they moved to a more subscription-based business model. What IS new, according to McKinsey, is that many high-tech companies are now looking to their CSMs not only to reduce customer churn but also to be a catalyst for growth.

“By artfully drawing on a CSM’s intimate customer knowledge,” the piece states, “companies can surface opportunities to provide relevant solutions and expand customer value.”

This sounds an awful lot like the animating principle of strategic account management.

The similarities don’t stop here. McKinsey proposes five critical elements of “customer success 2.0,” which you can see in this chart below:

These are all critical components of SAMA’s organizational enablers, which our work with hundreds of the world’s most sophisticated SAM companies identifies as the most critical components of a successful SAM initiative. Again, I am happy to see SAMA’s work validated by the business management experts at McKinsey.

Although SAMA has focused the bulk of its efforts on perfecting a process for co-creating value with a company’s most strategic customers, we also push the idea of imbuing the entire organization with the principals of customer-centricity. One way of doing this is by leveraging the SAM mindset by taking best practices that originate there and migrating them to customers outside the SAM program.

For just one example of this, read my interview with former Zurich Insurance Global Corporate CEO Thomas Hurlimann, under whose watch Zurich built a program to leverage best practices developed inside the SAM program. Zurich created a new segment, just below strategic accounts, of large and/or important accounts and assigned a “part-time SAM” to service them. These part-timers came from the ranks of Zurich’s absolute best product people, who volunteered to service one or two accounts in this segment in addition to their day jobs.

The initiative, Hurlimann told me, has been a huge success — in part because it injects the philosophy of customer-centricity into the larger organization. “In their day jobs doing a product job, these people realize, ‘Wow, I actually need to change the way I work and always have the customer in mind,” Hurlimann said. “When they play the SAM role, they realize how important it is to work as a team.”

McKinsey devotes a great deal of ink to both the importance and difficulty of identifying the right talent to fill the role of customer success manager. They talk about knowledge of advanced analytics and digital tools, but, more importantly, they identify the criticality of having the ability to derive, from deep strategic customer understanding, the critical insights that will co-create value for both parties.

Would you care to guess which trait SAMA has identified — through its years of benchmarking with the most advanced SAM companies in the world — as the most strongly correlated with SAM success? It’s strategic thinking. As SAMA’s Senior Knowledge Content Developer wrote in last year’s “Customer Value Co-Creation: Powering the Future through Strategic Relationship Management”:

“Both an attribute and a skill, strategic thinking is essential in account planning and many other SAM activities in order to connect the dots between knowledge of the customer and knowledge of one’s own company. Strategic thinking may be the most important asset to a SAM, though one of the least understood.”

Is McKinsey passing off as new thought leadership wisdom that’s been known to the SAMA community for the past 20 years? Is your company leveraging learning developed in the SAM initiative and deploying it across your entire organization? I would love to hear your thoughts, either in the comments or in SAMA’s LinkedIn group.

SAM characteristics that drive value for your customer

The demands of a SAM role require a fair amount of self-confidence and drive, but what is not as well known is that SAMs have less confidence in their organization, in getting things done and equipping themselves to face uncertainty. This is one of the findings of a study of “Individual SAM Characteristics Influencing Customer-Supplier Value Realization” conducted by Value Innoruption Advisors and SAMA.

While this is a noteworthy discovery, SAM leadership and the C-level could especially benefit from noting the finding of the critical connections among firm performance, SAM personality traits and value management. “Having a formalized SAM process and robust operating guidelines show as strong elements of success for the financial performance of a firm, as measured by EBIT (earnings before interest and taxes) and sales growth.” The study revealed a negative correlation to financial performance when introducing flexibility into the process.

Considering the connection to sales growth and absolute EBIT performance, the study recommends that “SAM team leadership engage with their HR and talent development teams to include emotional intelligence into the SAM competency model.” It also notes that there are demographic differences in both emotional intelligence and personality traits that we should take into account, such as the finding that SAM professionals ‘plateau’ after three or four years of experience. “One size fits all is not a productive approach in the design and deployment of SAM processes and value management programs.” Tweet: One size fits all is not a productive approach in the deployment of SAM processes & value management programs. https://ctt.ec/uHO4P+

The study also recommends that leaders focus on both individual and collective confidence levels. “Strategic account managers cannot feel like they are on their own lifting mountains. They have to feel part of a winning team that has strong belief systems and strong intention to win in the value and pricing management areas.”

Related to this, the study recommends that “Top executives in firms having a GAM/SAM organization should pay close attention to these results and work hand-in-hand with top SAM leadership. These top executives can act as strong champions for the SAM process and interact with SAM leadership to boost confidence levels.”

In addition to collaborative recommendations for top executives, the study encourages SAM leaders “to hold discussions with their marketing and pricing counterparts to establish new levels of collaboration among their teams so that they can holistically work on customer-value programs. The SAM team cannot be expected to design all value quantification and value capture tools and resources, and do this in a vacuum.”

The study also found that “The greatest drivers of value management capabilities reside in the back-end of the value management process and more specifically in the pricing realization and value capture steps.” In this regard, the study recommends balancing value management processes to include more focus, attention and resource allocation towards value quantification and value capture, including “the development of formal capabilities for both SAMs and SAM leadership via training, tool development, team interactions and process development.” It also recommends “having strong pricing discipline and focusing on preparation for pricing negotiation and management of pricing and value objections.”

Based on the overall findings of the study, SAM leaders are encouraged to “evaluate their overall programs to incorporate additional dimensions into both the value management process and their SAM competence models” and consider a value capability assessment.

Learn more about how the SAM can initiate transformation internally and externally at SAMA’s Annual Conference #SAMAAC17 or download the full study today.