Strategic Account Management Blog

A article in the January/February Harvard Business Review makes the argument that the corporate strategy of maximizing shareholder value, championed prominently by former General Electric CEO Jack Welch, has failed as a driver of sound long-term business practices. But author Roger Martin does not shed a tear bemoaning this failure. Instead he heralds a coming era when corporations increasingly will place maximizing customer value at the top of their priority lists. This will be the age of customer capitalism.  In the 1970’s and early 1980’s as corporate executives and boards of directors began to name maxed-out shareholder value  as their number one goal, Mr. Welch became arguably the most celebrated businessman in history for championing this approach. But after 30 years, the companies that emphasized maximizing shareholder value (Coca-Cola and General Electric) fared no better than companies that clearly put customer value ahead of shareholder value (Procter & Gamble, Johnson & Johnson), Martin writes.  And ironically 2008-2009 saw a historically unprecedented plunge in shareholder value (and after all those years of executives and their boards “putting shareholders first”!) We hope Martin’s article is just the beginning of a discussion on better business practices in the 21st century. Highly recommended! 

Article here (membership or subscription required):

http://bit.ly/7glbgj

Bravo to co-authors Philip Lay, Todd Hewlin and Geoffrey Moore for encouraging suppliers to agitate their customers as a way to add value and beat the current economic crisis (“In a Downturn, Provoke Your Customers,” Harvard Business Review, March 2009). In the article, they beautifully describe the process by which organizations can provoke their customers.

But we think that a lot of companies will find their greatest challenge – and reward – in implementing the right corporate structure to support provocation selling. While we all agree that mere consultative selling is not enough, the burden of provocation selling too often falls on the sales team alone. But sales people can only do so much. Provocation selling really pays dividends when it is deployed as a company-wide initiative. Our term for this is Strategic Account Management (SAM).

In reality, SAM initiatives are quite rare.  A 2008 survey conducted by our organization showed that 80 percent of SAM programs were younger than 7 years old, and only 12 percent of respondents reported that their SAM programs were “fully functional and effective,” and they identified “organizational structure” as their greatest challenge. Only when provocative selling becomes a corporate initiative will CEOs, senior executives and other departments (marketing, finance, engineering, etc.) work together to realize the benefits. Otherwise, sales people seeking to provoke their customers will have to confront the inevitable barriers existing within their own organizations.

View a synopsis of the original article or purchase it here: http://hbr.harvardbusiness.org/2009/03/in-a-downturn-provoke-your-customers/ar/1