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Implementation Competencies: Creating Long-Term Growth Foundations
A global industrial systems company found that its business environment was shifting rapidly. The firm had experienced market share losses with some customers and had received sharp (and unpleasant) communications from several of this firm’s largest national accounts. This firm’s executives believed that their product quality was superior to that of competitors, and the firm had a long-standing policy of market-based pricing. This loss of business and degradation of customer relationships was therefore unanticipated.
Recognizing the severity of this situation, the firm undertook a systematic effort to assemble “messages from the market” to guide its decisions. It learned that expectations were sharply different from those of previous periods. It learned that customers placed a very high value on service delivery related to new project introductions, logistics cycles, and technical support associated with the use of this supplier’s products. More and more customers were basing purchase decisions on the company’s skills in implementing its programs, rather than on product quality and pricing alone.
This firm is far from alone in having to accept the importance placed upon the implementation competency by its customers. Across industries, implementation skills have become a key basis by which customers differentiate among their suppliers. There are multiple reasons why the importance of implementation has escalated, including:
- Customer implementation of “just-in-time” approaches to manufacturing and logistics, requiring that suppliers be able to function successfully within this environment.
- Cycle-time reductions in the product development and introduction processes, requiring that supplier contributions to technology and design evolve at parallel speeds.
- High expectations regarding quality and service on the parts of end customers, requiring that suppliers be part of a “response chain” capable of timely and effective resolution of end customer problems.
- Globalization of business into diverse environments with widely varying labor skill levels and factory environments, requiring that suppliers be able to ensure the effectiveness of their offering independently of where it is used.
The list of factors that have underscored the importance of implementation skills goes on and on – including universal factors like those above and account-specific factors unique to the business environment of each supplier-customer relationship. Strategic account executives must anticipate higher and higher expectations relating to implementation from their customers, and get into a position to respond to them without having to go through the difficult times that were faced by the industrial systems supplier described earlier.
The Implementation Competency: A Growth Driver
Our research into the relationship between strategic account relationship management competencies and growth spotlights the importance placed on implementation. We examined three major clusters of competencies relevant to success with strategic account relationships – Relationship Competencies, Implementation Competencies, and Innovation Competencies. All three types of competencies are important, with strong correlation to growth with strategic accounts and to account stability.
The Implementation Competency reflects the ability of a supplier to not only meet the expectations of its strategic account, but to get ahead of problems and to produce results. The challenges identified by the industrial systems supplier described earlier reflect the dimensions of this competency. Can the firm deliver on time, in full, at proscribed levels of quality? Do the firm’s processes allow for ‘seamless’ transactions with its strategic account – regardless of whether the processes involve product design, logistics, technical support, order entry, or some other activity?
Strong Implementation Competencies play a critical role with respect to strategic account relationships. We find that strong Implementation Competencies allow a firm to move from a transactional “Supplier” relationship to the higher tiers where relationships become more strategic and where the supplier gains (at minimum) a ‘last look’ at the business. While Relationship Competencies may start the growth process, the long-term foundations for growing relationships depend critically on the Implementation Competency.
A key lesson emerges from an examination of the factors that customers cite as important with respect to Implementation Competencies: the focus shifts from the account executive to the firm.
While a strategic account manager’s ‘heroic efforts’ can yield significant gains in the Relationship Competency, it takes organization-wide efforts to demonstrate competency in implementation. We’ve all too often seen companies create strategic account teams in an attempt to cover up shortfalls in their Implementation Competencies. Somehow, their view was that individual sales executive heroism could counterbalance organizational incompetence. It doesn’t work. Top-performing companies make an organization-wide commitment to the strategic account relationship by functioning well on a company-to-company basis.
Our research suggests that two specific dimensions of the Implementation Competency are most closely linked to strategic account relationship growth:
While other dimensions of the Implementation Competency are also important, our research findings suggest the actions that strategic account executives and teams can take along these two dimensions in order to strengthen their performance with respect to implementation – and thereby take their strategic account relationships to a higher level.
Focus on the Processes Central to the Strategic Account Relationship
Processes are the first of two Implementation Competency dimensions closely linked to growth. The existence and quality of the Processes that are involved in transactions with strategic accounts are critical. Contributions to the Process dimension of the Implementation Competency occur not only in the course of ‘day-to-day’ transactions, but also during ‘crisis periods’ within the business environment. Solid firms have processes that function smoothly on a day-by-day basis. Exceptional firms have processes that can withstand the stress of crises.
As part of our research, we developed three clusters of strategic accounts along the growth spectrum (from top performers to underperformers) and correlated supplier performance along the various competency dimensions. The chart below summarizes our research findings with respect to Process strengths. It shows that suppliers that achieve stronger Process skills realize better performance in terms of faster growing accounts:
The firms working with top-performing accounts demonstrated nearly twice the level of Process competency than those whose accounts showed average performance, and the firms whose accounts performed at average levels showed about twice the level of competency as those whose accounts were underperformers.
Messages from best-practice organizations – those whose accounts fell within the top performer category – are very clear: It takes an organization to build strong Implementation Competencies. These messages are suggested by the following observations from firms that have developed strong Implementation Competencies:
- “All of our operational management people are measured and rewarded on customer satisfaction and growth.”
- “We look at how we’re performing across our key processes that underlie every aspect of our customer relationship – delivery, support, sales, R&D, every function. Then we look at how we can improve, tighten up and generally get to higher levels for this customer relationship.”
Developing effective Processes involves much more than the sales team working with the customer’s purchasing group. It’s all about company-to-company touch points – contact points that work. It’s about the front office, the back office, the factory floor, and the loading dock all delivering.
We have found that quality firms, those that have gone through formal processes related to quality improvement, score well along this dimension. They understand their processes, they understand how these processes connect to their customers, and they understand how to make them better. We have also found, unfortunately, that companies that perform poorly along this dimension are often unable to even define which are the critical processes that are relevant to success with their most important customers.
Focus on the Linkages between Supplier and Strategic Account Processes
Closely linked to the Process dimension is the Linkage dimension of the Implementation Competency. Linkages are best described as processes, programs and systems that interface, connect or intertwine the supplier and customer. Examples include order entry systems, demand forecasting programs, and web-based engineering processes. Strong and effective Linkages between the processes and people of the supplier and strategic account organizations are critical for continued improvement and for initiatives to “take costs out of the system”.
Again, the connection between stronger Linkage skills and faster growing strategic accounts is clear from the graph below:
There is roughly a 2-to-1 ratio in the scores as you move from one cluster to the next. Firms that scored highest in terms of this competency were rewarded with growth by their strategic accounts. Firms that scored poorly along this dimension found that their customers were clustered in the underperformer group.
The messages from top performing companies are once again very instructive:
- “What drives our success with this account? Effective links at every level, across every function, in every country.”
- “With this global account, we have regular conference calls and exchange visits. Our customer knows our people, our systems, and our capabilities in Asia as well as in the U.S.”
The first message says a lot. You have to work at linkage. It involves executive-to-executive relationships and other interactions all the way down the line. It involves business functions. It involves geographic units. We’ve seen cases in which it involves product lines. In truth, there are cases in which successful implementation of the Linkage competency involves just about any dimension of the relationship that you can think of between a supplier and a strategic account. The second message again says invest, work at it, be proactive, make it happen.
We heard one success story that involved a decision by a supplier and its strategic account to get the two Research & Development teams together. The result was a new concept that in the course of two years yielded a doubling of the business done together by the firms – to the delight of both the supplier and the strategic account.
We often find that firms that are frustrated about their inability to “sell” an innovation are ones that have failed to demonstrate their Implementation Competencies (and in particular have failed to develop the Linkages between their firm and their customer). More often than not, innovative ideas require that the customer embrace a change in the roles and boundaries between the supplier and itself. Willingness to do so is likely to occur only when the supplier has proven itself with respect to key implementation and linkage skills.
Strengthening the Implementation Competency
Getting a relationship started on the path to growth is hard work. Keeping it on that path is even harder. Showcasing strong Implementation Competencies is a never-ending challenge, with no “days off”. The organizations that commit to this path must recognize that such commitments are demanding, difficult, and sometimes daunting, but the results of our research clearly shows that the rewards are there along this path.
The experiences of leading companies can be used as a starting point in developing ideas as to how to strengthen and showcase a firm’s Implementation Competencies. The following examples from the Blue Canyon IDEABank© are relevant in this regard:
Blue Canyon’s IDEABank©: Developing the Implementation Competency
|1. Get your strategic account to react to your company’s performance goals and the metrics that it uses to assess performance.|
|2. Create “linked systems” audit teams from the appropriate touch points between the two organizations to share plans and identify performance improvement opportunities.|
|3. Document the geographic and organizational touch points between the two companies and assign individuals to establish communications links at each such touch point.|
|4. Establish an “operations champion” for the strategic account relationship.|
|5. Research and document how your company’s contributions contribute to your strategic account’s success with its customers.|
|6. Create a forum to discuss globalization challenges and strategies.|
|7. Identify what firms serve your strategic account’s competitors in the product and service areas that your firm serves your strategic account and document ways in which you can outperform these organizations.|
|8. Ask your strategic account to work with your firm to develop insights as to expectations for the business systems of the future.|
|9. Sponsor process improvement programs jointly with your strategic account.|
|10. Share benchmark and other research information with your strategic account in meetings including functional experts in key areas of linkage.|
The industrial systems supplier described earlier took the messages relating to its implementation skills to heart. New benchmarks were developed as to the service ‘norms’ that had to be met in order for this firm to remain best-in-class. The firm established cross-functional teams to review its processes vis-à-vis these norms, and to identify action plans to remedy deficiencies. In the course of this review, a detailed examination of the linkages between this firm and its major customers was completed. Action plans were defined in areas where deficiencies were identified, and a variety of tools were developed to support the rollout of the new processes developed through these action plans. These tools included a scorecard to assess competencies, Internet-based training tools and support systems, and creation of a new field service organization to work closely with strategic accounts in managing service delivery and critical programs.
We believe that the importance placed on implementation will continue to increase, and that this factor will become an even-sharper factor in supplier evaluation. Strategic account executives and their teams must therefore take on a leadership role to ensure that these evaluations will be positive. They must take on the challenge of mobilizing an organization-wide approach to successfully implementing their firm’s programs for their strategic account, and they must spotlight the linkages that are critical to the success of the relationship. For those strategic account executives that are successful in accomplishing these tasks, the rewards will be those that have been spotlighted by our research findings: faster growth and more stable account relationships.
 See Atlee Valentine Pope and George F. Brown, Jr., Whatever Happened to Growth?, published in Velocity, Fourth Quarter, 2001. Blue Canyon Partners, Inc. and the Strategic Accounts Management Association sponsored this research project. Research findings are based upon results gathered from an on-line assessment tool used by strategic account executives to evaluate their company’s performance vis-à-vis benchmark data on best-in-class practices related to relationship management and on surveys and interviews with a variety of executives and professionals working with major customers in a wide variety of industries.