The Summit Group Point of View, Strategic Account Management Association

1. The value road map: Part 1
Taking value creation to the next level in an
increasingly competitive marketplace
Introduction
By Philip Styrlund The forces impacting profitable growth are intensifying, and as a result companies
chief executive officer in many industries face accelerating commoditization of product and service margins.
the Summit Group The need to create and deliver value has never been greater. Leading companies are
responding to the challenges hindering profitable growth by refocusing efforts on
Shakeel Bharmal creating value for customers. Yet “value” is one of those business words that has lost its
President (canada) meaning to many and become increasingly difficult to deliver. The concept of value is
the Summit Group at risk of being commoditized. This has happened to many words with a foundation
in a fundamental idea, but overuse, misunderstanding and the inability to execute
have escorted them into the jargon junkyard to join words such as “synergy” and
and James Robertson
“re-engineering.” Eye rolling is a common response when a business leader or consultant
Vice president of business development
speaks of value.
the Summit Group
Value is a simple word that should hold powerful meaning. Value represents the notion
that to generate revenue from a customer, it must receive something in return that makes
its expense, as well as investment of resources and time, worthwhile. The central challenge
for many businesses remains: In the face of intensifying global competition, how can they
increase the value delivered to customers to drive sustainable, profitable growth?
“Value” is one of Simple yet elusive
As we have seen in our engagements with hundreds of Fortune Global 500 companies,
those business creating value is often an elusive goal. After efforts to understand it, many companies
words that has struggle with executing against that understanding. Other companies may succeed
at carrying out a number of initiatives or launching products that create value but
lost its meaning to then stumble at being able to sustain the efforts beyond the rollout or product launch.
Successfully creating, capturing, delivering and sustaining customer value creation
many and become requires cross-business alignment, an enterprise-wide approach and the application
of higher-order go-to-market capabilities, including structured listening, analytics,
increasingly marketing and sales integration and process change. No one of these elements is
sufficient. All must be synchronously executed to focus the entire organization on
difficult to deliver. sustainably delivering customer value and driving profitable growth.
The value road map series
In a four-part series we will draw on our 17 years of experience working with leading
Fortune 1000 and Global 500 companies to describe a value creation road map that
has enabled these organizations to differentiate themselves, transform how they go to
market and elevate the value they create for customers. A small number of companies
have cracked the code to enjoy sustainable customer loyalty and revenue growth. In
Velocity® ••18•• Q3 and Q4 2009
C o p y r i g h t © 2009 S t r at e g i C a C C o u n t M a n a g e M e n t a S S o C i at i o n . a l l r i g h t S r e S e rv e d . reproduCtion o r d i S t r i b u t i o n w i t h o u t e x p r e S S e d p e r M i S S i o n i S S t r i C t ly p r o h i b i t e d .

2. these articles we will share what the best do differently to create,
capture and deliver sustainable value. (The value road map is not Figure 1. The value road map
intended to be a prescriptive, “tick-the-boxes” approach to value
creation. Rather, we seek to provide a flexible thought framework
that recognizes each company’s unique situation, which in turn
means the value road map “dosage” and steps may change.) The
value road map comprises seven steps (see Figure 1):
Step 1: understanding customer value drivers
Step 2: aligning your capabilities with the customer value drivers
Step 3: developing and differentiating your products and solutions
Step 4: articulating the value you create Step 7
Step 5: capturing value Sustaining value
Step 6: delivering the value proposition
Step 7: sustaining value Step 6
In this initial installment of the value road map series we describe Delivering the
the first two steps: understanding and aligning. value proposition
Step 1: understanding customer value drivers
Value creation begins with a portfolio analysis of high-potential Step 5
market segments and customers. The purpose is to identify and
prioritize major opportunities for creating and delivering value. Capturing value
This ensures focus where there is likely to be the greatest return. In
particular we recommend identifying “lighthouse” customers within
prioritized market segments to jump-start your value creation
journey. These are typically innovative, collaborative companies Step 4
expected to lead their industries and be open to working with
suppliers to accelerate mutual growth. Engaging first with these Articulating the
lighthouse companies enables you to: value you create
• Focus resources where there is the greatest potential.
• Learn and gain insight with market-leading companies. Step 3
• Create a springboard for your initiative by securing quick wins,
delivering results and building a loyalty to the logic.
• Develop a replicable approach and solutions that can be scaled Developing and
to other segments and customers. differentiating your Step 2
products and solutions
The key to value creation is knowledge acquisition: gaining
deep insight and absolute clarity on your customer’s business value
drivers. To accomplish this, leading companies work hard to elevate
and institutionalize their capabilities for “listening louder” to their
customers. John Chambers, chairman and chief executive officer of Aligning your Step 1
Cisco Systems Inc., said at Cisco Live 2009 in San Francisco, “For capabilities with the
customer value drivers
19 years the one thing which has separated us from our competitors
is our ability to listen to our customers.” Understanding your
customer’s business is nothing new. As writer Peter Drucker said,
“The aim of marketing is to know and understand the customer so
well the product or service fits him and sells itself.” Our research Understanding
indicates, however, that relatively few companies get it right. customer value drivers
So what do the best do differently?
First the best companies reorder their thinking: starting with their
Velocity® ••19•• Q3 and Q4 2009
C o p y r i g h t © 2009 S t r at e g i C a C C o u n t M a n a g e M e n t a S S o C i at i o n . a l l r i g h t S r e S e rv e d . reproduCtion o r d i S t r i b u t i o n w i t h o u t e x p r e S S e d p e r M i S S i o n i S S t r i C t ly p r o h i b i t e d .

3. customer’s customer to understand why
it selects one product, service or solution
To listen louder, the best
companies intentionally
The central challenge for many
over another. Third Box Thinking™ is
a principle that operationalizes value
seek to increase their entire
organization’s contact and
businesses remains: In the face
creation by reordering and aligning
how you think with your customer’s
cadence with relevant
customer staff across functions
of intensifying global competition,
value drivers. Traditional go-to-market and decision levels. Listening how can they increase the value
processes lead with the product. In our to the customer is not just
experience this mind-set is one of the the responsibility of sales, delivered to customers to drive
hardest things to change, especially marketing or service: Value
when you have enjoyed product success. creation is everyone’s business. sustainable, profitable growth?
Third Box Thinking begins with the How can you listen louder as an
customer’s customer. (See Figure 2.) organization? Increasing your
Value is created by thinking from right touch-points with the customer – higher, • Establish strong alignment and focus
to left: starting with deep insight and wider and deeper – is key to gaining on the customer’s top priorities and
understanding of what your customer’s richer insights. One company we worked initiatives.
customers care about (seek?), what your with measured its percentage of staff
customers do to deliver value to their “touching” the customer each month; its • Assess and refine opportunities for
customers (care about?) and what you baseline was around 30 percent. Its goal co-innovation as a basis for developing
can provide (bring?). It’s about reverse was to reverse this so that 70 percent of a mutual growth blueprint.
engineering your relevance and listening its organization engaged the customer • Establish a tighter joint business
beyond your product: suppressing the on a monthly basis. Procter Gamble plan and elevated rhythm for the
urge to discuss your solutions before Co. established “mirror teams” with the relationship.
you understand what really drives the same intent. Relationships are mapped These “next practices” enable leading
customer’s business. and proactively developed with owners companies to discover, understand and
Leading companies engage lighthouse of key customer business initiatives. validate the customer’s key value drivers,
companies and ask the question, “What do Gaining deeper insight into customer a deep understanding of which maximizes
you care about and why?” The challenge value drivers requires understanding the the potential for creating value, ensures
is to approach and ask in such a way as “why behind the what” by repeatedly efficient resource allocation, elevates
to build credibility while gaining deep, asking “why” to uncover your customer’s relationships, differentiates how you
unique, strategic and tactical insight into higher-order needs. A number of our appear and counters competition.
industry value drivers, the customer’s clients are pioneering an approach to
business issues and initiatives and critical take collaborative value creation to the Step 2: aligning your capabilities
success factors. While quantitative and next level: establishing the foundation with the customer value drivers
qualitative research as well as customer for co-innovation. At the heart of this
With a profound understanding of
satisfaction surveys provide plentiful data, collaborative practice is a structured
what your lighthouse customers care
it is usually filtered through third parties, dialogue with the customer designed to:
about and the value they seek to deliver
difficult to interpret, harder to act on and • Gain deep insight into the customer’s
to their customers, you should now
unlikely to provide the depth of insight business and industry value drivers. be in the position to focus and align
required to guide the development of
differentiated, customized solutions.
Leading companies place a premium Figure 2. Third Box Thinking
on understanding the “ultimate truth”—
the unfiltered voice of the customer.
They proactively develop relationships
with business decision makers across
functions and outside their usual safe End
contact points. Notably they engage You Customer
Customer
beyond procurement. Developing
relationships higher, wider and deeper
across the customer’s organization is
critical to uncovering opportunities to
Bring? Care About? Seek?
create, capture and deliver value.
Velocity® ••20•• Q3 and Q4 2009
C o p y r i g h t © 2009 S t r at e g i C a C C o u n t M a n a g e M e n t a S S o C i at i o n . a l l r i g h t S r e S e rv e d . reproduCtion o r d i S t r i b u t i o n w i t h o u t e x p r e S S e d p e r M i S S i o n i S S t r i C t ly p r o h i b i t e d .

4. Figure 3. Majoring in the majors To refine and prioritize where they
focus, leading companies also evaluate:
Customer’s care-about What do you have? Impact (describe and quantify) • Attractiveness—the potential
profitable revenue growth for
themselves.
• Feasibility—their ability to deliver
value considering their relative
competitive position (strengths and
weaknesses), strategic and cultural
alignment, risks and ability to execute.
your value creation efforts with their stage in the value creation road map, you
priorities. Only if you are able to directly should identify and articulate where you
reinforce their value creation efforts or Proactive demand creation
can have the greatest impact on your
indirectly address one of their business customer’s business using, for example, A few of our clients are implementing a
issues that helps them become a stronger the matrix in Figure 3. Beginning with next practice to accelerate the sales cycle
provider – by driving profitable growth, the customer’s key “care-abouts” – issues, and provoke demand by reversing stages
reducing costs and improving operating challenges and initiatives uncovered in 1 and 2 of the value creation road map.
efficiencies or mitigating risks – will you the first stage of the value creation road Through Third Box Thinking, impact
be seen as creating value for them. map – you then: analysis and industry benchmarking,
these clients proactively develop and
Major in the majors • Describe your relevant products, articulate a point of view. They take
ser vices and solutions—your the initiative to identify issues, align
World-class companies elevate the
company’s pertinent capabilities. solutions and quantify impact, raising
value they create by “majoring in the
majors”: prioritizing and focusing on the • Articulate and where possible quantify the customer’s awareness of potentially
business drivers that have the greatest the impact your capabilities have on the critical business issues and creating
impact on what their customers care customer’s care-abouts—the degree urgency often ahead of their customer’s
most about. The level of value created to which your products, services full realization or appreciation of the
is directly linked to the importance of and solutions can increase customer implications or opportunity. Validating
the customer issues, challenges and revenue growth, reduce customer alignment of your company’s capabilities
initiatives you attach yourself to. At this costs or mitigate risk. with the customer’s key value drivers,
issues and initiatives will serve you well
in Step 3, the next stage of the road
map: “developing and differentiating
The value creation road map in practice
your products, services and solutions
Early last year a leading Summit Group technology client decided that it wanted to grow faster to create value.” We will explore that
and gain share in the retail sector, where it believed that its capabilities aligned with customer further in the next article in this series.
business challenges yet were “underappreciated.” The ambition was to grow sales to retailers
by 400 percent above the existing level within three years. Targeting a select lighthouse retail Philip Styrlund is chief executive officer of the
customer, our technology client initiated a collaborative business alignment engagement to listen consultancy The Summit Group (www.summitvalue.
com) and can be reached at ps@summitvalue.com
louder, gain deeper insight into customer business drivers and uncover new areas for growth. In or (952) 891-8400. Shakeel Bharmal is president
2007 our client had been named “supplier of the year” by the retailer’s procurement organization (Canada) at The Summit Group and can be
despite the fact that business had paradoxically stagnated and remained at a similar level for the reached at sb@summitvalue.com or (604) 218-
1076. James Robertson is vice president of business
previous six years.
development for The Summit Group and can be
Participation by retail line-of-business executives – who it was believed would have the greatest reached at jr@summitvalue.com or (952) 221-
4889.
appreciation for our client’s capabilities beyond the established procurement relationship – was
critical to the success of this collaborative initiative. In a structured, facilitated “conversation,” Additional resources
our client’s executives actively listened to each retail customer executive from store operations, For more on this subject by these writers in
supply chain and logistics, marketing and human resources describe their longer-term strategic SAMA’s library, the editors recommend: Philip
Styrlund, “On-demand webinar: creating business
business agenda and current initiatives, after which mutual priorities and next-action steps were
value,” Oct. 17, 2007, www.strategicaccounts.org;
agreed upon. This conversation uncovered multiple growth and value creation opportunities that and Philip Styrlund, Steve Andersen and David
until then had remained hidden to both companies. Later last year we received an elated call from Pearson, “How can an account manager best
our client’s retail account director telling us of a just-concluded multiyear enterprise agreement obtain insight into a customer and its industry?”
representing 1,400 percent revenue growth over the previous year’s business. Focus: Account Manager, Vol. 3, No. 2, Fall 2006,
www.strategicaccounts.org.
Velocity® ••21•• Q3 and Q4 2009
C o p y r i g h t © 2009 S t r at e g i C a C C o u n t M a n a g e M e n t a S S o C i at i o n . a l l r i g h t S r e S e rv e d . reproduCtion o r d i S t r i b u t i o n w i t h o u t e x p r e S S e d p e r M i S S i o n i S S t r i C t ly p r o h i b i t e d .