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| © The University of Queensland |
It’s not uncommon for CEO to spend
substantial part of their time with customers but is it really essential and
healthy? The answer is a resounding yes but with lots of caution as if wrongly
done, it can send the business southbound. Here are some of the guidelines starting
with the don’ts first. Not being negative but mistakes can be more costly. We
have substituted the term Sales for Account as it better describe the function in
current dispensation.
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Business relationships are inherently B2B or B2C and not personal
Business
relationships have three dimensions. The formal, personal and proxied.
It is important that
to have a mix of the three to cement business relationships. If highly
leveraged on the personal, key man issues might arise should CEO depart. Customers
might follow CEO or competitors might chance upon such moments of vulnerability
to pinch your customer and raid your business.
For companies with
substantial brand equity that is tightly associated with the CEO like Steve Jobs
at Apple, the new CEO would have a larger pair of shoes to fit into like Tim
Cook. Otherwise substantial brand equity will be an upside. If you carry a name
card with emblems of names like McKinsey or Goldman Sachs, half the battle is
already on your plate.
Whilst personal
dimensions ( both directly personal or proxied ) are important in business, the
core of business relationships are still formal in nature and ought to be conducted
with such end in mind. The personal and proxied should be view as a means to
the end and not the end in itself.
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The ‘Buck Stops Here” Syndrome
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This is borrowed from
a phrase that inhabits the desk of US President Truman in the oval office. If
CEO’s involvement is beyond ceremonial to operational, should a major issue arise,
it reaches end point prematurely as the CEO who presents the end point is there
for the picking. The Buck Stops Here has it use ( and abuse ).
In technology focused
business, it is not uncommon to see CEOs behind computers ( not as a tool for
their actual job ) performing what is essentially an engineer’s job. Bill Gates
spent almost his entire first day back at Microsoft as an adviser in Feb 2014 trying
to install Windows 8.1 upgrade on his PC. To add injury, he also had the new
CEO Satya Nadella in tow. Perhaps it is cheaper and more cost effective to have
the contractors upgrade the windows in his new corner office for a better view.
It is so essential to apply the right type and level
of resource to problems.
Decision ought to be made at the
right level.
Illustrations abounds of how senior people making ill advised decisions that
ought to be made at levels which are better armed with field situations and
relevant operation doctrines.
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Negotiations
This is a very sinful
trap CEOs or senior executives fall into repeatedly for reasons like stealing
the thunder from the account team. For meetings to negotiate deals which are
almost or already in the bag, CEOs ought not to be present. Should customers demand
better pricing or more favourable terms and conditions, it can be declined or
deferred on the basis that it is outside the sand box of those present. Such
reasons go down easier with customer as it sounds as if those present want
to help but is constrained. The customer might even be sympathetic about it.
During my career as
account director in a product company, I have declined some invitations by
business partners to be present at customer meetings for the same reason. Agents
can use my absence more effectively than my presence by deferring or declining
such request to the principal.
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Product Centred Events
Events that are
centred mainly on features, performance and products/services road maps are not
meant for customer’s CEOs or senior executives. The occasion should be graced
by your CEO or senior executives by way of a keynote address and maybe during
the Q&A or break session. The
engagement should kept in the macro or social dimensions and the account team
should preferably to there to control the engagement.
The CEO can play a very vital and key role in
sales and some of the functionaries might include these.
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Man of Last Resort
There will be
situations where critical deals at hand are resting on shaky ground. Such lost can impact business substantially in
terms of short term survival and future strategic advantage where the CEO might
be the only Man of Last Resort in turning situations around. Such situations
should be far and few in between and if it recurs often, something is amiss
especially if it occurs mainly with particular account manager or departments
without an underlying reasons. Examples would include global accounts ( for
which I spent a good part of my career in ) that manages relationships with the most
important customers. Escalation in such accounts are more prevalent. The more
forward looking business will assign an executive sponsor for each of these
accounts from his senior management team. This would provide a more intimate business
relationship and escalations can be handled more efficiently.
Even in Man of Last
Resort situations, the account team ought to brief the CEO on the field
situations and having an account plan as a living document is so important and
valuable. It seems to be the bane of many account team perhaps because of the
perception that it would make them more dispensable. My personal observation
says otherwise that it might be a ticket to the next level.
The possible end
points of the meeting should be rehearsed as not every meeting involving the
CEO might result in closure. This would help the account team and CEO to
conduct themselves appropriately having rehearsed the tango on the possible
outcomes and strategies ahead of time. Curve balls will always abound and it is
precisely this reason why an executive brief for the CEO is necessary to reduce
such risks.
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Connecting
Some business
relationships are top down and forged at upper levels between the executives
and executed thereafter. It would be an account team’s dream if most deals are
constructed as such but in reality, most deals are fought tooth and nails at
ground zero.
These connections are
increasingly more important as silo vendor providing products and services are
transforming into supply chain or outsourcing partnerships. Such engagement involves both
extensive and intensive partnerships between the businesses. Sometimes to the
extend of Siamese twins cannot happen without senior executive sponsorships. A
good example is the relationship between Apple and Foxconn where Foxconn is
treated as Apple’s production department but wearing Foxconn emblem.
It should be the account
team function to cement the relationship between the businesses in generating engagements
between the senior executives of both businesses. Questions prevail on how high
the connection should be. The appropriate level would most probably be plus one
or two levels above the working relationship. If the product/service is
photocopying/printing solution, it will not be wise and appropriate to involve
their CEO. The support/approving levels and the height of the organization
structure are also key inputs on the appropriate level to engage to.
Account team must
manoeuvre with care not to offend customer. Customer must be reassured that it
is not to bypass them which can be disastrous. For this reason, it is best done
with care and proper advisement. This is certainly not for the rookie or faint
hearted.
Having addressed the dos and don’ts, the
attention will shift to how to address situations that are already in trouble
or are headed towards trouble.
For M&As or the
likelihood of such, the CEO and key staff might be given a retention bonus to
make it worth their while to stay around to aid the transition. For the purpose
of succession planning, the retiring CEO or key staff can be offered an outcome
based bonus on retirement.
For business owners
cum CEOs that plan to monetised their business by selling, it might seems to
fool hardy to make himself less indispensable as it might translate into a
lower retention bonus for himself. On the other hand, a business with less key
man issues might attract a higher valuation so a balance is needed here.
Insurance company has
also ‘develop this market’ with products such as key-man insurance that pays on
occurrence of measurable and documentable events pertaining to key-man. Such
policies do not fully repair the damage but money does make difficult
situations more bearable and can be used to fund resources to repair the
damage.
CEO time is not only very costly and
precious, it is also not easily expendable and many business as well as CEO
might actually not realise. Methods such as having Co-CEOs have at best
produced mixed results and not widely adopted. In some cases, 1+1 might amount
to less than 2 but at times can dip below 1 due to conflicting directions from
two heads.
Account team must manage the CEO engagement
with customers prudently and CEOs have to go down hard on the account team with
tough love and challenge them on the value proposition before agreeing to the
meeting. Last but not least, CEOs ought not be above the law or rules in this
case and observe the ground rules themselves.
Safe Harbor. Please note that information contained in these pages are of a personal nature and does not necessarily reflect that of any companies, organizations or individuals. In addition, some of these opinions are of a forward looking nature. Lastly the facts and opinions contained in these pages might not have been verified for correctness, so please use with caution. Happy Reading. Peter Lye
