What we found…
Our finding was that institutionalizing core processes could be the secret sauce to succeeding with Key Accounts..but because it is so counter-intuitive to the entire concept of Key Account Management (KAM), it tends to get overlooked as a possible way to manage and grow Key Accounts effectively. Here is what our thinking boiled down to (guess what: some answers, and some more questions!):
The challenge of considering institutionalization of core processes took us back to the roots of Institutional Theory and the pros and cons of institutionalization as a way of creating competitive advantage and longevity for an organization.
Does it really work?
Does it foster rigidity and kill spontaneity and flexibility?
Does it provide the structure and security to ensure organizational success in the long-term?
The question is – will institutionalization increase rigidity and stagnation or will it provide the support structure to more effectively engage, customize and serve Key Accounts?
Studying how various large organizations, including GE, P&G, etc. – known for their systematic approach to problem-solving, process-driven management style, as well as their longevity of course – approach it, we arrived at some thoughts about whether institutionalizing core processes were valid in the KAM context:
- KAM is not a role or a function – it is an approach to business. It is how we choose to serve our most valuable customers. The core idea of Key Account Management is not to ‘sell’ to the customer, but to deeply entrench oneself with the Customer and their strategy, needs, and goals, so the value is created by way of the right solution at the right time to the right business entity within the Client organization. Institutionalizing core key account management processes can help empower KAMs – it can complement the way they can individualize attention and close deals with authority – because a certain methodology and systematic approach have been followed to manage the Account and address the white space opportunities.
- It is almost always preferable to use a systematic approach to) address recurring processes
b) problem solving than an ad-hoc approach. This is all the more critical in the Strategic Account Management context given the deep complexity of the Client organizations, the dynamic industry landscape, the relationship networks and the solutions themselves. While managing complexity requires flexibility to think and act on one’s feet; knowledge of the landscape; negotiation skills etc.(things which cannot be entirely codified), institutionalizing core processes just cuts out the clutter and the confusion that may be created if each KAM were to do these activities in different ways. The focus can then rightly remain on mobilizing resources as required to best address value creation opportunities instead of wasting time over fundamental but time-consuming processes.
- KAM by its nature is long term, so institutionalizing core processes gives everyone the clarity needed to see if things are on track. It empowers everyone in the ecosystem to participate in the Key Account Management process without wasting time on explanations, clarifications, data collation, formatting, etc. The objective of institutionalizing core processes is not to bring control and rigidity into the system but to provide accessible insight, easier collaboration, faster decision making, smoother problem solving and reduced operational work. Process-driven tracking and reviewing also make review and appraisal of KAM performance over the short and medium run easier as deals tend to have a longer gestation period.
And how it’s guided our thinking…
Having, for the most part, concluded that institutionalizing the core processes that drive management and growth of Key Accounts is a desirable thing, we turned to the question of how and how much. Moreover, this is where Key Account Management software can make all the difference.
The core processes we zeroed in for Key Account Management were: Data Analysis, Annual Account Planning, Tracking, Measuring, Reviewing, and Governance. The effort here is not to box in KAMs with a rigid rule book on how to do these critical activities, but to ease up the pressure on these activities by leveraging a systematic and consistent approach to executing them. A standard and systematic approach to core processes can also potentially eliminate gaps in communication, interpretation, accountability, and deliverables.
Technology additionally helps to streamline and automate a lot of the process. Technology enables a ‘proactive (iterative) institutionalization’ that keeps in mind the environmental dynamics and helps KAMs to leverage, to their own advantage, a systematic module that helps them reach their goals faster and easier.
Armed with that, it did not take much to get my friend to sign up for a free trial of DemandFarm. That is what I call an evening well spent.