Chapter 0 - Managing Global Accounts Preface
[MUSIC] Hello, I'm Noel Capon and I'd like to welcome you to this video book, Managing Global Accounts, or more specifically to the preface for managing global accounts. The reason I've developed this book is that I'm concerned with the ability of companies to continue to make profits today and to promise profits tomorrow, for their ability to survive and grow as independent organizations, and for their ability to enhance shareholder value. Now the arena in which I'm concerned is that where the customers are other organizations.
So this is classic B to B where the customers are either business firms, governments or not for profit organizations but it's also a concern with B to C where the customers are not consumers but the customers are members of the distribution channel like distributors, wholesalers and retailers.
Now suppliers to these organizations have known for many years that some of those customers are more important than others. I know for the years they've developed strategic account, key account or sometimes called national account programs to address their more important customers. Now suppliers that operate in multiple countries may well have multiple of these specific programs. So for example if they are dealing in Australia, they may have a key account program in Australia, they may also have one in Britain and United states and in Argentina. And in deed if they are dealing with a customer that is also multinational, that particular customer may exist in several of these different key account programs. For example in Australia, in New Zealand, in Argentina whatever. These programs by and large have been relatively successful and indeed the Strategic Account Management Association which has now being operating for basically around 50 years is set up in fact to help companies deal with those major accounts. But in recent years those customer companies, those multinationals that operate in multiple countries have been making requests to suppliers that have given suppliers some trouble. So let me suggest to you some of the sorts of questions that customers are asking, these aren't all the questions that I think they give a flavor to the sort of approach and sort of concerns of some multinational customers. So first question might be, we wanna place a single global order, we've been buying from you in multiple countries around the world, we've began to think that this is somewhat inefficient and we'd be better off placing one global contract. Second question might be, we want the same product versions around the world. Now, you Mr. supplier has been a very good job in different parts of the world, so your Argentinian subsidiary has been reacting to the special needs in Argentina and giving us product variations that work in Argentina. Similarly for the other countries in which we do business together, but we believe that over the long run it's gonna be better for us to cut down those numbers of variations and have relatively few product offerings. So rather than having all these different variations around the world in our global contract, what we wanna do is to focus on relatively few product variations.
Thirdly, we wanna identify service wherever we do business, we do business with you in Western Europe, OECD countries, we also do business with you in a set of developing countries. We noticed that the service you give us is not consistent, it's different in some countries than in others and what we wanna do is have have similar service wherever the two of us do business together.
Finally, we want a single global price. We're paying different prices in different countries and that really does not help us with our planning. We want you to come to a single global price. Now why is it that companies are getting these sort of requests? Well, the basic reason is increased globalization. And as you can see on this chart there's tremendous growth in global trade. These particular data come from the World Trade Organization and you can see a very very fast growth in the amount of global trade.
So, globalization is increasing. If you wanna know more about that it's well worth reading Thomas Friedman's book, The World is Flat, which gives you some sense of the drivers of globalization. Now how do companies deal with this globalization? Well, many companies response has been, and in fact what has partly driven globalization, is the formation of multinational organizations. Now Ray Vernon from Harvard did a lot of work on this. He and his team in the 1970s talked about the different organizational structures for moving out of a home country into foreign markets and one of those particular organizational designs, and many companies have used, is the geographical organizational design, where countries have a company manager and they also have regional vice presidents that oversee certain number of those countries. So for example Latin America might be a region, EMEA, Europe, Middle East, and Africa, Asia-Pacific and so forth. Of course what those organization structures do, is focus on the differences between countries.
The reason they have a different separate organization for France, than the company has for Britain is because it believes the French market is somewhat different than the British market. But the issue that we're concerned with now, is issue of similarity across countries, that is in fact well, these multinational customers are telling us that they want. Because of the fact that companies tend to be organized on a multinational basis, they're actually unable to address those set of questions that customers are now starting to ask. For example, single global order. For the supply company, who is gonna address that issue? The way the company is organized is with country managers and regional vice presidents. By definition, they're not set up to address a single global order, and so the problem for the supplier company is that when the customer asks for a single global order, there's nobody to talk to. Second issue, we want the same product around the world, we don't want all these different variations from country to country. The typical response to that is well, we operate geographically, our factories are decentralized and they make what is most required for their local markets. There's just no way that we can put together a single global product for you. Furthermore in those countries where we do operate even if the products are actually identical from one country to another, they may even have different part numbers. So there's really no way we can possibly cut down the number of products and offer you a similar product around the world. Third item, identical service. Well, our service strategies are determined locally. In Latin America we have a regional vice president, he or she and the country managers figure out the service strategies, figure out the resources that they're gonna allocate in their countries. And that's different from Western Europe. These are local issues as far as we're concerned and we just cannot approach delivering identical service around the world.
And finally with respect to prices, I mean you're kidding. [LAUGH] There's absolutely no way we can offer a single global price, our factories are decentralized, the cost structures are different, the transportation costs are gonna be different from one country to another depending on where you want the product. So there's just absolutely no way we can do that. Now those are the typical if you like responses that many companies give to the set of requests that I suggested that customers are starting to ask of Their suppliers. Now what is gonna happen? Well, if the firm is unable to respond effectively to those requests, a competitor is gonna do it. And if a competitor does it what is gonna happen is that the firm is gonna lose those customers. I've seen it time and time again where the supplier is set out to operate very effectively on a multi-country multi-regional basis when the customer comes along and says, now I really wanna work on a global basis and the supplier is just unable to do that, then loses a customer. And it's only then does the company suddenly realize this is a serious issue and starts to move towards managing global accounts. So what are we gonna talk about in this video book Managing Global Accounts? Well the key topics that I wanna talk about now are the table of contents of the book, learning materials, and related content that's available for readers. So let's start off with the table of contents. We are gonna focus on five different section.
Section one, fundamentals for managing global accounts. This section comprises two chapters. Chapter one is really an extension of the preface and focuses on making the case for managing global accounts, why global account management has become in the last 10 or 15 years and will be in the future, so critical for organizations in this arena where customers are organizations. Second of all we focus on in chapter two on value. One of the critical issues of course is any marketing sales management type person knows is that delivering customer value is absolutely critical. There in the big scheme of things that are really not super good frameworks for looking at customer value.
So I wanna focus on customer value and give you some ideas about delivering value to customers. In the second section we focus on strategy. And strategy at two levels, in chapter three we focused on strategy at the level of the account program. What does it mean to develop a global account strategy for the organization or business unit? That such strategy of course would comprise several individual global accounts. Second of all in chapter four, we focus on strategy at an individual global account. So we sort of dealt with the issue of strategy for the programs as a whole. Now we're focused on the role of the global account manager, that manager has a global account, what does strategy mean then and how do we think about developing that strategy for that individual global account. Section three focuses on organization structure and comprises a single chapter.
Now I find that organizations, one of the issues that troubles or concerns managers probably more than any other of the topics we're gonna cover because we've often been as an organization operating a geographic system with regional vice presidents and country managers, and there are gonna have to be some modification of that structure to deal with global accounts. So we'll suggest a number of different ways to approach the problem of designing the organization to address the needs and concerns of these very important global customers.
In the next section, section four we focus on human resources. Now companies have known for a long time that to develop and put in place managers of key accounts, key account managers, that's a somewhat different role from the classic role of the salesforce. Now the least issue of course is a much longer or medium term, focus on the key account manager than there may be on the average salesperson. Now we wrap that upper level to deal with global accounts, so a whole set of issues in terms of what are the characteristics of those sets of people that would be good global account managers, how do we find them, how do we pay them, how do we retain them and so forth. So this section and chapter focuses on human resources. In the final section, section five, we have four chapters. This section focuses on systems and processes or often what we talk of as the organizational infrastructure. The ways we do things in organizations in order to achieve those organization objectives. In chapter seven, we give an overview, in the overview, we lay out a framework for looking at the various types of systems and processes that the company should be thinking about in implementing a global account program. In the next three chapters, we pick up on individual systems and processes that seem particularly important. First of all we pick up on the planning system. How do we go about developing the global account plan for the organization and for individual global accounts? Second of all we focus on an error which is becoming increasingly important in recent years, that is the notion of executive sponsorship. The idea that senior executives should be involved with these most important global customers in some form of executive sponsor program. We'll lay out the rationale for those programs, and how organizations should go about setting them up. And then finally, in chapter ten, we focus on governance. Governance of the global account program and governance of the individual global account relationship for a single global customer with the basic idea that it is one thing to setup the global program. But it's quite another to keep it on track and keep it hamming along. So those are the five sections and ten chapters. Finally there is an epilogue.
Within the epilogue what I focus on are two things. One item is one particular company's journey starting from when global accounts started asking questions of them to more or less up to the day and the sort of transitions that they've been through. So that you can see that it's not just a question of a silver bullet or a magic wand to get you from point A to point B, but this is a long difficult often torturous process where with a number of different dead ends where you learn about how to deal with your global customers and increment the program upwards. And in the second part we focus on what I call key success factor and we'll layout a number of these key success factors, these are the items which in fact we have to be absolutely clear about getting right. Clearly we draw from the ten chapters but pull them together in the epilogue. Finally, there is a bonus chapter. Gaus Mickish is a recently retired global account manager from IBM. He has been doing account management, all his life, he worked also in senior management but has had some of IBM's major customers and has been extremely successful with those customers and so what he will tell us is a personal view.
In his view over the years, what has he learned about the appropriate way to address these major global accounts? Now let's move to learning materials. The first thing is that there are videos of all the sections and all the chapters in the book just like the prefix that you're looking at right now. Ten chapters, an epilogue and a bonus chapter. You have some options. One option for each chapter is to watch the video, right the way through as you are watching this preface right away through. The second option is to look at segments. So for each of the chapters I've divided up into veracy/g three four five or maybe six, six different segments, so you can watch one segment, one segment at a time and then if you like sort of think about that particular segment. To help you do that we have a set of reviews by segment. And those reviews I'm asking you three or four different questions. And you can then sort of reflect on the material that you've watched and listened to answer those questions. And it's an approach that maybe helps you absorb better the material that we covered. In addition, you'll have available the presentation decks, the in-design slides that you are seeing right now, you'll be able to take those and download them. In terms of access you just go on to the access Capon site as you are now, you are able to purchase the book, the videos come streaming to you, you'll be given a code that is linked to your email address and you can go back in as many times as you like and view the material. Finally, let me talk about some related content, some other materials that may be of interest to you, these are some books that I have either authored or co-authored, Managing Global Accounts which I wrote a couple of years ago with Dave Potter from Xerox and Fred Schindler from IBM. This was a real collaboration of the academic world and the business world. Clearly I've drawn on that book to make this video book but you may find that of considerable interest. The second book is Key Account Management and Planing. This is a book I wrote several years ago and it's still still widely used so that may be worthwhile you taking a look at.
Thirdly, there's a case study book which I read with Kristoffersen from the University of St. Gallen. Here there are a number of key account and global account cases which we add to from time to time and publish new editions. So if you're interested in what some major companies have done, some of the challenges they've had with their global accounts and how they reacted to them, and the problems they still face, that might be worth taking a look at. Then there's Strategic Account Strategy. This is a book which I've written, it's really a planning workbook. So that if you're developing a plan for a global account program or if you're developing a plan for an individual global account, there are sets of templates, work materials in there which I use when I work with major global customers in their planning sessions. You may find that useful. And finally there are Sales Eat First, first this is a research study which I conducted with my colleague Gary Tubridy at the Alexander Group and we looked at some of the factors that make salesforces successful. So this is the conclusion. The preface, this is what we've talked about in addition to the set of challenges and questions that global accounts raised. We then talked about the video book itself, the table of contents with it's five sections, ten chapters, epilogue and bonus chapter. We talked about the set of learning materials that are available to you in the video book and then finally we talked about some related materials which you may be interested.
So thank you for watching and listening to this preface. If you do wanna go ahead and buy the book, it's quite clear how you do that on the website. I of course hope you do. And I hope that more specifically what I've managed to put in this book will in fact help you deal with this really rather dramatic but absolutely critical change for all companies that deal with customers who are organizations. This increased globalization certainly isn't gonna go away, the changing set of requests and demands of those global customers are gonna make on their suppliers.
And then what I try to do in this book is to give you ways of approaching, dealing with those customers so that together you develop very positive relationships which in the long run means success for your customers and success for your organization. Thank you very much. [MUSIC]
So this is classic B to B where the customers are either business firms, governments or not for profit organizations but it's also a concern with B to C where the customers are not consumers but the customers are members of the distribution channel like distributors, wholesalers and retailers.
Now suppliers to these organizations have known for many years that some of those customers are more important than others. I know for the years they've developed strategic account, key account or sometimes called national account programs to address their more important customers. Now suppliers that operate in multiple countries may well have multiple of these specific programs. So for example if they are dealing in Australia, they may have a key account program in Australia, they may also have one in Britain and United states and in Argentina. And in deed if they are dealing with a customer that is also multinational, that particular customer may exist in several of these different key account programs. For example in Australia, in New Zealand, in Argentina whatever. These programs by and large have been relatively successful and indeed the Strategic Account Management Association which has now being operating for basically around 50 years is set up in fact to help companies deal with those major accounts. But in recent years those customer companies, those multinationals that operate in multiple countries have been making requests to suppliers that have given suppliers some trouble. So let me suggest to you some of the sorts of questions that customers are asking, these aren't all the questions that I think they give a flavor to the sort of approach and sort of concerns of some multinational customers. So first question might be, we wanna place a single global order, we've been buying from you in multiple countries around the world, we've began to think that this is somewhat inefficient and we'd be better off placing one global contract. Second question might be, we want the same product versions around the world. Now, you Mr. supplier has been a very good job in different parts of the world, so your Argentinian subsidiary has been reacting to the special needs in Argentina and giving us product variations that work in Argentina. Similarly for the other countries in which we do business together, but we believe that over the long run it's gonna be better for us to cut down those numbers of variations and have relatively few product offerings. So rather than having all these different variations around the world in our global contract, what we wanna do is to focus on relatively few product variations.
Thirdly, we wanna identify service wherever we do business, we do business with you in Western Europe, OECD countries, we also do business with you in a set of developing countries. We noticed that the service you give us is not consistent, it's different in some countries than in others and what we wanna do is have have similar service wherever the two of us do business together.
Finally, we want a single global price. We're paying different prices in different countries and that really does not help us with our planning. We want you to come to a single global price. Now why is it that companies are getting these sort of requests? Well, the basic reason is increased globalization. And as you can see on this chart there's tremendous growth in global trade. These particular data come from the World Trade Organization and you can see a very very fast growth in the amount of global trade.
So, globalization is increasing. If you wanna know more about that it's well worth reading Thomas Friedman's book, The World is Flat, which gives you some sense of the drivers of globalization. Now how do companies deal with this globalization? Well, many companies response has been, and in fact what has partly driven globalization, is the formation of multinational organizations. Now Ray Vernon from Harvard did a lot of work on this. He and his team in the 1970s talked about the different organizational structures for moving out of a home country into foreign markets and one of those particular organizational designs, and many companies have used, is the geographical organizational design, where countries have a company manager and they also have regional vice presidents that oversee certain number of those countries. So for example Latin America might be a region, EMEA, Europe, Middle East, and Africa, Asia-Pacific and so forth. Of course what those organization structures do, is focus on the differences between countries.
The reason they have a different separate organization for France, than the company has for Britain is because it believes the French market is somewhat different than the British market. But the issue that we're concerned with now, is issue of similarity across countries, that is in fact well, these multinational customers are telling us that they want. Because of the fact that companies tend to be organized on a multinational basis, they're actually unable to address those set of questions that customers are now starting to ask. For example, single global order. For the supply company, who is gonna address that issue? The way the company is organized is with country managers and regional vice presidents. By definition, they're not set up to address a single global order, and so the problem for the supplier company is that when the customer asks for a single global order, there's nobody to talk to. Second issue, we want the same product around the world, we don't want all these different variations from country to country. The typical response to that is well, we operate geographically, our factories are decentralized and they make what is most required for their local markets. There's just no way that we can put together a single global product for you. Furthermore in those countries where we do operate even if the products are actually identical from one country to another, they may even have different part numbers. So there's really no way we can possibly cut down the number of products and offer you a similar product around the world. Third item, identical service. Well, our service strategies are determined locally. In Latin America we have a regional vice president, he or she and the country managers figure out the service strategies, figure out the resources that they're gonna allocate in their countries. And that's different from Western Europe. These are local issues as far as we're concerned and we just cannot approach delivering identical service around the world.
And finally with respect to prices, I mean you're kidding. [LAUGH] There's absolutely no way we can offer a single global price, our factories are decentralized, the cost structures are different, the transportation costs are gonna be different from one country to another depending on where you want the product. So there's just absolutely no way we can do that. Now those are the typical if you like responses that many companies give to the set of requests that I suggested that customers are starting to ask of Their suppliers. Now what is gonna happen? Well, if the firm is unable to respond effectively to those requests, a competitor is gonna do it. And if a competitor does it what is gonna happen is that the firm is gonna lose those customers. I've seen it time and time again where the supplier is set out to operate very effectively on a multi-country multi-regional basis when the customer comes along and says, now I really wanna work on a global basis and the supplier is just unable to do that, then loses a customer. And it's only then does the company suddenly realize this is a serious issue and starts to move towards managing global accounts. So what are we gonna talk about in this video book Managing Global Accounts? Well the key topics that I wanna talk about now are the table of contents of the book, learning materials, and related content that's available for readers. So let's start off with the table of contents. We are gonna focus on five different section.
Section one, fundamentals for managing global accounts. This section comprises two chapters. Chapter one is really an extension of the preface and focuses on making the case for managing global accounts, why global account management has become in the last 10 or 15 years and will be in the future, so critical for organizations in this arena where customers are organizations. Second of all we focus on in chapter two on value. One of the critical issues of course is any marketing sales management type person knows is that delivering customer value is absolutely critical. There in the big scheme of things that are really not super good frameworks for looking at customer value.
So I wanna focus on customer value and give you some ideas about delivering value to customers. In the second section we focus on strategy. And strategy at two levels, in chapter three we focused on strategy at the level of the account program. What does it mean to develop a global account strategy for the organization or business unit? That such strategy of course would comprise several individual global accounts. Second of all in chapter four, we focus on strategy at an individual global account. So we sort of dealt with the issue of strategy for the programs as a whole. Now we're focused on the role of the global account manager, that manager has a global account, what does strategy mean then and how do we think about developing that strategy for that individual global account. Section three focuses on organization structure and comprises a single chapter.
Now I find that organizations, one of the issues that troubles or concerns managers probably more than any other of the topics we're gonna cover because we've often been as an organization operating a geographic system with regional vice presidents and country managers, and there are gonna have to be some modification of that structure to deal with global accounts. So we'll suggest a number of different ways to approach the problem of designing the organization to address the needs and concerns of these very important global customers.
In the next section, section four we focus on human resources. Now companies have known for a long time that to develop and put in place managers of key accounts, key account managers, that's a somewhat different role from the classic role of the salesforce. Now the least issue of course is a much longer or medium term, focus on the key account manager than there may be on the average salesperson. Now we wrap that upper level to deal with global accounts, so a whole set of issues in terms of what are the characteristics of those sets of people that would be good global account managers, how do we find them, how do we pay them, how do we retain them and so forth. So this section and chapter focuses on human resources. In the final section, section five, we have four chapters. This section focuses on systems and processes or often what we talk of as the organizational infrastructure. The ways we do things in organizations in order to achieve those organization objectives. In chapter seven, we give an overview, in the overview, we lay out a framework for looking at the various types of systems and processes that the company should be thinking about in implementing a global account program. In the next three chapters, we pick up on individual systems and processes that seem particularly important. First of all we pick up on the planning system. How do we go about developing the global account plan for the organization and for individual global accounts? Second of all we focus on an error which is becoming increasingly important in recent years, that is the notion of executive sponsorship. The idea that senior executives should be involved with these most important global customers in some form of executive sponsor program. We'll lay out the rationale for those programs, and how organizations should go about setting them up. And then finally, in chapter ten, we focus on governance. Governance of the global account program and governance of the individual global account relationship for a single global customer with the basic idea that it is one thing to setup the global program. But it's quite another to keep it on track and keep it hamming along. So those are the five sections and ten chapters. Finally there is an epilogue.
Within the epilogue what I focus on are two things. One item is one particular company's journey starting from when global accounts started asking questions of them to more or less up to the day and the sort of transitions that they've been through. So that you can see that it's not just a question of a silver bullet or a magic wand to get you from point A to point B, but this is a long difficult often torturous process where with a number of different dead ends where you learn about how to deal with your global customers and increment the program upwards. And in the second part we focus on what I call key success factor and we'll layout a number of these key success factors, these are the items which in fact we have to be absolutely clear about getting right. Clearly we draw from the ten chapters but pull them together in the epilogue. Finally, there is a bonus chapter. Gaus Mickish is a recently retired global account manager from IBM. He has been doing account management, all his life, he worked also in senior management but has had some of IBM's major customers and has been extremely successful with those customers and so what he will tell us is a personal view.
In his view over the years, what has he learned about the appropriate way to address these major global accounts? Now let's move to learning materials. The first thing is that there are videos of all the sections and all the chapters in the book just like the prefix that you're looking at right now. Ten chapters, an epilogue and a bonus chapter. You have some options. One option for each chapter is to watch the video, right the way through as you are watching this preface right away through. The second option is to look at segments. So for each of the chapters I've divided up into veracy/g three four five or maybe six, six different segments, so you can watch one segment, one segment at a time and then if you like sort of think about that particular segment. To help you do that we have a set of reviews by segment. And those reviews I'm asking you three or four different questions. And you can then sort of reflect on the material that you've watched and listened to answer those questions. And it's an approach that maybe helps you absorb better the material that we covered. In addition, you'll have available the presentation decks, the in-design slides that you are seeing right now, you'll be able to take those and download them. In terms of access you just go on to the access Capon site as you are now, you are able to purchase the book, the videos come streaming to you, you'll be given a code that is linked to your email address and you can go back in as many times as you like and view the material. Finally, let me talk about some related content, some other materials that may be of interest to you, these are some books that I have either authored or co-authored, Managing Global Accounts which I wrote a couple of years ago with Dave Potter from Xerox and Fred Schindler from IBM. This was a real collaboration of the academic world and the business world. Clearly I've drawn on that book to make this video book but you may find that of considerable interest. The second book is Key Account Management and Planing. This is a book I wrote several years ago and it's still still widely used so that may be worthwhile you taking a look at.
Thirdly, there's a case study book which I read with Kristoffersen from the University of St. Gallen. Here there are a number of key account and global account cases which we add to from time to time and publish new editions. So if you're interested in what some major companies have done, some of the challenges they've had with their global accounts and how they reacted to them, and the problems they still face, that might be worth taking a look at. Then there's Strategic Account Strategy. This is a book which I've written, it's really a planning workbook. So that if you're developing a plan for a global account program or if you're developing a plan for an individual global account, there are sets of templates, work materials in there which I use when I work with major global customers in their planning sessions. You may find that useful. And finally there are Sales Eat First, first this is a research study which I conducted with my colleague Gary Tubridy at the Alexander Group and we looked at some of the factors that make salesforces successful. So this is the conclusion. The preface, this is what we've talked about in addition to the set of challenges and questions that global accounts raised. We then talked about the video book itself, the table of contents with it's five sections, ten chapters, epilogue and bonus chapter. We talked about the set of learning materials that are available to you in the video book and then finally we talked about some related materials which you may be interested.
So thank you for watching and listening to this preface. If you do wanna go ahead and buy the book, it's quite clear how you do that on the website. I of course hope you do. And I hope that more specifically what I've managed to put in this book will in fact help you deal with this really rather dramatic but absolutely critical change for all companies that deal with customers who are organizations. This increased globalization certainly isn't gonna go away, the changing set of requests and demands of those global customers are gonna make on their suppliers.
And then what I try to do in this book is to give you ways of approaching, dealing with those customers so that together you develop very positive relationships which in the long run means success for your customers and success for your organization. Thank you very much. [MUSIC]