Building the Collaborative Value Chain - Customer Relationship Management

I’m now presuming we’re in agreement that we have to be willing to go beyond the “ordinary” extended value chain of company,partners,suppliers and to the CVC when appropriate. That means engaging customers and remembering that there are other experts who need to be a part of the effort.

If that’s true and I’m not blowing smoke,then I’m going to outline the steps to prepare the way for a collaborative value chain—what has to be in place to make it happen.

Steps to the CVC
Step 1: Make sure that the internal processes,technologies,metrics,and corporate structure are aligned appropriately. If there is something that’s internally broken, the effort will be doomed from the start.

But this isn’t the typical alignment based on efficiencies. Many companies will use processes like Six Sigma or lean manufacturing to design their systems to reduce deficiencies and align based on purely internal criteria. Even though I’m speaking of internal alignment,it’s in conjunction with customer-focused objectives so it isn’t purely agnostic. For example,say you have an accounting process that is efficient and saving the company thousands of dollars a year,but it’s impacting customers negatively. While this meets a possible Six Sigma objective,it doesn’t meet a CRM objective—which is to provide positive impact to your customers,or at least not impact them negatively. Even if you lose the savings by changing or discarding and replacing the process to make it work in a more customer-positive way,it’s worth it. The alignment of all internal objectives is painted with the brush of customer expectation.

Step 2: Make sure you have all the processes and technologies associated with external interactions working well. Typically,this is going to take the form of web-based activities. The communications media— blogs,wikis,podcasts,and the more “traditional” forms such as e-mail—have to be working effectively among the elements of the internal ecosystem and for the customer. You need to also have processes,procedures,and governance in place for how you and your customers or your partners will share intellectual property and information that ordinarily is considered competitive. Agreements need to be in place,and the rules of the game have to be defined clearly.

This is probably the most important single part of the first two steps. The reason is that you might be doing collaborative forecasting or joint scheduling with your partner,or you might be handing over product design documents. You might be sitting down with a customer who is reviewing the product that you and they just developed. There are clear hurdles that need to be overcome when it comes to how you participate with each other and what kind of legal considerations have to be given.

This isn’t that unusual. Its Neanderthal manifestation was software companies providing customers with beta software for them to implement and test for free. In return for the participation in the beta program,the customers got to use a licensed version of the software prior to its release. But it wasn’t just a matter of installing it and starting to use it. Since it was beta software and being put into a laboratory environment by a rather bold customer,liability had to be assessed; agreements that took that liability or lack thereof into account had to be signed. Nondisclosure agreements (NDAs) had to be executed so the nature of the new version wouldn’t be leaked to the press or competitors. The software needed to be in a specific environment,which may have forced some investment by the company. In other words,the t’s were crossed and the i’s dotted before the program got underway.

Because the results of this collaboration could be a jointly held asset,how that manifests has to be worked out from the get-go. Who owns what for how long and what the expected uses are have to be considered in the preparation. Once these things are done,the final step can be taken.

Step 3: PricewaterhouseCoopers has a lovely description of the third step,though it’s not their third step. This comes from Matt Porta in an article in Cygnus Supply and Demand Chain on what is a maturity model for the collaborative value chain:

They recognize the potential of the new business model enabled by the Internet and collaboration. They have a track record of applying new processes and using technologies in new ways. They are moving beyond collaboration with supply chain partners and are starting to include customers and the sales and marketing processes into their collaborative value chain. These companies seek to link the entire customerdriven value chain in a new way to improve their competitive position,to drive customer loyalty,and to improve profitability.

Step 4: Make sure that you have clear management for the CVC—someone who will be the facilitator and have decision-making power. There are substantial and complex decisions that have to be made. The CIO is actually a good choice for this because of the impact on business rules,IT,and processes—in addition to the social aspects of the CVC. That’s a first. I never thought I would see the CIO as a viable choice for anything in CRM. Regardless of who is chosen,he or she should be a champion for the idea.

Step 5: Remember that the CVC requires not just your customers,vendors, partners,and suppliers,but also industry and other expertise. As you’ll see below,SAP has as a place to access these industry experts so the benefit of third-party knowledge can be realized.

Needless to say,this isn’t meant to be the exhaustive guide to creating a CVC—just an indicator of what it takes to bring together the internal and external resources that are necessary to align the processes,technologies,and social interactions in an exhaustive way so that innovation and collaboration are encouraged and customers in particular are engaged in creating what is important for them and other customers. I didn’t really elaborate here on the cultural issues involved in this kind of effort. If interested,check out the online chapter “You Can’t Handle the Truth—So You Have to Change,” where I discuss how SAP,in particular,made those cultural changes—in fact more effectively than any other company that I can recall. Which is why they are the Superstah! for this chapter! I know you want to hear all about it,so let’s take it to SAP.

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