1. LGO/SDM Web Seminar Customer Renaissance Jonathan L.S. Byrnes jlbyrnes@mit.edu http//mit.edu/jlbyrnes March 14, 2008 Copyright © 2008 Jonathan L.S. Byrnes

2. Today’s Menu Four Telling Cases Customer Renaissance New Imperatives New Value Creation Process Managing for Strategic Success jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes

3. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Stuck in the Mud What Business Are We In? Major Cost Reductions – Foreseen and Unforeseen Surprise Revenue Increases Pile On!

4. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Distributing Chemicals Efficiency Measures Aha! Major Strategic Advantage

5. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Coffee with Customers Sales Force Productivity Key Role for Operations Putting It All Together

6. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Stop the Presses! Now What? Look Ma...No Inventories! Managing Demand Massive Strategic Advantage

7. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes What’s Going On? Huge New Revenue Increases Decisive Strategic Differentiation – Enduring Competitive Advantage It’s Not About the Products! 30-60% Supplier Base Reductions Across Industries Who Wins Big? Who Gets Pushed Out?

8. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes New Frontier of Strategic Differentiation What is Customer Service? What’s Your Worst Nightmare? Why Not Me? was

9. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Customer Renaissance Customer Profitability Asset Productivity Integrated Account Management Supply Chain Management Change Management Competitive Advantage

10. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Three Eras of Markets Inchoate Markets Mass Markets Customer Renaissance 19002000

11. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes New Locus of Value Creation Product General Foods P&G – Wal-Mart Alliance Baxter-Cardinal Nalco LoJack Dell Go-to-Market Process Customer Renaissance Watershed Mass Markets Locus of Value Creation

12. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes New Era, New Imperatives Stable, Homogeneous Markets Product Driven Product Innovation Crucial Broad-Market Targeting Functional Separateness (periodic alignment) Dynamic, Heterogeneous Markets Account Driven Supply Chain Innovation Crucial Precision Account Targeting Functional Integration (overlapping responsibilities and ongoing alignment) Mass MarketsCustomer Renaissance

13. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Drivers of Change Mature, Sophisticated Buyers Exerting Pressure to Increase their Profitability Increased Competition Filling the Ecological Niches Sophisticated IT Both Inside and Between Channel Partners Sophisticated Supply Chain Management Capabilities Throughout the Channel Strong Offshore Competitors

14. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Where Are Companies? Product Your activities are here! Your customers are here! Go-to-Market Process

15. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Problematic Consequences Scattered Islands of Profitability in a Sea of Marginal Business Accounts/Products/Orders Profitability 0 loss low high

16. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes New Value Creation Process Product Attributescrucialimportant Internal Efficiencyadequateimportant Supply Chain Management adequatedecisive Integrated Account Managementadequatedecisive Customer Internal Profitability –crucial Mass Markets Customer Renaissance

17. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes New View of Profitability Management Our CompanyOur Customers Mass Markets Customer Renaissance

18. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Managing for Strategic Success Integrated Account Management Supply Chain Management Revenue focus Cost efficiency Gross margin focus ROIC effectiveness Which relationship? With whom? Strategic differentiation Market mapping Building account relationships Managing change – internal and external Functional Convergence

19. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Management To-Do List -Form a small core team -Cull your own best practices -What’s your baseline? -Out-of-the-box customer visits -Define relationship migration paths -Develop a joint market mapping process - Showcases: 2-4 territories and 2-4 customers -Company-wide wins – salesforce productivity and asset productivity -PC-based profitability map Assess 3-4 months Move Forward 6-8 months

20. jlbyrnes@mit.edu Copyright © 2008 Jonathan L.S. Byrnes Customer Renaissance Management Strategybroad positioningprecision positioning Integrated Account Managementproduct-focusedrelationship-focused Supply Chain Management internal & operationalintegrated & strategic Resourcescash consumptioncash generation Mass Markets Customer Renaissance Decisive Factor for Market Share, Profitability, and Strategic Advantage