Growth Strategy: Building Customer Intimacy Competency Through Acquisition

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I am often asked what the role of acquisitions is in the effort to move through the Customer Intimacy Engine™ journey more quickly - can it help with building critical mass in developing customer intimacy capabilities? 

First, let's discuss the importance of critical mass for the success of the effort.  As you create True Solutionsin specific market segments, you'll begin to have success selling the solutions (assuming you have an appropriate portfolio strategy and are leveraging the power of Service Chains). As success builds, you'll of course have to be able to implement these solutions, and build Trusted Advisor relationships to enable the harvesting of the accounts. 

These actions will require not only the appropriate talent (both numbers and ability), but the talent must also be able to perform as planned.  This critical mass will be the difference in meeting your expectations and failing to launch.  Please try to view that getting your organization ready for action - we might term this your customer intimacy workforce - requires that your R&D spend will be just like with a new product.  You wouldn't take a product to market that you could not manufacture in the volume necessary for success.  Also, remember how many companies view talent today - they wish to minimize the number of people as much as possible as one measure of success.  Therefore, getting this correct and getting support for the hiring (and there may be significant hiring) is crucial.  

This is further complicated by the number of True Solutions™ you are taking to market and the number of market segments you are working with.  Like many issues in the journey, the best approach is somewhat counter intuitive. 

Let's divide the acquisition strategy into two categories:

  1. Acquiring products to strengthen your pull through opportunities, that is to say, getting more products that can be pulled through your Customer Intimacy Engine™ model.  Although this is an important topic that can positively affect your Customer Intimacy Engine™ business, most companies have good processes in place to manage these acquisitions.  Therefore, we'll skip this category.

  2. Acquisitions of professional service capabilities to assist accelerate the development and execution of your Customer Intimacy Engine™. Professional service people have many of the skills you need to build and deliver the front end of your True Solutions (sometimes the entire True Solution, depending on the solution itself).  They have not worked in the environment you are creating.  Therefore, the creation of critical mass - that does exactly what you want the way you want it done - must be created by you.  That is to say, you must bring in resources and develop them (form them; train them; lead them; manage them; coach them; reward them) into the force you need.  Therefore, large professional service acquisitions early in the journey can be detrimental to the effort of building the force you need. Large acquisitions could swamp your teams, methods, approaches, etc.  Let me make a quick comment if you must make a significant acquisition (there could be political reasons for this or need to show significant revenue quickly) it can be accomplished but you must undertake the following to an even stricter degree. Then, you might ask: "Is there no value to Professional Service Firm acquisitions?" Yes, there is, and it can be very powerful.
In the 17 years we have been working these issues, every company we have assisted required the development of offers (True Solution) that they did not have the expertise to create and deliver.  Therefore, acquiring small Professional Service Firms with specific expertise to assist in filling you're your portfolio can be very important. But, and this is a critical caveat, these are acquired differently.  Usually companies do acquisitions to gain immediate revenue and/or margin (taking out a competitor and cutting the overhead).  These approaches focus on large deals (most M&A people believe it is just as difficult to get a large deal as a small deal, and large deals make better market valuation impart).  As stated, these are small deals where you are buying expertise (IP and people) more than revenue, even though these firms do have revenue and clients that can be leveraged right away.  The acquisition target is chosen because it can enable you to provide better offers that allow you to work above the Safety Line more quickly than your competitors, thereby allowing you to build intimacy more rapidly and move more of your customers through to the account harvesting phase more quickly.   But acquiring these firms has their own difficulties, and integrating them quickly creates their own challenges.  I'll discuss these challenges in the next entry, which will focus on the successful acquisition and integration of professional service firms.

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This page contains a single entry by Dean McMann published on December 6, 2010 7:47 PM.

Global Account Management for Customer Intimacy was the previous entry in this blog.

Acquistion Imperatives: Accelerating Time to Value is the next entry in this blog.

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