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Eighty-eight percent of all CEOs say getting closer to the customer is the most important dimension to realize their strategy in the next five years.  According to an IBM study, "The most successful organizations co-create products and services with customers, and integrate customers into core processes. They are adopting new channels to engage and stay in tune with customers. By drawing more insight from the available data, successful CEOs make customer intimacy their number-one priority."

This is not news for anyone who views customer intimacy as a business model and not just a sales technique. One of the key tenets of a superior customer intimacy practice is to constantly maintain a tight linkage between service delivery and value creation.  In fact, by definition, you can't have real customer intimacy if you're not solving your customer's most strategic issues.


The diagram above makes the following point: there must exist an optimal balance between your promise and your delivery, i.e., you gotta walk the talk.  Further, the value proposition you bring to your client must impact your customer's value drivers in a perceptible way.  Once you have convinced the customer that your idea will in fact deliver value (idea selling), then you must in fact deliver what you promised.  In our case, we say that you must offer True Solutions™ and be an intimate partner in solving problems and bringing new ideas to your clients. Of course, you also have to keep in mind that your ideas or propositions must be screened to ensure they meet your criteria for fostering customer intimacy.

If your solutions don't deliver on your value proposition, you're guilty of marketing hype.  This can be a fatal mistake.  Far too many companies believe their own marketing propaganda, and don't know how to deliver on their marketing promises.  90% of the time, this is why customer intimacy gets a bad rap.

Now, a few words about customer value drivers. We're all indebted to the academician Jag Sheth's theoretical model that explains the five values that drive customer choice:

1. Functional value: the perceived utility that derives from a product's physical, utilitarian, or functional attributes.
   
2. Social value: derived from an alternatives association with an identified demographic, socioeconomic, cultural, or ethnic group.
   
3. Emotional value: derived from the ability of an alternative to arouse an emotional or affective state.
   
4. Epistemic value: acquired by an alternative as the result of its ability to arouse curiosity, provide novelty, and/or satisfy a desire for knowledge.
   
5. Conditional value: derived from the specific situation or context of the purchase decision. 

At McMann & Ransford, we help our clients build True Solutions™ that meet all five customer values.  Unfortunately, far too many companies are focused on functional value alone, a classic symptom of the product-driven company.  In our next post, we'll look at an industry which is addicted to innovation and examine the consequences of this behavior.

You may recall that I recently wrote a blog post about enabling the sales executive and her organization titled Why Solution Selling is not Enough.

Today, I would like to discuss the role of the marketing executive in terms of customer intimacy.

In the simplest sense, marketing has a direct role in market strategy, participation strategy, and enabling the success. Because of their unique role and perspective on the business, marketing owns or is heavily involved in the strategy of the business, and often drives the decision-making process of how to address commoditization issues.

These include:
•    Expanding product lines to leverage current channels
•    Acquiring market share and thereby eliminating competitors
•    Moving to a platform offering
•    Moving to a suite of products that can be sold in a bundle format
•    Moving to the Intimacy Engine™ model.

All of these and other strategies make sense at different times and for different reasons and many times they need to be combined in order to deliver the transformation required. We believe that the Intimacy Engine™ should always be considered as a mechanism to change the paradigm of a business that is experiencing or will be experiencing the crushing cycle of innovation that does not yield the long term price differential needed to support the growth and profit margins of a sustainable business.

Marketing is key in assisting the organization in gaining an understanding of what’s at stake. Marketing has a future view of the business and therefore brings that to the discussion - often line executives must be immersed in the day to day do not have the time or maybe the information to question what can be different and what direction to go.

All significant product portfolio changes including the adoption of the Intimacy Engine™ require significant investment, process changes, leading new buyers, creating new messages, but the Intimacy Engine™ takes advantage of what we have today and what markets we’re in. It moves up the organization to executive buyers and provides a portfolio of things they are interested in. Furthermore, it allows the pull through of the existing products and services.

We have seen several marketing executives take the lead in getting their organizations head around the power and journey of the Intimacy Engine™.

Here, Mike Mendenhall of HP explains their campaign titled “Let’s Do Amazing”:

We’ll examine HP’s campaign in detail in another blog post, but suffice to say, it fits within the purview of marketing to take the lead.

Now here are the steps used by one of our clients as they lead their company’s business model transformation.

•    Market Participation strategy
Use these questions as inputs to the process:

- Which Markets/segments must you win in to continue your growth and margin requirements?
- What markets/segments do you do you need to move into wither to take from competitors or to leverage your product strategy
- What capabilities do you have that can be leveraged in a True Solution™?

Often, your customers think of themselves as part of a vertical business segment - phama, food and beverage, energy etc. It is important when discussion an Intimacy Engine™ business that this perspective is used as the overriding structure.

•    Business Model development
A model can be developed to explain the investment and return rate including timing should be developed for the organization. This will most likely include a lengthy discussion of the Intimacy Engine™ business model, its components, benefits, and other unique attributes. Also, where to pilot the model should be identified and reasoning provided.

•    Socialization Effort
The Marketing Executive is the perfect executive to take the lead in getting the broader management team on board. This often requires intellectual material, and an event set aside for the team to gather and go through and develops an understanding of the power and impact the Intimacy Engine™ can provide.

•    Pilot Implementation
This by definition is a combined, collaborative effort between a line executive and marketing to assure that appropriate resources are allocated - often new hires are required, for example. But, it is important that the broader executive team stay deeply evolved in the pilot’s progress - this will provide support for the inevitable challenges that occur, and the broadest understanding of the power of the model to be understood.

Obviously, there are significant efforts made during the pilot on offer development, market messaging and go to market messaging. Although these are quite different than traditional offers and messaging they follow the same process and must be properly enabled for success.

I hope I’ve made the case for why the marketing executive is a natural to take the lead in Customer Intimacy transformational initiatives.  Stay tuned for more on this topic.

Most B2B companies strive to build an intimate and trusted relationship with their customers, at least that's what they say they want. They expend a lot of energy educating their sales professionals to work in that space thinking that this is the area most in need of help. After dedicating considerable resources and time on sales training, most find that it's unfortunately not the panacea they hoped it would be.

As we've stated on this blog several times - Customer Intimacy is a business model change, not simply a series of training session for customer-facing employees.

 

As the diagram shows us, customer intimacy business model re-invention is more than just a sales approach. It is literally a new way of thinking and executing work.  Let's save that discussion for another post.  For now, I'd like us to examine the plight of the sales organization. 

How does your sales organization meet the challenge? How does your customer relationship become an intimate one?

Often, we find that a major stumbling block is that the "solutions" the sales organization take into customer discussions are  in fact little more than a bundling of products - which tend to emanate from a single product family, business unit, or process.

True, they may make a larger sales - but the customer does not engage in a meaningful way.

At other times, we see companies selling the "solution pricing" premise, that is, "buy this bundle of stuff and get better pricing." Finally, we sometimes see an effort to refocus the discussion around the products as a driver of savings - this approach will be of some interest to the customer, but it does not differentiate your offerings from the competition. In fact, it can spiral into destructive price warfare.
 
All these and many other approaches are tried every day and then foisted upon the sales organization with little more than sales training, which, let's face it, does not change the central problem - are you really solving your customer's most strategic problems?

Your customer executive still does not engage, and your solution pitch is still viewed as just another sales pitch. 

After literally over a thousand discussions with key executives, I can state that they are tired of this approach and don't want to solve your problem: finding out what's important to them so you can pitch your products to that issue or topic.

So what does work? Equipping your sales talent with True Solutions™ - that is to say, accept that you must create and offer things that create a true partnership. 

You must develop a portfolio of intimacy driving things that the executive truly cares about - for example, hospital executives are more interested in patient safety than the name on the MRI; food and beverage companies are more interested in getting new product ideas and out in the market, then what copier is used.  This does not mean that your current products don't need to be sold. But, if you want an executive to sit up and take notice, you must equip them with the right True Solutions™. 

I know this sounds impossible (you ask: how can we have anything to offer that would fit the bill?) and its sounds impractical (how does this sell my products?).  In answer to both questions, I hope you have been reading this blog and are gaining an understanding of the power of the Customer Intimacy Engine™.  But let's be logical for a second; if the customer executive wants to meet more often with your team because they are truly helping they will be more sympathetic to your products and services.  Also, many times a section of the portfolio can directly pull through products and build intimacy.  My empathy is always with the people on the front lines - those actually helping your customers. 

We need to accept that it is asking a lot of sales people alone to carry the weight of building those key relationships. In addition to the right solutions they need a support organization that can come into an account with the type of vertical expertise and specific solution knowledge to convince the customer that your are for real and can/will implement appropriately.  Building the right kind of expert consultancy internally is crucial.  That is no easy task, but it can and must be done.  These experts will have experience talking "straight" to executives and holding their own when tough information must be delivered.

Finally, "solution selling" by itself is not enough to equip the sales talent to be successful in this new and different landscape.  We must equip them to leverage the power of ideas and consultative help available through team selling. This is a large conceptual change but once they are doing it - almost all can become proficient in this type of leverage - they can go to any executive with confidence that they will be well received and well thought of.

In summary, the notion that solution sales training will get us into an intimate executive relationship where we are providing that proverbial "trusted-advisor" impact is just not true. 

We need to equip ourselves in a much more serious manner - and it's worth it because owning the customer's mind share always leads to wallet share. 

These include:

• True Solutions™ - ones that meet the executives needs not yours,
• Consultative Support - people that can dominate the intellectual issues of the industry and the solution in a "doctor-patient" relationship
• Training on how to master idea-driven relationships, and
  
• Leveraging a team selling environment.

I'm often asked by senior executives about how they should assess their company's progress on the Customer Intimacy Journey.
A quick Customer Intimacy Assessment can be done by answering the following set of questions. Executives should be familiar with the key milestones for each phase, and, most importantly, they need to be as objective as possible in order to come up with their next set of actions.

Getting Started

• Does your organization understand that this is a business model and not a sales technique?
• Does the executive team understand what it takes to be successful?
• Do you have buy-in for the long term transformation?

Forming the Business

• Do you have ideas that are strictly applicable to the niche (vertical market) you want to compete in?
• Do you have proof points to differentiate your company?
• Are you selling to the key executives in your target market?
• Can you upsell more solutions to the executives you currently serve?

Commercializing the Business

• Can you save disaffected accounts?
• Do you add new accounts through solutions?
• Are you pulling through significant product deals?
• Do you have a portfolio that touches several key executives in the vertical?
• Can you grow rapidly?

Scaling the Business

• Do you have integrated verticals where key accounts are run by a Customer Intimacy business model?
• Do you have large transactions sold without sales activity?
• Have you eliminated some corporate cost by leveraging solution teams to do them?

Dominating the Market

• Are you running the company/business in a new way?
• Have you changed your performance metrics?
• Are you still running to business models - old and new?
• Are you promoting Customer Intimacy leaders to top leadership jobs?

At McMann & Ransford we guide our clients throughout the Customer Intimacy Journey - from getting started to dominating the market. Do you know where you stand?  

We work with many new practices that include people from our clients' legacy businesses, consultants with vertical expertise that are recent hires, and other new hires that might sell solutions.  While they each have been successful in their own careers and think they know how to build customer intimacy, in practice it is often a challenge to get the group to work together effectively.

This can be especially challenging for management consultants hired into the practices - they have done billable work before, sold consulting deals, and managed clients and they don't readily see the difference between selling services and customer intimacy.

The effort of getting everyone performing in a fast-growth, repeatable, Customer Intimacy Engine™ - that pulls through products as its primary goal - can be very frustrating for our clients and they often find this part of the journey the most surprising.

I wanted to walk through the steps we believe are best practices and what effect they have during this part of the journey.  Please keep in mind that each time you move to a new practice area you will experience many of the same issues, so the ability to get this right and do it again and again becomes a key skill in taking you company into and being successful on the journey.

Complete Integrated Training Program
This seems to be an area that most major companies have trouble adapting as necessary.  You need to know you are building an entire business model that works differently.  You must know what skills and competencies are needed for each job category, and you must be able to deliver the skills transformation and be able to hold your people accountable. (We'll take up this topic in detail in a future entry.)

I will say that we have been doing this for 17 years and the amount of IP and transformational education materials required are immense.

On-boarding begins During the Interview
From the first time an internal or external person is introduced to the business - they should begin the education on the business model and how the role they are considering fits in - some use extensive materials even video vignettes.  This opens a question I often here - sharing methods - I am asked why we openly share on our blog and elsewhere how to make the journey.  I like to use the Toyota story - Toyota has always opened their miracle of manufacturing for inspection by other car companies. They are asked why they do that - my understanding of their answer is - it is not knowing what can be done but having the discipline, fortitude and guidance to do it.  That is the way we feel - we want companies to make the journey and if sharing helps them get going great - but we know that it requires more than a cursory knowledge to make it through the journey.  Anyway, every discussion with a candidate should reinforce and question their understanding of the model and role.  This also helps determine who should join the business.

The First Six Months
We think of this as the time members of the business go through a personal understanding and skills transformation.  It includes a great deal of training and role playing - only by doing do they begin to see the differences. Also as the business grows you can have your own clients come in and play their roles in this effort.  Further, each newbie gets a coach that rates their adaptation to the new skills - intellectual, emotional, and demonstrable - this can go directly into their review.  Further, they need to do fail-first learning (harsh, perhaps, but effective) they must be pushed into client situations - this will begin to dispel the false idea that "I can do this my own way."

On-Going Learning
Usually the members of the organization are now hungry for the continued learning aspect of the roles and the roles they aspire to.  They embrace the training/role playing activities they will experience over the coming years.  Please remember this is like the army: the action is on the ground not at headquarters - people must know what to do in client situations and feel free to take action. They cannot take problems back to senior management or cut prices to make things work. 

Teams
The final support for the people is that everything works like a project and they are always on teams - although the teams are different.  On a close knit team, day-to-day coaching and feedback become the norm.  Think of a family - you don't wait till the end of a review period to tell your kid that they did something wrong or great.
 
I hope this entry helps you get an introduction to the breadth of the issues and some best practices to drive the change using the Customer Intimacy Engine™.

When developing Service Chains™ it is important to evaluate their business value and your ability to implement them in the market. At McMann & Ransford, we recommend tracking the following criteria to help foster customer intimacy:

1. Strategic Importance
2. Financial Importance
3. Market Attractiveness
4. Demand & Delivery Potential

Please keep in mind that each criteria directly relates to the overall portfolio. As your business grows you will want a portfolio of True Solutions™ that a) builds intimacy with key executives above the safety line, and b) builds critical mass of the solution business, and pulls through product directly.

Let's take some time and discuss the power of ideas and their importance as the central component of a True Solutions™.  Good ideas facilitate the road to true customer intimacy. 

A solution is the embodiment of an idea - and how the idea can be realized.  The idea is the kernel of the change in the relationship from pushing products and discussing business opportunities.  Often conversations that are supposed to be about solutions are really about how to better use our products and get more bang for the buck in our relationship; these are valuable issues but not True Solutions™ discussions. 

As seen in the diagram below, there are many levels of impact from solutions.


The solutions that build intimacy above the line of safety are what we term True Solutions™.  These solutions are based upon ideas.



Using ideas as the focal point of discussions with clients immediately changes the dialog and therefore the relationship.

The power of ideas is that they immediately accomplish several things:

• They focus the discussion on the idea - not the sales representatives (or consultants)  skills,  not the company or current relationship, but the idea.
• They enable a more consultative conversation - discuss the merits of the idea in a particular environment.
• They align with the way real decisions are made - instead of working against the process. 
  

What makes a good idea?  Ideas for this discussion are focused upon seizing an opportunity for a company - be it business growth or protection, increase revenue or cut costs.  A good idea is not wishful thinking - but a challenge to see the business differently.  A good idea should be easy to summarize - to be expressed in a few minutes.  A good idea should be actionable, understandable and straight forward to evaluate for applicability.  Finally, a good idea should have a "wow" factor.

Granted some ideas are bigger than others - some require a bigger budget, some require more authority to move forward, but all good ideas should draw the client into a discussion about the possibilities.
 
How do ideas flow with the way decisions are made? 

Decisions are made by deciding:

1) Whether to Act,
2) How to Act, and only then,
3) With Whom to Act. 

Whether to Act - This stage is all about deciding if something should be done. Is it worth investigating this opportunity or issue(s)?  Only when this is decided does How to Act come clearly into view.

How to Act - How can this be done - What are the alternatives? Where are the risks? What's the game plan?  The staget is fruitful with analysis of how to get things done.

With Whom to Act - Can I do this alone, do I need help, who can I trust, etc.  This is about selecting partners for the implementation.  If you have assisted in Whether to Act and How to Act, then you are the partner for Whom to Act with.

How often have you been involved in a sales situation where all the discussion is about With Whom to Act - our product is better, cheaper, etc.? 

For clients to buy from these discussions they must have determined the first two questions without you - either buy themselves or with someone else's help.   Also, long sales cycles are often caused by selling With Whom to Act when the client is still deciding Whether to Act.

The importance of moving up the food chain is paramount - the true value of the relationship is created in the Whether to Act and the How to Act stages of a decision.   Also, this help must be paid for - yes paid for, otherwise it is not of any value to client.

I think at this point it might be helpful to discuss some of the issues of forming the group that is to incubate your Intimacy Engine™ business model.  I say incubate because like many new initiatives it must be kept apart - nurtured and protected from the normal processes, procedures and pressures of the organization. 

As we mentioned earlier there will be natural forces within the company that will work against its success - normal, but they can be destructive, as we saw in the case of Microsoft. Dick Brass' recent op-ed echoes the frustration of so many:

Unlike other companies, Microsoft never developed a true system for innovation. Some of my former colleagues argue that it actually developed a system to thwart innovation. Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers.

Internecine warfare is common reaction you set about changing your business model. It's not simply a go-to-market adjustment.  When building a customer intimacy business model, their are several unique attributes that cannot, and must not, be compromised:

Similar to Consulting Firms - Like consulting firms the key people will be spending time advising clients and working with them in an intimate way - think trusted advisor. This means investing much more authority in field functions and less reliance on staff functions and a much flatter organization - more people doing, less people checking to see what they are doing.

Similar to the Army - The decisions are made on the battle field.  The general cannot be called every time a corporal must make a decision.  Further, like some consulting firms these businesses must deal with a large influx of people who must become experts rapidly in their career. This requires a level of constant training and development unknown in today's corporations.

Pull Through Product - Unlike consulting, the purpose of the intimacy is to differentiate the company and allow trusted advisors and True Solutions™ to pull through product.  Therefore the measures of success are different than consulting.

Rapid Growth - To make a difference to a large enterprise in a reasonable amount of time the business must grow very rapidly.  This means hiring many people - early in the growth curve and that is difficult for companies today who look to hiring people as one of the greatest risk they have.  Further, the business processes and procedures (which are often different existing processes) must be implemented at the start - these counterintuitive processes and procedures may go against the grain.

 
It is important that the new group report appropriately in the organization so that that it receives frequent attention from senior management.  Many organizations believe this can be accomplished outside of the organization chart - and in some cases that is true.  

Ask yourself, in your company, how important is the organization chart? Is it the first thing discussed? Does it drive how we view who and what's important? If so, then organization placement of this initiative becomes critical to success.

Often the leader emerges from the effort to get the organization aligned on the vision and motivated to take action.  The very passion required to get the organization moving is also needed to keep the effort going.

The attributes of your leader are important:

1.    They must be respected by the organization
2.    They must be aggressive - this effort will require immense energy
3.    They must be flexible - like any new venture this effort will require many adjustments
4.    They should not be bureaucratic or rules-bound - the nature of new and the nature of solutions-led businesses is that they are flat organizations with much authority given to people lower in the organization.
5.    They must be determined - this effort requires 3 to 5 years to be completely successful, and the leader must be able to stay focused for the duration.

The initial portfolio during the "form" phase of the transformation to an intimacy business model (which we call the Intimacy Engine™) is crucial.  The dilemma is the need to develop True Solutions™ - which must address an important business opportunity or correct a business problem for your client - and have the ability to implement these solutions consistently.  

The structure of this new group will resemble a type of management consulting firm.  There will be practices for each grouping of offers (discussed a little later), a group that helps create offers, manages methodologies and trains the staff, and the junior consultants organized into a pool of resources.

You'll notice that I neglected to denote all the staff functions normal to a product business - HR, Finance, etc.  It is not that these are not important, it's just I want to speak to them separately. Let's take each one of the denoted groups and explain their purpose:

Practices - this group holds the expertise of the offer - usually vertical in nature.  If the practice is to serve hospitals this group will have the experts that know how to sell and deliver to hospitals.  It is important to note that you may or may not have a sales organization for this business - there are reasons for both. But the ability to convince clients to buy the offer will live in the practice.

Methods - the ability to do the same thing many times is the mission of the methods group. These might include the following activities: hire, train, and on-board someone, or develop offers, or conduct steering committee meetings, etc.  These groups are made up of rotating people from the practices and the pool.  They must be able to do the work to understand how to build and maintain the methods that enable success. 

Pools - the pool is where consultants stay as they learn the trade and develop what are called "major" and "minors" -  their specialization - vertical and/or type of work.

During the first stage of the Customer Intimacy Journey it is important to create and deliver solutions that have a visible impact with your clients. 

As you know, terms like "solutions" and "customer intimacy" are overused in the management consulting industry, and I believe often mean too little.  In this blog, we'll try to distinguish our thoughts with not-so-clever use of the terms True Solutions™ and Intimacy Engine™.  I want to talk about what True Solutions™ are and how it is crucial to the building of the Intimacy Engine™ business model.

As you can see by the chart as you move up and to the right you are both making a greater impact on your client and requiring greater intimacy ability to get them to buy and implement solutions.

True Solutions™ - represented on this chart as business solutions - must address a true important business opportunity or correct a business problem for your client.

It is not the bundling of your product and services, it is not adding professional services to implement your service or even assist in product selection (although all these are valuable and will be part of your portfolio).   Further, a True Solution™ should be focused above the Line of Safety in the clients business:


The problem or opportunity that the True Solution™ addresses must add something that is crucial to someone (hopefully more than one) above this line.  Also, you'll require their support and purchasing power to engage you on the problem.  Fall below the line of safety and you're easily replaced - by technology, price, or salesmanship. Stand above the line of safety and competitors will find it difficult to dislodge you.
 
This means developing True Solutions™ requires deep understanding of the business sector your clients occupy, and profound knowledge of the unique issues in that sector - not how they use your product! 

Over the last decade we have spoken to literally hundreds of senior executives on behalf of our clients, from all industries: Food and Beverage, Retail, Pharma, Insurance, Healthcare, Financial Services, Heavy Manufacturing, etc. - and the common requirement from this broad group is that they want to partner with experts in their industry who bring them new ideas and the staff to help them through the realization of the benefits of those ideas.
 
Too many companies think they understand their clients' business but in reality their investments tell the story. They are heavily invested in product-driven R&D, and their interactions are far too shallow to uncover real value. They invest in product focus groups, product user meetings, and low-level interactions with transactional salespeople.  The few executive interactions ave mainly "dog-and-pony shows" to show support and get feedback about what is irritating customers.   I'm not saying these are not important, but I am saying that this sort of engagement does not build a deep understanding of your customers' business - or the drivers, challenges and methods to solve key business issues. 

A case in point: I was once meeting with the CEO of one of the largest companies in the world and he stated that he had intimacy with his customers - he could meet with any of them for dinner at any time - it was just that others would not follow up on the promises he made.  This statement told me everything; he was not intimate at all; rather, they were being polite and leveraging the meeting for concessions.  Intimacy means actual daily presence in the trenches, solving real client problems.
 
Think through your own experience: who is your trusted advisor to you? Who do you reach out to for advice and help? Usually it is someone that understands your problems and issues and has proved themselves by providing impactful solutions in the past.  Remember, our goal is to become an extension of our clients' organization - to be treated as part of the body with no anti-bodies seeking us out and trying to exterminate us.

Let me tell you about a personal experience which illustrates my point:

I live outside of Houston, Texas and have large tract of land. I was building a house on the land and wanted to add some flower beds - nothing unusual.  I contacted three companies to come out and talk to me about it.
 

• The first company spoke to me for about 30 minutes and focused on where you want the beds and how they were the best buy in town.
• The second company came out and showed me some pictures of other work they had done and suggested different plants that would look good and a little work qualifying my willingness to invest.
• The third company sent two people - one a land architect and one water architect and they brought a custom layout with pictures and video of what my land should be.  They took the approach that I had an opportunity to make this into something to be proud of and that it was important for me to understand and be educated about the many options and what they would say about me and my view of the land. They encouraged me to think of the native positives of the land and how the acres of trees need to be brought work in harmony with new meadows.  They encouraged me to build a natural looking acre pond for birds, etc.

The three companies saw the problem differently - I met with someone trying to solve a cost problem, someone trying to solve a color problem, and someone trying to get me to take advantage of an opportunity.  I chose the third company and have had a long (expensive) but rewarding relationship with them.  But, I must add, had they not used the proper approach to educating me and bringing me along, it could have appeared that I was being manipulated. I call that putting the client first: they genuinely wanted to show me what was possible for my family and were passionate about it.

You've been hearing for years that your organization must be client-focused - but the Intimacy Engine™ is the business model that actually makes that possible.  A common reaction from many of our clients goes like this: "We get the concept, they say, "but we do not have the ability to deliver these True Solutions™, even if we could identify them." They often want to start where they are and slowly move towards solving the more important issues.  There is truth in these statements.  As stated earlier in the blog, getting and maintaining support for the revolution is paramount and never ending.  But, there are multiple truths here:

1) as solution provider, we must find the key ideas that impact the client above the safety line, and, 2) we should take into account what results ave achievable today. 

We'll take up that question in detail later on this blog.

What's wrong with driving your business using the historic S-curve (innovation) model?  The innovation model has virtually dominated all literature, organization design, sales training, and investment strategies since the world economic boom following World War II. This is the common and erroneous management belief that we can continue to grow our business by improving current products and/or continuously making breakthrough innovations. 

We call it the Drug of Innovation.

Many of the great B-to-B brands that appeared during the last century were created riding a breakthrough innovation - copiers, computers, etc. The ability of these companies to differentiate their brand through their products and drive significant margins  -  as their products were first adopted by the market then improved for the markets - was a very long cycle. 

To understand how much that's changed and will continue to change look at the PC life cycle - introduced by Apple, then quickly dominated by IBM - then a free for all with many entering, exiting and dominating (rags to riches to rags) changing all the time.  Today leadership oscillates between a few players with cost becoming the driving factor, as important, if not more important than product innovation. 

For the few firms that ride a breakthrough technology to market, the innovation model should be the dominant business model and can be effective for a time.  But for many established companies particularly in North America and Europe, the ability to differentiate a product or product line through feature enhancement has a very limited life cycle that is being ruthlessly compressed as more global product players come on-line particularly from China and India.  Furthermore, unless you happen to be Steve Jobs, the ability to predict breakthrough technologies that create whole new markets is virtually impossible.

We find the diagram below almost always describes a company's experience with innovation.



As we all know price differential begins to be pressured after a time for new products or product enhancements.  The issue for most firms is that this compression of price differential comes ever more quickly.  Soon firms and often entire industries are trapped in a no-win game of musical chairs as they take turns leading with ever-fleeting advantages based on product innovation.  Not only does commoditization rapidly effect their valuations but the musical chairs inevitably causes firms to innovate past their customers' real needs - thereby sinking hundreds of millions into products that few need at any price.

Question: When should firms get off this Drug of Innovation?

I believe the first step for most companies is for someone (sometimes anyone) to accept that the musical chairs cycle of innovation will slowly strangle the business.   This is so important - someone must see clearly that the emperor has no clothes.  Then they must accomplish a couple of things:

1) gain an understanding what the business model options are, what the correct direction is and become familiar with journey,
2) build a community within the business coalescing around these truths.
 
This in itself is very difficult - as I mentioned before, the innovation model dominates our business culture - we are prisoners of our mindsets.

We believe that an understanding of the business model choices immediately helps a business see its few options.  Historically there have been three distinct business models that have been successful - Innovation, Low cost, and Intimacy. 

That is not to say that each component is not pursued but that the business model used is driven primarily by one of these components.

Let's define customer intimacy as a business model: organizing business efforts to identify ideas to address true customer problems/opportunities at the highest level, bring those to the customers, and living with them to take advantage of those ideas. 

It is a complete integrated model - not a sales program.  At best, customers see you as an extension of themselves.

This blog is dedicated to the importance of this topic and the how of getting there -and there is much how. But let's, for a moment, take one aspect of it for illustrative purposes.

If we are going to be preoccupied with identifying/creating ideas that fundamentally help our clients (and lets call them clients - customers buy things, we serve the best interest of clients) then more of our R&D spend must be about those ideas.  Let me give an example:  let's say you provide some complex equipment for hospitals.  Some R&D spend must be on the broader Hospital problems - how to lower error rates in the hospital, how to get patients through faster.  You must bring better ideas to the client then the consulting firms they deal with today.  I know this seems impossible and it's not clear how it helps sell your current products - I assure you it's not impossible (in fact it's relatively straightforward) and it fundamentally impacts sales of current products.  We'll be discussing this as we move forward.

UP NEXT: The Customer Intimacy Journey.