Why is executive sponsorship so important in change initiatives?
Executive sponsorship in any change initiative is imperative to success. It is just one of the five risks to managing the change: implementing strategic account management (SAM), as discussed in 'What are the risks with organisational change?'
With a SAM program, the entire business must own major accounts. There must be genuine commitment and active involvement from the Chief Executive Officer (CEO) and other senior executives. In difficult times, SAM is often one of the first programs to be cut, if the CEO doesn't understand the strategic value, revenue and profit drivers of SAM. So, CEOs and other leaders must be 100% behind your SAM program.
Your executives must commit time throughout the program - from kickoff to ongoing internal and external SAM activities. They must set clear expectations: the account manager will have primary responsibility for coordinating activities within the company and with the strategic account. In traditionally hierarchical or siloed organisations, giving the account manager primary responsibility is often one of the most difficult things to change.
Account managers need to set up and take far greater responsibility for developing and driving the strategy with the account. Senior executives including the CEO must accept that they will often be working under the direction of the account manager to achieve the account objectives.
Influential senior executives and directors have made decisions that derailed years of effort by an account team. Their involvement (interference) has cost their companies millions of dollars through price discounting to retain business. They simply didn't understand the strength of their company's value proposition because they hadn't been involved in developing the SAM program. When under pressure during negotiations they made significant price concessions to retain the business; price concessions that were unnecessary and avoidable had those senior executives had a better understanding of SAM.
Establishing a 'powerful guiding coalition' including the CEO and other key senior executives is essential. If the CEO fails to establish the SAM program as a priority, this will undermine the program. Some senior executives will think they operate under a separate set of rules. Key people will not attend account review meetings, will not make available their team and resources and will not respond to requests of the account manager, putting the program in grave risk of failure.
In a manufacturing company, the account team had been gradually building a strategic relationship with a major account. They had been executing the key elements of their plan for the account and making good progress. Without the account managers knowledge, the CEO, who was not up to date with developments with the account, met with the account's CEO. During this meeting, the CEO agreed in principal to a price discount to secure some new business.
Unknown to the CEO, the account manager had been working on this opportunity already. The account manager understood the competition could not provide the same service. However, she also understood there was an opportunity to incorporate other company services that would deliver better value to the account and greater and longer-term revenue for the company.
The effects of this miscommunication were significant. In one meeting, many months of strategic effort were destroyed, undermining future SAM commitment. The account understood the supplier would discount to secure more business, setting an unhealthy precedent for future negotiations. Finally, revenue and profit was unnecessarily lost because of the discounting decision.
This example highlights the pivotal role the account manager plays: proactively communicating upwards and across the organisation to keep key stakeholders informed. In addition, no-one in the organisation, including the CEO and leadership team, should meet with the account without the prior knowledge of and briefing from the account manager. Also, no-one should make decisions about the account without involving the account manager.
For more guidance on how to manage the practicality of implementing SAM as a change initiative check out chapter 4 of Peacock and Kozicki's Managing B2B customers you can't afford to lose.