Blast from the past Posted by Tomi Heikkinen , Tuesday, January 19, 2010 at 20:27, in Labels: CRM, dissertation, growth companies, tomi heikkinen

I've always forgotten until now about this. With my year in Cranfield moving into a stage where I need to start really thinking about my Master's dissertation, I was again reminded of a thing I was supposed to do: post the abstract of my Bachelor's dissertation for online reference and storage. The 112-page, 24 500 words of a brick was titled "Strategic Customer Relationship Management of Growth Companies", and I was really happy with the end result. Though with the benefit of hindsight, I'd do a lot differently.

But here's the abstract at last. I have also a 1000-word executive summary available.

Customer relationship management, or CRM, is often understood narrowly as a technology or a utility. In a more recent theoretical discussion it is however understood from a strategic perspective or as a fully-fledged business strategy that requires implementing CRM from a strategic point-of-view and combining it into the company’s other business strategies cross-functionally. From this perspective, the focus is on what CRM offers to growth businesses that are mostly thought to gain their growth by acquiring new customers.

This thesis understands CRM and customer management from a process-based, holistic and innovative point-of-view. The core of its theoretical basis is a framework of CRM that determines its five most crucial processes. Another important element of the theory used in this thesis involves literature that describes and studies rapid-growth companies, especially in the field of information technology.

The purpose of the thesis was, with the help of a theoretical framework and a thorough study, to establish what is “growth-oriented” CRM of growth companies and how the theoretical framework suits their needs. The qualitative study, conducted by themed interviews in the summer of 2007, involved five Finnish ICT growth companies.

The study revealed that typical to growth companies’ CRM is a project-based, short time-perspective method of managing and examining their customer relationships. Taking into account this and their demand for growth, it is concluded that these companies have a challenge in forecasting their business accurately, as one interviewed company told. Perhaps one of the most important observations was that these companies have grown profitably via their old customer relationships. Additionally, this involves that how companies manage their older relationships and the success of their acquiring new business are very closely interconnected.

This thesis describes and gives a justified opinion on CRM of growth companies, basing it on leading literature and observations acquired with the study. The thesis also views literature from the viewpoint of the reality of these companies and thus makes new suggestions and findings to it. Furthermore this thesis gives concrete development suggestions so these could develop the profitability of their customer relationships.

Keywords: CRM, customer relationship management, customer management, rapid growth, growth company

Thesis mentor: Dr. Seppo Leminen

PS. The conceptual framework of CRM I used was the model of Dr. Adrian Payne and Penny Frow.

Why everybody in a company is a marketer? (Really) Posted by Tomi Heikkinen , Tuesday, December 8, 2009 at 00:54, in Labels: competitive advantage, copypaste economy, marketing, tomi heikkinen

Why everybody in a company is a marketer, service-dominant logic makes sense and people/competence is a key generator of competitive advantage.

Seth Godin delivers another online gem.

"So, how to protect your ideas in a world where ideas spread?

Don't.

Instead, spread them. Build a reputation as someone who creates great ideas, sometimes on demand. Or as someone who can manipulate or build on your ideas better than a copycat can. Or use your ideas to earn a permission asset so you can build a relationship with people who are interested. Focus on being the best tailor with the sharpest scissors, not the litigant who sues any tailor who deigns to use a pair of scissors."

Godin writes about how to protect your ideas in the online world. His insightful words however touch another interesting topic of how companies should approach marketing from a relational, competence based perspective.

Gary Hamel and CK Prahalad (1996 2nd ed.) talk about core competences and how they drive company’s competitive advantages. In their words, core competencies translate into substantial competitive advantages and are particularly relevant in the current economy. Companies pool these competencies by skilled recruitment and stakeholder network management.

We all know the old wisdom that everybody should be a marketer in a company. But this is especially true for knowledge intensive service organizations. Consider briefly the recruitment criteria of such a company. These organizations hire people of talent and potential, or in other words, for their competence. They are idea developers and results providers. Deriving from Godin’s logic, they have a basis to attract interested people (customers and other stakeholders) and thus create mutually beneficial relationships. If they these recruits are market oriented and capable of two-way communication, by hiring them the companies have just saved a lion’s share of their marketing budget. These organizations don’t have to worry about push sales tactics or brand awareness. They have word-of-mouth and natural pull on their side.

Robert Vargo and Stephen Lusch (JoM 2004) talk about a paradigm change for marketing from a goods-based business logic to a service-dominant logic, where services based on competencies are transacted with goods as mere vehicles for service delivery. I think they are after something right. In an online, hyperfast copypaste economy it is increasingly difficult to succeed with a product leadership strategy. So knowledge becomes an asset, and how you deliver your offering the advantage.

A organization where everybody who creates ideas is a marketer must truly focus on employee retention. These kind of companies adamantly consider their employees and customer relationships as their most important assets, even though as assets they are ungrateful and expensive. But investments in these assets pay off. Benefits diffuse to improve shareholder value through happy, ambitious employees, improved brand value, competitive advantages, enhanced customer experiences and longer, more profitable customer relationships. Take a company like Reaktor Innovations, a growing IT service success story that is constantly awarded as a Great Place to Work.

I’ve researched knowledge-intensive Finnish companies and SMEs like these have the best potential to become such organizations. A few are already and enjoy profitable double digit annual revenue growth rates year after year. So, are you recruiting people who have great ideas and helping them share and spread theirs and yours?

Should environment be a stakeholder in your company? Posted by Tomi Heikkinen , Thursday, December 3, 2009 at 21:29, in Labels: business strategy, shareholder value, sustainability, tomi heikkinen

Companies around the world but particularly in the West are driven to develop their sustainability and their contribution to social and environmental issues. The aim is to create a closed loop of consumption that enables us to stop overusing the finite resource base we currently can capitalize. This is because we're permanently damaging the environment and it's ability to regenerate resources. The result is that in the long-term the environment cannot meet our current needs nor the needs of future generations.

In order for companies to systematically and concretely drive a focus and mentality of sustainability some suggest that environment should be considered to be a stakeholder of (all) companies. This way, the "voice" of the environment would be heard in companies, effectively establishing its presence in decision-making processes. It is a noble idea, but a flawed one.

The question, is environment a stakeholder in a company, boils down to how you consider environment from a means-end perspective. Is environment a mean for humanity's well-being or a end in itself? In a gut feeling, one might think the former represents a purely capitalist and liberalist point of view where environment is just a tool for humanity to be used as we wish, while the latter is a predominantly "green" position where environment itself has a value comparable to human life. These two views are extremes and are mutually exclusive, but there is a grey area in between.

The environment cannot speak for itself. We can't talk to a cow or a river and ask their opinion on matters. Who should then represent environment in a stakeholder conference? A person? But how can a person or a group of persons effectively and sensibly represent the needs of an awesomely complicated eco-system? If a person is doing the talking, isn't the person representing herself and other people who share certain ideals (like clean air for our children)? Doesn't it mean then that a certain way of utilising and treating the environment serves as a mean to reach their ends, their ideals? In the end, is it just humans discussing and advancing their own interests, how moral or immoral they are?

What is suggested here is that you can address and pursue sustainability while leaving it out of the list of stakeholders. Not regarding it as a stakeholder shouldn't denote lack of consideration. Even though environment is a tool for humanity, it's importance for human well being and survival cannot be underestimated. Companies as citizens of societies should pursue to respect environment even if it is considered to be a mean rather than an end by including their impact on the environment in their corporate strategy planning processes. A sustainability plan is a good start - companies can discover means to cut costs and gain new, profitable competitive advantages that create shareholder value. We still live in a world fueled by money, so we're better off rationalizing sustainability and making a good buck while sustaining the world for tomorrow.

How does marketing contribute to shareholder value? Posted by Tomi Heikkinen , Wednesday, December 2, 2009 at 01:14, in Labels: job interview, marketing, marketing accountability, shareholder value, tomi heikkinen

A superb question to any marketer's job interview. Why?

By answering "correctly" (a vague term in real life I know), you..

1) show to the interviewer you understand the strategic, dual value purpose of marketing: Creating value both to the customer and the shareholder.

2) point out you fathom the importance of relationships in marketing and business as drivers of long-term value

3) can bring forth your understanding that marketing is not a one silo thing - but rather cross-functional, where the marketer (you) acts as a facilitator of customer orientation within the firm and an advocate of the customer to the other functions of the company

4) indicate that you are financially literate and understand the purpose of predicting and measuring financial, hard outputs - VERY important!

5) also show you grasp the role of marketing as the company's vanguard element whose task is to acquire critical market intelligence, both customer insight and external information about the environment around the company, and disseminate this intelligence across the firm and to the value chain participants.

6) prove you comprehend what brand equity is about and how brands create shareholder value

7) point out your appreciation of strategic marketing as a tool of resource allocation decision making

The list is hardly complete. But are you asking your prospective marketers this question?