All Posts in Strategy and Tactics

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Hitting a pitched baseball is the most difficult job in professional sports, or so I’m told. According to my back-of-the-envelope calculations, only about 1% of the strike zone yields a solidly struck ball, and the batter has less than a half second to get his bat there, swung hard enough so the ball at least clears the infield.

It isn’t easy, which is why anyone who can do so a third of the time receives a lot of money to play a game.

A recent column likened this task to customer relationship management (CRM) or supply chain management (SCM) projects, suggesting that the 30% success rates reported for them aren’t all that bad. Quite a few readers objected to the comparison. They’re right, too: CRM and SCM make hitting a baseball seem easy.

CRM and SCM require strategic change. As I use the terms, tactical change results in business improvement — your measures get better — while strategic change redefines your goals, and as a result changes what you measure.

Strategic change is much, much harder. Why?

Tactical change involves three organizational dimensions: Process, technology, and employee skills. Typically, you begin with process redesign, then design the technology the new process will need, and finish with a training program for all affected employees.

That’s hard enough. But it’s far simpler than strategic change, which may involve as many as seven other dimensions of change as well — all interconnected and interdependent.

Strategic change looks outside the company as well as inside. Looking out, you may need to redefine relationships with customers and vendors, along with your products, and pricing. You need to anticipate how the marketplace you operate in will evolve, and you need to pay careful attention to your “messages” — communication through all media, from advertising to conversations between customers and your call centers.

Internal change gains complexity, too, because you can’t stop with process, technology and skills. Usually, strategic change leads to structural change as well — how you’re organized, your compensation system, and the criteria and paths by which you advance employees. Nor can you ignore the corporate culture.

Some companies say they’re implementing CRM when what they’re really doing is installing a contact management system. That’s a tactical change, and isn’t really all that difficult. True CRM, or SCM, or any other strategic change is a whole lot harder.

In fact, it’s a whole new ball game.

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|In: Industry Commentary|Last Updated:

If you don’t have a new idea, coin a new acronym.

Last year’s fad was C-level positions. We had CKO (chief knowledge officer), CPO, (chief privacy officer), and CCO (chief customer officer), and it was a wonder nobody added CSO (chief sanitation officer) to the list, all reporting directly to the CEO, re-titled “chief ego-gratification officer” since that’s the only possible reason a CEO would install all of these people in the executive suite.

That was last year. This year we’re augmenting CRM (customer relationship management) with other relationships, like PRM (partner relationship management) and VRM (vendor relationship management). With all due respect, the point of CRM is to scale up what the family butcher did with our grandparents — build a strong relationship based on intimate knowledge of each customer, leading to repeat business while turning “cross-selling” and “great service” into synonyms.

The corner store achieved this result with the proprietor’s unaugmented brain. Replicating this strategy with millions of customers, thousands of sellers, and a half-dozen communications channels is a difficult proposition, with no parallel in the more manageable situation of dealing with partners and vendors. Besides — I want my vendors to worry about their relationships with me. VRM inverts this responsibility in an unwholesome way.

CRM is a business strategy. It doesn’t start with customer analytics, which are all about the customers you happen to have now, nor does it start with a software installation. It starts with design, as any good strategy should. Just as a product strategy begins with a design of the product line, followed by a design of each individual product, so a relationship-based strategy should begin with identification of targeted customer profiles, followed by design of the desired relationship with the customers within each of those profiles. That means figuring out how you want those customers to think of you, and then designing a set of experiences and interactions that will lead them to think of you that way.

And since CRM is a business strategy, its intent isn’t to improve your company’s key measures. When you improve measures you’re thinking tactically. Strategies redefine goals, which means changing what you measure.

With CRM, this means shifting focus from transaction margins and process efficiencies to customer retention and growth in customer lifetime value.

Sound risky? It isn’t. If you stop losing customers and make more money from the ones you have, you’ll increase your profits. How can you avoid it?

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