Why Minnesota Power Succeeded at Strategic Realignment

We asked those at MP why the three-year alignment and restructuring around customers had been so successful when so many other firms had failed in similar endeavors. The MP employees told us that there were several reasons. First and foremost was that the charge had been led by Bob Edwards, who made his position known and who then staffed and changed the organization to support that position. As Dave McMillan says, "There was no way a lesser executive could have pulled this off." But it wasn't just positional power that made Edwards effective. It was, as McMillan says," that (Edwards) showed how much of a personal commitment he wanted to make by laying out the new strategy for every employee in the company."

Another reason for success was that virtually everyone at MP stepped up to the challenge the firm was facing, assuming personal responsibility to find solutions. At the same time, MP's drive toward strategic alignment was data-driven, from the customer assessments to the very unpleasant financial cases developed to show what would happen should MP continue doing business as usual. And just as critical was Edwards' and Norberg's early realization that change could not be driven solely by marketing; all functional areas needed to be a part of the effort. This led the company to develop a number of cross-functional teams who scored successes by working together in entirely new ways. That realization also led to the creation of the Strategic Accounts department as well as the Customer Solutions group. Most critically, it led to new communication processes that meant every MP employee could keep up with the strategy and what was happening with the largest accounts.

As Bob Edwards says, "For us, alignment wasn't just a program—a flavor of the day. ...(W)hat we launched is first and foremost what we are doing today. We truly transformed the culture. I feel best about that. You wouldn't hear a different story if you asked anyone at MP what we did then and what is really important to us now. Our goals are now inbred in the organization—and not just in the marketing groups but in all functions." Strategic account management was not a sales initiative. Instead, it was an organizational and cultural initiative, changing MP's business model.

Most firms we know started strategic account management programs as sales initiatives, creating what were essentially key account selling programs. Key account selling can be an effective way to generate increased customer revenues. Our experience has been, however, that getting firm buy-in and commitment prior to rolling out strategic account management can take those account relationships and their revenues to a level far beyond those achieved by key account selling. Successful strategic account management programs tend to start by creating committed and coordinated cross-departmental executive support groups behind the account management process. These groups lessen the internal marketing the strategic account manager must do, freeing him to focus on managing and growing the relationship. The cross-functional groups, working within an account management process, also tend to lower the overall costs of sales, especially when they redesign existing processes to serve strategic accounts. Finally, creating and managing the internal relationships required to serve strategic accounts allows the supplier, as we saw with Minnesota Power, to chip away at cultural and functional cross-company issues that limit a firm's overall competitiveness and ROA.

If ... it takes a village to raise a child, it takes an entire firm to own and manage a strategic account relationship.

Not aligning all functions in the service of strategic accounts will, in many cases, create a situation such as the one we saw with the Federated story just before Chapter 1. If, as the African proverb goes, it takes a village to raise a child, it takes an entire firm to own and manage a strategic account relationship.