Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Assessing organizational culture in complex sociotechnical systems : Methodological evidence from studies in nuclear power plant maintenance organizations

Failures in industrial organizations dealing with hazardous technologies can have widespread consequences for the safety of the workers and the general population. Psychology can have a major role in contributing to the safe and reliable operation of these technologies. Most current models of safety management in complex sociotechnical systems such as nuclear power plant maintenance are either non-contextual or based on an overly-rational image of an organization. Thus, they fail to grasp either the actual requirements of the work or the socially-constructed nature of the work in question. The general aim of the present study is to develop and test a methodology for contextual assessment of organizational culture in complex sociotechnical systems. This is done by demonstrating the findings that the application of the emerging methodology produces in the domain of maintenance of a nuclear power plant (NPP). The concepts of organizational culture and organizational core task (OCT) are operationalized and tested in the case studies. We argue that when the complexity of the work, technology and social environment is increased, the significance of the most implicit features of organizational culture as a means of coordinating the work and achieving safety and effectiveness of the activities also increases. For this reason a cultural perspective could provide additional insight into the problem of safety management. The present study aims to determine; (1) the elements of the organizational culture in complex sociotechnical systems; (2) the demands the maintenance task sets for the organizational culture; (3) how the current organizational culture at the case organizations supports the perception and fulfilment of the demands of the maintenance work; (4) the similarities and differences between the maintenance cultures at the case organizations, and (5) the necessary assessment of the organizational culture in complex sociotechnical systems. Three in-depth case studies were carried out at the maintenance units of three Nordic NPPs. The case studies employed an iterative and multimethod research strategy. The following methods were used: interviews, CULTURE-survey, seminars, document analysis and group work. Both cultural analysis and task modelling were carried out. The results indicate that organizational culture in complex sociotechnical systems can be characterised according to three qualitatively different elements: structure, internal integration and conceptions. All three of these elements of culture as well as their interrelations have to be considered in organizational assessments or important aspects of the organizational dynamics will be overlooked. On the basis of OCT modelling, the maintenance core task was defined as balancing between three critical demands: anticipating the condition of the plant and conducting preventive maintenance accordingly, reacting to unexpected technical faults and monitoring and reflecting on the effects of maintenance actions and the condition of the plant. The results indicate that safety was highly valued at all three plants, and in that sense they all had strong safety cultures. In other respects the cultural features were quite different, and thus the culturally-accepted means of maintaining high safety also differed. The handicraft nature of maintenance work was emphasised as a source of identity at the NPPs. Overall, the importance of safety was taken for granted, but the cultural norms concerning the appropriate means to guarantee it were little reflected. A sense of control, personal responsibility and organizational changes emerged as challenging issues at all the plants. The study shows that in complex sociotechnical systems it is both necessary and possible to analyse the safety and effectiveness of the organizational culture. Safety in complex sociotechnical systems cannot be understood or managed without understanding the demands of the organizational core task and managing the dynamics between the three elements of the organizational culture.