Ualue-added ohstacle

Are c.e.o.s and sales managers on the same page?

By Daniel F. Jennings

fIUSINESSES rhat develop value Llactivities gain a competitive advantage that can lead to superior profits. However, studies indicate that c.e.o.s and their top managers may disagree regarding the relative importance of certain value activities.

Are the c.e.o.s and sales managers from building materials manufacturing/supplier and distribution firms on the same page regarding the importance of different value activities employed by their companies? We set out to answer this question in a recent study and found that not only are they not on the same page, they are not in the same book.

For the study, c.e.o.s and sales managers were asked to rank five value activities - supplier relationships, customer relationships, competitor analysis, competitor identification, and top management activitiesusing a five-point scale, five signifying most important.

In all areas except competitor identification, a significant difference existed in the importance of perceptions between c.e.o.s and sales managers. For example, c.e.o.s from both supplier (3.78) and distributor (3.94) firms ranked supplier relationships as being the most important value activity, while sales managers for both suppliers (3.75) and distributors (3.94) ranked customer relationships as most important. All groups ranked competitor identification as being the least important value activity.

On the surface, the difference in perceptions between c.e.o.s and sales managers may well make it difficult for suppliers and distributors to achieve a competitive advantage. However, we should consider other factors. For instance, the perceptions may differ because of the nature of their positions: a c.e.o. may adopt a strategic view of a situation, while a sales manager may adopt a tactical view of the same situation. Further, c.e.o.s may tend to focus on the profitability of their firm, while their sales managers may tend to focus on generating revenue.

Also, somewhat concerning to us, was the low ranking assigned to competitor identification by c.e.o.s and sales managers. We are concerned that c.e.o.s and sales managers may not have a process for identifying new competitors or situations in which a significant competitive force may be developing. Thus, those managers may fail to identify the new competitors and wait too long before engaging in a meaningful response.

Numerous studies have found that a difference in perception among c.e.o.s and their top management team tends to lower performance. Perhaps the secret is to somehow have c.e.o.s and sales managers work together in the right way so that their objectives are aligned and focused on achieving a competitive

- Daniel F. Jennings is the Andrew Rader professor in industial distribution at Texas A&M University. Contact him at djennings@tamu.edu.