Stealth Fighters, Cargo Helicopters, and Client Relationship Management Pt. 2: Managing Perceptions and Expectations

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In part one of this blog, we discussed the scrutiny Lockheed Martin is facing due to the seemingly high cost of its helicopters and stealth fighters.  We also established that value is a better metric, than looking at cost alone. But, regardless of how the true value of a program should be assessed and reported, Lockheed Martin must contend with how its various programs are in fact perceived by customers and other stakeholders. Conventional wisdom states that “the customer is always right.”  Further, explaining to a concerned client why their concerns are irrelevant and unfounded is not a viable business model. What can Lockheed’s headaches with the F-35 and CH-53K teach us about client management?

An examination of the defining characteristics of these two Lockheed Martin programs provides insight:

1. Intense public scrutiny. These two programs are highly visible to the public.  Further, the programs are subject to Congressional oversight conducted by elected representatives who need to answer to the voters every two or six years. Understanding and, when appropriate, responding to public commentary is critical.
2. High price tag. The per unit and total program costs for these two aircraft are well into the billions of dollars, yet even the smallest business program likely means the world to someone, somewhere. Assessing price against costs and value is necessary.
3. Highly complex value proposition and product. The F-35 is arguably the most advanced fixed-wing combat aircraft ever-built and the CH-53K is one of the most advanced helicopters ever built.  Lay observers may find it difficult to fully understand why these two aircraft are so important to the end user.  For instance, President Trump famously suggested that he would consider purchasing additional F/A-18 Super Hornets from Lockheed Martin’s arch-rival Boeing, due to cost concerns, showing that stakeholders at any level can have trouble understanding the value of the product. Having a cogent and readily available statement of value will ease or eliminate misperception.
4. Diverse and demanding user base. Much like the failed TFX aircraft project of the 1960’s, the DoD intends the F-35 to fill many different roles across numerous organizations.  Delivering an aircraft intended to be used by three U.S. Armed Services as well as several key allies means keeping many constituencies happy and satisfied at once.

Five Things Businesses Must do to Overcome CRM Challenges in High Profile Programs

Lockheed Martin obviously has its hands full in delivering a complex and expensive product to a diverse and demanding customer base in a very public manner.  While few businesses will ever be faced with such a daunting challenge, the issues at play here can be found in smaller-scale business issues as well.  These could be as mundane as installing a new copier in the office or as critical as implementing a new inventory management system.  By remembering a few key points, businesses can better manage even the most complex programs with the most demanding clients:

1. Embrace the scrutiny. Any high-profile program will attract naysayers like flies.  Be prepared for criticism and plan to provide good, rational answers.  It is here that identifying and applying the proper program metrics becomes important, such as gauging adherence to schedules and budgets rather than per-unit cost.  Gaining buy-in from critical decision makers in the client organization is also key.  When I start an engagement with a client, I always ask, “What does your boss think about this? Is he/she on-board?”  Ensuring a solid relationship with key stakeholders will pay off later when observers start asking questions.
2. Brilliance in the basics. I’m continually amazed by just how poorly some people are at the nuts and bolts aspects of running a business.  It is immensely difficult to execute a complex high-cost program if you can’t find your budget sheet or don’t have a project calendar.  Stay organized, communicate both internally and with the client, be accountable and demand accountability from your team. The knowledge that your project and team are organized, prepared, and share a common vision breeds tremendous confidence that your clients will detect and value.
3. Own the price tag. Pricing can be a challenge, especially when offering a highly complex product or value proposition.  Make sure your customers understand what they’re getting and why it’s worth what you’re charging, when they sign the contract and at times throughout the engagement.  Don’t negotiate your price after the sale has been made; be proud of your product and don’t apologize for what it costs.
4. Be honest about challenges. Even the simplest and most well-managed programs are subject to delays and overruns.  Be honest with yourself and your client about the challenges you face.  Ideally the project plan and contract will have a fair and equitable mechanism included for dealing with delays and overruns.  If not, be prepared for some pain if you want to save the project and the client relationship.
5. It’s about the client. Remember that your customer is human.  Most humans are risk averse and fearful of change.  Your product or service may represent a tremendous amount of risk and/or change for your client or his or her colleagues.  Even a tiny program can mean the world to a small client.  Listening to your client’s concerns, reminding them why they will be better with your product, and assuring them that you are invested in their success can go a long way to calming frayed nerves.

Delivering a large and complex program is never easy and even small programs can pose challenges. By understanding and preparing for the types of scrutiny that a program will face, businesses can influence both client and public perception in a way that supports common objectives and the client relationship.

Tags: Aerospace & Defense, Competitive Intelligence, Diversified Industries, Risk Management, Scenario Planning