___________________________________________
Developing a Practical Model for
Managing Cordeo’s Partner
Network
An Action Research Investigation
Faculty of Economics & Business International Business & Management
March, 2008
Author: Nick Klein Douwel Supervisor: M.A.G. van Offenbeek
Address: Hoefslagmate 67 2nd supervisor: I. Haxhi
8014 HK Zwolle
The Netherlands Principal: Cordeo BV
Student No.: s1272527 Supervisor: C.J. Reijnen
Tel: +31 (0)38 460 60 46 Tel: +31 (0)38 466 9420
This paper reports on the case of Cordeo’s partner network. It starts with Cordeo’s question on how to effectively manage its partner network. In literature partner networks have only been researched from an empiricist point of view, this paper takes a relativistic/constructionist approach. By using action research and combining value, RM, organizational structure and international business literature we attempt to build a practical and comprehensive model for managing Cordeo’s partner network. The main research question is: How should Cordeo organize its value adding activities and the relationships in its growing and increasingly diverse partner network from a relativistic/constructionist point of view?
Value and RM contributed to this paper by identifying the content and the structure of the relationship. The most important findings were the identification of three different partner levels, with each a different value offering. Another finding was that examining the structure of the relationship was not sufficient to manage the partner network efficiently; information on Cordeo’s organizational structure was also needed.
An analysis of Cordeo’s organizational structure found problems with Cordeo’s current structural configuration. The ‘professional adhocracy’ as described by Mintzberg was proposed as the new organizational structure. In this structural configuration Cordeo has to split up into two separate entities, the administrative component and the operational core. To research the international diversity of Cordeo’s partner network, Cordeo’s Japanese partners were included in this paper. They identified that sharing of local knowledge and the relational value offering were very important to the success of managing cross-cultural partnerships. These finding provide Cordeo with a practical guide to manage its partner network.
These streams of literature provide insights on managing partnerships and networks of partners from points of view that have previously been ignored in the context of inter-organizational networks.
Table of Contents
1. Introduction... 4
1.1 Cordeo... 5
2. Problem Description and Research Question... 6
2.1 Partner Relationships: Varieties in Partner Needs and Expectations ... 6
2.2 Growing Partner Network: The Workload of Employees ... 7
2.3 Operationalization of Problem Areas ... 7
2.3.1 Value and Relationship Management ... 7
2.3.2 Cultural diversity ... 8
2.4 Research Question ... 8
3 Action Research and Research Model ... 10
3.1 Action Research ... 10
3.2 Research Model... 10
4 Iterative Cycle One: Value and Relationship management... 13
4.1 Literature Review: The Related Concepts of Value and Relationship Management ... 13
4.2 Research Approach... 15
4.3 Decomposing Value and Relationship Management ... 15
4.4 Methods of Data Collection... 17
4.5 Data Analysis Current Situation ... 17
4.5.1 Market oriented behavior ... 18
4.5.2 Value Offering... 18
4.5.3 Organizational Activities... 19
4.6 Analysis of the partner interview data... 20
4.6.1 Market Oriented Behavior... 20
4.6.2 Cordeo’s Value Oriented activities... 20
4.6.3 Product Offering. ... 21
4.6.4 Service and Support Factors... 22
4.6.5 Relational Factors ... 26
4.6.6 Relationship Structure: Initiation ... 28
4.6.7 Relationship Structure: Maintenance ... 29
4.7. Diagnosis ... 34
4.7.1 Value... 34
4.7.2 Relationship Structure... 36
4.8 Evaluation Research Cycle One ... 39
4.9 Reflection on Theory Research Cycle One ... 40
5 Research Cycle Two: Organizational Structure ... 41
5.1 Literature review ... 41
5.2 Methodology of the data collection... 43
5.3 Current Organizational Structure ... 43
5.3.1 Design Parameters ... 43
5.3.1 The Contingency Factors ... 46
5.4 Diagnosis ... 46
5.4.1 Current Organizational structure ... 47
5.4.3 Directions of structural configuration ... 48
5.5 Evaluation Research Cycle Two ... 51
5.6 Reflection on Theory Research Cycle Two... 51
6. Design………53
6.1 Structural design... 53
6.1.1 Cordeo as the Administrative Component ... 53
6.1.2 The Operating Core... 55
6.2 Cordeo’s Value Offering ... 59
6.2.1 Product Offering ... 59
6.2.2 Support Offering... 60
6.2.3 Relational Value Offering ... 62
7 Research Cycle three: Value and Relationship Management in Japan... 63
7.1 Research Approach... 63
7.2 Background information ... 63
7.3 Methodology ... 66
7.4 Analysis of Interview Data ... 66
7.4.1 Market Oriented Behavior... 66
7.4.2 Cordeo’s Value Oriented behavior... 66
7.4.3 Product value... 67
7.4.4 Service and Support Value... 67
7.4.5 Marketing Support ... 68
7.4.6 Technical Support... 68
7.4.7 Training ... 69
7.4.8 Relational Factors ... 69
7.4.9 Trust and Commitment... 70
7.4.10 Communication ... 70 7.5 Relationship Structure... 70 7.5.1 Role Specification... 70 7.5.2 Ideal Situation ... 72 7.5.3 Planning ... 72 7.5.4 Monitoring ... 72 7.5.5 Incentives ... 72 7.5.6 Enforcement ... 72 7.6 Diagnosis ... 73 7.6.1 Value... 74 7.6.2 Relationship structure ... 75 7.7 Design ... 75
7.8 Evaluation Research Cycle Three ... 78
7.9 Reflection on Theory Research Cycle Three ... 79
8 Discussion……..………80
8.1 Limitations and Directions of Future research ... 82
8.2 Evaluation Conclusion... 83
8.3 Design criteria ... 83
1. Introduction
Cordeo is a small sized company which is at the center of a network of partners. As this network is growing, it is becoming increasingly difficult for Cordeo to manage. Cordeo has approached me with a clear practical question in mind: How can we(Cordeo) manage partner our network more efficiently?
Partnerships are defined as purposive strategic relationships between independent firms who share compatible goals, strive for mutual benefit and acknowledge a high level of mutual interdependence. They join efforts to achieve goals that each firm, acting alone, could not attain easily. The formation of these partnerships is motivated primarily to gain competitive advantage in the marketplace (Bleeke and Ernst, 1991). Although strategic partnerships can take many forms, including both horizontal and vertical relationships (Broys and Jemison, 1989). This study is focused on a vertical relationship between supplier (Cordeo) and distributors (partners).
There is no single stream of literature where the management of a partner network is thoroughly described. One stream of literature has developed models for managing partnerships from a relational point of view: both Anderson and Narus (1990) and Mohr and Spekman (1994) present us with comprehensive models of the activities related to partnerships between suppliers and distributors. These models inventory the activities related to partnerships from a relational point of view.
In other streams of literature inter-organizational networks are described from a structural point of view: How to manage a network of organizations is a different question than how to manage the relationship with an individual partner. Literature about managing inter-organizational networks on the firm level is almost absent (Simsek et al., 2003). This study will attempt to bridge the differences in point of view and come up with an integrated model of managing Cordeo’s partner network.
Both of these fields of literature on partnerships and interfirm networks have been researched from a traditional positivistic/empiricist approach (Wilson and Vlosky, 1997; Peter and Olson, 1983). This approach searches for theories which are universally true. In this perspective of science, however, certain factors are excluded from consideration and regarded irrelevant for understanding of scientific progress.
When researching a case study such as the organizational problem of Cordeo, the full context of the problem cannot be understood with such an approach. In a relativistic/constructionist approach these factors and the context of the problem are included. Denzin and Lincoln (1994) comment on the relativistic/constructionist approach that "the concept of the aloof researchers has been abandoned. More action-, activist-oriented research is on the horizon . . . . The search for grand narratives will be replaced by more local, small-scale theories fitted to specific problems and specific situations."
1.1 Cordeo
Cordeo is a small sized company established in 2001 as a consultancy company specialized in the field of marketing, information technology and communication. It focused on providing marketing efficiency for its customers through one-to-one marketing and Publish-on-Demand (PoD) solutions. PoD is a process to manage and automate the whole chain of a documents’ publication, from the initial creation of a document until its actual printing. PoD solutions are most useful in companies that deal with a lot of documents. Most of Cordeo’s end-user clients are large companies. Cordeo tries to deliver value by combining knowledge in marketing, communication and document creation processes with software technology. The company is focusing on improving efficiency through streamlined and transparent processes, effective brand management and cost control. (www.xldoc.net 11-05-2007).
Through the years Cordeo has been developing XLdoc, its main product. XLdoc is a web based integrated software platform which allows end-customers to manage the whole document life cycle. XLdoc allows users to easily create, revise, manage, translate marketing materials by using flexible templates of documents. Templates are outlines of documents in which text and pictures can be easily changed. XLdoc is also integrated with a network of printing companies. The service saves time and money by allowing companies to inexpensively update or change marketing collateral on demand and locally print only the number of pieces needed. This reduces marketing expenses related to obsolescence, warehousing and distribution of marketing communication materials. Cordeo has been developing XLdoc for the past six years. It started by selling XLdoc directly to end-users. After getting familiar with XLdoc these customers where given the opportunity to resell the XLdoc to their customers and to become partner of the XLdoc network. This is how XLdoc’s partner strategy developed. Nowadays XLdoc has eleven partners, six in the Netherlands two in the United States, and three in Japan. Cordeo is at the center of this web of partners. All partners provide XLdoc to their customers as if it is their own product. These partners pay fixed monthly fees for the use of XLdoc and they pay a click-charge, this means for instance an amount per document created in XLdoc. Now most partners, with some small exceptions, are still highly dependent on Cordeo. Cordeo is providing the whole technical infrastructure for partners; implementing XLdoc for end user-customers of the partners, partner and end user technical support, hosting partner servers, software updates and backups. Cordeo also handles most of the functional tasks, which means implementing the components that are specific for different end-users such as the building of templates for documents, making checklists and providing training modules.
The technical infrastructure needed is fixed. Not many differences between technical infrastructures of the different partners exist, however functionally the product is highly customer specific.
XLdoc in a much more autonomous way. In the next version of XLdoc one of the biggest changes will be that partners are be able to produce document templates themselves with new software development kits. Cordeo is also developing an implementation methodology with which partners should be able to do most of the customer implementation autonomous from Cordeo.
2. Problem Description and Research Question
To get further insight in the problem situation at hand, a structured problem description following the methods by de Leeuw (2000) is provided in section 3.1 through 3.4. De Leeuw first asks the questions what is wrong in the current situation and why is there dissatisfaction about it?
2.1 Partner Relationships: Varieties in Partner Needs and Expectations
Due to the growing partner network Cordeo is encountering problems with the relationship itself. At present Cordeo is still managing a relatively small number of partners, and the relationship with them is very personal. Cordeo is noticing that with a growing number of partners it becomes increasingly hard to keep the relationships as personal as they are at present. This could possibly negatively influence partnerships. Another problem is how to cope with the diversity in partners. Now Cordeo offers virtually the same value to all of its partners. However, partners differ greatly in size, nationality and even goals. Take for example the case of Customer P and X;
P is a local printing company and one of Cordeo’s first partners, it currently has 7 customers using XLdoc, their customer network is steadily expanding, it is putting in hard work and it is motivated to expand their number of Xldoc users. P doesn’t just want to create as many prints as possible on their machines through Xldoc, but it wants to build a lasting relationship between partner and end-user. P’s strategy is based on shifting their business from printing to managing the whole document lifecycle from creation to fulfillment. This is proving to be very successful (P’s, XLdoc project manager, 2007) Partner X is a global printing company. IT only uses Xldoc for one very big customer, the Dutch multinational D. Whereas P has an expansionary strategy, X has just one big client and has no direct plans to further expand its customer base. (Cordeo’s CEO, 2007).
From the description of these two partners, a number of direct problems can be derived. How can Cordeo make sure their partners are getting the most out of their Xldoc product? Furthermore, what support is offered to which partner, for example would X pay for the same marketing and sales materials as P? Other questions that arise: how does Cordeo make a distinction between its partners in legal terms? Do smaller and bigger partners get the same contract? Can Cordeo set the same goals for all the partners? And can itoffer the same incentives? This problem will be expanded in the new version of XLdoc as Cordeo has to decide which levels of autonomy it should give to the different partners.
behavioral expectations can differ greatly among partners from different countries and cultures.
2.2 Growing Partner Network: The Workload of Employees
The Xldoc partner network is growing and this is putting increasing pressure on Cordeo’s employees. At present Cordeo has nine employees, ten partners and fourteen direct end-user-customers. Although these employees have assigned tasks there is little structure of who does what for which customer/partner. Until recently this allowed Cordeo to be flexible and respond quickly to the market, but as the partner network is growing tasks get too complicated and intertwined. This can lead to lower efficiency, misunderstandings and possibly even tension between employees. An example of this is that the development team that has the task of designing and programming the new versions of XLdoc, is also caught up in operational work and solving technical issues for partners. Especially with a growing partner network these problems are only getting bigger.
2.3 Operationalization of Problem Areas
After having identified the problems mix in the organization, De Leeuw (2000) asks the questions: Which changes are needed and how can we operationalize these into more concrete concepts that can be researched in this study. For every problem area discovered a sub question will be formulated, these sub questions help answer the main research question. The practitioner oriented sub questions will also act as the starting point for the research cycles described in section 3.2.
2.3.1 Value and Relationship Management
Firstly, there is the issue of value: What value does Cordeo create for which partner in terms of product offering and supportive services. The issue of value also addresses the value of the relationship with the partner. With a decreasing personal relationship value, how can Cordeo substitute this personal value with more structured relational value. The practitioner oriented research question that follows from this problem area is: What value should Cordeo offer to each of their partners?
The practitioner oriented research question that follows from this problem area is:
How can Cordeo better organize the relationship with its partners to efficiently manage its growing partner network?
In section 4.1, we have identified that value and relationship management are related concepts. This is why we have chosen to research these topics together in research cycle one. The second practitioner oriented research question is not to be confused with the topic of organizational structure researched in the second research cycle. The problem of organizational structure is not yet posed in this section because, it only emerged after answering the questions in research cycle one.
2.3.2 Cultural diversity
Mentioned only implicitly is the cultural diversity of partners: as the partner network of Cordeo has a global character with partners in the U.S. and Japan, this diversity can very well be of influence on the concepts stated above. Value perceptions and relationship management of a company in Japan or the U.S. could be different from the Netherlands. This is why the concepts explored should be seen in an international context.
The practitioner oriented research question that follows from this problem area is: How can Cordeo manage the international diversity in its partner network?
2.4 Research Question
Although an early definition of the research question and possible constructs is helpful, both are only temporary in this type of research. Due to the practical nature and the complexity of this investigation, the research focus may shift and there is no guarantee what place the identified constructs get in the resulting theory.
We want to find an answer to Cordeo’s practical question: How can we(Cordeo) manage our partner network more efficiently? So the aim of this paper is: To offer Cordeo advice of how to more effectively manage its partner network. By answering this question we will also be able to address the research gap, which is to find activities associated with organizing supplier-dealer relationships and managing an inter-organizational network of partners from the relativistic/constructionist point of view. Through this approach of the problem we try to place emphasis on applying models from different streams of literature, to get a complete picture of Cordeo’s problem situation.
The activities relevant in managing partner relationships have been specified as the identification of value-adding activities and the organization of these activities and the relationship as a whole.
3 Action Research and Research Model
3.1 Action Research
The set up of this paper follows the regulative cycle by van Strien (1986). Regulative means that this research cycle is focused on decision making. This paper starts with a clear organizational problem. The methodology we use should reflect such a practical oriented problem solving approach. Frank Heller in his book “The Use and Abuse of Social Science” (1986) describes a variety of problem solving approaches. The problem solving approach to this study is action research. According to Heller action research is characterized by three things; (a) the client company identifies a practical problem, (b) the research design is formulated in close collaboration with the researcher and (c) the research involves active collaboration and some measure of control on part of the client organization.
The term “action research” was introduced by Kurt Lewin in 1946 to denote an approach to research combining theory building with research on practical problems. In his definition on action research, Lewin emphasized the collaborative relationship where both the scientist and the client are jointly involved in change and research. Lewin’s statement “there is nothing so practical as a good theory” is used to guide action researchers. Action research is a type of applied social research that differs from the other varieties of research, in that the researcher is directly involved in the organization’s action process.
As can be seen in this definition, the important concepts in action research are close collaboration between the researcher and the client, and change.
Most action research involves iterative cycles of implementation or action and evaluation (Gill and Johnson, 2002). Because the implementation of the model that will be developed is beyond the scope of this inquiry, the focus of this paper will mainly be directed to fact finding and interpreting these facts and the design of a solution. Heller notes that with limited involvement of the researcher in the implementation and the main focus on fact finding, the method can better be seen as research action instead of action research. This doesn’t mean the important concepts of action research can be ignored; to get a good grasp of the practical problem this research has to be conducted by closely collaborating with the stakeholders in the researched system and evaluating every step with the help of these stakeholders.
3.2 Research Model
touch with the reality of the problem situation and will direct this paper to research activities that are relevant. By researching the problem this way, every time there is theoretical input it will be evaluated with stakeholders to keep a practical perspective. Also, every time there is input from stakeholders it will be evaluated with the help of theory. This way there will always be a balance between the research side and the action side of the research.
One thing that should also be taken into account is that with research in such a practical context there is a lot of uncertainty and potential influence of a changing context. The structure is hard to define beforehand, and in action research one should always take into account that with the evaluation of every step that the research questions or goals can change. The research starts out with the research model depicted in figure 2.1. All the steps have to be seen as iterative cycles that are highly dependent on input from reality and thus, are highly susceptible to change.
The first step of the model is formulating the approach to the problem. This problem description is formulated in close collaboration with the client organization, through interviews with the internship coordinator who is also the company’s CEO and other company staff. This is the action input in this stage, while the research input is conceptualizing the mess of problem identified jointly by the members of the company and me. We conceptualized the problem areas as structure of the relationship, value and relationship management and the international dimension.
The design and planning phase are mostly the domain of the researcher, the research approach is defined as action research. There is, however, also an input by the stakeholders: The progress made in this phase is reviewed weekly by the CEO and at the end of this phase the whole research design will be presented to the company staff [in the form of a presentation], after which a joint evaluation of the design is undertaken.
The next steps are the iterative cycles. Originally two cycles were identified, a third emerged after the new problem areas were identified in the first cycle. The first cycle focuses on the relationship with the partner, especially in the areas of value and relationship management. The second cycle, which emerged from the first cycle, focuses on Cordeo’s organizational structure and managing an interfirm-network. The third cycle focuses on the relationship with Japanese partners and the cultural diversity in the partner network. It will take a similar approach as the first cycle but the focus will be on cultural diversity in the partner relationship.
The first cycle started by researching Cordeo’s value and relationship activities. This cycle will begin with a literature review, which is the theoretical input, and this was followed by defining the research question of that cycle and a methodology. The data analysis was the practical input in this cycle. This was followed by a diagnostic phase in which theory helped to structure the data acquired in the previous phase: this is where the action and research side came together. Last was the Design phase in which the diagnosed data was turned into a model which is both academically founded and of practical use for Cordeo.
The next step is an evaluative phase in which the proposed model is presented to the stakeholders. Until they are satisfied with the results, iterative cycles will be added to this research. All iterative cycles will have a similar structure to the first one.
4 Iterative Cycle One: Value and Relationship management
Following the original problem description the topic of this first cycle of research has been identified. The practical preliminary research question which was formulated in section 2.3 after the first problem identification is taken as a starting point. This cycle will both research Cordeo’s value offering and relationship management.
How can Cordeo better organize the relationship with its partners to efficiently manage its growing partner network? What value should Cordeo offer to each of their partners?
4.1 Literature Review: The Related Concepts of Value and Relationship
Management
Throughout the literature it is widely acknowledged that value is a key concept in any supplier-customer relationship. Lorenzoni and Baden-Fuller (1995) identified creating value for partners as one of the key roles of the strategic center of a network of organizations. The broadest and generally accepted definition of value is that value is the total worth of the benefits received for the price paid (Anderson and Narus 1998). This suggests that there are two sides to consider benefits that add value to a relationship and that there are factors that offset this added value.
Also value can be divided in direct value and indirect value (Simpson et al. 2001). Direct value can be expressed in monetary terms, has a clear objective and has quantifiable benefits. Indirect value is derived from less tangible aspects of the relationship such as a strong relational bond between supplier and customer.
Combining the first definition with direct and indirect value, Woodruff (1997) defines value as; “a customer’s perceived preference for and evaluation of those product's attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situation”. The importance of Woodruff’s conceptualization of value over the other definition is twofold: firstly, the definition emphasizes the multifaceted nature of value creation in that both attributes and consequences of activities comprise perceptions of value. And secondly, value is derived from the perspective of the customer or value recipient.
What has been shown here is that value has several dimensions. There is the value that comes from the transactional context, such as the product offering and additional services, and there is another form of value that is important to manage relations between suppliers and customers. Gronroos and Ravald (1996) name this value relational value, they conclude that the relationship itself might have an effect on the value received and perceived by the customer. In close relationships the customer goes from evaluating separate value offerings to evaluating the relationship as a whole.
Relationship marketing is closely related to relationship management. Relationship marketing deals with constructs as trust and commitment and interaction to develop and facilitate strong, long term relationships. Relationship management is no clear construct in academic research but most researchers in the field view it as part of the discipline of organizational structuring. Relationship management is defined as something that gives structure to relationships. It is more concrete and broader than relationship marketing; it deals with the activities and managerial issues that organize and govern the management of relationships. The relationship management approach that is used in this paper is the same as in network management literature. The understanding of the specific activities associated with network relationships or partnerships is needed. This should advance our ability to cultivate, manage, and sustain closer channel relationships and thus, gain competitive advantage over the long term (Vloskey and Wilson 1997).
The constructs of value and relationship management are closely interrelated. Relationship management forms a structure in which relationship value can be created, relationship marketing sits in the middle of this on the one hand it is part of the value offering and on the other hand part of the structure of the relationship. This way the relationship structure itself creates value in the relationship. So in one way the value offering is part of the relationship structure and in another way the relationship structure is part of the value offering. The relations between value and relationship management are depicted in figure 4.1.
Following this literature review a new research question which combines the concepts of value and relationship management can be created:
How should Cordeo organize its value offering and relationships to efficiently manage its partners?
The Sub-questions that arise are split in two parts. One part about the value offered to partners and the other about the organization of the relationship.
Which activities should Cordeo engage in to create balanced value for the different partners?
- What value does Cordeo create for its partners now?
- What are the value perceptions of the partners and what value does Cordeo want to create for its partners?
Which activities should Cordeo engage in to optimize the organization of the relationship with a growing number of partners?
- How does Cordeo organize the relationship with its partners now? - How should Cordeo organize the relationship with its partners?
4.2 Research Approach
The aim of this cycle is to identify and organize the value adding activities of Cordeo towards its partners and the structure of the relationship between Cordeo and its partners. The first step is the identification of the current value adding activities and organization of the relationship. We know only roughly what we are exactly looking for, and the description will emerge only as the study enfolds. To gather data about the value and relationship management, input from all the stakeholders is very important. Both due to the need for this data to be in depth and rich, and the uncertainty that we are dealing with in this paper we will take a qualitative research approach.
This research cycle will focus on the action side of the research model. In this session data is collected through observation and by interviewing the stakeholders, which are Cordeo and its partners. In the interviews objectivity is very important. To get the best results the stakeholders cannot be biased by giving too much theoretical direction in the interview questions. Before we can start making the interview scheme we first need to decompose the concepts of value and relationship management.
The data acquiring step is commenced with a description of the current situation. The input from the researcher is the observation of the current situation by being in the middle of the organization and descriptions of what is seen and heard concerning the value offering and the relationship with partners. The inputs from the stakeholders are interviews about the current situation with company staff. In the second data acquiring phase through semi-structured interviews with partners, the value perceptions and ideas about structure partners have will be mapped. We will elaborate on these topics with the client company staff. The final result of this will be a list of value perceptions and ideas about organization of the relationship of all the stakeholders. This information will act as the basis for the analysis of how Cordeo can effectively manage its partner network.
4.3 Decomposing Value and Relationship Management
In order to research the topics of value and relationship management we return to the literature to get a precise description of how value creation between sellers and resellers is decomposed and which elements are important in the construction of the relationship. It is important to note that this is only done to get an idea of how value and structure in the seller-reseller relationship are decomposed in order not to miss any important issues while collecting data. Although this analysis gives some direction to the data analysis phase it is important that it does not direct the data collected through observation and interviews.
that the market orientation of the supplier organization is positively related to the market orientation of the distributor and it will lead to a higher distributor perceived value of the relationship. The distributor perceived value is exactly what we want to find in this cycle, and the relationships as Simpson et al.(2001) found them are especially useful in the context of the relationship between Cordeo and its partners. We simplified the model by Simpson et al. (2001): As we just use this model as a description of the variables present in value creation, we have left out certain relationships which are not relevant in decomposing the value offering. This includes for instance the influence of the relational, product and service and support value on increased reseller financial performance.
Figure 4.2: Adapted from Simpson et al. (2001)
Market Oriented Behavior
Relational Factors Product Factors Service and Support
Factors
Committed Behavior Product Quality Marketing support
Trusting Behavior Pricing Sales support
Cooperative Norms Innovation Technical support
Communication Profitability Training
Distributor Perceived Value of Relationship
The model assumes that value is determined from the perspective of the receiver (partner) of the value activities. For now this framework is used as an outline to categorize the different value activities. We do not look at the positive or negative points of this model for Cordeo, it will just be used as an overview of all value activities which are present in supplier-distributor relationships.
primary responsibilities are to maintain an effective relationship between the different parties. The literature reviewed above gives us a good overview of the value creating activities
4.4 Methods of Data Collection
The sample size of the partners we interviewed in the Netherlands was seven, first there was Cordeo. Then there were five more Dutch partners; GX, H, N, NN and P. HY is also a Dutch partner, but this company was excluded from the research, because it is not an active partner at the moment, interviewing this partner was advised against by Cordeo’s CEO. Then there is X which is a U.S. based company, but with subsidiaries in Holland which makes the sample size 7. With such a limited number of cases quantitative research would not be valid. This confirms qualitative research is suited for this research. The U.S. based partner RV and Japan based partners Y, F and FX have no Cordeo activities in the Netherlands, they will initially be excluded from the sample. For the U.S. partner RV, because of limitations of time and money, making it unfeasible to do interviews at this company. And the Japanese partners will be interviewed in another research cycle, which cycle will focus on cultural diversity.
The partners that are included in this research cycle are shortly described in table 4.1.
Table 4.1: Short description of partners
Partner
Name GX H N NN P X
Organizational
size* SME SME MNE SME SME MNE
Core
Business Management/Web Content Technology consultant Regional Printing Organization Document Solutions/ Technology consultant Corporate Branding/ Consultant Regional Printer Organization Document Solutions/ Printer Hardware Number of Customers running May 2007 Implementing XLdoc themselves Multiple projects in implementation phase 1 customer running Xldoc independently 1 project in implementation phase. 5 Customers running XLdoc through their server 1 customer(with different divisions) running XLdoc independently
*SME < 250 Employees, MNE <250 Employees+ operations in more than one country
The interview questions are based on the models described in the literature review in this chapter. Using Emans (2002) the variables in the models are turned into interview questions. The Interview scheme includes semi-structured and open questions and can be found in appendix A.
4.5 Data Analysis Current Situation
- What value does Cordeo create for partners now?
- How does Cordeo organize the relationship with partners now? 4.5.1 Market oriented behavior
Cordeo is closely connected to its own market; besides managing partners, Cordeo has a stable base of fourteen direct end-customers which are using the XLdoc solution. Through experience with these customers and occasional informal discussions about the product, Cordeo identifies new developments in the market and it learns about end customers’ value perceptions. It uses this knowledge in order to improve the new versions of their product. Employees in all organizational levels are in direct contact with the market. At present market information is not documented and it is not structurally shared with partners.
4.5.2 Value Offering
Product offering. XLdoc is Cordeo’s core product. According to Cordeo’s CEO, its key characteristics are that it is a high quality and innovative product. It differs from most competitive products because XLdoc is not built from the software perspective like competing products, but from a perspective of chain integration. The key is that Cordeo integrates the document life cycle by developing easy-to-use software. “The XLdoc solution is relatively simple to use and concentrates on the functions marketers need to easily and quickly store, create, edit and order documents. Other comparable products don’t take this functional approach; they concentrate on the many print options they can provide, which are not useful to marketers”. - CEO,
Cordeo-Cordeo’s software is technically standardized, which means that Cordeo software can be set up for different customers with minimal technical changes. But at the same time it has the flexibility to be functionally set up just as the customer demands.
XLdoc is sold using two different pricing models. End-users can choose to buy their own private web portal or buy a private-label solution. This means they have a log in on the partner site, with the same possibilities as the private portal but limited capability. Due to lower implementation cost this is a more cost effective way for smaller customers to make use of the XLdoc product.
The next version of XLdoc will offer more autonomy to partners. Cordeo’s chief applications manager says that in the next version Cordeo will no longer be the bottleneck with limited capacity because functions like creating templates can be delegated to partners. This way the value offered to partners will increase and at the same time, Cordeo will have more time to spend on other kinds of support.
other partners regularly ask for this support. Another sales tool is a demonstration site that partners can use to demonstrate the product to potential customers.
Concerning technical support Cordeo’s CEO notes: “Technical support is an important issue for high technology firms like Cordeo.” Cordeo’s philosophy is to provide a hassle-free technical platform. If there are problems partners can call or email Cordeo’s support desk, which delegates problems to the people in the organization that can solve it.
When implementing the solution, partners get on-the-job training. Cordeo has only limited training materials available. There is no additional training, however, on request additional training can be provided.
Relationship Value. Cordeo’s CEO characterizes relationships with most partners as close, there is frequent communication and knowledge is shared. In the 6 year history of Cordeo and its partners no significant conflicts have taken place between them. Most communication between Cordeo and its partners is on an ad hoc basis, there is no structural planning for frequent communication.
4.5.3 Organizational Activities
Role Specification. In the current role specification Cordeo is involved in virtually all stages of implementation and maintenance of XLdoc. First of all, Cordeo is the developer of XLdoc and maintains the technical platform, which for instance includes hosting the application. Also Cordeo does the technical and the functional implementation for all new XLdoc customers and partners. Theoretically relationship managers of the end-user-customers should be the first line of support, relationship officers at partners should be the second line of support and experts at Cordeo are the third line of support. Cordeo’s CEO states that in practice experts at Cordeo handle virtually all questions and are the first or second line of support.
Partner roles also differ greatly in the current structure. There are separate non-standardized contracts for each partner. No two partners have exactly the same roles except for trying to sell XLdoc.
Planning. Cordeo completely plans the implementation of the application for the partners. Some partners however, can assist in making the preparations for such project planning. More strategic planning such as planning on goals and targets is nonexistent, only informal talks in which partners explain their visions and goals are held
Monitoring. Cordeo occasionally evaluates partner’s financial performance, but this is done on an ad hoc basis. Partners are not monitored in a structural way.
Incentives/Motivation. According to Cordeo’s CEO, Cordeo motivates partners by providing the best product possible, which has the right functionality, is easy to use and can be quickly implemented. He also states: “The motivation for partners to sell XLdoc should be that XLdoc is better than the rest. Partners should also be motivated by the fact that the more XLdoc is used by their partners the more money their end-customers will save and the more money they will earn, this is a win-win situation.”
primary contact for implementing and administering the XLdoc solution. No standardized partner levels or service level agreements are included.
4.6 Analysis of the partner interview data
In this section the interview data gathered from partners is presented: The data was analyzed and the most important information was filtered out. The goal of this chapter is to present the data in a structured and objective way. In the diagnosis stage the data as presented in this chapter will be used as a practical sourcebook. Each topic presented is also shortly reflected upon by Cordeo, their input is very important in this chapter.
4.6.1 Market Oriented Behavior
The interview data shows that all partners perceive market orientation from Cordeo as very important, especially in the initial phase. The chief sales manager at Partner H states: “Cordeo has a good knowledge of end-customers and this is necessary because of little experience of H with putting XLdoc on the market. Cordeo is a valuable source of information in the initial stage of the relationship”. All other partners make similar statements; they all think Cordeo is close to their market and they need to share their information with partners which are inexperienced with new types of customers. Only P thinks Cordeo widely shares its information about the market. The results are summarized in table 4.2.
Table 4.2: Market oriented behavior
Number of partners that think Cordeo has good knowledge about its market. (N=6)
Number of partners that think market information is widely shared. (N=6)
6 1
Cordeo’s CEO said that by dealing directly with end-user customers Cordeo stays in touch with the actual customer needs. Cordeo notes that this information is shared with partners in an informal way as tacit knowledge.
4.6.2 Cordeo’s Value Oriented activities
4.6.3 Product Offering.
In the previous section of this paper we stated that the different value perceptions of the partners concerning the product could be used to differentiate the partners. There was not a lot of variation in the partners’ product value perceptions; partners mainly identified the same value that the product should offer.
Table 4.3 shows the strengths and weaknesses of XLdoc mentioned by partners and the number of times they are mentioned by partners.
Table 4.3: Cordeo’s strength and weaknesses
Strengths Number of respondents mentioning item (N=6) Weaknesses Number of respondents mentioning item (N=6)
Technically strong* 6 Complexity 6
Quality 6 Pricing Model 3
Innovation 4 Growing
Autonomy**
2 User Friendliness 3
Pricing Model 2
XLdoc’s strength’s and weaknesses
*Different technical strengths are taken into account.
**Growing Autonomy in itself is not a weakness, but partners are afraid they will not be able to handle more autonomy. There are however, a few differences.
1. Pricing Model: While P and sees XLdoc’s pricing model as a strength, and mention it is relatively cost efficient comparing to competitive products, N and H don’t share this opinion. They think the pricing model forms a barrier for small companies. Partner N’s relationship manager stated: “XLdoc’s price is quite high, this can be a barrier to smaller companies. Now XLdoc offers too much functionality for small companies this can also be a barrier as these companies may feel they are paying for a product they only partly use.” H agreed functionality of the product is sometimes too high and this is accompanied by a too high and not-transparent pricing model. Partner NN agrees that the pricing model is complicated and not-transparent in its current set up.
Cordeo’s CEO does not share partner opinions about a simpler and cheaper version of XLdoc, he believes there is enough flexibility in XLdoc’s current set up. XLdoc can be offered to customers in two ways by partners as was described in section 4.5.2.
As they are not familiar with the design or print world they don’t know if they have the resources and expertise available.
Cordeo’s CEO’s perception on different product offerings is that he agrees some partners which are qualified to do so should get more autonomous then others. For instance certified partners should get the ability to do implementations themselves using the new implementation methodology, and non-certified partners should not get this possibility. In short, product offering in terms of autonomy should be differentiated by partner level. 3. User friendliness v. complexity: Partners P, H and NN see user friendliness as a strong point of XLdoc, however all partners except for H also mention too high complexity. NN and P mention both high user friendliness as a strong point and complexity as a weak point. NN relationship manager notes on this subject: “XLdoc is much more functional and much easier to use than in most comparable products. But sometimes still to complicated, different user interfaces are weak, with a too industrial feel.”
Cordeo see user friendliness as one of Cordeo’s key strengths. However, there is always a trade-off between keeping XLdoc user friendly and keeping it functional for many different companies. In the new version of XLdoc functionality can be added or removed with one click of the button.
4.6.4 Service and Support Factors.
The most important factors in service and support offering are presented in table 4.4.
Table 4.4: Service and support factors
Partner Name
GX H N NN P X
Feelings/
Concerns training is the Functionality most important support factor. Messy structure. Our overall knowledge of the product has too many
gaps.
Project management and planning are by far the most important
supporting factors, but this is not very well
developed. Swift support is important, making templates fast, and responding fast to technical requirements. Keeping planning and deadlines are the most important supporting factors that have to be considered. Planning should be improved, more proactive attitude of Cordeo towards partners.
Problem Area Product Knowledge Product Knowledge Planning Proactive Service Planning Planning/ Proactive Service
feel that sometimes we have to push Cordeo too much to keep these deadlines. I want to see a more proactive approach from Cordeo concerning these topics.” – Relationship Manager, X -.
H adds that Cordeo needs to be more proactive in preventing problems and answering questions. Now Cordeo is responding to most problems and questions because of a lack of an overall structure in their service and support structure. “The lack of structure in the relationship we perceive is most obvious in the lack of structural training”-Relationship Manager, H –. All but one partner (P), that are already working with XLdoc and its own customers base, describes big gaps in the overall product knowledge as a result of lack of training and documentation.
Cordeo’s CEO thinks Cordeo’s ability to work fast and deliver a high product quality with as little technical problems as possible is their most important service and support element. He agrees that due to capacity problems they are not able to work as fast as they would want. He also agrees that on certain points they are not proactive enough: “Right now Cordeo can barely handle the amount of orders and assignments we receive. By making partners more autonomous in the next version of XLdoc we hope to resolve these capacity problems and start to support our partners more actively.”
Marketing Support. P and N stated they are not interested in marketing support. P’s relationship manager states: “We don’t need marketing support from Cordeo, we are already at attracting new customers at Cordeo’s full capacity.” N’s relationship manager explained they don’t need marketing support because they are not actively selling the product, they take a consultancy approach. This means identify an organization with a problem related to documents and they use XLdoc if it is a fitting solution.
The four other partners did consider marketing support to be relevant. Table 4.5 shows what partners are looking for in marketing support. They agree that documents with a clear product outline, which position XLdoc in the market and which give a clear indication of the applicability of XLdoc could be very useful.
NN’s relationship manager opposes N’s view that consulting companies don’t need marketing support by saying: “I think marketing support is important to convince customers to use XLdoc and especially to do internal marketing, this means to keep XLdoc on top of the minds of our consultants.”
Table 4.5: Marketing support
GX H NN X
Marketing
Support Product has to be positioned clearly. Materials that can help to do this are ppt presentations and fact sheets.
Documents that help us to position XLdoc in the market. Product descriptions. Now there is too little and it is too much dependent on Mr. Reijnen.
Marketing
materials have to be developed, best with a clear outline of what XLdoc can do.
actively marketed. In the Next version which is almost finished, more active marketing can begin. “In the new version Cordeo is not the bottleneck anymore. Partners and end-customers can have much more autonomy through creating the templates themselves, but also because this version will be even easier to work with and we will have more resources available to educate partners to be more autonomous.” – Willem Stalknecht, Cordeo director/Chief designer of the XLdoc
solution-Sales Support. All partners think sales support is very important and they all agree this should be support in the form of demo materials, cases with clear results concerning XLdoc’s savings and profitability and cases which show XLdoc’s applicability in different problem situations. GX’s relationship manager said: “Cordeo supported us with some sales presentations in the past and I think this is very important to get us started, until we can do this ourselves. NN’s relationship manager made similar statements. For sales support the same things are expected as for marketing support. “With the introduction of the new version of XLdoc sales materials such as demo-sites and flash demo’s will be provided to customers. Also we see a role here for a partner manager, who can give sales training to partner firms and who can develop personalized sales materials” – CEO,
Cordeo-Technical Support. All partners agree Cordeo-Technical support is messy and has an unclear structure. Partners identify 2 main reasons:
1. Technical support is not standardized. “Technical support is messy, there is no standard time one problem is resolved or a question answered, this way it is hard to have expectations. There should be more standardization.” This quote by N’s relationship manager is a good illustration of what is going on with Cordeo’s technical support: all partners agree this support should be structured. X and NN both think Cordeo has problems with translating “techno talk” to normal language, this gives partners the feeling Cordeo is impatient and sometimes even somewhat unfriendly. X’s relationship manager says this is partly caused by not having a fixed contact point in the organization for different problems.
2. No documentation of technical problems. H and NN feel that a lot of technical problems can be avoided rather then resolved by having better documentation of frequent problems available. H’s relationship manager states: “By making technical manuals and answers to frequently asked questions available, a lot of or even most problems can simply be avoided.”
Figure 4.3: Technical support problems identified by partners
Training. PCZ thinks the on-the job training it received was sufficient, however the other partners agree Cordeo’s training program is either non-existent or very messy. All partners have been trained on-the-job or they learned from experience by themselves. “The training I received was minimal; it only trained me in the functional area. I agree the functional aspects of XLdoc are very important but training in the applicability and more technical aspects are also desirable… Cordeo should also develop better training manuals… Training should be kept up to date throughout the different phases of the relationship” –relationship manager,
X-N and X-NX-N agree their knowledge of XLdoc has too many gaps. P, GX and H all stated functional training and sales/applicability training should have the first priority, training materials to support this training are also very important.
Table 4.6 shows what areas of training partners rated as important.
In a later stadium, applicability training and somewhat more technical training will be more important and the focus should be on keeping the product knowledge up to date.
Training Area Number of Respondents mentioning item (N=6) Remarks
Functional Training 6, All partners Sales and
applicability
Training 5, GX, N, NN, P and X
Especially in the early phases of the
relationship Technical Training 2, P and X
NN suggests this can be done through yearly up-date sessions. This will all benefit Cordeo itself, as this keeps the partner informed and more capable to resell XLdoc.
For training a similar model (figure 4.4) as for technical support can be developed:
Figure 4.4: Training
Cordeo now only gives on-the-job training in the area of product functionality, Cordeo also developed some user manuals for the different applications to support this training. Cordeo’s CEO agrees, however current training methods are not structured enough. Training in other areas such as sales, applicability and the technical area should also be more developed.
4.6.5 Relational Factors
Trust. Trust is viewed by partners as keeping one’s promises in the form of deadlines and contractual obligations. As was discussed before, Cordeo keeps promises but sometimes partners have to push Cordeo due to capacity problems. Meeting deadlines has its ups and downs; this has to be planned in a better way. Cordeo has to take a proactive approach to make this better. N, X and NN all made similar statements about trust. P and H think trust is more about friendship, openness and a close relationship. Partners all have trust in Cordeo.
Cordeo’s CEO agrees with these partner views and additionally sees trust as trusting partners with each other’s confidential information. Both Cordeo and partners agree that by adopting a more proactive approach, Cordeo can improve the trust as perceived by partners.
which sells us office supplies, we have several companies where we can order, but we always order from the companies which keep us up to date with information, these companies are committed to us and are always on top of the mind of the people that have to buy our office supplies” –Relationship manager,
NN-A more proactive attitude is also mentioned by X, H and NN. GX and P think keeping promises is key in being committed.
Cordeo’s CEO sees commitment more as an investment, he thinks Cordeo invests a lot in partners and this also requires more investment from partners.
Communication. There is a clear distinction between the perceptions of Cordeo’s communication between the partners close by in Zwolle and the other partners in other places in The Netherlands. P and H from Zwolle view the communication as very good. They both stated their communication is almost daily and very personal. N and X are less satisfied with the communication, they said in the initial phase communication was good, but as the relationship is progressing it is getting worse, again a more proactive stance from Cordeo is needed to keep the communication going. X’s relationship manager mentions “Cordeo has to keep in mind ‘the customer is king’ mentality, for instance the translation from techno talk to normal language which has to be better and friendlier.” NN states the communication is unstructured: they suggest planned contact moments, and much more sharing of information in the functional, technical and commercial area. All partners complained about insufficient information about the new version, even P, who will be involved in the testing process of this new version soon.
“The information to the partner is on an ad hoc basis and this should be structured in a better way. Partner managers should make the relational communication more structured and more proactive. They should be the direct interface between Cordeo and the partner. They should actively inform partners in the functional, technical and commercial areas and they should also communicate market oriented information such as new development in the market. Project managers should be assigned to individual projects to handle all information concerning these running projects. .” –CEO, Cordeo-Cooperative Norms. Most partners identify close cooperation as essential for a good partnership. P is very happy about being involved in the testing of the new version, their relationship manager stated this makes the relationship between the two companies feel more like a partnership. Other partners also agree it is important to work close together, this also keeps XLdoc on the top of their minds. N thinks Cordeo should improve joint planning and H thinks a good sign of cooperative norms is generating leads for each other. Cordeo’s idea of cooperative norms has to do with sharing resources in the partner network. “Certified partners should be able to perform tasks as building templates and implementing applications for less certified partners. Also these partners should be able to take over tasks of equally certified partners.” –CEO, Cordeo-.
Table 4.7: Summary of section 4.6.6 Relationship Factor Number of respondents rating item as most important in relationship. (N=6) Feelings/Concerns+ Number of respondents mentioning item (N=6) Points for improvement+ Number of respondents mentioing item (N=6) Trust 5 Trust is keeping promises. (3) More proactive stance (4)
Trust is closely working together (3)
Commitment 0
Commitment is keeping the partner's
interests on top (4) More proactive stance (4) Commitment is
keeping promises (2)
Communication 1 Good communication instills trust (1)
Communication has to be structured(1) Information has to be shared more proactively (4) Cooperative Norms 0 Cooperative norms mean to be included in activities other than standard
operations (1) Joint planning has to be improved (2) Cooperative norms
are joint planning (2) Cooperative norms
mean to work together on leads as
partners (1)
Satisfaction. All firms give a sufficient mark to the overall relationship with Cordeo. However, the smaller company representatives (CZ, H and GX) gave a significantly higher mark than the larger X and N. The results are shown in table 4.8.
Table 4.8: Relationship satisfaction
GX H N NN P X
Satisfaction with relationship 1-10 scale.
8 8.5 6 7.5 9 6
P, X and GX see the implementation phase as the initiation phase of the relationship, however NN, N and H see it as a learning phase which takes a lot longer then just the implementation. H added that in the initial phase the emphasis must be on training, and useful materials like manuals as well as sales and marketing materials should be available. Cordeo sees the first phase as a process where a mutual feeling of trust and commitment is created, which will last until the partner has its first real customer up and running. Then a process starts in which partners will learn to make deals with customers themselves. In this initial phase the partner should receive close support from Cordeo. A learning curve is set in, in which the customer learns to deal with increasing autonomy.
4.6.7 Relationship Structure: Maintenance
Current Role Satisfaction. Most partners agree with the present role division because of limited capabilities of both Cordeo and themselves. For instance P’s relationship manager stated that: “The role in the XLdoc network played by us is limited by Cordeo’s limited capacity, we desire a more autonomous role.” Other partners are not so clearly dissatisfied with their own roles, but they see similar possibilities. X, N and NN noted that Cordeo’s role should be a more active one.
About the way the roles that are set right now Cordeo’s CEO stated “Cordeo is clearly the bottleneck, most actions still go through us and due to capacity problems processes slow down. In the new version partners will get the possibility to have much more autonomy, then partner role should be much more structured based loosely on the different levels of autonomy the different partners can have”. He also noted that Cordeo should have a more active role in supporting partners with marketing and sales support and with materials and information, when it shifts more autonomy to their partners.
Partners Role. There are some differences in how different partners see their roles in the XLdoc network, however all partners see themselves as having the primary customer contact.
Partner roles as they see it themselves can be visualized using 2 continuums. This is shown in the figure 4.5.
1. Actively reselling XLdoc: P and H see themselves as pure resellers. XLdoc is their only Publish-on-Demand product and they are actively trying to resell it to customers.
N, NN, X and GX however, take a consultancy approach, which means no active selling but problems are identified in end-customer organi-zations and XLdoc is considered as a possible solution out of a broader line Actively reselling XLdoc
High P, H
Med GX N, NN X
Low
Low Med High
Actively managing partners
