This second in a series covering guiding principles that go deeper into specific strategies for solving this challenge. It starts with a focus on three initial considerations:
- What are the guiding principles?
- Where do they come from – or what main observation might we conclude about them?
- What should we do with them?
Guiding principles are concrete guidelines specific enough to allow us to make quick yet informed decisions instead of conducting lengthy discussions or enduring complete decision deadlocks. The principles are based on observations of generic values, beliefs, policies, laws or truths pertaining to the desired behavior of an organization.
An example of an observation could be a statement like, “Our policy is to promote the longer-term interests and objectives of our organization and those of all our stakeholders, including our suppliers.” This implies a guiding principle that sourcing contracts are to be negotiated to benefit suppliers (and their customers, of course).
What then are the most important principles of collaboration? To define them as shown below I start with a generic observation followed by the recommended guiding principle. These principles should be agreed by all stakeholders and applied by a proactive supplier or customer management from the initial analyzing to the final restructuring of a collaboration and its operation.
Mutuality – if you avoid it, you risk your relationship
Observation -- It takes two to tango in most business relationships. The parties that you deal with need to get enough benefit from the relationship to motivate all parties to really care about your interests and develop a truly productive collaboration – otherwise, the relationship is nothing more than the contract itself, which usually is not good enough. Without mutuality, you get the goods you ordered and payed for. Full stop. Or, if you are a supplier, the customer will pay you (probably late), demand a lot of extra’s for free -- and don’t expect further business.
Unfortunately, many organizations tend to only care for their own interests. This is often aggravated by operational or commercial targets that are relevant for only the narrow responsibility of the individual department that you are dealing with. Examples include a procurement policy that focuses only on getting 20% off the price, or a sales executive who is interested only in hitting his or her bonus threshold this quarter.
Guiding principle - Think “them – us – me”. This means thinking first about the benefit for the other side (them). If we care about the interest of the other party, they will care about ours. Our party will then reap the benefits we’re after (us). Collaboration success will in the end pay back at the individual level (me).
Interests and objectives – care about the other party and you both win
Observation – The interests and the supporting objectives of parties in a collaboration set or remove constraints and conditions for collaboration. If the other party is pursuing objectives that are against your interests, it will be very difficult to work together in an open way. If, on the other hand, the two of you have a shared, common objective, collaboration will probably happen easily.
Commonality of interests and objectives work as magnets between parties; shared interests and objectives are a strong pulling force for collaboration. However, the opposite strategy filled with contrary interests and objectives push parties away from each other. Unfortunately, in such a situation, drivers are not always well understood by all. We recommend that you be open and transparent with them. Ask and answer what is driving you, what do you wish or need to get out of this collaboration, or even what is holding you back?
Guiding principle - Understand how your interests and objectives align with those of other parties and organize collaboration to match.
Differences generate value for you and the other party!
Observation - It makes sense for organizations and individuals to collaborate if and because they are different. If we offer the same services or products, have the same competencies and work in the same market, we are competitors. We should only join forces if we lack the scale required by the market.
But differences between us, such as different capabilities, could make it possible to generate value for the other party, and vice versa. It could be that your own small company with just a local presence owns a brilliant technology but is lacking market access. An international company with a global reach but no capability in your field could be an ideal party to work with.
Guiding principle - Seek and exploit complementary capabilities and synergies between your own organization and the other party.
Differences – take them seriously -- maybe critical issues are involved
Observation - Humans are social animals that seek protection by belonging to a group of individuals that are like themselves. The unspoken assumption is that you can trust the ones that are like you better than those that are different. The side effects of this could result in group-think, conformism, and the rejection of ideas that are outside the domain of accepted thinking (not-invented-here syndrome).
This level of reasoning works against the previous principle, which advocates embracing differences. However, resistance usually indicates that issues of real importance are at play, maybe at the level of deeply felt values and beliefs. It is advisable to take them seriously and explore resistance in a rational manner.
Guiding principle - When you face resistance against leveraging capabilities of the other party, explore and evaluate what it is, and accommodate any rational objections (they might be justified).
Trust during times of uncertainty
Observation - A high level of trust is NOT always needed. High trust levels can be required when risk or uncertainty are high, but for many transactions involving products or services, all you need is a basic formal guarantee that you will have delivered the product or service for the price; the time of delivery; and the quality that were agreed in the contract.
Guiding principle - Trust levels must be aligned to the required depth of collaboration.
‘Horses for courses’; different situations require different capabilities
Observation - Collaboration is not “one size fits all” nor is there one kind of collaboration that is better than others. A standard service, such as catering or cleaning, requires a relationship between supplier and customer which is set up very differently than a complex IT outsourcing service or a bespoke software development program.
Guiding principle - Chose the kind of collaboration that fits the nature and content of product or service delivery.
Not everyone is your friend; a close relationship is NOT needed for each collaboration
Observation - Most of us are biased towards certain types of human relationships. Our values tell us that we ought to strive for friendly ties with the people around us. Unfortunately, in the real world, that is not always an option. You can’t be friends with everyone. Conflicts of interest get in the way, or circumstances change and prevent people or organizations from living up to expectations. Sometimes, the balance of power plus the nature of the other party is such that the other side can’t prevent behaving as an enemy.
Guiding principle - Chose the kind of collaboration that fits the nature and attitude of contracting parties, and, in appropriate cases you will need to get used to collaborating as enemies.
Partnership is not a customer/supplier relationship model
Observation – Some might promote the idea that partnership is the ideal relationship model for customer/supplier collaboration. I strongly disagree. Partnerships are typically understood as relationships in which individuals share a common destiny and objectives, implying that partners care for each other and work jointly in all transparency and openness to achieve the common goal. In reality, at times the customer and the supplier are - to some extent - working in an adversarial relationship, pushing to minimize cost respectively, maximize revenue and profit margin, and maximize delivery versus minimize effort, etc. This can lead to conflicts of interest.
Guiding principle - Don’t blur the commercial customer/supplier relationship that is inherently competitive with the friendly and intimate connotations of real partnerships.
Collaboration takes time – building trust can’t happen overnight
Observation - Getting into a (close) collaborative relationship is not achieved by two gentlemen signing a contract, while cheerfully looking into the lens of a PR-camera. It takes effort, elapsed time and a controlled process to build trust and develop a productive relationship.
Guiding principle - Allow the time for change and adopt a structured process to develop the collaborative relationship all parties are seeking.
Collaboration is configurable, not fixed but variable and depends on its context. A customer may find that an intimate collaboration with a software developer is appropriate and sets up a mixed development team to promote sharing of knowledge and experience. Or a supplier may understand that delivering its services to an aggressive monopolist customer requires a strong defense posture and therefore, the supplier sets up a top-notch team of legal experts and contract negotiators.
So, at the end of the day, we must keep two goals in mind:
- understand the forces that drive collaboration, organize accordingly; and
- define and use guiding principles as our instruments for making deliberate, well-timed choices in creating commercial relationships and keeping them healthy.
My next article goes deeper still! No I’m not a fanatic! Collaboration is complex even for most experienced practitioners. So, my third iteration traces the journey towards effective collaboration by defining, designing and implementing an appropriate type of collaboration -- one that fits the purpose of all parties involved.
ABOUT THE AUTHOR
Dr. J.A. (Joost) van Boeschoten – Principal is a specialist in sourcing and collaboration between IT organizations. After a 25-year career as a consultant and manager in major international IT organizations, Joost became an independent consultant in 2006 working with IT customers and suppliers. He helps them create successful collaboration, create new relationships or improve existing ones.
Contrasticon provides specialist expertise in partnerships business collaboration. Contrasticon is rooted in the IT industry, and most assignments are aimed at creating or improving customer and supplier relationships in IT. IT Governance is an area of expertise important for many collaboration issues in IT. Contrasticon is knowledgeable in this area, and many of their assignments build equally on their expertise in both IT Governance collaboration.Could customers and suppliers redeem us from post-COVID-19’s economic crisis?, Reference: CEJ