The basics for good collaborative relationships
The previous article ended with a question: “How to change the direction of the relationship spiral, and get to a good collaborative relationship? The shortest possible answer is “think them – us – me”, in that order.” We will pick up where we left, and move on to discuss how to develop a fruitful collaboration. It all starts with principles for collaboration. This article discusses:
- What principles are
- Where they come from (“observation”)
- What to do with them (guiding principles themselves)
Observations and Guiding Principles are discussed in pairs, per theme. Themes are for example “Mutuality”, “Interests and objectives”. A next article will focus on taking action to define, design and implement the type of collaboration that is fit for purpose for the parties involved.
What are Guiding Principles?
Guiding principles help to make informed and rational decisions. In our case it’s all specifically about fundamental choices in customer/supplier relationships. Guiding principles are guidelines that are concrete and specific enough to come to speedy yet informed decisions instead of having lengthy discussions or even a complete decision deadlock.
Guiding principles are based on observations of generic values, beliefs, policies, laws or truths pertaining to the desired behavior of an organization. A generic example could be the observation that “Our policy is to promote the longer-term interests and objectives of both our own organization and those of all our stakeholders, including our suppliers”, which implies the Guiding Principle that “Sourcing contracts are negotiated in such a way that they will generate demonstrable net benefit to contracted suppliers”.
Below I’ll discuss the most important collaboration principles, each time starting with a generic observation followed by the recommended guiding principle. These principles should be agreed by all stakeholders and applied in pro-active supplier or customer management, from analysis down to restructuring a collaboration and its operation.
Principles of collaboration
- Observation: It takes two to tango, in most business relationships. The parties that you deal with need to get sufficient benefit out of the relationship to motivate them to really care about your interests and develop a truly productive collaboration. Else, the contract is the relationship, which usually is not good enough. 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 interest. 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. For example: procurement that wants to get 20% off the price, or the sales exec that needs to hit his bonus threshold this quarter.
- Guiding principle: Think “Them – us – me”. Think about the benefit the other side will get from your joint success, to counterbalance the risk of egocentricity and make sure that the collaboration will serve the interests of all parties.
- Interests and objectives
- Observation: Interests and their supporting objectives of parties in a collaboration are the drivers that 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, and the opposite, contrary interests and objectives push parties away from each other. Unfortunately, drivers are not always well understood, between parties and by parties themselves. We recommend to be open and transparent about them: 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 alignment of interests and objectives between parties and organize collaboration to match.
- Differences are an opportunity driver
- 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, 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 are also a risk
- 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. Effects are group-think, conformism, and the rejection of ideas that are outside the domain of accepted thinking (not-invented-here syndrome). This all works against the previous principle, which advocates embracing difference. However, resistance usually is an indicator 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 resistance against leveraging capabilities of the other party is apparent, explore and evaluate the drivers behind resistance, and accommodate any rational objections (they might be justified).
- Observation: A high level of trust is NOT always a necessary condition. High trust levels can be required when risk or uncertainty are high, but for many commodity products or services all you need is a basic formal guarantee that you’ll get delivered what was contracted, for the price, moment and quality that were agreed.
- Guiding principle: Trust levels must be aligned to the required depth of collaboration.
- Horses for courses
- 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 very different in its setup and operation from a complex IT-outsourcing service or a bespoke SW development program.
- Guiding principle: Choose the kind of collaboration that fits the nature and content of product or service delivery.
- Not everyone is a friend
- 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 world at large that is not always an option. You can’t be friends with everyone. Conflicts of interest come in the way, or circumstances change and make that people or organizations can’t live up to expectations. Sometimes, the power-balance and the nature of the other party is such that the other side can’t help behaving as an enemy.
- Guiding principle: Choose the kind of collaboration that fits the nature and attitude of contracting parties, and, in appropriate cases adjust to collaborate as enemies.
- Partnership is not a customer/supplier relationship model
- Observation: Partnership has been promoted as the ideal relationship model for customer/supplier collaboration. It is NOT. In society 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 contrast, customer and supplier are to some extend in an adversarial relationship; they wish to minimize cost respectively maximize revenue and margin, maximize delivery versus minimize effort, etc.
- Guiding principle: Don’t blurr the commercial customer/supplier relationship that is inherently competitive with the friendly and intimate connotations of real partnerships.
- It takes time
- Observation: Getting into a (close) collaborative relationship is not achieved by two gentlemen signing a contract, whilst 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 guide development of the collaborative relationship.
Collaboration is configurable. The ideal collaboration configuration is not fixed but variable and depending on its context. A customer may find that an intimate collaboration with a software developer is appropriate and set up a mixed development team promoting sharing of knowledge and experience. Or a supplier may understand that delivering its services to an aggressive monopolist customer requires a strong line of defense and set up a top-notch team of legal experts and contract negotiators. Understand the forces that drive collaboration and organize accordingly. Define and use guiding principles as the instrument for making deliberate choices in development of commercial relationships.
Next time we’ll talk about the journey towards effective collaboration; defining, designing and implementing the appropriate type of collaboration.