Collaboration – have you got your bases covered?

My first article published June 12, 2020, in IACCM’s Contracting Excellence

Journal (CEJ)1 refers to a question I ask about how would you change the

direction of a collaborative relationship spiral “and create good collaborative

relationships? The shortest possible answer is to reorganize priorities is “them –

us – me” in that order.”

So, I am moving forward now with the 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:

1. What are the guiding principles?

2. Where do they come from – or what main observation might we

conclude about them?

3. 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.

Collaboration is complex even for most experienced practitioners. So, my next and third article 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.