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Partnering – Part 1 Attitude Attitude Attitude

There is a story told amongst managers, and I doubt that it is apocryphal, about an organization that worked for a year or more to become a supplier to a Japanese manufacturer. The managers of this organization had tried hard to meet their customer’s requirements; were welcoming and honest during a number of visits from the Japanese and made a series of presentations, but they had been unable to make the part to specifications. Hence it came as a shock when they learned that they were awarded ‘supplier status’. Being very open, they admitted their surprise and asked how they could have been chosen since they had clearly failed to meet the requirements. Their Japanese customer told them they had succeeded because of attitude. That they had worked on it and were open about what they were doing were the critical selection criteria.

And that, as simple as it is, is the message of this series. Attitude, attitude, attitude – that’s the key to partnership. We will explore some principles that lead to practical actions for managing the relationship, but we should never lose sight of what matters.

But the right attitude, as easy as it is to declare, is a difficult thing to achieve. The behavior of openness, commitment, acting in the mutual interest and the like are effectively counter to the underpinning philosophy of most of our organizations’ management and design. Take, for example, the food sector. We see suppliers being squeezed on cost and being asked by customers – the supermarkets – to accept penalty clauses, delay invoices and even repay part of the value of their historic contracts so that the supermarket can satisfy their shareholders. These parties are not ‘in it together’; their relationship is characterized by the strong prevailing upon the weak.

It is the same in the construction sector. Despite intentions to improve co-operation, construction companies are designed and managed in ways that maximize ‘win-lose’ relations. On agreeing to a new contract, both sides – customer and supplier – typically appoint a person whose job it is to maximize the gain for their side. The waste associated with the infrastructure of ‘contract management’ is enormous; there is a whole army of third party negotiators, which represents an identifiable cost. The costs incurred within the parties and in the execution of clauses that permit the extension of costs would be harder to identify. Contractual thinking and behavior adds enormously to costs, yet contract management has been the culture of doing business.

In the wider context the UK Government has led the world in adopting ISO 9000, a contractual customer-supplier registration that has had a disastrous effect on organizational performance.

If we want partnerships – and we should, for they may provide the best way to exploit future opportunities – we need ‘method’ rather than ‘contract’. Let me share a story. While researching material for a book I met a manager working in the Midlands, supplying parts to automotive manufacturers. A manufacturer wanted his organization to be registered to ISO 9000 and they only paid attention to the relationship when things went wrong. By contrast, the Japanese manufacturers were not interested in ISO 9000 and the day they became suppliers, the Japanese were in their operations and in their processes’ working on what the supplier did and how it fitted with what they did.

These are matters of method. They are at the heart of partnering. What can the two do together that is more than each could achieve? And the execution of that opportunity is more concerned with what the parties do – method – than how they structure their relationship. Method has to succeed over contract. Where method succeeds, costs fall – for both parties and the consumer.

Spooky stuff I know. Managers who like to think in terms of ‘deals’, if they haven’t stopped reading by now, would have a fit. Their interest is in getting the best from the deal, not getting more together. We will explore an example of this is in part two.

But this adversarial behavior points to a deeper problem. Our systems foster adversarial relations in systemic ways. Managers are measured on budget or other measures of output. Furthermore, many managerial budget-holders may be affected by the work of a supplier; each will be focused on what they win or lose. Our larger organizations appoint buyers to manage the relationship with suppliers – we now treat purchasing as a profession. All of these people are measured on matters of cost.

A supplier to a major organization was invited to join their Supplier Council, composed of ‘preferred suppliers’. At the meeting he was told by senior management that his ideas were welcomed, and that he should bring any ideas to the appropriate buyer, who would pursue the idea internally.

Knowing of a manufacturing problem on the customer’s line, the supplier set out to re-design his part in a way that would eliminate the difficulty. His solution would add a few cents to the cost of his component but would reduce the final product cost by dollars.

With great anticipation he explained his idea to the relevant buyer who rejected it out of hand. The buyer’s performance was measured on the purchase price of components. The buyer made it clear that the supplier should not ‘go over his head’ with this idea, lest he be struck from the approved list.

This was not a bad buyer, more a bad system. In the same vein, suppliers to a large American automotive manufacturer were told on a visit by the US Company president that ‘supplier partnerships’ was the future. Once the boss had gone buyers made it clear that price was what was really going to count.

The buyers were not at fault. They were and are products of their system. If you design a job to squeeze your suppliers, your suppliers will get squeezed. End of story.

Partnering – with what purpose?

There is little value in changing the goals and measures for buyers. To get on the road of working in partnership, managers, not buyers, should first address the purpose: What can two do together that is better than ‘going it alone’?

Given our organizations may work to obviate the conditions that lead to badly structured working relationships, I offer four principles for establishing and maintaining partnerships: Mutuality, commitment, clarity and openness.

The four principles of partnering

Mutuality: A common purpose with mutual benefit.

Commitment: Parties are prepared to commit resources to the mutual Endeavour.

Clarity: Each party is clear about who is doing what.

Openness: Both parties are prepared to raise issues concerning the quality of the working relationship.

Where to start

While it would be nice to think that US managers could take the lead with commitment and openness as the Japanese did in the story I opened with, I believe our managers need to start their deliberations about potential partnerships through considering mutuality and, within that measurement. This may be a cultural problem, so you have to start where the culture ‘is’.

Measurement is the language of management and, if used in the right way, will facilitate discussion about method. If there is a mutual benefit from common purpose it ought to be measurable. Such ‘end to end’ and joint measures might open the discussion about the causes of costs rather than costs per se; and if the right measures are used in the right way, the parties may learn how to act to achieve their joint purpose.

In part two I will tell the story of outsourcing customer service in the home computer products industry. It is a story of ‘nice words’ but ‘win-lose’ actions. I will consider how the same opportunity might have been approached using the four principles of partnering.

Articles were written by John Seddon (Managing Director) and Vanguard Consulting Ltd.  He is an occupational psychologist, author and consultant.  John describes his work as a combination of systems thinking – how the work works, with intervention theory – how to change it.  This article has been edited by the people of Bryce Harrison Inc. (USA).  The Bryce Harrison website is www.newsystemsthinking.com.




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Bryce Harrison, Inc.
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