Stuart Maister, Joint MD, Mutual Value
Ecosystem thinking is taking root in business, driven by the ability of technology to connect customers, suppliers, partners and other bodies in a way that allows co-creation of solutions, new interdependencies and – if done well – more rapid innovation.
Deloitte defined ecosystems as ‘dynamic and co-evolving communities of diverse actors who create and capture new value through both collaboration and competition’.[1]
However, as with so many technology-driven trends, success depends on the people who use it and this is where things can go wrong. For example, if the buyer at the centre of an ecosystem continues to act transactionally with all of its suppliers, then all you really have is a series of parallel trading relationships run on traditional grounds. There may be warm words about collaboration and innovation, but beneath it are the same people seeking to advance their own short term interests with no sense of a bigger picture.
Here’s where Mutual Value can bring to life ecosystems and help them deliver on their promise, especially in the B2B environment where personal relationships are so critical. The focus on collaborative behaviours and the development of trusted relationships is at the heart of the Mutual Value programme, and should be similarly core to the functioning of an ecosystem. If these don’t exist, then all the technology in the world won’t help.
Let me take the example of the public construction sector. Major public projects depend critically on a complex ecosystem of buyer stakeholders (internal and external), suppliers, sub-contractors and other senior decision makers. If there was any area where there is a need for a single vision, with aligned objectives and highly collaborative behaviours based on long term trusted relationships – then this is it. If that were achieved then the promise of a well-run ecosystem – new value through innovation and seamless co-creation of solutions – would be achieved.
Technology is meant to be an enabler of this. Increasingly the sector is searching for a single version of the truth in projects, where they can all work from and plug into the same digital model so that everything is consistent. This would enable much easier collaboration and joint problem solving.
However, this nirvana usually fails at the first hurdle: the procurement process. Despite the increasing use of warm words about collaboration and partnership, there is deep cynicism among contractors that most government buyers will make decisions on anything other than price. There remains a strong ‘us vs them’ mentality on both sides of the buyer/seller relationship.
The result: the very opposite of smooth running ecosystem.
Instead, there are often parallel and competitive trading relationships, a focus on the wording of specific contracts and a highly transactional mindset that constantly results in challenges and change notices. Vendors bid low and seek to recover margin on the project; buyers look to squeeze the price under the heading of ‘value for money’. Valueis the last concept anyone discusses once the project is awarded.
The real focus should be on building a team of collaborative partners, all clear on a single vision and with agreed sets of behaviours that hold both the suppliers and the buyer to account. The rules of the ecosystem should be consistent and geared towards building mutual value – this includes a reasonable margin for the suppliers and an expectation of innovation and new ideas to help the buyer achieve its objectives. The relationships are the glue that hold this together, not the contracts, and this is recognised formally by the parties at the centre of the ecosystem.
Everyone in the ecosystem knows that things will change, go wrong and new possibilities and challenges will emerge. No-one can predict these, and that is why contracts, process and governance can’t cope without the right kind of relationships. If these are defined, nurtured and remain the focus, then the individual transactional issues no longer threaten the big picture. In fact, they form part of if because they were anticipated and the way they are tackled demonstrates the strength (or weakness) of the ecosystem.
Ecosystem thinking is right at the heart of the next wave of transformation. Those that focus on the relationships, not just the processes and infrastructure, will make them an engine of success. Mutual Value can be a key component of that effort.
At Mutual Value we work with organisations who want to be more ambitious about that they can achieve with their customers, suppliers and partners. This is based on a changed mindset, a new skillset and a toolset we have developed, and deliver through consultancy, training and coaching programmes.
If you would like to set up a call to discuss this please email sophie@mutual-value.com
[1] Deloitte University Press 2015