By Stuart Maister, Joint MD, Mutual Value
Ecosystems should be the foundation for much more ambitious outcomes from the relationships between buyers and sellers. But that’s only true if they are fully activated. This article looks at how to do this.
As I set out in my last article, Deloitte defined ecosystems as ‘dynamic and co-evolving communities of diverse actors who create and capture new value through both collaboration and competition’.[1 This sets out the goal neatly: to create and capture new value – for all parties involved. (That’s why we called our company Mutual Value.) What does this look like?
Amazon doesn’t succeed just because it has the best products and ideas. It does so because it has used these to develop a great ecosystem of partners, suppliers, customers and employees, all interacting in a fluid and dynamic way that accelerates evolution and innovation. Its leadership has been open to new ideas and understands that not all of these will come from within. And there is a clarity of purpose which – consciously or not – unites all of these players.
Same with PlayStation. And Uber. And eBay. And all those other new wave businesses which are always quoted as exemplars of platform thinking, dynamic innovation and disruption.
In its IPO – at that time the largest in history – Alibaba Group in China mentioned ‘ecosystem’ 160 times.
In a parallel universe, many if not most large B2B contracts are awarded in a stiff RFP process with little or no collaboration, highly linear engagement and using outdated scoring methods that are designed to stifle ideas and enable the buyer to assess bids as though they were apples or pears. The master/servant nature of the process is emphasised at the negotiation stage, when the procurement team tries to crush the price.
Working in an ecosystem way enables collaboration, sharing of ideas and exploration of new solutions in an ambitious attempt to create much greater value for everyone concerned. Working in a traditional procurement environment results in multiple parallel trading relationships with conflict of interest built into the process.
The difference is the focus. One emphasises trust-based relationships; the other is all about the transaction.
The world is moving to open source thinking, but there are still many organisations who remain in MS-DOS structures.
So how do you switch to an ecosystem strategy?
This depends where you are in the ecosystem. Are you the centre – for example, if you are the team leading a major public sector project or service, then your role is as the creator of an ecosystem incorporating suppliers, partners, your internal and external stakeholders and decision makers. If you can create a common vision and purpose, and develop an ecosystem of collaborative players who trust the network and behave accordingly, then you will deliver your service or project at a higher level of performance and more likely at a lower cost.
Or you can focus on price – and fight your suppliers one by one for the rest of time. That’s your call.
However, I’d like to look in detail at the role of a supplier, perhaps with a key account strategy. Let’s take a major construction company, or a consultancy with strategic accounts. It may be the case that the client at an account is a traditional buyer of services through an RFP, viewing each vendor as a standalone deal to be negotiated in a linear way. So how can you respond?
Firstly, understand the nature of the actors in a genuine ecosystem. They deserve and extend trust, focus on relationships not deals, and align according to the needs of those the ecosystem serves. Steven R Covey defines trust as having two dimensions: Capability and Character. Most organisations focus on the first when pitching or communicating: what we can do.
What actually differentiates them is the second: how we do it. In particular, the integrity and intent we show in our behaviours.
At Mutual Value we have added a third dimension to our trust model: Clarity. This means we are clear on our purpose and values, the value we bring to the ecosystem and the vision we have with this client or marketplace. We can then engage much more productively with others in the system because everyone is clear on their role and how they intend to behave together. We have greater Trust Capacity.
If you can be the leader in developing your own ecosystem of people and organisations who are serving that account (or market) then you will demonstrate trusted behaviours which will build better relationships. Our proposition is that this will create more value for the key account and for your own organisation and its ecosystem.
This starts within your business: what is the network of people and resources that we harness to serve this customer, and how can we connect them together so that there is a common vision, consistent behaviours and a company-wide character which is demonstrated at every important point of contact with the customer?
Then can we extend this to our associates to create a powerful ecosystem – suppliers, partners and other like-minded organisations serving this customer? If we can do this we form a strong coalition geared towards the best outcomes for the customer, working together in an open and collaborative way and explicitly focusing on the relationships which connect the players.
In our view this should be done openly and, as far as is possible, with the client’s knowledge and participation. We are gearing up to super-serve them and ideally work with them in a consistent, co-creational way. We want to build an ecosystem of which they are part. This is powerful positioning if based on the real intent we demonstrate and the way we consistently behave as an organisation.
What are the barriers to this strategy?
This is a good question to ask yourself. It may be that this approach is already where you are.
If not, typically, the challenges are internal. Culturally, your organisation will have powerful beliefs about what it needs to do to succeed. Typically this is about bidding on RFPs, seeing procurement as the enemy and focusing on winning the deal. Major suppliers often see their relationship with major customers as linear – that is to say, fundamentally transactional, with occasional collaboration on an ad hoc basis with related parties.
These belief systems need to be challenged and changed if behaviours are to transform to be suitable for an ecosystem which works.
Even more powerfully, when a bid is won the delivery part of the business sees itself as a technical service not part of the bigger relationship of trust. The focus is the project at hand and the emphasis is on sorting out what needs to be done, the issues that arise and the margin involved. Any discussion about an ecosystem strategy can get lost in the immediacy of delivery, and that is why it is so important for the leadership to remain clear about the big picture and for training about behaviours and relationship-building to go wider than simply the account team.
In other cases the issue may be with the culture of the customer. However, most typical B2B engagements are complex and not short term. Therefore, the trusted relationship and collaborative behaviours are critical whatever the attitude of the customer, because as soon as you win the bid there is an interdependence between the buyers and sellers that should be recognised and celebrated.
If you as a major supplier are clear about that, explicit about the trust behaviours you intend to demonstrate and proactive about seeking to develop an ecosystem that serves the customer and involves them in its purpose, then in most cases this will differentiate you in your marketplace and enable you to shine as a true partner, not a transactional vendor. If not, you need to consider whether and how to challenge the beliefs that the customer’s people have and therefore the assumptions they make about how things succeed.
Most major customers understand this model and will say they want it; your job is to show them what it looks like in practice. The starting point is with your own organisation. This requires a programme of developing a clear narrative that everyone understands, training those involved to take ownership of the approach then and hands-on activity to support the transformation to an organisation that creates a powerful ecosystem of value to deliver much more ambitious performance.
Mutual Value offers such a programme. Do get in touch if you feel this is of interest.
- Deloitte University Press 2015