By Kevin Vaughan-Smith
Success in life, and in business may be best measured in terms of the relationships you create. And when you consider relationships its clear that those that are the most productive and sustain most successfully are those that create Mutual Value, however both parties consider value, which may not necessarily be monetary. So it makes sense to use a model of Mutual Value as a lens to consider any choices you make.
Consider the model above. The vertical axis is of Courage. This is the courage to achieve a win for you, and importantly in business, your team and your organisation. This is important in mutual value – its not simply outward facing, it is equally important to achieve mutual value with your team. Is this win truly a win for them as well as you personally? Sometimes its easy to excuse your behaviour, sacrifice your team, make commitments that are beyond their capability, or whatever, if you lack the courage to go for a win which is inclusive of their needs. Equally, its easy to give up the organisations best win to achieve personal goals – ending up with lower pricing, discounting, giving up scope, in the belief that a win for the individual is what counts.
This lack of courage, and especially the lack of courage to consider the team and the organisation has a number of medium and long term affects. With the team, it creates tensions, lack of engagement, and potentially poor client experience. With the organisation it creates margin pressure, and a culture where a belief in the priority of a personal win becomes paramount, teaching the organisation that discounting and give aways are the way forward.
The horizontal axis represents consideration. This is the consideration towards the success of the other side – the person, their team and their organisation if we are talking about business. Many people might question this. Do we really need to be considerate beyond the individual we are facing off too?
Let’s consider that for a moment with an example. Imagine you are dealing with one of the Directors of the potential Client, and she is keen to engage your organisation, and she has budget and signatory power. You also know that other parts of the Clients organisation will be affected by the project you are involved in. What’s the risk if you don’t understand their needs and what would be a success? In my experience there can be numerous issues and opportunities
If you understand that other party’s needs, you might
- Achieve better outcomes for your key stakeholder and her organisation as a whole
- Realise that the project will not benefit the organisation in the way expected, and help them avoid a waste of money and effort, avoiding a bad decision for your Client
- Get everybody buying into the project and its outcomes, building support.
- Build positive relationships with more contacts at the business.
So if you focus on true consideration for the entire organisation you strengthen relationship.
The model outlines some of the different approaches and the long term outcomes, however let’s focus on the two positive ones – mutual value or win-win and win-win no deal and using them as a lens to consider decisions.
Decisions which focus on the transaction rather than the relationship are on the surface attractive – they appear to offer a short term gain – and the question often raised about mutual benefit is the trade off between efficiency -getting the deal now – and effectiveness – building a relationship which might produce more results, more frequently – but appears to take more time. The reality is often that going for the deal is slower than going for the relationship. When we go for the deal, we often get less than we expect, end up in tricky negotiations, unexpected delays and other issues. We have failed to build trust with our Client. On the other hand, when we demonstrably seek mutual value, we lower barriers to progress, get access to key decision makers, reduce the need to undertake lengthy sales processes, and lay the foundation for repeat business.
The potential for working in mutual value is huge. The world of commerce has moved progressively to win-lose/lose-win thinking and it’s becoming broadly acknowledged that it is costing the economy enormous amounts of money. The leading protagonists of win-lose thinking are undoubtedly Government – and its perhaps no surprise that the Audit Committee regularly reports on project failures in Government – they don’t deliver on time, they don’t deliver on budget, and they don’t deliver to specification – and this is the model which has been generally adopted across large commercial organisations.
Let’s consider using the Mutual Value model instead
Given the opportunity when presented with a formal procurement I want to move from a reactive mindset to a proactive one and ask – what is the Client trying to achieve by using this process and what is the underlying business need the process is trying to resolve. This leads to a conversation with the Procurement team initially. When I have done this we can start to explore the potential limitations of this kind of process
Typically, they rely on a written interpretation of their business needs rather than allowing bidders access to human beings. This generates, guessing and interpretation on the part of the suppliers, and unquestionably poorer responses
The written responses are themselves subject to interpretation, made worse by suppliers taking the opportunity to caveat their answers such that they can change control the contract once awarded.
Suppliers bid a minimum competitive and compliant response to meet the needs of the procurement process rather than the true needs of the Client.
The subsequent price negotiation process encourages adversarial positioning, subterfuge, and compromise. None of this achieves the best outcome for Client or Supplier
Considering this through the lens of Mutual Value gives a different perspective, challenging the process and trying to deliver the results or better.