Author: Tim Cummins, IACCM
“Every human will disappoint you and you will do the same to them.”
That is the somewhat downbeat – but perhaps realistic – assessment of Alain de Botton in an Opinion column in the New York Times. His point is that the perfect fit is an illusion and many of the ‘faults’ in a relationship will not become evident until we have entered into it. Instead of becoming frustrated or levelling blame, we will succeed only if we recognize the need to manage differences and work through them.
These observations have direct relevance to relationships between buyers and suppliers. Often they engage with each other in a spirit of great optimism and, steadily, disappointment sets in. In a field such as outsourcing, where ‘intimacy’ is essential, failure rates are variously estimated at somewhere between 40 – 60%.
So what do commercial professionals need to do to raise the chances of mutually successful outcomes?
1) Recognize that sutainable relationships must be win-win. Mutual success is a pre-requisite and each party needs to feel the other cares about and respects their goals.
2) Ask searching questions when evaluating or selecting a customer or supplier. Pessimism is no bad thing so long as it creates a healthy skepticism and does not yield to cynicism.
3) Analyse the depth of interdependency that will be needed. Not all relationships are equal and they require varying depth and frequency of interaction depending on issues such as levels of value, the extent of uncertainty or volatility, the likelihood of change, the nature of risk.
4) Define and agree governance levels and mechanisms that are appropriate to the extent of interdependency. This is where standard contract templates and rigid approaches to compliance frequently stand in the way of good relationships.
5) Appreciate that differences of culture, style or approach can be enriching. We say we want innovation and continuous improvement. Managed well, differences become a source of those ideas and inspirations. Managed poorly, they become a source of tension and anger.
Ultimately, we must exercise good judgment and test for fundamental issues of incompatibility – for example, dishonesty, incompetence, lack of capacity or capability. But once we have made our selection, we share responsibility to make it a success. “Compatibility,” states Mr. de Botton, “is an achievement of a good relationship; it must not be its precondition.”
Read more from Tim Cummins on the Committment Matters website.
Tim Cummins is CEO of the International Association for Contract & Commercial Management (IACCM), a non-profit organization that he founded in 1999. Read more here