Unless you have an unlimited budget and have decided to build everything your business needs in-house you will most likely have a portfolio of business partners, advisors and vendors critical to the success of your organisation.
Maintaining healthy and long-lasting relationships with those partners and vendors can mean the difference between business success and failure. Approached in a structured manner and with clear, transparent intent and expectations, a good partner should help take your business to places it would otherwise not reach alone.
With over 20 years in the technology and financial services industries, I’ve worked with many businesses either as a customer, vendor, partner, consultant, or associate and have had countless opportunities to learn and reflect on what makes a successful partnership.
This blog describes a few of those key learning points.
Until we see the full dawn of Artificial Intelligence, your business partnership will be with and through another person. They will have their own goals, hopes, and struggles that they and their company are facing. Being aware of the personal aspect involved in every business interaction is the first step toward building a successful relationship with your partners.
Business always has a personal aspect and impact. Lose sight of this and you will lose the substance of the relationship.
This is the ‘walk a mile in their shoes’ argument. It’s not rocket science, but it’s always worth repeating and surprising how often it’s forgotten in the heat of quarterly targets and delivery deadlines.
As soon as your partner feels you’re more interested in the transaction than the relationship then you’ve lost the partnership and you’re left in a dry, transactional world which will generate far less value than one where you’ve shown interest in – and acted upon – your partner’s concerns.
It’s always struck me as odd, when it comes to business negotiations, how often I see participants drive towards an outcome of receiving everything and giving nothing in return. And worse, viewing the achievement of this as a badge of honour.
It’s thankfully becoming less prevalent than it used to be, but there are still ‘tough guy’ negotiators out there who believe screwing down the price point is the only real measure of success.
The behaviours this approach drives are toxic. In my opinion, it’s the root cause of so many big IT failures, particularly in the public sector where the taxpayers’ pound is seen as sacrosanct. Big procurement departments score deals heavily on price; this drives their intended delivery partner to minimise their associated scope, value, skills or risk appetite in order to win the deal. In response to aggressive procurement behaviours, many companies will discount their initial quotes to win (or ‘buy’) the business with a view that they ‘can make it up on the backend’ through change control.
So, while the ‘tough guy’ will have got a ‘great deal’, what he’s actually achieved is a minimally incentivised delivery partner who is going to seek any opportunity to invoke change control in order to recover their price point. And too much change – particularly where it’s artificially created – brings instability to a project, and ultimately that instability creates failure.
There’s a fine line between getting a good deal and being a ‘user.’ Nobody likes to be used.
If you feel you’re heading into this territory, then that fundamental human relationship discussed above needs to come into play and be used as the basis for a grown-up discussion around behaviour, value and keeping things real.
If that human interaction is not forthcoming and the tough guy stance doesn’t change, you need to consider just how the relationship will pan out. If you can’t talk sensibly at the start, it doesn’t suggest things will be easier once contractual milestones are speeding towards you.
Remember – a partnership needs at least two parties to succeed. Because of this, you always have power in any negotiation, even if it’s just the power to walk away.
So, if the exchange cannot and should not rely solely on price, where should it be focussed? The answer is on value. A good partnership will be open about what overall impact each side expects the other to have on their business.
This will, of course, include the transfer of money (price) at some point. But it should also include recognition of functionality, service, risk transferal, growth enablement, structure, commercials, quality improvement, schedule adherence – you name it. Wherever a partner’s activities will touch and impact the other, this should be captured, discussed, and reviewed at regular intervals throughout any engagement.
There’s a fundamental difference between selling goods versus a partnership with another business. It’s not a one-time sale.
Vendors and partner relationships are not a one-time buying pitch. The service or product you’re offering needs to be continually evolving and relevant, otherwise the relationship will fall apart.
You want your vendors and partners to make money and not be the only person receiving money from the deal.
The deal you make with your customers or vendors today needs to be as good a deal tomorrow, the next day, and the day after that.
Dismissing your partner’s goals will cost you in the long run.
Not having empathy and understanding for others, specifically your partners, could cause you to lose them and tarnish your reputation. Bad news and bad reputations are hard to get rid of.
When working with partners, you need to show that you care by aligning your interests. You need to prove that you share their similar concerns about things likes their profit margins and struggles. When you’re both equally invested in each other’s company, you’re in a balanced relationship.
You want to avoid relationships with other companies where you’re beating them down on their prices so much that you’re sucking the life out of their business. Any business will respond to a threat, and the consequences may well be outside your control.
Care about others and their business and you’ll be happier, healthier, and wealthier in the long run.
It’s obvious but worth stating that you need to be transparent and honest if you want a lasting relationship.
When starting a relationship that’s based on recurring revenue or delivery of time-critical milestones, you do not want to start with the other party having unrealistic expectations. It’s a terrible idea to oversell and exaggerate. This is a bad habit that often creeps into a sales pitch, and people will oversell and over-promise on their product and service to get a ‘yes.’ The problem starts when the value the other company was promised does not line up with what you’re delivering.
Intentionally falsifying your value and failing to deliver damages credibility. You want your company to have a history of doing what you promised you would do. If anything, it’s better to under-promise a little and then over-deliver.
Follow-up and communication is critical. I cannot stress this strongly enough.
Responding to people is critical to maintaining quality relationships. There’s nothing more frustrating than working with a business partner that does not respond when you email or call them. It ties back into the idea that both parties are mutually beneficial to one another.
Once you’ve made an agreement with someone, it takes work to keep that agreement alive and ensure everyone receives what was promised. You will need to constantly follow up and be available if they’re having issues with the product or service you’re offering.
Over-communicating – without becoming a stalker! - with your partners and vendors reveals solid respect and integrity.
By not responding, you’re showing others that you don’t care or value them enough to simply answer their question, concern, or feedback. That message will not be lost on your partner.
Even the most tightly-knit deals, where proper expectations have been clearly articulated for both sides, need regular review.
Over time a relationship may shift to where one party is no longer receiving a fair deal out of the process.
It’s happened in the past, where the relationship started with great fanfare, but when the business environment changed, the needs of one of the partners changed. One large outsourcing contract I was involved with had been entered into and signed during a period of contraction for the client and was all about cost containment. Within six months of signing, the customer’s business had turned around, and they were on a growth trajectory. This perversely caused many problems; I was incentivised in the contract to control and limit expenditure – the client wanted flexibility to increase his spending to meet his new-found growth.
We ended up going back to the negotiating table and re-writing service levels and resource fulfilment so the client could get the best from their relationship with us. We didn’t take advantage. We listened to the client, and we didn’t attempt to reposition or reprice. We listened and renegotiated on the basis that we wanted the client to succeed. That business partnership is now 16 years old and going strong.
Negotiations are always tricky, and we certainly could have gone a different way. Our original business model was based on a certain approach, and the pricing structure and rate card we had offered didn’t meet the needs of the new dynamic. But we persevered and negotiated in good faith and earned the trust of our client through acting properly.
Negotiating might cost you a bit more sometimes, but without your trusted partner, where would you be? You’d be out of a valuable relationship with a partner and penny-pinching will always end up costing you more money in the long run.
Renegotiate and treat people fairly. You’ll be glad you did.
The greatest way to find success with your partners in business is to focus on and embrace the human aspect.
Consider your most important partnerships. Have you reached out to your contact there recently? Have you been ducking their calls or not attending governance sessions? Where would your business be without them?
If the answer to that is ‘nowhere good,’ then get a conversation started. Make it count.
To have great partnerships you need to make sure you and the other business are equally invested in your relationship together and you’re both willing to work to make it succeed. You have to be willing to communicate, have difficult conversations in order to set expectations and make sure that you’re all benefiting from the relationship.
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