For anyone who has read the other books in the Vested Outsourcing series, Getting to We (published in August 2013) is the logical next step in the pursuit of more collaborative, value-based relationships between supply partners. A better way to think of the book might actually be as a ‘prequel’ to the others, stepping back in time to explain how to reach the point where you are working in a Vested relationship. Getting to We is the connection between the vision of Vested Outsourcing and the negotiating tactics necessary to turn the vision into a reality.
If you are new to the Vested approach, Getting to We is a grounded entry point into a philosophy that emphasizes that when individuals and companies work together in unconventional ways, the results can be astounding. As with the other books by Kate Vitasek and her co-authors, this title does not assume that the reader is a buyer or a supplier. The same preference for cooperation is required regardless of the title you bear or the relative power you wield in each negotiation. This approach is not for every supply relationship, and should be applied only when the opportunity for strategic value creation exists for both parties.
Rather than founding business relationships on transactions or dollar amounts, Getting to We recommends building collaboration around a nucleus of trust. That trust is made possible through transparency and compatibility. All parties involved must want the effort to succeed and be willing to extend the benefit of the doubt to the others, believing that they also want the same mutually beneficial result and are acting in the best interests of all. “Trust exists when a person or organization has confidence in a positive result even when issues and outcomes are out of its control, and there is a risk of a potentially negative consequence” (p. 25). Getting to We even suggests leaving some money ‘on the table’ in a negotiation, indicating confidence that a real partner will not take advantage in the short term if it risks the longer-term opportunity. Knowing that the larger potential is greater than the gain of any one transaction helps the organizations resist the temptation to take action out of pure self-interest.
It is necessary to believe that the long term gains of a ‘We’ relationship offer greater gains than could be negotiated through traditional competitive approaches. This attitude may be difficult for some negotiators to absorb. While anyone that understands the importance of value creation can adopt new techniques, Getting to We also creates the opportunity for a new breed of negotiators to rise through the ranks. ‘Credible’ (as opposed to ‘muscular’) negotiators have the advantage of being able to address dynamic needs at a higher level, working to make changes in collaboration with their supply partners. “In other words, credible negotiators are forward thinking (and acting), uncovering potential risks, and developing a mechanism to address those factors and then factoring them into the contract” (p. 32). The background and experience of the professionals that will excel under these changed priorities gives managers a reason to rethink their recruiting profiles.
In addition to being flexible about the creation and management of a contract, the agreement between the two partners must transcend the documentation itself. The length of a contract is often artificially determined based on market conditions, risk, etc. and assumes far more about the ongoing relationship than either party can know at the time of signing. The relationship, and more specifically the vision statement that the relationship is based on, replace the contract as the hinge between the partners. “A shared vision for a partnership breathes life into a We relationship. It gives people in the relationship a bigger purpose” (p. 64). Like the new approach to negotiation, defining a vision and steering the organization through the process of creation requires a skill set beyond traditional sales or procurement roles.
In the past collaborative supply relationships have been rare, only being considered and made successful under very specific conditions. While they are still not appropriate in all (or even a majority of) instances, the percentage is growing as companies realize the strategic potential of working side by side with partners. All professionals on both sides of the business relationship owe it to themselves and their organizations to be educated on the profile and creation of Vested relationships, and Getting to We is an accessible way to get started.
-- Kelly Barner, Co-owner, Buyers Meeting Point
Vested Outsourcing is based on a study conducted by the authors in their capacity as faculty members at the University of Tennessee Center for Executive Education and the United States Air Force. The study gave the research team an opportunity to examine “progressive companies that were exploring more innovative approaches to outsourcing.” The resulting approach became the foundation for a series of publications, speaking engagements, and Supply Chain Visions – a specialized consulting firm.
Vested Outsourcing Philosophy
The core principle of Vested Outsourcing is creating outsourcing relationships where companies and their suppliers become vested in each other’s success. What this translates to mean in practice is that many of the barriers that have traditionally existed between companies and their suppliers need to come down in order to increase visibility, communication, and ultimately value creation. In fact, one of the core tenets of Vitasek’s philosophy is that once both sides are vested in the relationship, the potential benefit to both is greater than what either could have gotten in a traditional, self-motivated relationship model.
While Vested Outsourcing clearly outlines the process, motivations, and potential pitfalls of “Outsourcing 2.0”, it does not give the misconception that achieving a vested relationship is easy. Nor is it appropriate in most outsourcing arrangements. In fact, the resource investment required to make the dynamics work and to successfully maintain them in the long term would prevent most organizations from having more than a couple of vested relationships at once.
Vitasek, Kate. Vested Outsourcing. Palgrave Macmillan, New York: 2010, p. 2.
Supply Chain Visions: http://www.scvisions.com/
Ibid. p. 2.
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