Addressing disconnects – the barriers to collaboration
‘Collaboration’ is a big theme for management in many organizations. There are many factors at play in driving this direction. One is growing interdependency between organizations. Another is the trend away from product purchases to an increasing volume of services and solutions (or ‘indirect spend’ in procurement terms. Then there is concern over reputational risk, which makes the quality of relationships far more important. And finally we have innovation and the recognition that this is more likely to occur in a collaborative relationship.
I spent some time this week reviewing the state of collaborative working and it is clear that most organizations face a significant gulf between aspiration and reality. They seem to fall into two camps:
- There are some who focus on developing internal mechanisms and measurement systems to encourage greater cooperation with their suppliers or customers, but fail to translate these into revised approaches to contracting. The policies and practices that underlie terms and conditions (and the way they are negotiated) show little sign of alteration. While this does not necessarily destroy the possibility of collaboration, it certainly makes it harder.
- There are others who believe that they can change organizational behavior simply by introducing new forms of contract. Not only does this not work, it actually increases frustration and risk.
Another important disconnect is that many programs designed to deliver more collaborative relationships fail to consider the extent to which most suppliers now operate within an interdependent network. If that network is not operating collaboratively, all the aspirations will be undermined.
What can we do to address these disconnects? Common wisdom is that the contract is an output and comes at the end of process and organizational design. I suggest that the opposite is the case – the contract should come first. A thorough assessment of goals and markets leads to an understanding of the characteristics that surround collaboration – for example, commitments to communicate, share data, develop joint systems, agree mutually acceptable payment terms, acceptance provisions, responsibilities, security etc. The contract can be used as a method of assessing the extent of disconnect between collaboration characteristics and collaboration capabilities. This understanding is then used to drive internal reengineering to ensure alignment between ‘the market’, ‘the contract terms’ and ‘the ability to collaborate’.