In his blog on Spend Matters, Jason Busch comments on Boeing’s recent win of a major defense contract in India.
Jason observes that “other defense contractors have lost billions of dollars in Indian defense contracts not because they weren’t selected as a preferred supplier, but because they failed to meet offset requirements to source a certain percentage of the total award from local suppliers.” While I find this claim rather surprising (such off-sets have been typical in the industry for decades), it is indicative of a real and growing issue. As the worldwide economy faces a period of no growth, it is inevitable that political – and social – instincts will turn to protecting domestic industry.
Indeed, we are already seeing the emergence of unrest in Europe, with UK protests over the use of foreign workers and mass strikes in France over economic policy. The pressure on government to ‘buy local’ will inevitably increase.
With credit in short supply, government policy has taken on added importance. As one of the few reliable buyers, having government customers will do wonders for a company’s credit rating. So not only will public procurement save jobs, it will also influence competitiveness. It beccomes very tempting to favor domestic champions or to insist on extensive local content – even if sometimes that may result in degraded quality or higher prices.
In the old days, there was skepticism about local content providers, especially in emerging economies. But is that concern still valid? Of course, at times the answer is yes. Sadly, there are still cases where the ‘local content’ is a favored firm with ties to the government, or where there really are not local companies with the required skills or technologies. Yet this is no longer universally the case, as highlighted recently by IACCM Board Member Dave Connor. Dave ‘s interview (available as a podcast in the IACCM Library) indicated the maturity of today’s local content programs – and in fact, that many local and regional providers are now surpassing the quality standards of their global rivals.
So Jason is right to focus on the importance of this sensitive issue and it is without doubt an area where leading companies – and those aspiring to remain leaders – must raise their capabilities in managing local content programs and use this as a source of competitive advantage in bidding for international government business.
It is inevitable at a time of such economic turmoil that we wonder about our own job security. So how threatened are those in the contract management, legal and procurement community? And are there steps we can take to bolster our position?
Of course, it has now become the flavor of the day to issue lists of ‘The Top Ten Secure Jobs’. There is surprisingly little overlap in the views of the ‘expert’ commentators on what these ten jobs are. And I am quite sure we could found counter-positions for many of them.
But there are some trends and some opportunities. For example, it is generally true that public sector jobs – at least short-term – may be more secure than private sector. But for how long? And to what extent will shifts in public policy result in new opportunities for some, but work elimination for others?
Another key area relates to the management of trading relationships, at both an individual and portfolio level. Company survival depends on the ability to oversee effective supply and customer relationships. This means not only superior selection of the right partners, but also continued oversight of performance. As one of the ‘experts’ puts it, “with the widespread awareness that excessive risk-taking got banks – and so the wider economy – into their current difficulties, companies are stepping up their efforts to monitor potentially disastrous transactions and to comply with the tighter regulations that the financial crisis is bringing.”
This recruiter calls such professionals’ Compliance/Risk Officers’ – and indeed that is one possible title. But interestingly, this is an area of development that has not proven especially successful. Most risk specialists seem to be focused in rather narrow areas of financial risk and are somehow blind to wider commercial risks and policies.
Compliance is another area that has failed to deliver the expected benefits. Once again, the role has tended to attract quasi-auditors who police the wrong-doing of others, rather than seeking out the reasons for delinquent behavior and driving innovation and change to address its root causes. As a result, compliance specialists tend to be viewed by many in the business as a source of risk (and to be avoided), rather than as managers of risk (and to be welcomed and included). After all, how many people welcome visits from the auditors? And what executive really equates audit with long-term business growth and profitability?
Business success in these tough conditions will depend on people who have the characteristics needed to make balanced and objective decisions. In the area of trading relationships, there are several criteria for success:
- Breadth of view. Creating the right commercial offerings and deals requires people with a cross-functional perspective and an innate understanding of the sources of risk and complexity. They must have a strong appreciation for business capabilities and potential – in other words, does this commitment make sense?
- Communication skills. These are roles that demand the ability to both listen and speak. They require clarity of expression and a talent at making complex situations easy to understand. This means building rapport with key stakeholders and speaking in terms they understand. It means being assertive, not confrontational; encouraging openness, not secrecy or blame.
- Objectivity. Much of the need for compliance is driven by the skewed behaviors driven by corporate management and measurement systems (including bonuses, incentives etc.). Therefore it is critical that those who are required to make these ‘balanced business decisions’ are not part of this bonus and incentive structure.
In such uncertain times, many groups vie for positions of increased power and influence. It is human nature to do so. But having the loudest voice or historic influence does not mean that they are equipped for this dramatically different world that we now face. Indeed, they were frequently part of the problem, so may be singularly ill-equipped to be today’s solution.
There is little doubt that some within the commercial, contracts, legal and procurement community have the personal skills and knowledge that fit them for this key role in ensuring effective governance in the formation and management of commercial policies and trading relationships. Others have some elements of the required skills, but must acquire more if they are to deliver enhanced value.
The challenge for most is the issue of leadership and credibility. Among the questions you might ask as you ponder your future are:
· Do you have the functional leaders who are prepared to put their heads above the parapet and position themselves for this critical role?
· Have you prompted those leaders, have you encouraged them by demonstrating your readiness for the challenge?
· What evidence do you have to show your readiness for these tough times, or the steps you are taking to differentiate yourself from those around you?
Times of great uncertainty are also times of change – and therefore represent opportunity. But those opportunities do not simply seek out those who sit and wait. They fall to the people who demonstrate their readiness to bring solutions, to drive improvement and ensure economic survival for their company.
So the final attributes that can get you noticed are those of determination and innovation – taking the initiative, promoting new and improved ideas, demonstrating personal commitment. These are all areas where IACCM can help – indeed, is helping many individuals and functional groups right now. At times like this, the true leaders draw on their networking skills, discover and develop ideas, equip themselves with the facts and the data that get them – and their people – to a position of greater status and security.
Discover more about how IACCM can help by writing to info@iaccm.com and outlining the challenges you would like to tackle. In addition to advisory services, IACCM can assist with research, benchmarking, training, professional certification, networking, job search, process design and amny other areas of personal development or organizational capability.
In all the talk about credit and financial viability, the voice of the customer has typically drowned the issues and concerns of suppliers. Certainly, my mailbox was full of messages from purchasing managers, expressing worries over supply chain security and how best to manage the risk of supplier failure.
It is interesting that this concern appears to have been so one-sided. After all, it is just as legitimate – arguably more so – for suppliers to worry about the security of their customers. Default on orders, failure to pay bills on time or at all – these are very real issues for anyone ‘investing’ in a customer; and of course ultimately may cause the supply chain disruption that those purchasing managers worry about.
The questions I received from purchasing managers frequently asked about ways to increase visibility into supplier security. They were concerned that traditional approaches to credit rating are simply not reliable in a period of severe economic turmoil. And of course, they are broadly right, though obviously some businesses and industries are relatively less affected (for example, those with enormous cash piles, or dealing largely with public sector customers).
In truth, as a recent article in CFO magazine points out, it is frequently the behavior of customers that actually determines the fate of the supply base. Decisions to cancel orders, or to delay payments, or to negotiate massive price reductions are initiated through purchasing.
Companies need to get a better handle on their corporate customers’ ability to pay
The article highlights that around a quarter of public companies are at risk of defaulting on their debts. It also comments that “some companies want their suppliers to practically fill in as bankers, by extending payment terms and giving their working capital some wiggle room”.
Why does this imbalance exist? In large part, it is of course because suppliers need to be far more sensitive to their customers’ feelings than vice-versa. It is once more an example of the rather more vocal and belligerent behavior of procurement groups. In other words, they feel quite within their rights to demand evidence of credit-worthiness from their suppliers; yet as customers, they feel great insult if their suppliers make similar demands.
Many customers think little of extending their payment period or simply delaying payments – we all know that the old 30 day terms have steadily been going out the window, to an average today that is much closer to 60+ days. And if you are a small business, even that is optimisitic. IACCM members running small enterprises regularly tell me of payments that take 4 or 5 months to reach them.
So should such delays be taken as a warning sign? The problem for suppliers is that they do not want to alienate customers and risk losing their business; yet at the same time, they cannot risk non-payment or having to deal with a liquidator. They face a tough balancing act – unless we can somehow change the rules of the game.
Factoring debt and becoming far more cautious on credit-checking new customers are of course a couple of ways that companies can protect against insolvent customers. But perhaps one of the most striking things about the CFO article – and the suggestions of the experts it interviews – is how devoid they are of any real ideas for improvement. Turning up at local networking meetings of credit managers or establishing greater discipline in undertaking annual credit checks through completion of a survey hardly seem like optimum approaches in today’s electronically networked world.
In the end, true partnership depends on a readiness to share information, to become more transparent in providing the data that enables risks to be managed effectively. This takes us back to the core principle of ethical commitments – that they should be honest, open and subject to a robust on-going governance and reporting system. Surely in today’s technology era, it should not be beyond most companies to have transparent reporting information openly visible to their trading partners, on almost a real-time basis. And a reluctance to do this shoud perhaps be taken as one of the clearest warning signals about their creditworthiness and their honesty. So who will take the lead?
An audit report on Iraqi reconstruction projects has unearthed almost 600 cases of contract mismanagement. It highlights a range of key actions that should be taken to ensure improved performance. Analysis of the report by IACCM researchers has produced the following summary. While some of the actions are specific to government sector, many of them apply equally to all contracting environments – and the principles of better selection, improved relationship segmentation and improved tools and systems are among the top actions recommended by IACCM in its current ‘call to action’ for our community.
IT: Developing information systems for managing contracting and procurement
Training: Getting contracting personnel trained to execute specific types of contracting. Early involvement of contracting staff (in the planning stage itself). Institutionalize special contracting programs
Develop and implement information systems for managing contracting and procurement in contingency operations.
The interagency working group that explores the CFAR should also review current contracting and procurement information systems and develop guidelines and processes for enhancing these existing systems or, if necessary, creating new ones to meet unique contingency operational needs.
Create a deployable reserve corps of contracting personnel who are trained to execute rapid relief and reconstruction contracting during contingency operations. This contracting reserve corps could be coordinated by the DoS Office of the Coordinator for Reconstruction and Stabilization as part of its civilian ready reserve corps.
An existing contingent of contracting professionals, trained in the use of the CFAR and other aspects of contingency contracting, could maximize contracting efficiency in a contingency environment. Include contracting staff at all phases of planning for contingency operations. Contracting plays a central role in the execution of contingency operations, and thus it must be part of the pre-deployment planning process. Whether for stabilization or reconstruction operations, contracting officials help provide an accurate picture of the resources necessary to carry out the mission.
Pursue the institutionalization of special contracting programs. In Iraq, smaller scale contracting programs, like the Commander’s Emergency Response Program (CERP) and the Commanders Humanitarian Relief and Reconstruction Program (CHRRP), achieved great success. Commanders used these programs to accomplish projects that immediately met the needs of a post-war population in distress.
Given the positive performance of CERP and CHRRP in Iraq, the Congress should legislatively institutionalize such programs for easy implementation in future contingency operations. Pre-compete and pre-qualify a diverse pool of contractors with expertise in specialized reconstruction areas. These contractors should receive initial reconstruction contracts during the start-up phase of a post-conflict reconstruction event.)
“Forecasts emanating from market economists are suggesting a surge in bankruptcies in the coming months and through next year. Today, we are completely blind to the risk that exists within our supply base. So with the likelihood that there will be supplier organisations facing financial difficulties, I’d like to get some advice on how IACCM could assist us to develop an approach to supply risk management and the tools and methodology we should be considering in the design of our solution.”
This request is typical of a growing number hitting my mail box. My reply appears below. There is no quick fix, though there are short-term steps that can reduce both probability and consequence of failures.
“You are of course right that this is a major topic for every organization right now and many are not well prepared to make the necessary risk assessments – nor for determining what they will then do once the risk has been identified.
In the end, the assessment options are fairly limited.
Companies that have strong SRM programmes are probably best placed, because these mean that they have identified critical / strategic suppliers (especially sole source situations) and are likely to have built-in relationship review procedures.
A second tier of companies have some level of on-going financial monitoring, whereby they do at least check the published accounts and credit ratings for their top-tier supplies. Some have outsourced or off-shored this activity – and that might offer a rapid way to improve your own situation.
Whatever method has been adopted, the challenge in current market conditions is that even healthy companies may be challenged either for cash, or because of the weakness of their supply or customer base.
Inevitably, some may see massive erosion of revenue based on their exposure to specific industries. However, at a minimum, you should urgently assess any sole-sourced agreements anddetermine the time and difficulty of either replacing or dual-sourcing those suppliers.
But moving beyond the question of risk, we get to the challenge of a solution. If you identify potential failure or weakness, what do you do about it?
Obviously many will look to potential switch to stronger suppliers (but the stronger supplies may not have capacity because others will do the same), encourage mergers (but that takes time), consider a dual or multi-sourcing policy, or purchase increased buffer stock. Beyond this, depending on your own financial strength, there may be situations where you consider funding or otherwise supporting your supplier, for example as a guarantor or through more generous payment terms, or even through taking some stake in their business. Finally, you might consider in some situations bringing the activity in-house.
This is a very high level summary of what I am hearing and seeing. IACCM could certainly pull together some sort of forum – physical or virtual – to enable a sharing of experiences and techniques. Of course, whatever solution you adopt, it will demand some combination of extra resource and money.”
In e-sourcing forum, Charles Dominick highlights the reluctance of many Marketing groups to acclaim the success of their Procurement organization as a source of competitive advantage.
The point he makes is interesting and in my experience, sometimes valid. However, as a negotiator from the other side of the fence (sales contracts), i have a different view on why companies are sometimes hesitant to boast about procurement success.
When I negotiate, if I highlight the quality of the procurement group’s efforts – at driving lower prices, or generating superior reliability, or cutting lead times – then it is certainly correct that customers value this. So of course the immediate question (from one of those talented procurement professionals sitting opposite me) will be “So where are those benefits reflected in your contract?” They immediately turn my achievements around on me to look for ‘superior’ terms and conditions or lower prices.
Now that is fine if I can indeed demonstrate that I do offer better terms – shorter lead times, higher damages for failure, lower cost of ownership, superior guarantees or service levels. But few Sales organizations have this level of competitive intelligence – we rarely know in detail what competition is offering or what they may be desperate enough to match. So making these boasts means I had better have verygood market intelligence and also that I have extremely good supplychain integration – by which I mean true flow through from market requirements down to the very lowest level of supplier.
Second, in today’s inter-connected world, many of my major customers are also my major suppliers. It is not always smart PR to suggest that I am somehow screwing my customers – yet that is the way that Procurement success stories will often be read, especially when so many of them still gravitate around driving lower costs.
“Here is the burning question with respect to the industry – how are folks benchmarking the respective performances of internal shared services organizations, external nearshore providers and offshore providers in the procurement arenas?”
This question came into my mailbox over the weekend. It reflects similar requests that have been posed recently at conferences and IACCM breakfast seminars, so here is how I replied.
Benchmarking
The reason that benchmarks struggle – in my view – is that it is very hard to find like-for-like comparators. The best benchmarks would look at relative process performance, focusing on outcomes. But when performing such research, you find such disparity of organization and roles that you soon realize there are too many variables to decide what it is that led to the superior performance!
For example, as we look at Procurement groups today, we see growing divergence in their role and status. We see some that are being pushed into a fairly narrow vendor evaluation role (perhaps as commodity choice experts), while others are expanding to cover full life-cycle supplier relationship management. Just this week, I have encountered major groups where in one case, all contracting work has been taken away from Procurement, while in another they have lost out on the SRM role and yet in a third they now have both these roles added to their responsibilities!
In order to make benchmarking meaningful, you need consensus on the primary values that you want to achieve from Procurement activity and how these will be measured. Then we can look at comparative performance in other organizations based on those values / measures.
Organization
I believe that it makes sense to establish the shared service with a view to using that as the precursor to decisions over outsourcing / offshoring. In other words, the shared service approach is the right umbrella and is not an alternative to outsource / offshore, but a prerequisite to their success.
For many groups, the move to a shared service is the method by which they ensure consolidation of resource and harmonization of role, to create a group that is capable of oveseeing organizational performance (whether internal or outsourced). Until then, there is often a fragmented process and potential inconsistency in the way that procurement services are delivered around the business. So while an instant move to offshore or outsource may yield some cost savings, it will frequently do so at the expense of service quality.
All this said, the process definition associated with the creation of an effective SSU structure is the forum that allows proper discussion of where tasks will be performed. From this, you can then derive the optimum ways to deliver on those tasks –i.e. through automation, through remote resources, through service centers, through expert teams. It is within this analysis that opportunities for outsource / offshore rapidly become evident.
IACCM approach
The primary way that IACCM is assisting members with this questions is through two primary activities:
1. Capability Maturity Assessment. An on-line survey tool that can be deployed to get internal views of current performance (providers and users of the service). This generates a benchmark (against other companies that have undertaken this study) for each major performance characteristic (e.g. skills, knowledge management, leadership etc) and gives a sense of the overall performance strengths and weaknesses.
2. Process design workshop. As outlined above, analyzing the tasks to be performed with a view to process optimization. Organizational design and roles are an outcome of this.
An alternative approach is to focus on specific companies that appear to be ‘best of breed’ and to conduct interviews. We are doing this very successfully for several companies at present, on a variety of topics.
Years ago, when I was working at IBM, I observed how contract terms were written to reflect the goals of internal stakeholders, rather than the values of the market. This caused conflict and frequent non-compliance; it also drove regular demands for re-negotiation.
IBM’s reaction (like that of many other companies) was to apply more resources to ensure no deviation, or to support controlled negotiation. Costs spiralled and customer satisfaction fell. Meanwhile, management had no visibility of what was going on – they simply saw mounting complaints and growing dissatisfaction with the company’s claims to be a ‘solution provider’.
IBM fixed those problems and recovered its market leadership position – but deriving high quality management information to drive business change remains challenging for most companies. There is still a tendency by most support functions to believe that they alone know what is good for the company and that suppliers or customers (aided and abetted by business managers and Sales) are intrinsically unreasonable and potentially dishonest.
Hence ‘compliance’ is a major feature in most organizations and has been a key function of many software applications, especially in Procurement. Yet blind compliance is not only undesirable, it can destroy market relationships.
So I am delighted to see a number of leading application providers grasping this issue and focusing on the quality of management information and reporting. The latest is Emptoris, which has expanded its suite to offer ‘more actionable insights and greater agility’ in managing procurement and contract relationships.
The new portfolio includes sourcing intelligence and contract performance visibility, to support improved decision-making at all levels of the organization. These enhancements move us closer to a world where groups like procurement and contract maagement can begin to demonstrate value based on relationship outcomes. They also ensure that such groups will be able to offer a more strategic perspective, due to the value of the information they control.
In order to take full advantage of the power of these applications, it is critical that contracts, procurement and legal groups start to re-think many of their traditional metrics. The values embedded in today’s service level agreements and balanced scorecards do not yield actionable data. Intelligent organizations, using the power of the tools that Emptoris has now made available, have an opportunity to drive significant competitive advantage through superior partner selection and relationship management.
The theme of IACCM’s Europe, Middle East and Africa conference, held in London September 22nd – 24th, was risk. It was a timely issue, given the status of world markets and the melt-down of one of the (supposedly) most risk-governed and regulated industries.
At the behest of senior members of IACCM, our thrust was not traditional ‘risk management’, but rather the challenge of balancing risk and opportunity.
Many risk specialists become so absorbed with their field of expertise that they overlook the wider risks that can be created when we see things through a distorted lens. Every transaction that we undertake entails some risk. It is prudent to protect against this. But the challenge is to decide what level of prudence is required. At what point does prudence turn to unwarranted caution, causing us to lose healthy and profitable business?
The conference sought to explore some of the fundamental issues of probability, consequence and oucome that are fundamental to good risk management. Today’s speed of change and market volatility, together with the dramatic shift in areas such as reputational risk, have generated a sensitivity to risk that encourages increased review and approval, more governance and potential regulation.
Yet as the conference established, these instincts are in themselves extremely risky. The speed of change will not reduce. Reputation risk will not go away. The real point is that we must learn to adapt our attitudes and our systems to cope with the new world, not to confront or fight it. So we need to adjust and develop innovative risk management techniques that equip us for the future, rather than the past.
The techniques that were revealed at the conference were many and varied. Certainly, better use of technology (to collect, share and analyze data) was one key element – after all, networked technology lies at the root of this new world, so it must also be part of the answer. Specialist applications, such as contract management software, are part of the solution, but just as important is the need to focus on more holistic and integrated systems that support data flows across the business – for example, the link of risk management into CRM (customer relationship management ) or SRM (supplier relationship management) systems. These must be futher supplemented by powerful analytical tools, such as those coming from organizations such as Synaptic Decisions or Alliantist.
But automation alone will clearly not offer the quality of judgment that is inherent to good risk management. So designing a management system that causes focus on the right things and enables the right discussions is also key to any solution. The conference sessions that addressed this need ranged from those of simplification (BT’s review and approval systems, P&Gs dramatically reduced contracts), to better integration and analysis (Rolls-Royce on commercial innovation, State of Flux on relationship segmentation), to enabling collaboration (Cisco’s “gateway” initiatives, QinetiQ’s learning from PPP and PFI contracting techniques).
In the end, improved risk and opportunity management depend on a limited number of relatively simple steps – but as always, it is getting started and making the transition that is tough. A new risk regime demands collaboration across specialist groups, which means management must support (or demand) a new shared service delivery system. Specialists must adopt common language and common tools, to make the risk process seamless (as responsible risk managers they should themselves be powerful advocates for this improvement).
Once the structure is in place (and IACCM has developed a model for this), it needs clear goals and a shared sense of purpose, which must be based on corporate strategies and objectives (too often, risk assessment seems detached from the wider goals of the organization). And a key aspect of the measurement of success must be that the new organization enables high quality local decisions as close as possible to the market, wihout abandoning proper control and transparency.
To operate at acceptable levels of cost, the central service group will need to look not only at automation and empowerment, but also at the use of low-cost resources. Risk maagement has a strong reliance upon rules and these can be communicated (though many experts resist that communication for fear that others will no longer need them). Good risk management also depends on consolidation of data – the ability to observe frequencies and to monitor portfolios. This points to the value of centralized resources, suh as managed help desks, as a component of the answer. Outsourcing and offshoring can cut costs and increase quality through the ability to bring talented resources to areas such as bsusiness support, analytics and the performance of repetitive tasks such as document management, storage etc.
So if things are so simple, why are they not already in place? A major challenge is of course the issue of power, influence and perceived job security. The natural tendency of most people in large organizations is to emphasize ways in which their particular area of responsibility is distinct and different and requiring unique skills or knowledge. This encourages fragmentation, not integration. As an example, just take the world of contracts and relationships. In most organizations, there will be specialist groups covering distribution channels, alliances, outsourcing, strategic partners, IT, OEM …. Rather than recognize that core skills are the same and that business benefit will be gained by consolidation, they allow unnecessary diversity and inconsistency. Learning and experience are lost. Flexibility is lost. The ability to undertake effective and proactive risk management is lost.
It is not that we do not need specialism. It is rather that we must have specialism integrated into mainstream activity to ensure a more seamless process. This must focus more on portfolio management and the management of change than on the current obsession with transactions. By creating the right framework for risk, we can contain the number of risky situations and also be faster and more consistent in handling individual opportunities.
So ironically, risk specialists are often the cause of major risks occuring. Unless management forces a more integrated view and places matching levels of accountability, we will see many more instances of companies and business sectors imploding through their inability to see the woord for the trees.
That, in essence, was the theme of the IACCM conference. And its participants left wih a clear message about the need and opportunity for real change.
“A team is as strong as the relationships within it. Always want more, always give more. Stick together. Focus on being mentally stronger and always keep going until the end. Show the desire to win in all that you do. Enjoy and contribute to all that is special about being in a team – don’t take it for granted.”
This advice might have come from many inspirational business leaders – and I will identify its source a little later – but the real point here is the applicability of these sentiments to anyone seeking sustained success. How many of these behaviors are truly endemic to the environment in which we work? Far too often, I encounter corporate cultures where the readiness to find fault, to criticize and to apportion blame is close to the surface. Rather than lauding what was done right, or working together to improve, there is a readiness to highlight the problems and inadequacies of others. Today’s environment of fear, where regulatory and reputation risk play into the hands of groups with control instincts, is increasing many of these internal frictions.
A lack of trust inevitably leads to exclusive, rather than inclusive, behavior. Groups like Procurement, Legal and Commercial / Contract Management are frequent victims of exclusion, or indeed seek to exclude themselves, believing they are in some way ‘special’ or ‘too busy’ to be part of the core team. As a result, “We were involved too late”, is a frequent cry. Or, “We could have warned them about that if only management had included us.”
Victims remain victims unless they take control. And speciaists become increasingly irrelevant and exposed if they do not find way to integrate. We become part of the team through our commitment to its success, not by right. So the groups I observe struggling are typically those wth a focus on control and compliance, those that depend on the whims of executive management for their inclusion and influence. Groups like these are not seen as team players – they are seen more as auditors or line judges.
So what does our management guru advocate? He focuses on getting talented people to work together. And to do this, he hires good players, though he never overpays and does not want people who will disrupt the overall rewards pattern. He focuses on building teams with a clear sense of identity and common purpose. They are required to prepare thoroughly and then trusted to take their responsibility seriously.
How might we go about building such winning teams? One key characteristic that we have been promoting at IACCM is the commitment to empower. If we work to enable others and to apply our talents only when they are truly needed, not only do we become more valued, but we also gain increased status and respect. This point was emphasized recently by Tammy Erickson in a Harvard Business Review blog: “Increase your firms ‘collaborative capacity’ by building relationships and encouraging knowledge exchange …. Find ways to help your organization become more spontaneous, innovative and reflexive. Pass the ball.”
Of course, another basis of judgment will be to measure results over time – how often do you win, to what extent are the desired outcomes achieved, and what patterns can be identified to ensure lessons are learnt and improvements continuously made?
So to build winning teams, we must focus on enabling others. It must be obvious that our commitment is to team success, not personal glory. We must get out of the way when we have limited relevance or added-value; and when we are involved, we must share information and work towards finding solutions, not problems.
For many of us today, this challenge in fact goes further than just our own organization. ‘The team’ is increasingly composed of people from multiple companies and cultures. Success can only occur if it is achieved by all the players. That means our philosophies of teamwork must increasingly extend across a network of organizations – suppliers, sub-contractors and customers. The common purpose may be a successful outsourcing initiative, or a major construction project.
Therefore the development of powerful teaming instincts and methods will increasingly be a key competitive advantage, bringing speed, quality and agility to business operations. It is an area in which we can bring leadership (for example, in designing negotiation or post-award contract management methods); but whether as leaders or participants, the critical issue is that we must exhibit collaborative behaviors. “Enjoy and contribute to all that is special about being in a team.” In other words, recognize that teamwork is not a threat to our power or authority – it is in fact a pre-requisite – and in addition to that it can be fun!
So who is the management leader who made our introductory quote? It is Arsene Wenger, coach at Arsenal Football Club. And his words were not written for publication – they were a reminder to his team of the values he instils and expects. As a fan of Tottenham Hotspur, Arsenal’s great rivals, I hope he has got it wrong. But given results over recent years, I suspect he has not! So in the interests of teamwork, I suppress my natural instincts to belittle Mr Wenger and his team, and instead pay tribute to his achievements and contribution to knowledge exchange.
Commitment Matters 