Healthcare Matters

The difference between “what’s in it for me” and “what’s in it for we” is the difference between zero sum thinking and a value creation philosophy. The former is a bad artifact –like a 70′s decor. The latter is a new best practice that is quickly emerging as a defining principle of modern day supply chain management.

As SCM professionals, we are obliged to build business cases each time we see an opportunity for improvement. And if our case is approved, it is our responsibility to manage the change.  Jeanette Nyden and Kate Vitasek are creating the vocabulary that is being used to articulate what collaboration means in this context. They have co-authored a paper entitled “Getting to We,” so I thought it would be timely, given last Friday’s post, to get a first installment up post haste (we’ll be posting excerpts from their paper all week).

Thanks to Jeanette and Kate (www.vestedoutsourcing.com) for allowing us to do this:

–Companies have been schooled in the principles of “Getting to Yes” since Roger Fisher’s and William Ury’s original publication of the book on effective negotiation. And most companies approach contract negotiations from a desire to optimize their own position, even going so far as to win at the expense of their partner. Companies must challenge traditional negotiating practices and adhere to principles that help achieve a win-win for both the buyer and supplier—enter the What’s In It for We (WIIFWe) approach.

Traditional negotiation theory assumes the classic, economic model that when each strives for his own personal interest—even at the expense of each other’s interests—the resulting deal benefits the market. When the companies get to “yes” a deal is struck that creates market equilibrium. The premise? If it was not a good deal the parties wouldn’t have reached an agreement. The conventional approach is for the buyer and the supplier to sit across the table during negotiations, standing in opposition to one another in an old-fashioned tug of war. We have all been in the situation—the age-old tit-for-tat position where you try to get to “yes” while giving up as little as you can. The power of the relationship is used up because each company tries to extract value from the other. And after partners have extracted value, the economic landscape looks bleak and renewal conversations are even more contentious.

Reaching a commercial agreement with a strategic partner to solve today’s tough business problems demands the Getting to We concept. This negotiation paradigm asks partners to pull together on the same side of the rope—effectively putting the business problem on the other side of the rope. This exponential power, pooled when companies work together, helps solve tough business problems that create market value.

Does co-creating value by working together sound too good to be true? It isn’t. In fact, some of our nation’s most reputable companies have struck gold simply by sticking to the WIIFWe philosophy (e.g. Microsoft and Accenture). How does the WIIFWe concept work in practice? The crux of the strategic relationship is legal independence coupled with economic interdependence, i.e., the more interdependent the relationship, the greater the need for “we” thinking. Businesses should implement the five principles of WIIFWe to reach effective company results via this new negotiation paradigm.

Here’s the first principle:

• Skinny Dipping-Transparency: Transparency is the most important principle in “Getting to We.” In a world where information is power, most people tend to hide, horde and misrepresent information, and use it as a battering ram to get their way. But such classic negotiation tactics act as a trust barrier. Solving tough business problems requires companies to share more information with each other than ever before. Businesses also have to recognize that sharing information can change the conversation. After years of contentious conversations, one $3.5 billion company knew it needed to make a bold move to prove that it was going to treat its service provider as a partner. At the outset of conversations to renew the service provider’s agreement, the buying company agreed to give the service provider its master agreement with its customer. The buying company felt they had nothing to hide and everything to gain by allowing their service provider to generate value-creating ideas. And it worked. Conversations shifted away from how to penalize for performance errors to measures designed to catch and rectify problems before the customer was ever aware of them, thus creating a win for all. Another example of transparency is sharing your Best Alternative to No Agreement (BATNA). Often, the “real” answers don’t lie in just one place. Often the insight into root cause comes from connecting the dots and bringing disparate pieces of information together so you can see the whole picture. In traditional negotiations, it is sacrilege to share your BATNA, which is, in essence, your walk-away alternative. Negotiation training experts warn never to share your walk-away strategy as the person on the other side of the table can take advantage of you by knowing your breaking point. “Alignment demands a commitment to one vision, one path and one set of actions to achieve that vision. If you don’t like your business partner, don’t kid yourself into thinking they’d make a good strategic relationship.”—

In our second installment tomorrow afternoon, we’ll talk about “getting real,” as in “authentic,” in your negotiations.

—Tom Finn