We have all heard the old expression,”Don’t cut off your nose to spite your face”, that warns of a needless self-destructive behaviour, but how is this strategic..?
A couple of months ago, I saw very large vendor come to be informed that they had “lost the business”, because in all those years they had been the incumbent, they had failed to innovate and the business stakeholders had decided that it was time for someone new to inject some innovation into their business. Yet, what had actually transpired was nothing like that.
They had for years, met with the customer’s strategic sourcing team and proposed many more things that could be undertaken and some radical changes that would make life better for both sides. their mistake was only having access to that strategic sourcing team, so instead, those ideas were listened to and put into a “not right now” basket in favour of just doing what was needed right now across the many other contracts that team managed. The strategic sourcing team had not taken those ideas to their stakeholders and the stakeholders had not actively voiced their concerns or frustrations with the status quo to that team – so nothing had changed.
Instead, in this vacuum of change and growing frustration, an upstart competitor had gone straight in there. Made contact with a number of key business stakeholders and dealing directly with the frustrated business users, showing them innovative new things that made the current incumbent look hopelessly out of date, and probably most importantly, listening directly to them, giving them attention.
The decision was an easy one, made the business stakeholders and then facilitated by the strategic sourcing team. The incumbent never saw it coming and never had a chan
ce to even try head the inevitable off…
As a supplier, how many times have you had your large customer’s strategic sourcing team “remind” you that without their permission or facilitation, your business may not communicate with anyone inside their business? This means that the relationship stops being one that is focused on the users and becomes solely one of managing to an existing contract’s expectation – nothing more, nothing less (despite any fancy language that may be wrapped around strategic or innovation commitments). This approach may help prevent “out of scope” discussions with the business users and ensure that all communication is routed through the strategic sourcing team, but without the right sourcing team actively managing it, is a recipe for disaster and a certain way to strangle the very partner you consider to be strategic.
Sometimes as suppliers, we need to learn that as the incumbent, we have a right and a need to develop relationships deep into the customer’s business. Similarly, as a strategic sourcing team, we have the responsibility to continue to nurture the strategic relationship we have developed with the incumbent supplier, beyond ourselves and deep into our own business – they depend on us for that.
Strategic partnerships should by their nature be just that, “strategic”, and in being so, should aim to be dynamic, innovative and in the best interests of both sides. There’s never really a good reason to cut off your own nose.