Making Use of the Standard for Procuring Strategic Partners
We all know that collaborative working across organisations has not had a great track record, with up to 70% of relationships (1) hitting significant problems due to cultural clashes and ineffective collaborative working. Research (2) has found that mergers and acquisitions have an even worse track record with over 90% failing to achieve the originally intended value. In both cases ‘human factors’ – behaviour and culture being the largest single contributions which in turn damage the development or management of processes and structures which support effective collaboration.
In previous blogs we have shown how organisations have attempted to manage some of these risks through the partner selection process where behavioural assessments aim to answer important questions – ‘does the potential partner have the right ‘soft skills’ and behaviours’, ‘will our organisational cultures–fit’, ‘how do they really operate as a team’ or ‘how will they collaborate with us’? The London Olympics & Paralympics Delivery Partner assessment was an excellent example of this approach https://www.b2bppm.com/blog/behavioural-assessment-for-the-london-olympic-paralympic-games-483 or more recently our work with Thames Tideway Tunnels partner selection has moved assessment practice on further.
For the most part though, if effort is expended on managing these risks, it is usually reserved for when the partners are ‘in bed together’ in a contract relationship. But is that enough? Can further steps be taken earlier? Through the lens of BS11000, (the Standard for collaborative working), this blog looks at the initial business decision to collaborate in the first place. It also looks at the importance of the readiness of the buyer or owner to collaborate, the process for the selection of collaborative partners, and ways in which the mobilisation of new collaborative relationships can be used to address shortfalls in collaborative competence and to embed the relationship.
Collaboration is a Two-Way Street
The usual, (and very understandable), focus of procurement teams is on evaluating the potential partners competence. However, successful collaborative business relationships are about ‘fit’ and the competences in and between the partners and their mutual readiness to collaborate. A sole focus upon assessing the potential external partner is like trying to predict the likely success of a marriage by only looking at the characteristics of one of the partner’s!
If the ultimate measure of an organisations procurement function is the delivery of contract objectives, then for contracts requiring high levels of collaboration, procurement teams should not only be looking-out and testing potential partners collaboration capability, but they should help their own organisation to look–in to ensure that they are fit and ready to collaborate effectively and have the leadership to make collaboration work.
BS11000 Collaboration Standard provides a useful road map where it provides an eight-stage framework for creating, maintaining, improving and, ultimately, ending a collaborative business relationship. Partner Selection stage is one of eight stages.
The ‘Partner Selection’ Stage
The most obvious entry point for the procurement function is the ‘partner selection’ stage. However this is the 4th stage of BS11000 and it cannot be delivered properly unless the earlier stages have been completed. The four stages that follow ‘partner selection’ can only happen once the contract is awarded. To the traditional procurement team the activities either side of Partner Selection may seem out of scope for their activity. But if successful contract delivery relies upon effective collaboration, paying attention to the stages either side of Partner Selection is key for the procurement team. It starts with the question – is collaboration what we really want and need?
Is collaboration or alliancing what you really need?
Stage 1 ‘Awareness’ provides a model for establishing the true business requirement for collaboration. This is where the procurement team can enable the organisation to clearly determine what degree of collaboration is actually required. This is the key stage for getting leadership support and ensuring understanding of their role in supporting the future collaborative venture. It is also the stop-go point for deciding if collaboration is best or whether an alternative delivery model is a better solution!
The ‘Knowledge’ Stage
If stage 1 has been passed, the ‘knowledge’ stage provides a framework for the procurement team to test the market place and reactions of key stakeholders to the proposed collaborative venture.
The ‘Internal Assessment’ Stage
This stage asks the question of the buyer – ‘’how fit are we to collaborate and what do we need to do to ensure we play our part well? It may be beyond the scope of the formal role of the procurement team but their influence in promoting ‘internal assessment’ and follow up development actions will increase the chances of a successful future relationship. If ‘Awareness’ was handled well, the necessary strategic management backing and support for this will also be in place.
The ‘Partner Selection’ Stage
Identifying, evaluating and selecting the future partner are tasks firmly within the procurement team scope. In this stage the Standard challenges procurement teams to examine the fitness of their usual methods to assess and evaluate partner competence and provides models for developing relevant assessment criteria and evaluation methods which are better suited to the task compared to some traditional assessment approaches. The current Standard is less effective in advising that the results of the partner selection process should be re-used used to identify risks, challenges and opportunities going forward with the new partner and to make use of assessment outcomes and the internal assessment to inform a joint development process.
The ‘Working Together’, ‘Value Creation’ and ‘Staying Together’ Stages
If the previous stages are necessary building blocks leading to effective partner selection, the next three stages aim to deliver the intended value of the collaboration post contract award. This includes putting in place the people competences, processes and governance structures to obtain maximum value from the relationship and to ensure, through mandating measurement and improvement of collaborative behaviour and levels of trust, that the relationship continuously improves its value. These stages all occur after contract award so how can procurement play a key role in making these stages successful?
In our experience, specifying tender requirements for bidders to provide proposals for building the relationship rarely gets the attention it deserves. In the tender evaluation phase, B2B past experience has been that these factors are either not evaluated at all or are given such low award score values that they do not receive great attention by those seeking the contract.
How much value is given to a collaboration competence requirement is a decision which should fall out of the work undertaken in the early stages of the model but it clearly should be aligned with an assessment of its contribution to contract delivery and importance to managing risks.
The final stage is the ‘Exit Strategy’. In the Standard, it is anticipated that an exit strategy will be developed early-on and continually refined during the life of the relationship to ensure an ending where the interests of the partners are secured and improved as a consequence of the collaborative relationship. Bringing the relationship to a close is usually the last thing on the buyers or partners mind at the front end of a contract.
Procurement teams can ensure that plans to manage relationship exit are embedded in the requirement and maintained during the life of the relationship.
Strategic partnering and alliancing approaches are a growth area and the BS11000 standard (and the future ISO11000), can provide the procurement function with a valuable road map to inform the successful procurement of a strategic partner and, importantly, support the delivery of a successful contract thereafter. The B2B team are currently working with a number of buyer organisations to help them to integrate features from BS11000 into their procurement process – including behavioural and cultural assessment. B2B team are also helping buyer organisations to assess their own readiness to collaborate and to determine the steps they may need to take to play their full role in the ‘chemistry’ of collaboration.