Win-win approach. Collaborative relationship. These buzz words are tossed out frequently as a hallmark when executives describe their outsourcing relationships. But the terms are apt to be misused. I’ve had some interesting conversations about winning and collaborating in outsourcing relationships. One executive summarized an event in his company’s relationship this way:
“When we identified the root cause of the issue, we collaborated to determine the solution that would meet our needs and be a win-win.”
Despite the fact that a lot of companies use the buzz words and label this kind of situation as a win-win approach and as collaborating, it’s really just compromising. When moving forward depends on having one’s needs met, or when both parties have to give up something important to them so they can make the best of a situation and meet in the middle, no one really feels that they win.
Here’s another description where an executive mentioned a collaborative relationship:
“Our supplier came to us and said they had some new software that would benefit us and they wanted to show us a demo on it and have a collaborative discussion on whether to implement it.”
That seems more like an effort in the provider’s sales cycle. Sure, the implementation could very well result in mutual benefits. But this is not a collaborative discussion; it’s one company trying to gain buy-in from the other.
A true win-win approach drives the creativity of both parties, causes them to listen to each other’s ideas and challenge and enhance them. It enables collaboration. And that drives greater mutually beneficial value creation in a relationship.
Here’s an example of what such a relationship looks like. This relationship didn’t start out to be transformational, but it shifted that direction two years into the deal. The executive described the origins of the transformational initiative as follows:
“We wanted to transform our CRM system. We didn’t know if we would outsource it to our existing service provider or not, and we didn’t know if we wanted to buy a packaged solution. We just knew we wanted some enhanced functionalities in the system, and we knew they had some capabilities we might want to leverage for more efficiencies for both of us. We had a very collaborative-centric discussion with our provider, from a whiteboard approach, about the possibilities to see if there would be a win-win opportunity around this.”
A highly successful outsourcing relationship of a multinational manufacturer and a Tier-1 service provider, which had large-scale global complexities and a short time line for some of their year-one objectives, actually accomplished those objectives ahead of schedule. They attributed their success to collaboration and partnering.
But successful collaborative relationships don’t just happen. They must be planned and nurtured, and they depend on a win-win approach. Here are some essential perspectives I’ve noted in outsourcing relationships that built a win-win, collaborative environment.
1. Put aside the merits of compromise and aim for win-win instead. Having a difference of opinion and having a conflict is not the same thing. A difference of opinion is an important element of collaboration, as value arises from new ideas and different perceptions. In this situation, a win-win approach and collaboration is possible.
In contrast, a conflict arises when people have different information, view the same information differently, or feel the need to defend something of value to them. This type of situation ends in compromise and cooperation rather than a mutual win.
A mindset that compromising is the same as a win-win approach or collaboration in outsourcing is like the mindset of a dieter who thinks: “I can eat whatever I want today because I’m going on a diet tomorrow.” Let’s not kid ourselves. There are consequences to eating whatever we want; and there are consequences to continually taking a compromising approach rather than a win-win approach in outsourcing. As several buyers have told me,
“I remember how many times I’ve given in and how many times they gave in, and I’ll even that score somewhere down the line.”
Obviously, one party shouldn’t clobber the other; but keeping score and thinking about getting even doesn’t build trust or create an environment for partnering – a key to success in many outsourcing initiatives.
2. Core beliefs and values are crucial. Addressing a an issue (identifiable as such based on the fact that someone’s needs or interests must be satisfied in order to move forward) is based on the level of trust that exists in the relationship as well as each party’s core values and beliefs about the issue. The issue could as easily be an opportunity as a dispute.
An executive in the multinational manufacturer’s outsourcing relationship mentioned earlier describes his company’s approach to building their win-win environment as follows:
“We started with an agreed-on, principles-based approach to how we make decisions. That enables us to work together in the challenging times. If the decisions are based on principles, it makes the decisions more palatable, and we can get to a win-win situation and then to collaboration.”
What are those principles? He explained it’s based on the core values that both companies share as well as having integrity when dealing with each other.
What is your opinion on this topic? Is compromise the same thing as a win-win approach? What has been your experience in collaborating with your outsourcing provider or your outsourcing customer? What enables it? Can companies accomplish more than a mediocre return on investment without a win-win, collaborative approach? Click on “leave a comment” and share your view.
Since 1998, freelance writer Kathleen Goolsby has studied outsourcing relationships’ successes, failures, trends, and best practices. She has interviewed more than 860 executives at buyer and service provider companies and is the author of “Critical Requirements for Building and Sustaining a Successful Outsourcing Relationship,” a chapter in Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships (December 2006, Gower Publishing). As a freelancer, she also currently serves as the Senior Writer for Outsourcing Center (whose parent company is sourcing advisory firm, Alsbridge) and has authored dozens of articles as well as white papers. In a past role, she was editor of Outsourcing Venture (a former print publication). You can contact Kathleen at ksgoolsby@gmail.com.
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It’s all about trust and collaboration that will make any outsourcing deal a winner. I believe that you can’t simply give instructions to your outsourced team and expect them to read between the lines. Any work is a work of constant collaboration and if there’s none, you are doomed to fail in your efforts. Flexibility is also the key here and I love what you wrote about the difference of opinion. Sometimes, a team can try to please each other at the expense of innovation. Ideas do matter and collaboration should be a tool to make them work.
I dont believe that compromising is the same as win – win – however I think there is a caveat here. It all depends on what you are compromising. To start with – if both organizations’ core values and beliefs are not in line with each other, there is a good chance that sacrificing important values to maintain the relationship and a mindset of one upmanship will dominate the relationship. That makes it difficult to be collaborative, when you are trying to get back at someone to even the score.
However, If both parties’ core values and beliefs are in-sync, and they are truely working in a collaborative relationship, then win-win will be the result without compromising any of the important stuff.
The important factor I beleive in the relationship is to have a goal, a target to achieve – The SLA should be set as a means to achieve these targets, and any innovative or technological advancements that either party brings to discussions which they believe will enhance the relationship can easily be evaluated as a win-win without comprimise based on whether it brings both organizations closer or further away from the goal or target. This is also a great way to avoid bruising anyone’s ego and ensures a collaborative effort to make positive changes.
If you are faced with giving up something that is at the heart of your organization – something of high value – then it’s my opinion that you should pass on the opportunity. Compromising your values will result in a failed relationship at some point. The question is not if, but when.