Intelligent Supplier – Understanding Your Business Strategy (Series: 1 of 9)
Byon October 10, 2017
This article is the first of a series of nine articles dedicated to your Strategic Partner in a complex service delivery relationship: the subject of the ‘Intelligent Supplier’. Both the mindset and behaviour of your Supplier are critical to their ability to drive maximum value over the lifecycle of your relationship. With this in mind, in our experience of working with over 500 strategic supplier relationships, and our research into how the most effective Intelligent Client Function (ICF) teams perform, there are eight core elements of behaviour, that when combined, will determine whether your Strategic Partner is an ‘Intelligent Supplier’, and, therefore, more likely to be a true partner in the relationship.
What is an ‘Intelligent Supplier’?
An ‘intelligent supplier’ is a supplier-side team that appropriately responds to, supports and critical-friend challenges their client’s business vision, objectives, strategy and behaviours, and works and innovates with them to ensure those business outcomes and objectives are more likely to be achieved within the time and costs anticipated at the outset. An intelligent supplier will also, at the same time, be making sure that it is legitimately, openly and honestly achieving its own objectives too – it would only be fair and appropriate for them to do so.
If you are behaving as an ‘intelligent client’, you will already have specifically articulated ‘what good looks like’ in terms of your business vision, and what you are aiming to achieve from the services being delivered by your strategic partner, at what cost and over what timescale. You also will have ensured that you have communicated and agreed this vision clearly to your internal stakeholders.
Once this internal alignment has been established, you should then make sure that you have a process agreed for communicating this business vision to your potential and existing suppliers and their teams (yes – including their legal teams). In this way, any suppliers that want to work with you to help you achieve your business vision will be clear as to what your expectations are. Essentially, clarity and communication are at the heart of both the intelligent client and intelligent supplier status.
The ‘challenge’ of being an intelligent supplier
Throughout the hundreds of major strategic relationships we have been involved in and those that we dedicated ourselves to researching, we have found that ‘challenging’ the client on its business/supplier service delivery aspirations and objectives, can be a mixed blessing for an intelligent supplier.
Some clients know they want to improve because what they have been doing up to that point hasn’t achieved the business outcomes they need. Interestingly, our research found that clients who were already ‘good’ and ‘intelligent’ in their approach to improving their business outcomes, were often confident enough in their own abilities to own up when their knowledge was lacking in some areas. In other words, if a supplier can offer a more productive, effective or innovative way of achieving a particular business outcome, an intelligent client will often seriously consider how this can be incorporated into its operating process.
It’s the ‘not-so-intelligent’ clients that seem to cause problems for intelligent suppliers. In both our research and experience of the best performing outsourcing and other complex service relationships, we have found that there are some clients who struggle to articulate their business vision and quantify the key objectives they need to achieve.
In turn, they then have difficulty getting buy-in from their internal stakeholders to invest in the changes in the service necessary. When they go out to the supplier marketplace to procure services, they tend to focus primarily on the input of the service and evidence of the supplier having delivered such services to other similar organisations. In these circumstances, it can be difficult for potential suppliers to understand how they can work with the client to innovate a service(s) and achieve the expected outcomes and objectives in a more efficient and cost-effective manner.
Worse still, it seems these not-so-intelligent clients not only resist different approaches from suppliers, but actively discourage suppliers from wanting to challenge their expectations or from seeking better articulation in order that they might offer more effective solutions.
Both in our research and our own experience, we found that not only were highly productive clients much more open to supplier challenges and new ideas, but ironically the reverse is also true, with those who struggle to achieve business outcomes and objectives, least likely to want to be challenged with new ideas from suppliers.
Logic would dictate the reverse should be true, that the clients who are having the most problems in achieving their outcomes, would be most receptive to constructive critique and new ways of approaching their service delivery requirements, from their suppliers. But the evidence, unfortunately, suggests otherwise.
The conclusion we came to was that intelligent suppliers should mobilise an ‘intelligent client’ due diligence process. This will help suppliers quickly identify, at a very early stage, whether the potential client is likely to be ‘intelligent’ and, therefore, worth working collaboratively with and investing significant time and resources towards. Again, from the research undertaken, these clients are also less price sensitive, and more attuned to the ‘overall value’ they can achieve from supplier collaboration.
Public sector clients and the intelligent supplier
The public sector is an environment of extremes from the perspective of most suppliers. There are some aspects of the public sector that have really become very forward-thinking in recent years. An example of this would be the efforts of many local authorities. In days gone by, say 15 or so years ago, many aspects of central government used to think of local authorities as the poor relation – almost a younger sibling that had to be kept in line and chastised for its behaviour when appropriate to do so. Because the impact of local authorities was perceived to be low, they were semi-ignored by central government to ‘get on with it’; ‘it’ being services that central government didn’t really understand, but was pleased to have someone to take away the headache of delivering.
Both before the financial crises in 2007/2008 and thereafter, many local government organisations have been dedicated to seeking out innovative ways to change their behaviour, making huge strides forward in the delivery of local services and supporting their local economies, despite savage financial constraints being imposed on them by central government.
However, there are some aspects of public sector organisations that remain doggedly resistant to an intelligent supplier approach, though even here there are extreme variations of approach. Public procurement departments, for example, may be led by and operated by some really innovative individuals, but, as with any organisation, there are others that are dyed-in-the-wool-compliance, tick-the-box, don’t-rock-the-boat-as-I-am-eking-out-my-time-to-retirement, type individuals. Fortunately, the latter are dwindling in number in the public-sector environment.
There are many public-sector procurement professionals who deeply understand the constraints put upon public sector organisations with the European Procurement Regulations. They have worked hard, often in their own time, to construct ways to leverage the strengths in the Regulations and reduce and/or minimise the impact of the negatives to help make public sector procurement processes much faster, effective, value for money and to assure a fit for purpose service delivery outcome.
There are other individuals, however, who do not understand the wider holistic picture of aligning the service to be procured with the wider business outcomes to be achieved. They have been asked to procure a service. They will do the minimum to tick the boxes to achieve that. During the course of our research we have found that it is these individuals that the most effective intelligent suppliers have designed due diligence to seek out and either by-pass, or simply not respond to public sector tenders that they either generate or are responsible for.
As an ‘intelligent client’, it is your mission to seek out similarly intelligent suppliers and evidence, in all your communications and interactions that you fall into the ‘intelligent’ category. The reasons for this are twofold: 1) you will want to ensure that you are providing your supplier with the best opportunity possible to achieve the outcomes and objectives that you have thoroughly assessed, quantified and articulated. And, 2) you will want your chosen supplier to also choose you, because for you to fail to be recognised as an ‘intelligent client’ might result in your preferred supplier deciding to save itself a whole world of pain by simply rejecting your offer of a collaboration.
Both sides in the relationship must be pulling in the same direction for expectations to be understood, efforts recognised and outcomes achieved.
Stay tuned over the next few months as we release the other eight articles in the series (or better still, subscribe to the blog and have them delivered straight to your inbox).