Costco continues to amuse and amaze by offering more than the usual products to pile in the cart. The Costco Connection magazine for June (www.costco.com, "connection") has a page devoted to "Fresh Views," with mini-features on: Wally "Famous" Amos (who has moved on to found Wally's Muffin Company),brainstorming techniques, and a quick summary of a 2009 book, Extraordinary Groups: How Ordinary Teams Achieve Amazing Results.
My big takeaways this month, aside from a hankering for a muffin or a chocolate chip cookie, were from Extraordinary Groups. One - not quite an aha! moment - was that a group dynamic can hinder, rather than stimulate, group productivity. The other was that "exceptional experiences can be thoughtfully nurtured and intentionally encouraged."
Good stuff, but the authors may have missed the larger point, which is that transporting tools and techniques for elevating group performance, to the operation of business relationships involving entire companies, can magnify and multiply the consequences of what might be accomplished.
Maybe an even greater message, though, lies in how Costco works at a fuller customer relationship by providing unexpected value, beyond the nuts and bolts of selling them tires and tube steaks.
I'm grappling with a concept again, which is no surprise - nothing comes easy to someone with my limited candlepower. Malcolm Gladwell devotes considerable space in Outliers to the premise that exceptional intelligence might be of little incremental value in the real world, that being "smart enough" is good enough to provide a foundation for success.
I've been trying to apply the principle to the world of supply chain management and how the players in a given supply chain relate to one another. Apologies if I'm twisting the author's meaning and intent a bit. I do agree that a level of intelligence that makes people - and organizations - capable of operating only in some bizarre parallel universe doesn't help make things go well in everyday life.
But, if I were constructing a supply chain designed for success, I'm inclined to think that I'd pick participants who were somewhat better than smart enough. It's like choosing up sides for a schoolyard game - you want players who are better than good enough, but you might avoid the superstar divas (unless you, yourself, are the diva).
Then, I'd be looking for supply chain partners who were also creative and innovative. Not simply creative enough, but better than creative enough, without being completely undisciplined and wildly impractical, or even irrelevant.
The importance of - and difference between honest enough and better than honest enough is a discussion for another day, but you get the idea.
Am I wrong? Aren't we all striving to create solutions, organizations, and business relationships that are noticably better than good enough, without losing traction in a fruitless quest for the diminishing returns of absolute perfection?
Note: Achieving perfect order performance is not a fruitlesss quest; it is a byproduct of being noticably better than good enough.
The April 14 issue of The Economist (www.economist.com) asks whether the twenty-five year (or more) run of the shareholder value model has ultimately failed. (NB: See Michael Jensen and William Meckling's 1976 "aha!" work, Theory of the Firm.) This very fine self-styled newspaper goes so far as to quote a ferociously persuasive practitioner of the model, "Neutron Jack" Welch, who, in a possible about-face, recently called shareholder value "the dumbest idea in the world."
Yet another guru, an academic writing in the Harvard Business Review, has called shareholder value a "tragically flawed premise." As an ardent adherent of the "human face" school of capitalism, I can only applaud signs of a return to a stakeholder value model, in which the interests of employees, suppliers, customers - and, yes, shareholders - are looked after in a balanced way, and with a long-term (i.e., longer than one fiscal quarter) perspective.
Here is the crux of the contest between shareholder and stakeholder value models, in my view. Can tightly integrated supply chain partners successfully maintain effective business relationships if they are not on the same4 page of the value-model hymn book? Further, does insular commitment to a shareholder value model preclude wholehearted participation in a supply chain driven by visions of collaboration, mutual benefit, and sustainable end-to-end performance for ultimate customers?
You may intuit my bias easily enough, but what's your take on the ebb and flow of competing value models?
I was in the shower the other morning, channeling Leon Redbone doing Desert Blues, and thinking - a dangerous, even lethal, combination. Not an alarmist by nature, Armageddon, Snowmageddon, Oilmageddon and such aren't usually what I worry about getting larger in the rear-view mirror.
But, a growing number of responsible commentators are beginning to speculate about future consequences of our overall economic position in the US. (No, not just the weirdos in commercials hawking investment in gold.) One line of musing anticipates a couple of somewhat related developments. First is a continuing decline in the value of the dollar, which is painful enough already for anyone who travels. Another is big-time inflation, thanks to, among other things, all the borrowed money that's been poured into the economy. I'm not alone in these wonderings, according to The Ohio State University's Bernard J. (Bud) La Londe, Jr., Ph.D.
A third horseman riding toward apocalypse is a fairly rapid rise in interest rates. On one hand, we'll likely need to do something to stem inflationary pressures. On the other, we may need to make the dollar more attractive as an investment to domestic and international purchasers of US debt. If lenders enjoy a higher rate of return, it surely follows that borrowers are going to be paying an even higher rate.
A fourth horseman might be continued high unemployment numbers, but we'll deal with those impacts at a later date.
The exceedingly bright commentator Charles Krauthammer has used the term "hyper-inflation," but I'm not ready to invoke the specter of Germany's Weimar Republic - yet. But, we could see altered behaviors in business if inflation kicks in at a level not seen in some decades. That is, a corporation with cash on hand might choose to invest the money in building inventory - which would hold relative value - rather than watch the asset lose value when not put to some immediate use. The flip side of the coin is that corporations without cash might be very reluctant to borrow in order to build inventory, and pay a premium for the privilege.
At that point, tightly integrated supply chain performance could be adversely affected if partners in business relationships take different approaches to the challenge. If one supply chain partner builds a bloated inventory to use cash, but preserve value, while another slashes inventories (and elevates performance risk) to avoid the cost of borrowing, the disconnected day of reckoning will not be pretty. And, the fabric of previously successful intimate business relationships could be strained beyond saving.
In the real world, partners in supply chains typically have widely varying skill, competency, experience, and maturity profiles. That's consultant-speak for "some players are stronger, and some are weaker." In leveraged and progressive supply chains, the stronger partners have responsibilities to lead, mentor, and teach the others how to get better, not only in raw performance but also in risk management and mitigation.
If the grown-up in the room finds that the other organizations in the overall supply chain can't or won't respond to the required leadership, perhaps they aren't the right partners. On the flip side, if the weaker players aren't getting the leadership and instruction they need to grow and eevelop, maybe they're in the wrong supply chain altogether, and need to find new relationships.
It's sad to see the "A" players and the "B" players pointing fingers at one another like 6-year olds in the wake of a problem. The "A" players have got to act like grown-ups, or maybe they're not really "A" players where it counts. Size and naked power alone do not confer grown-up status on a supply chain partner.
This challenge can become mission-critical for ultimate supply chain success in the marketplace when one of the partners is a logistics service provider (LSP, or 3PL). While it is possible that a relatively new 3PL can be manhandled by a big and savvy customer, it is frequently the case that the customer is less-experienced and less-aware than a diversified multi-customer service provider.
That's when the LSP - in a genuine supply chain business relationship - needs to be the grown-up in the room, and lead the customer to success, taking every care to not let the customer slip off the path into a dismal swamp of risk and failure.
Within the past year, I have become a huge fan of Southwest Airlines for business travel. Their new boarding process has overcome my previous major objections. Add to that their free baggage policy (for the first two bags), on-time arrival and departure, regular pilot communication, and the use of full size planes has turned me into a raving fan! And given the frequency of my business travel, that has turned into real money for Southwest.
Jody Hoffer Gittell, author of The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance, argues "that Southwest's most powerful organizational competency- the 'secret ingredient' that makes it so distinctive- is its ability to build and sustain high performance relationships among managers, employees, unions, and suppliers." p.xii
If you have always wondered how to turn business relationships into a competivetive advantage, check Gittell's book out. You will soon see how the deceptively "soft stuff" turns business relationships into gold.
(Southwest Airlines Way is available on Amazon.com)
Dr. Gabriel Weisskopf, CEO of Softair AG, has wryly observed (in a recent issue of Air Cargo World), "change is inevitable - except from a vending machine." And, so it is, which brought Spencer Johnson's 1998 mini-classic Who Moved My Cheese? to mind.
The little book has been much abused, sometimes being handed out during periods of turmoil as a managerial way of saying, "Get over it, and get back to work." Difficulty in dealing with change is not confined to a rabble of knuckle-dragging mouth-breathers, though. It afflicts us all in some degree, no matter how enlightened we may think we are.
And, it's not a challenge confined to individuals. Organizations - and their operating relationships - struggle with change. Wheteher we are inclined to be reactors or proactors, continuous change stresses our capablilities and the quality of our business relationships.
Weisskopf maintains that we collectively live on a planet called Comfort Zone. I'll add that the planet is ringed with the Moons of Denial. Nevertheless, change is a constant in our business lives, and winners will be facing change and taking action. But, it's not as easy as a motivational book might lead you to believe.
By the way, it's perfectly okay to challenge the premises of change, as long as the challenge is healthy and not a smokescreen for the warm fuzzy option of inaction. At the end of the day, though, management by hope is not a workable strategy in a universe of change, especially when tightly linked supply chain performance is at stake.
Anthony Iannarino is President and Chief Sales Officer for SOLUTIONS Staffing. He is a consultant with B2B Sales Coach and Consultancy, and teaches at Capital University.
Joe Sperry sat down with Anthony Iannarino last week to discuss how his handling of business relationships contributes to his success.
Joe: How has your approach to relationships in business contributed to your personal or your company's success?
Anthony: My personal approach to relationships in business is based upon the idea that creating value together requires a relationship based on trust.
Mutual trust allows us to share ideas and information that might not otherwise be shared to explore potential ideas that allow us to exploit opportunities together, to solve problems, and to share business metrics that help both our companies do better work together than we would otherwise.
For example, 30 days after we start a large staffing project for a call center, we will share our turnover data. Initially some of our clients don't want to share their internal hiring data, but eventually they see it's the best way to discover how we improve our results together. Sometimes we have lower turnover numbers, and we share our on-boarding process with the client to help them improve their own results.
It's not always easy to build this trust, and sometimes there are individuals within some companies who cling to the idea that vendors are disposable. But once they have a successful business relationship, they understand the great value that a trusted business partner can help create.
Joe: How has proactive relationship management impacted both your organization's top-line and bottom-line performance?
Anthony: We schedule quarterly business review meetings with our clients. In addition to being a differentiator, this proactive approach has allowed us to improve our top and bottom line by defining the relationship as something more than a "vendor" could offer. In many cases, this approach by itself has helped a number of clients to move to us exclusively. This, in my opinion, is the response to "act like a vendor, I'll treat you like a vendor." Because we take a serious interest in our performance and how it impacts our client's performance, we are treated as something more than a vendor.
Joe: Do you have any advice for beginning relationship or account managers?
Anthony: Create value before claiming it. Understand that trust takes time to build, and you have to walk the walk before that trust will be developed as much as it can be. Have a presence. Have a presence. Have a presence. Never hide from problems or challenges, even if it makes you uncomfortable.
Thanks, Anthony! Business Relationships Members, do you have any questions for Anthony? Leave a comment if you do!
Anthony Iannarino is the President and Chief Sales Officer for SOLUTIONS Staffing, a professional sales coach, and a consultant for a firm he started, B2B Sales Coach and Consultancy.
Mr. Iannarino is also Adjunct Faculty at Capital University, where he teaches Persuasive Marketing, Social Media Marketing, and Personal Selling in the School of Business.
Anthony Iannarino is President and Chief Sales Officer for SOLUTIONS Staffing. He is a consultant with B2B Sales Coach and Consultancy, and teaches at Capital University.
Joe Sperry sat down with Anthony Iannarino last week to discuss how his handling of business relationships contributes to his success.
Joe: How has your approach to relationships in business contributed to your personal or your company's success?
Anthony: My personal approach to relationships in business is based upon the idea that creating value together requires a relationship based on trust.
Mutual trust allows us to share ideas and information that might not otherwise be shared to explore potential ideas that allow us to exploit opportunities together, to solve problems, and to share business metrics that help both our companies do better work together than we would otherwise.
For example, 30 days after we start a large staffing project for a call center, we will share our turnover data. Initially some of our clients don't want to share their internal hiring data, but eventually they see it's the best way to discover how we improve our results together. Sometimes we have lower turnover numbers, and we share our on-boarding process with the client to help them improve their own results.
It's not always easy to build this trust, and sometimes there are individuals within some companies who cling to the idea that vendors are disposable. But once they have a successful business relationship, they understand the great value that a trusted business partner can help create.
Joe: How has proactive relationship management impacted both your organization's top-line and bottom-line performance?
Anthony: We schedule quarterly business review meetings with our clients. In addition to being a differentiator, this proactive approach has allowed us to improve our top and bottom line by defining the relationship as something more than a "vendor" could offer. In many cases, this approach by itself has helped a number of clients to move to us exclusively. This, in my opinion, is the response to "act like a vendor, I'll treat you like a vendor." Because we take a serious interest in our performance and how it impacts our client's performance, we are treated as something more than a vendor.
Joe: Do you have any advice for beginning relationship or account managers?
Anthony: Create value before claiming it. Understand that trust takes time to build, and you have to walk the walk before that trust will be developed as much as it can be. Have a presence. Have a presence. Have a presence. Never hide from problems or challenges, even if it makes you uncomfortable.
Thanks, Anthony! Business Relationships Members, do you have any questions for Anthony? Leave a comment if you do!
Anthony Iannarino is the President and Chief Sales Officer for SOLUTIONS Staffing, a professional sales coach, and a consultant for a firm he started, B2B Sales Coach and Consultancy.
Mr. Iannarino is also Adjunct Faculty at Capital University, where he teaches Persuasive Marketing, Social Media Marketing, and Personal Selling in the School of Business.
Celebrations at about the time of the winter solstice have been a staple of many cultures across the millenia. North Americans' and Europeans' versions have powwerful religious roots, however much they may have morphed into secular adventures in retailing. The movement of goods stresses supply chains and relationships, and, as we ride the crest of this year's tsunami, business publications are making much of the struggles (including DC Velocity's perspective on toy sales, Toys: A Supply Chain Christmas Story, available at www.dcvelocity.com).
While we think of this annual surge of merchandise as a retail phenomenon, affecting B2C supply chains, there are many upstream B2B relationships that feel the pain of capacity, resources, and capability shortfalls. Suppliers take the hit a little earlier in the season, but their pain is real. Other supply chain partners caught in the riptide include carriers (in all modes), and those third parties providing warehousing, distribution, and fulfillment services to meet consumer demand.
Failure would not seem to be an option, but failures do occur. In toys, in apparel, in electronics, in confections - the list goes on.
Next comes the peak in returns, which inexorably follows the outbound peak, and which may involve even more third-party logistics service providers (LSPs).
This would not seem to be the time to be randomly selecting supply chain partners, and certainly not from the shallow end of the gene pool. It would seem to be the time when carefully built and nurtured business relationships with capable and committed partners pays off with exceptional execution, flawless recovery from challenges, the vision and stamina to get through the toughest times, and the reserves to really rev up performance after the storm has passed.
Have you been burned trying to get by with arm's-length performance in arm's-length relationships? Has the heat been turned up during seasonal peaks? Is this the time to re-think how you prepare to collaborate for a better peak next season?
I've been railing, raging like Lear against the storm, for some time about the inevitability of a turnabout in the stampede to Asian off-shoring - and the creation of long-distance, difficult-to-manage, and arm's-length busineess relationships in extended supply chains. The pressures of escalating transport costs, rising local wage structures, increased inventory holdings, up-front cash requirements, and delivery uncertainties - among other factors - simply had to tip the economic equation sooner or later. Maybe it's finally happening.
The New Calculus of Offshoring from the October 2009 issue of CFO magazine (also available at www.cfo.com) hits the issues head-on, and reflects a recognition in the financial community that bodes well for a coming-together of traditional antagonists, accountants and supply chain practitioners. It's more than ironic that the same executives who argued for distant off-shoring a scant few years ago are now touting the competitive advantages of closing down many such operations.
The article cites a cornucopia of challenges in the old off-shoring model, including unsustainable cost savings, weak project management, poor communications, differing work ethics, error rates, costly travel for oversight, overseas wage inflation, inflexibility, and low speed, among others. It goes on to outline a number of options in sourcing and "shoring" (some a bit tongue-in-cheek).
But, shifting service and manufacturing functions creates mission-critical challenges in business relationships. Few of the moves are to in-sourced internal operations. Instead, they require the creation of new relationships with new supply chain partners, with all the risk and uncertainty implied in commitments to less-well-known entities. Further, sorting out the right (often blended) solution among the options is, in itself, a test of an organization's acuity in the front-end processes of deciding what kinds of relationships with which partners are the right value-adding combinations.
My opinion? These moves are no longer isolated events; they constitute an emerging trend. But, they're not yet mega-trends. This is the time for supply chain leaders (and those who want to be) to get the relationship act together. Prowess in this arena will be tested over the next couple of years.
At the end of the day, you'll not want to be Lear, lamenting, "The weight of this sad time we must obey . . ."
Some early insights into the power and value of supply chain partnerships appeared in We're All In This Together, a Harvard Business Review article by Douglas M. Lambert and A. Michael Knemeyer of The Ohio State University. The brief piece dealt with a Wendy's/Tyson partnership, and described the outline of a Partnership Model and a four-celled matrix structure for classifying partnership potentials into high-value and low-value targets.
Those concepts have matured considerably, and are fully described in the recent book, Building High Performance Business Relationships by Lambert, Knemeyer, and John T. Gardner. A summary of the key components of partnership programs was recently presented to a Breakfast Club meeting at Ohio State's Fisher College of Business. It outlined a comprehensive set of specific elements in families of Drivers, Facilitators, Components, and Outcomes that lead to supply chain partnership success.
The plusses, as I see them, are: 1) the wealth of case-based real-world partnership accomplishments involving major corporations, and 2) the richness of detail involved in constructing, analyzing, and refining partnership practices. I'd like to see more examples of breakthroughs involving "followers" along with those somewhat expected of "leaders." Some academics have recently suggested (in CSCMP's Journal of Business Logistics) that the net impact of adopting positive practices by the real world's many followers is considerably greater than the contributions of the relatively few leaders in the field.
That said, I recommend getting an understanding of this perspective on partnerships, giving some thought to how the principles might apply to the world beyond supplier/customer relationships, and considering what the human dimensions of making these partnerships work might be.
I'd be interested in hearing what you think about the approach described.
There are still firms trying to get a handle on what exactly service quality is so that they can deliver it. I can help a bit, drawing from the wonderful research done in the 1980s by Valarie Zeithaml, A. Parasuraman and Leonard L. Berry. Their conclusions appeared in the 1990 Free Press book Delivering Quality Service: Balancing Customer Perceptions and Expectations. This may seem old information to some but it’s been interesting to see how few of our customers really know this source. In that book the three authors break service quality down into five determinants, from most important to least important:
Reliability: Ability to perform the promised service dependably and accurately
Responsiveness: Willingness to help customer and provide prompt service
Assurance: Knowledge and courtesy of employees and their ability to convey trust and confidence
Empathy: Caring, individualized attention the firm provides its customers
Tangibles: Appearance of physical facilities, equipment, personnel, and communication materials
This may seem like common sense, but the three authors’ conclusions are the only researched determinants of service quality we know. Almost everything else defining service quality is an educated guess.There are some interesting conclusions that can be drawn from these five determinants. The most important, I believe, is that the three most critical determinants come before empathy, on which many service people are hired.
The conclusion is that service quality, while it includes “niceness,” is in fact a detailed performance issue. If your firm is not reliable, responsive and knowledgeable, it will do it no good to focus solely on empathy. And yet much customer service training, in experience, focused on empathy and ways to use it.
To rephrase their conclusion, a firm which seeks to offer quality service most start with the actual expectations of customers and then create systems which allow the firm to provide consistent reliability, responsiveness and assurance.
In designing quality service, a firm needs to see it as a matter of cultural alignment, and not just customer service people being empathic. This is especially true of strategic accounts, where a given person at the account might phone any employee at the firm to get his questions answered. If there has not been effective training and the firm resource called is nice but knows neither the account nor the answer to questions, it sends a message that may be hard to erase in the customer's mind.