Implementing and managing collaborative relationships
Outsourcing is where organisations work together using their specialised resources innovatively to achieve aims and objectives that could not be realised on their own. Successful outsourcing can thus only be achieved through the realisation that it involves collaboration. This is dependent on good management of relationships.
However, relationship management is often seen as a ‘black art’ where we don’t know what to do, we don’t know that we don’t know what to do, it’s somebody else’s job or we haven’t the time or money to do it. Look for a course in a business school and you are unlikely to find it. They do Customer Relationship Management and Supplier Relationship Management, but not Enterprise Relationship Management – the process for coordinating all the business activities that are essential to the success of a joint/multi-party endeavour.
By formally managing the essential activities of the joint enterprise you bring partnership management out of the ‘mist’ and into focus. It becomes proactive and accountable. It needs to be supported by an objective relationship performance measurement system that allows you to create clear joint understanding amongst the partners and ensures you ‘get things done’ to time, cost and quality. What’s more, you put in place a management system that has the ability to always create and capture joint value within partnerships, alliances, networks, consortia, business constellations or whatever you wish to call collaborative business relationships.
The Enterprise Relationship Management Plan is the key component of a robust management system. It provides the clear joint understanding essential to ensure complete transparency and a focus on continuous improvement. It will contain the following:
- Organisational Arrangements – Who’s who and what they do
- Business Case – Objectives and Value Proposition
- Asset Register of Resources and Capabilities – What we all bring to the table
- Risk Assessment – Keeping an eye out for the unexpected
- Commercial Agreement – Flexible contracting
- Management Activities – Operations and processes
- Continuous Improvement & Innovation – Building on success
- Knowledge Management – How we share IP
- Communications – The pattern
- Exit Arrangements – Pre-nuptials
The Relationship Manager (RM) will be responsible for developing, implementing and then maintaining the collaborative business relationship management process throughout the organisation and becomes the repository for knowledge and experience in collaborative working. Externally, the RM manages the relationships with networks of organisations, often involving dependencies. It is likely that this web of relationships is highly complicated as shown below. Where you find strong relationship management there is less friction and scattering of resources which allows the partner organisations to move forward and achieve their aims.
An outsourcing relationship will have three distinct operational phases. In the Decision phase a new partner will be chosen. Although the usual business selection criteria are important, an understanding of the potential capability to work together to meet joint objectives is equally essential.
The Operations phase involves working very closely with the partner organisation to meet joint objectives on a day-to-day basis. It also involves instigating activities that make continuous improvement happen including process innovation and learning from experience and, provides the ability to exploit new opportunities that the joint business opens up. All these activities will be co-ordinated and managed by the RMs jointly at their monthly meeting.
Every successful business relationship will eventually come to an end and needs to be carefully planned and managed. Significant intellectual property rights will often be involved as well as those investments that have been made and used by the partners such as skills, materials and infrastructure. The impact on the up-stream and down-stream members of the supply chain should not be forgotten. A planned exit will ensure that a satisfactory outcome for all stakeholders will be achieved including the retention of goodwill and therefore the opportunity to do business in the future.
Treating relationship management as a formal discipline allows organisations to achieve consistently high standards. Organisations that collaborate well will not only achieve a competitive edge but will attract other good collaborators and enhance their reputation with external stakeholders.
About the Authors
Dr Andrew Humphries is CEO of SCCI Ltd, a company that specialises in helping organisations to improve the effectiveness of their Business-to-Business relationships, using a scientific tool set developed with Cranfield Business School. He has 35 years’ experience in the demanding military logistics field and has written a number of definitive books and papers on collaboration.
Linda McComie is a director of SCCI Ltd and co-developer of its partnership appraisal methodology and supporting tool set. She has worked extensively with blue chip companies to improve the performance of their alliances and collaborative partnerships. She has held senior management roles responsible for multi-million pound projects in the finance, retail, manufacturing and employment sectors.