Crisis

Getting Beyond Crisis Triggers As the Foundation For Successful Relationships

Do not get me wrong, there are of course steps that can and must be taken to evolve the relationship between stakeholders, from the concept stage through to the execution and outcome stage.

One example is the Staircase of Relationships presented by Malcolm Morley in his June 9th, 2016 blog post of the same name.

But here is the thing . . . building successful relationships is not simply a matter of following a recipe in a cookbook, or following Ikea-like instructions to assemble a piece of furniture.

If it were that simple, then everyone would be doing it. The high rate of complex relationship failures speaks to the inadequacy of the simple plan approach.

Based on my experience over the past 20 plus years in developing my relational model framework – including the core Relationship Charter – I have found that success begins with a desire to work together.

This means that I have had to learn how to facilitate a “WE” mentality or mindset based upon understanding key external triggers. In other words, understanding the triggers that get people beyond an us against them attitude, to a WE mindset. This is the key to relationship success.

Think of it like diet and exercise. People know that eating right and working out 2 to 3 times a week is good for them. However, it usually doesn’t lead to a sustainable change in behavior until something major happens, such as a heart attack.

It seems that only when it gets to a critical or a crisis stage that people are willing to take proactive measures to change. In the case of relationships, this means moving towards greater collaboration and cooperation.

Take the I-35 Bridge collapse in Minnesota.

I talked about this at length in previous posts.

When the tragedy struck, the state and its suppliers put aside all standard procedures and rolled up their sleeves and worked together to achieve a solution.

The end result was a bridge that was built in record time at considerable cost savings.

Unfortunately, and in the absence of a crisis, with the next bridge project, the state reverted to its old ways. They subsequently ran into the same old problems that have traditionally infected the relationships between key stakeholders in the public sector.

The question is why? If it worked so well for the I-35 project, why wasn’t the same approach adopted for all future projects?

In short, do we only work well together when faced with a crisis? Is getting to WE impossible outside of the framework of dire circumstances?

This brings us back to my original point in today’s post.

Relationship models that do not take into account the above variables of human nature, and thus enforce compliance to a set of executable criteria alone, will not achieve success.

There has to be a desire to work together.

pulling same direction4

In my next post, I will tell you how to create that desire within the framework of my relational model in the absence of a crisis trigger.

In the meantime, and if you want to get a truly in-depth understanding of how to create the desire to work together outside of a crisis scenario, here is the link to my book Relationships First: The New Relationship Paradigm In Contracting.

Shipbuilding transparency

Why scrap shipbuilding strategy? Improved outcomes starts with open communications and transparency

“That project was awarded to the Seaspan’s Vancouver Shipyard. The briefing assigned no blame but suggested there were improvements the B.C.-based shipbuilder could make . . . “Vancouver Shipyards needed to find skilled staff, establish capability to increase design work and learn how to use new facilities,” the briefing material said.” – CBC News, November 25th, 2015

As I read the above excerpt from a recent newspaper article in which it was reported that costs related to the national shipbuilding procurement strategy (NSPS) had “ballooned” by the billions of dollars, it would be reasonable to wonder what happened?

Was there a breakdown in communication, or a lack of understanding relating to what was and was not actually possible, that led to the project coming in at 181 percent over budget?

Simply put, in formulating its “procurement strategy” through which partners such as Seaspan were engaged, were the government and its industry partners too eager to make a move in a particular direction? Did they make key decisions before they had a true handle on either the scope of the project, or its eventual cost?

Once again, and coming in at 181 percent over expected budget, one could be excused for thinking that this was the case. To a certain degree – at least in relation to the last paragraph, this would be a fair conclusion.

But does it bring us any closer to a real understanding of why it happened, and more importantly, how we can prevent it from happening again in the future?

In this regard, I would like to refer to an Ottawa Citizen article by former ADM MAT Alan Williams.

According to Williams, the government should scrap its plan – in fact the entire NSPS strategy, in favor of a return to the way things had been done in the past. Specifically, utilize DND personnel to write the statements of requirements that will achieve the needed balance between effectively describing the military’s needs while, enabling the private sector to bid a fixed or certain price.

While Williams’ approach may at first glance, seem reasonable, there are some problematic gaps in terms of what he is recommending.

To start – and this should come as no surprise to anyone who has read my blog or, attended my seminars, it is virtually impossible to reliably establish a set requirement without taking into account that both our needs and/or the product or service offering of the vendor will inevitably evolve over time.

Beta Versus VHS

Think about what I am saying from the standpoint of an everyday situation.

Many of you will likely remember when both Beta and VHS first came out.

They were clearly different formats that were not interchangeable. This meant that when you chose one over the other, you were in reality locked in to that choice.

However, and before making your final decision of which technology to buy, you likely did some research into the differences between the two, in an effort to determine which format would best suit your needs both now and in the future. In short, you made your decision based upon the best information that was available at that time.

Shipbuilding Options

What happened to everyone who chose Beta?

In choosing Beta, did you make a bad decision? Did you make a mistake?

Perhaps you can take solace in the fact that even VHS was eventually replaced by newer and more advanced technology.

The point is this; wouldn’t it have made sense to pursue a certain course of action today, while keeping your options open for the future relative to any unforeseen changes in the market?

For example, what if you purchased your Beta system from the vendor, with the understanding that you could trade in the unit and exchange your library of movies at a future date, and do so at a preferred price?

I realize that this is an overly simplistic example, but it does effectively illustrate my point regarding the problems with locking in both the buyer and vendor into a set course of action. Particularly when it involves complex technologies and long term contracts that can span years and even decades.

Now I do not want you to misinterpret by position regarding the Williams suggestion as an indication that I am fully supportive of the NSPS approach. It clearly has its shortcomings. This being said, I do believe that the NSPS strategy has its strong points, and is therefore good for Canada.

For example, it does facilitate government intervention with regard to creating a sustainable supply chain. The NSPS strategy also stimulates economic activity and opportunities, that would otherwise have been missed under the transactional model that Williams is proposing.

What this means is that rather than trying to tighten specifications and hold vendor feet to the proverbial flame, we need to work towards creating a more consultative and collaborative engagement mechanism between government and private industry.

Once again, this is something that is not possible under the ever elusive certainty model that Williams is proposing.

While Williams and perhaps even the Central Agencies want us to think that they operate in a world of absolutes in which there is a high degree of certainty in costs and outcomes, nothing can be further from the truth. The fact is, there is no such thing as absolutes – especially when it comes to building new aircraft, new warships or for that matter any complex acquisitions for which either new supply chains must be established or, an economic activity created.

Now at this point, some might be inclined to point to LCC analysis models as a solution to the problem. While there is no doubt that LCC analysis will enable management to understand the total cost of ownership, it is not a cost prediction tool.

A more reasonable approach to addressing budget overruns is to accept the fact that with complex initiatives, absolutes do not exist until after the fact. It is the immutable 20-20 hindsight rule of the procurement world.

Within this context, it would make far more sense to openly say that we do not know what the exact cost and benefit will be at this time however, it would be reasonable to establish a target of say $30 billion in cost, and $50 billion in potential benefits.

As we progress further through the process we are, at set time intervals, committed to establishing a communication and reporting discipline involving all stakeholders. It is at these points of open engagement that we will be able to gain more certainty regarding costs as well as the related economic and industrial benefits. In short, the present information vacuum that exists between project announcement and the revelation of a 181 percent budget overrun will be eliminated, and with it the shock leading to a futile exercise in finger pointing, and what went wrong lamentations.

What I am really talking about is managing a collaborative process as opposed to executing an adversarial transaction.

If the government really wants to achieve a different outcome, then they have to move beyond the adversarial matrix of a transactional orientation in which the buyer’s role is limited to project monitoring and contract enforcement.

Shipbuilding transparency2

This means that they will have to adopt a radically different yet undeniably proven mindset, that is based on a collaborative approach that drives ongoing alignment with project goals, and open communication.

The real question this raises is whether or not TBS, PSPC, IC and Program owners are ready to become relational in their thinking and approach.

business-relationship

Understanding The (New) Role of Relationships In Achieving Business Success

A recent international conference brought together senior buying executives, vendors and lawyers from around the world, to discuss solutions to the high rate of initiative failures. According to one study, more than 70% of all business arrangements fail to deliver the expected results.

What were the two key conclusions that came out of the conference in terms of reversing this trend? Building and managing strong relationships is essential to achieving desired outcomes for all stakeholders.

I would personally like to extend to you and your colleagues, an invitation to attend my Fall seminar on November 25th and 26th, 2015 on Relational Contracting and Strategic Relationships Management.

Held at the Courtyard Marriott in Downtown Toronto, this highly interactive and engaging 2-day seminar will equip participants with the know-how and skills to:

  • Gain a total system understanding of collaborative business relationships with an emphasis on outcome realization and change management;
  • Plan, source, establish, manage and participate in high performing collaborative business relationships;
  • Improve the performance of current arrangements such as MOUs, Agreements and Contracts; and
  • Establish the relationships & vendor management organization, and build its capacity to create a culture of collaboration and trust.

Discussions will cover two important classes of relationships:

  • Client-Vendor Relationships such as operations management arrangements, Alternative Service Delivery (ASD), Public-Private Partnerships (PPP), Commissioning, Outsourcing, Futuresourcing™, Major Capital Projects, and In Service Support (ISS) contracts; and
  • Intra-Public Sector Relationships such as Shared Services arrangements, Program Owner-Provider relationships, Transfer Payments and Intra-Municipal Agreements.

Please feel free to contact me with any questions you may have.

See you in Toronto!

Andy Akrouche

Gunfight3

How To Avoid The Tombstone Effect In Business Relationships by Andy Akrouche

Welcome To Tombstone 

Whenever there is instability and divisiveness in the buyer-side internal relationship framework, this dysfunction is ultimately extended to include external stakeholders such as vendors.

Think of it as the wild west town of Tombstone and the famous battle at the OK Corral.

What would it have felt like for an outsider to ride into Tombstone during the OK Corral gunfight? If you were that outsider, would you try to step into the middle of it and restore peace or, would you run for cover with your own pistol drawn?

Gunfight-at-the-OK-Corral-3

For those of you who have followed my Relational Contracting Intelligence Blog, and/or have read my book Relationships First, you are already very familiar with my areas of expertise and focus.

As you know, far too many business relationships are actually compromised well before a vendor, a service provider or a partner is introduced into the equation.

This is why it is critical to establish and operationalize a relationship management framework (Relationship Charter) before engaging service providers or the vendor community through an RFP, and ultimately a contract. The fact is that without a Relationship Charter, you are inviting your prospective vendors into a Tombstone-like situation. This not only distracts them from their intended purpose, it forces them into a survival mode in which their own survival agenda becomes the primary focus.

Under such circumstances, even the best crafted contracts will not enable you to achieve your objectives.

A collaboratively developed and operationalized Relationship Charter would help:

  • Align internal stakeholders with the organization’s objectives while clearly demonstrating everyone’s gain both individually as well as collectively.
  • Establish a collaborative as opposed to a subordinate communication mechanism that is viewed as being inclusive as opposed to exclusive (Dale Neef talked about the problems of the latter in his 2000 book e-Procurement: From Strategy to Implementation).
  • Employ a collaborative joint governance and alignment framework for managing and controlling the initiative from concept to contract and subsequent fulfillment or execution).

Adopting The Right Mindset (The eVA Success)

Understanding and properly engaging the diverse internal stakeholders within an organization is critical.

In his seminal 2007 post Yes Virginia! There is more to e-procurement than software, Jon Hansen observed the following relative to that State’s successful eVA initiative:

“The recognition on the part of Virginia that government goes beyond a mere org chart but is actually comprised of Higher Education, K-12, Corrections, Public Safety, Transportation, Health, Social Services and Construction etc. meant that they really understood the “special needs, special rules and special challenges” associated with the procurement practice of each entity both individually and collectively.”

This, according to Hansen, was a key to their success – a success that continues even today.

Virginia understood the make-up of their broader government enterprise, and actively engaged all buyer-side stakeholders, aligning their objectives into a coordinated strategy that eliminated barriers to adoption.

In other words, they got their own house in order, before inviting external stakeholders into the relationship.

As Hansen would go on to write; “Unburdened by the misguided belief that tighter controls produce desired results, the Commonwealth brought a service mentality or attitude to the project.  While there is almost always varying degrees of skepticism whenever . . . “big brother” initiates a program, the genuine effort to communicate with individual departments was invaluable in achieving the necessary buy-in for eVA’s success.”

While participation as Hansen put it was not voluntary, the right measures of flexibility within a centrally established framework addressed any potential issues of compliance.

The Relationship Charter focuses on the very elements that Virginia brought together, to create a working relationship between different stakeholders within the buying organization. It is based on a collaborative interaction with stakeholders as opposed to subordinate response to a centrally driven edict, thus creating a stable environment into which a vendor, or an internal service provider can be easily integrated.

Or to put it another way, the Relationship Charter eliminates the likelihood of a Tombstone environment emerging. It enables the buying organization to straighten up its own house before opening the door to external stakeholders or partners.

guns hung up

To learn more about Relationships and Relationship Charters refer to my book Relationships First or read my blog Relational Contracting Intelligence

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partnership

Can you commission success? by Andy Akrouche

“The act of granting certain powers or the authority to carry out a particular task or duty.” – definition of commissioning

There is – at least in the world of complex project contracting and management, a fine line between the delegation of a project’s lead to a more experienced third-party, and the abdication of responsibility for its success.

With the former, the buyer is looking to leverage the expertise of a third-party to accelerate the implementation process to achieve a desired outcome faster and on a cost efficient basis.

In the case of the latter, this objective is often lost by an overriding desire to transfer risk and ultimately responsibility to a third-party. Ironically, this reflects a similar mindset that one would usually associate with the traditional outsourcing model. It will also produce similar results for the same reasons.

The results to which I am referring are the high rate of outsourcing initiative failures.

The fact is that whether you call it outsourcing or commissioning, adopting an approach that is centered on using contracts to legislate performance through onerous terms and conditions, has never made sense.

However commissioning, if introduced as part of a collaborative or relational framework, has the potential to finally deliver on the promise associated with Public Private Partnerships on a scalable as opposed to circumstantial basis.

Scalable Versus Circumstantial

In the past, I have made reference to the successful rebuilding of the I-35W bridge that collapsed in Minnesota.

The project was an incredible success largely because of the circumstances and urgency to get the job done, while being sensitive to the  needs of the community.

Unfortunately, successes such as the one in Minnesota, remain elusive because the circumstances were so unique. When I say unique, I am referring to the exceptions that were made on the part of all project stakeholders to get the job done. This included operating at a level of transparency that is rarely part of the normal complex contracting process.

This raises the question, do exceptional circumstances or situations provide the only opportunity for stakeholders to truly collaborate?

My answer would be a definite no.

This is where commissioning – if introduced and managed correctly, represents the bridge between an ineffectual Public Private Partnership past, and the realization of the promise that comes from a relational approach going forward.

The Road Less Traveled

It is at this point in time that we have to look at commissioning in the context of a new beginning.

When I say new beginning, I am not talking about the introduction of previously unknown or unproven methods. What I am talking about is a different way to look at relationships based upon the values and methodology that can (and has) consistently produce the best results.

Or to put it another way, the I35-W bridge project, and those like it, no longer have to be the exception to the rule.

Scalability is not only possible in terms of achieving consistently successful outcomes, it is guaranteed through a relational approach that is governed by the creation of a Relationship Charter.

In the coming weeks, I will be sharing case study excerpts from my book Relationships First: The New Relationship Paradigm In Contracting, that will provide you with a roadmap to complex contracting success.

In the meantime, we are on the cusp of a very exciting and productive time, as long as we view commissioning through a revised lens of relationship-driven collaboration and transparency.

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Check out the second edition of my book Relationships First: The New Relationship Paradigm in Contracting . . .

Andy New Book Cover

P3 image

The Truth About Public-Private Partnerships

“The fact is that the majority of all long-term complex business arrangements underperform or fail because they are structured as a deal or a transaction as opposed to a strategic relationship between key stakeholders. Whatever name you give it, a transaction or a deal is still a deal.” – The (Real) Art of the Deal by Andy Akrouche, Relational Contracting Intelligence Blog, December 23rd, 2013

When I considered the response to a recent Toronto Star newspaper article that talked about the myth of Public-Private Partnerships or P3s, the only surprise was that many people were . . . well surprised.

In calling into question Infrastructure Ontario CEO Bert Clark’s position that P3s are an ideal way to pass off some of the risks associated with complex projects to the private sector, the article while accurate in terms of outcomes was technically incorrect.

What do I mean?

The promise or potential for P3s to deliver significant savings and improved outcomes for governments and the citizen’s it serves is in fact very real. Therefore the myth is not in the possibilities in terms of deliverables, but is in the areas of expectation and execution.

It is this latter point that requires closer examination and the development of an implementation process that is based upon open communication and collaboration.

Communication – More Than Just Talking

In an article written by IACCM’s Tim Cummins he has made reference to the paper “A Conspiracy of Optimism,” by the International Center For Complex Project Management.

The paper identified what it called “the conspiracy that leads executives on both sides of the table to lie to their trading partners and to create a combined version of the truth that leads to mutual delusion over what they can achieve, by when and for how much.”

This I believe forms the basis for the conclusions reached in the Star article, including the misguided suggestion that P3s are “against the public interest.”

The idea or premise of the P3s is not the culprit here, but the way in which we do business.

In his paper titled How to make your outsourcing & PPP initiatives successful, Jon Hansen made reference to the “transactional mindset” associated with most P3 initiatives.

While I will let you read that paper at your convenience, the key take away is that a transactional mindset means that the relationship between the primary stakeholders is viewed as one time interaction. This leads to what Hansen called a “win the business first, worry about making it work afterwards” approach, that ultimately undermines the relationship and eventual outcome.

To move beyond the misconception of P3 promise, we have to change the way in which we approach complex projects. In short, we have to adopt a relational as opposed to transactional mindset. This means that the public sector can work with the private sector to better manage certain risks, however said risks cannot be totally transferred or allocated to the private sector as the public sector ultimately remains accountable for outcome realization. There instead must be a sense of shared risk ownership and reward when working towards a mutually desired outcome. In other words, we must view our interaction with key stakeholders from the standpoint of embarking on a new and long-term relationship, in which all concerned parties work towards an outcome that is rewarding both individually and collectively.

It is only within this framework that open and honest communication can take place.

Collaboration Is An Act Of Will

In his book The Procurement Value Proposition, Robert Handfield wrote “integration across the business is not the responsibility of a few but rather a challenge that must be embraced company-wide.”

These are incredibly powerful words as they speak to the fact that collaboration takes a conscientious and concentrated effort on the part of all stakeholders both within and external to the buying organization. Or to put it another way, one cannot simply hope to become collaborative. There has to be a tangible and coordinated effort to create the means by which stakeholders can work together towards a shared outcome.

P3 connectthedots

This is where the creation of a Relationship Charter comes into play.

The Relationship Charter provides the strategic and operational framework for working together. It is within this charter that metrics, timelines and financial obligations, as well as quality are jointly managed.

Consisting of three parts: Shared Mission and Purpose, Joint Governance, and the SRS Open book financial management framework, the Relationship Charter is based on six foundational principles, which are as follows:

  • Act of Relating – and this is where “relational” comes from.  Connecting and linking in a naturally complementary way
  • Mutuality – Having the same or similar view or output each to the other
  • Respect – Recognizing each other’s needs, requirements, contributions, abilities, qualities and achievements
  • Innovations – Use of combined strength and synergies to deliver improved outcomes
  • Continuous Alignment – Making necessary adjustments to improve and achieve relationship objectives
  • Empowerment – Introduction of Joint management structures and processes at the strategic and operational levels to manage the realization of relationship objectives.

As highlighted in the above text, there is a methodology through which a P3 project can be effectively managed towards the desired result.  A vehicle if you will that enables stakeholders to proactively deal with both known and unknown variables that ensures the project remains on track and meets stakeholders expectations.

The creation and introduction of a Relationship Charter, will eliminate the purported secrecy and lack of public accountability, higher financing and consulting costs, and implied profit making on massive scale that was bemoaned in the Star article.

The introduction of a Relationship Charter also makes far more sense than the suggested throwing out the baby with the bathwater abolishment of P3 projects.

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Blank business diagram with lots of room

Turning Good Relationships Into Great Relationships by Andy Akrouche

“Good is the enemy of great. And that is one of the key reasons why we have so little that becomes great. We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life.” ― James C. CollinsGood to Great: Why Some Companies Make the Leap… and Others Don’t

Good-is-the-Enemy-of-Great

During a recent discussion following one of my seminars I was asked the following question; “If we are 2 years or 5 years into a 10 or 15 year transactional arrangement, can we still become relational and take advantage of the relationship-based paradigm.”

I thought it was a great question for many reasons.

To begin, when one thinks of defining the parameters of doing business, they usually think of it at the beginning of a new relationship.

This is of course logical in that when we build new relationships, we normally spend a great deal of time and effort to establish a framework for how individual stakeholders will work together.  This includes understanding individual stakeholder capabilities in relation to achieving a desired outcome.

Once that new relationship has evolved to the point that it seems to be up and running smoothly, we tend to turn our attention to other areas in which there is an immediate need.  After all, if it isn’t broke as the saying goes, why fix it.  Everything is good!

However, could it be better, or even great?

In this regard, I have always viewed relationships as an ongoing work in progress in which one never arrives but is in a state of constant progression.  This is a critical point to consider because change is truly inevitable.  What works today may not work tomorrow, and therefore you must always look for ways to improve upon the status quo, or the good.

That is why when I was asked the question “can we still become relational” – even after many years of working together, I said yes.

How To Make Good Relationships Great

So, how do you turn a good relationship into a great relationship?

It all begins with the collaborative convergence process through which stakeholders develop and operationalize the Relationship Charter.

The Relationship Charter consists of three main components: shared mission and purpose, joint governance and transparent financial management.  This last element, which I refer to as being the Open Book Framework or “OBF”, is critical.  Without financial transparency the viability of the relationship becomes impossible to assess, and therefore becomes vulnerable to competing agendas.

As a point of reference Jon Hansen, in his executive paper How To Make Your Outsourcing and PPP Initiatives Work, cites the U.S. Navy – EDS case study as an excellent example of what happens when competing agendas occur as a result of a lack of transparency.

A lack of transparency represents just one of many possible gaps, which can also include; differences or changes relative to client outcomes, changes in vendor business strategy or core capabilities, and misinterpretation of assumptions and contractual text relating to service levels and KPIs.

As a means to both identify and address these as well as other gaps, I utilize a Strategic Fit Assessment.

Blank business diagram with lots of room

What Is A Strategic Fit Assessment or SFA?

As part of the process for developing and operationalizing a sound Relationship Charter, the Strategic Fit Assessment leverages the Diamond-E Framework concept.

The Diamond-E Framework, which was originally proposed by Joseph N. Fry and Peter J. Killing in 1986, focuses on the internal group (organization), and the external components or elements of a relationship, in an effort to identify their alignment with the organization’s overall strategy.

My Strategic Fit Assessment, goes one step further than the Diamond-E Framework. When there is a misalignment or gap, otherwise referred to as a deficiency, the SFA can identify it as well as assess the impact of said gap on the Relationship outcomes.  The Stakeholders can then make the decision to either address the gaps while maintaining their adherence to the original objectives, or establish a new strategy through which alignment can be achieved.

Experience has shown that true alignment, is a multidirectional collective analysis that ensures that all stakeholders both internal and external to the buying organization are in sync with one another relative to the three main components of the Relationship Charter.

In this regard, the Relationship Charter serves a dual purpose as both a guide or reference point in terms of creating the needed alignment between stakeholders, as well as ensuring that said alignment is maintained in relation to achieving the best outcome.

When ongoing alignment is achieved good relationships, will become great relationships.

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