ISO 44001: Creating The “New”​ Standard For Business Relationships

Over the past few months there has been, with increasing frequency, the publication of many articles written on the emergence or re-emergence of the relational approach to complex business relationships.

Whether it is a true renaissance or not, remains to be seen. After all, the importance of relationships in business, and for that matter, in everyday life is not a “new” concept.

However, what is new, is that for the first time there is a means by which you can quantify and evaluate the effectiveness of your relationships.

ISO 44001 Standard: Moving From Intent To Actualization

In today’s increasingly diverse marketplace, the complexity of doing business demands more than just a simple intent to collaborate. It requires both a commitment and a solid understanding of the changing dynamics in how government and industry do business, and the critical role that relationships play in achieving successful outcomes.

To this end, and to address the complexities of public-public and public-private business arrangements, several collaborative models and corresponding frameworks have emerged over the past decade. The primary objective of these new models was to move beyond the transactional architecture and mindset that has limited collaboration effectiveness.

While this demonstrated a recognition and intent to become relational, a clearly defined framework through which such relationships could actually be structured, implemented, and measured for effectiveness on an ongoing basis, was not available.

ISO 44001, presents a real and meaningful opportunity for organizations to both contribute and share best practice methodologies in the areas of collaboration and relationship management.

Originally established in 2013, the ISO/PC 286 Collaborative business relationship management framework, was proposed by the British Standards Institution in the United Kingdom – otherwise referred to as “BSI-UK” based on the success of the BS 11000 model in the UK and Europe. ISO 11000 which has been renamed to ISO 44001 was approved for publication on December 6, 2016.

With an established and globally recognized standard such as the ISO 44001, a continuity of understanding and progressive insight will ultimately create a truer and more enduring framework that will serve as the standard for relationship management.

New Standard Inevitability

The International Organization for Standardization (ISO) is an international organizations that was founded on February 23rd, 1947. Focused on promotion worldwide proprietary, industrial and commercial standards, ISO was one of the first organizations that was granted general consultative status by the United nations Economic and social Council.

Needless to say, ISO certification carries a great deal of influence around the globe in terms of certifying that an organization’s management system, manufacturing process, service and documentation procedure meet all the requirements for standardization and quality assurance.

In this context, the introduction of the ISO 44001 standard was inevitable. The reason is relatively straight forward; relationships and relationship management – especially when it comes to managing complex contracts, requires more than an enforcement of legal terms and conditions. It requires true collaboration and transparency between all stakeholders, which prior to the establishment of the ISO 44001 standard, were merely reflections of the desire to work together.

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Upcoming ISO 44001 Related Seminars and Workshops

Strategic Relationships Solutions Inc., in partnership with the Centre for Executive Leadership, Telfer School of Management, and the Institute for Collaborative Working (ICW) is pleased to offer a seminar on Relationships Management and Relational Contracting in Ottawa on May 23-25 and Toronto on June 14-16, 2017.

For more information and registration please see course outline for details or contact us directly at Relationships@srscan.com

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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.

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

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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How Do You Source A High Performing Business Relationship? by Andy Akrouche

Now that we have in my previous post, identified what a high performance relationship actually is, the next question is how do you find one?  Or perhaps the better word would be “establish” one?

“The contract must become a platform to manage inevitable change, not pursue certainty based on the original deal.” – Ian Mack. Director General Major Project Delivery (Land & Sea), Canadian Department of National Defence

The “Relational” Ties That Bind

Establishing a collaborative high performing relationship requires a different sourcing process, as one cannot use the prescriptive or familiar procurement mechanisms to source a dynamic business relationship.

This becomes particularly important as it relates to Futuresourcing projects.

With Futuresourcing projects, where neither the client nor the vendor has constructed, built or delivered the required capability, past work experience cannot be solely relied upon or used as a selection criteria.

In sourcing dynamic relationships, a closer examination of the vendor’s strategy and core capabilities are paramount to determining the likelihood of the ultimate success of the relationship.

In this context, all projects should be viewed with this fresh look of uncertainty, especially given the fact that the vast majority have failed to deliver the expected results.

Beyond these needed checks and balances, the sourcing process about which I will be talking today, advocates an intense industry analysis and engagement before and during the actual procurement, as well as post procurement.  This sourcing process also involves the application of advanced analytical tools to objectively assess and evaluate the fit between a vendor’s strategy, core capabilities and the initiative’s strategic objectives in relation to the expected outcome.

With high performing relationships, collaboration is born out of common purpose and intent, and must therefore be a product of strategic fit.  The advanced analytical tools associated with my SRS relational model are used to determine the veracity of the “strategic fit” between the client and vendor.  This “fit” as I call it is critical for establishing the framework for the Relationship Charter about which I will be talking at great length in an upcoming post.

I think that it is important to note at this point that irrespective of where you presently are in terms of your current contract management lifecycle, it is never too late to introduce the relationship-based model.  That being said, the sooner in your process that the model is used, the more effective your relationship management framework interms of achieving all the benefits delivered by the relational model.

business teamwork - business men making a puzzle

Within the context of the above, the following 4-Step process will enable you to reliably source and establish high performing relationships.

Step 1 – Creating the BRF Framework

In 2003, and based on our team’s extensive experience to that point in time, we established Benefits Realization Factors (BRF®) as a means of defining the variables or key factors that must be enabled to achieve success relative to the expected outcome.

Not to be confused with Key Performance Indicators (KPIs), which need to be defined jointly with your selected partner at a later stage, a BRF® to a procurement initiative outcome is much like a Critical Success Factor (CSF) to project management and risk factor in risk management.

It is a factor without which the desired benefits associated with an acquisition or delivery cannot be harvested.  In this context I am certain that almost all procurement professionals can recall at least one initiative where despite the success of one or two success factors the expected outcome in terms of the overall initiative was never realized.

Step 2 – Industry Analysis

I have often been asked about the advanced analytical tools that I have used to understand an industry and assess the strategic fit between potential partners.

The fundamental idea behind the use of these tools is to introduce Competitive Analysis and Competitive Intelligence gathering  within a procurement framework prior to the actual procurement itself.  These tools ultimately  enhance both the insight and the understanding of specific industries and organizations within those industries, as it relates to identifying the critical points of strategic fit relative to achieving an expected or desired outcome.

In essence, and as an initial step, by understanding an industry as opposed to an individual company, you will be in a better position to compare all competitive bidder capabilities by a single standard that truly aligns with your contracting goals.

Or to put it another way, to really understand individual company capabilities you must first understand what their specific industry is doing as a whole.  This is of course where the importance of strategic grouping comes into play.

A strategic group is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies.

My Strategic Group Analysis (SGA) aims to identify organizations with similar strategic characteristics, following similar strategies, or competing on a somewhat similar basis.

The Industry Analysis phase will also provide added insight needed in your procurement strategy, enabling you to determine if your expected outcomes and BRFs can be achieved.

This second step establishes the preliminary alignment between your objectives and industry capabilities, that will enable you to intelligently engage the targeted industry.

Step 3 – Strategy and Industry Engagement

One of the critical issues engulfing the procurement regimes particularly in the public sector, is what is referred to as industry engagement.  For many years the government had simply relied on defining their requirements and then taking them to market in the hope that a vendor, any vendor would be able to step forward and deliver to contract specifications.

The problem with this approach is that it abdicates buyer responsibility in terms of the successful delivery of the required product or service.   In essence the government would ask for “A” and then rely on imposing legal terminology and financial penalties as a means of enforcing the desired outcome.

History has clearly demonstrated that this approach in both the public and private sectors has failed to produce successful outcomes.

With Steps 1 and 2, we have addressed this issue.

Based on your newly gained insight of the industry, rather than raising the defined requirement flag in the hope that a vendor – any vendor, will salute it, you are now able to develop a strategy that focuses on two key elements.

The first being the Business arrangement framework which includes a description of your strategic objectives, and the resulting alignment with target industry capabilities.  From this, the profile for an ideal business arrangement that encompasses the actual relationship itself, as well as the corresponding service and financial management framework will emerge.

Once you know what you require in a high performing relationship partner or partners, the second element, which  is a description of the procurement process itself, can be mapped out and acted upon.

It is important to note that this initial connecting point with the target industry, is part of a ongoing engagement process that will continue to provide intelligence to what will become the joint governance team, throughout the duration of the relationship.  I will talk about joint governance in greater detail in my next post when I review the process to “operationalize” the Relationship Charter.

In the meantime, we are now ready to move on to the fourth and final step in sourcing a high performing relationship.

Step 4 – Vendor Selection

In sourcing high performing relationships, vendor selection is based primarily on the following four components:

  1. A business proposal that describes the general approach and strategy for meeting known deliverables and immediate or short term goals along, with any technical, HR and management plans that may be required in the immediate future as seen and determined by the bidder;
  2. Strategic Fit Assessment – As mentioned earlier in this post, this is a process that uses advanced analytical tools to objectively quantify the fit between a corporate strategy and core capabilities, with BRFs. The assessment output is what we call a Relationship Certainty Score and is carried out by an independent team of qualified professionals and academic personnel in strategy, finance and business operations.
  3. Relationship charter components and Joint Governance team qualifications. The Relationship Charter (components of which are covered in prior posts, and will be revisited in my next post on Operationalizing the Relationship Charter) is introduced as a Straw model template format during the procurement process. Finalized at the negotiation phase of the procurement – it is one of the few things that will require phase based negation in the relational approach.
  4. Open book Framework, which is the financial evaluation of vendors proposed financial terms and management metrics. As I mentioned in a previous post, the OBF is a pricing model based on actual cost accounting with dynamic constructs and incentives depending on the type of activities involved during the relationship lifecycle.
  5. Last but not least, and before any transition can take place, operationalizing the relationship charter is critical as it empowers stakeholders to work in teams as a cohesive single unit. This collaborative cohesion is at the heart of any high performing strategic relationship, and it is the Charter platform that provides the parties with the ability to effectively and successfully address problem areas as they arise, as opposed to being avoided.  This Charter platform also provides the insight into the relationship elements that enable the delivery of improved outcomes and, the intelligence across the value chain to better leverage change as a strategic advantage as opposed to being viewed as an undesired and unanticipated risk.  As a result, there will be a resiliency to the relationship in times of inevitable change that will ensure an effective shared response, and ultimately a successful outcome.

As previously indicated, in the next post I will go into greater detail regarding how to operationalize the Relationship Charter.  However, the key take away from today’s post can be found in the following response from a senior private sector executive when he was asked why relationship-based models work:

Successful private sector organizations attribute their success to close customer intimacy where they learn and work with their clients to produce the next generation products and services – the Relationship based model is the systematic approach that delivers customer intimacy”.

Register for our next Seminar – November 18 – 19, 2014 Toronto, Ontario

(Click image below to register)

Andy Seminar Banner Fall 2014

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How to make Outsourcing and PPP Relationships Work Webinar Series Launched on Udemy by Andy Akrouche

In response to the steadily increasing number of requests I am receiving from senior managers of both public and private sector organizations regarding the Relational Model of Outsourcing and Public-Private Relationships, I have created an on-line webinar series.

Utilizing a frank, conversational style format, the 4-Part video series on “bridging the gap between expectations and successful outcomes” will provide senior managers with an executive level briefing on how to make complex Outsourcing, FutureSourcing™ or PPP initiatives successful.

In this series, in which I talk with host Jon Hansen, I focus on providing answers to the following five most frequently asked questions:

  1. Why do Outsourcing and Public-Private Partnerships fail to meet expectations, and more specifically what are the fundamental issues?
  2. What is a relationship based approach and how can it solve many of the root problems?
  3. How can you introduce effective consumer protection constructs and create the conditions for sustainability?
  4. How can you use procurement framework and industrial policy to create a strategic supply chain and economic value beyond the project bubble?
  5. How can you establish and operationalize a relationship charter representative of all stakeholder interests and goals?

Available on the Udemy platform I invite you, as well as others who are contemplating any form of strategic procurements including Outsourcing, FutureSoucring™ or Public-Private Partnerships, to view the series.  My ultimate goal is to provide you with the insights that will help to guide you towards achieving improved outcomes with lower risk.

Up until the 28th of April I am pleased to offer you a 50% discount off the regular course price.  Simply enter Coupon Code COMP503W where indicated using the following link; https://www.udemy.com/outsourcing-and-ppp-relationships/

 

Bridging the gap between PPP promise and successful outcomes by Andy Akrouche

“Recent failures, bailouts, and excessive costs show that the risk analyses and value-for-money accounting used to justify P3s are clearly flawed and cover up the true costs and risks for the public.”

Such as the one from which the above excerpt has been taken, there are no shortages of articles and papers relating to the unrealized expectations of what were once promising PPP initiatives.  The question is why do PPPs consistently underperform?

An April 2012 report titled “Public Private Partnerships in India: Lessons from Experiences” goes a long ways towards identifying at least in part, some of the key problem areas that have caused so many programs to run off the rails.  While this report points to many of the issues requiring solutions, it unfortunately fails to offer a real systematic framework for fixing them.  The issues to which I am referring include a “static” transactional orientation, how variability of demand and expected changes are viewed and managed, risk/reward allocation, and the effective utilization of PPP procurement as a vehicle to create sustainable economic value above and beyond project bubble.

With UK government taking a hard look at PFI and introducing PF2 as a measure to improve the performance of traditional PPPs, where the public sector partner(s) take an active role and ownership of the “business”, the gap between the promise of P3s and their outcomes may become slightly narrower.  However, until a truly holistic adaptive framework is introduced, we will continue to struggle to gain the necessary traction to achieve the hoped for outcomes.

So what is a holistic adaptive PPP framework?

An adaptive PPP, or as I sometimes refer to it as a relational PPP (in keeping with the relational terminology), is a relationship-based Public-Private partnership framework where the focus of the PPP management process is on two integrated dimensions:

a)      Establishing the baseline business arrangement from which we will begin a continuous alignment process. This dimension includes all of the usual management, technical and financial planning activities, but without the burden of having to predict the unforeseeable in terms of variability of Demand and PESTL  environment; and

b)      The establishment of a Relationship Charter within which contractual elements and metrics such as deliverables, timelines, financial obligations, service level quality and performance are jointly managed.

For those who have already read my book Relationships First (eBook ,Hard Copy), and have attended my seminars and training programs, you know that the SRS Relational Contracting Methodology provides a detailed roadmap for managing the process and development of baseline arrangement referenced in point “a”, as well as how to properly structure and operationalize the Relationship Charter.

Consisting of three constructs, the Relationship Charter will also provide the framework that is needed to operationalize the new UK approach to PPPs.  

The SRS Relationship Charter consists of:

a.       Shared relationship mission and purpose;

b.      Joint Governance Framework;

c.       Open book financial management offering transparency and accountability in managing public funds.

With the added layers of transparency, openness and objectivity required for public procurements, the SRS Relational Contracting Model becomes an essential enabler and a natural platform to launch and implement successful Public-Private Relationships.

This is due to the fact that the SRS relational model provides the necessary checks and insight mechanisms to ensure the selection of the right strategic partner. In referring to the right strategic partner, I am of course talking about one that can deliver to meet today’s needs, but is also strategically capable of adapting to changing circumstances to jointly manage the delivery of improved outcomes.