It is a burgeoning reality that businesses need to work faster, better and with greater agility. Big businesses are, for the most part, undergoing a necessary transformation. As part of the “agile” spirit, big companies are needing not only to work in a more entrepreneurial fashion; more often than not, they must work with smaller companies and/or younger entrepreneurs in order to inject the new ideas and talent into their own eco-system. The question that is all too frequently disregarded and needs to addressed: are these smaller companies considered by the big companies as vendors or partners? The vendor mindset is rational. It keeps the outsider at arm’s length. It looks for one-sided victories. On the other hand, the partner mindset is, at its core, about establishing trust.
Vendor or Partner?
Having worked in big business for 20 years, I was able to witness from the inside what types of policies and practices were put in place in terms of vendor or supplier relations. It is rather shocking to see how some large corporates operate with small businesses, especially ones that are of a strategic nature. I think, particularly, in terms of the excruciatingly slow decision-making process and delayed payments. I would soften my comment to nuance that a lot of it comes, not out of deliberate malice, but from the morass of bureaucratic procedures. However, I clearly remember hearing about certain decisions being taken around the delay of payment in order to squeeze out extra interest income. It happens (despite laws that attempt to dissuade the practice)!
When the vendor mindset suits
Without doubt, companies need to negotiate volume discounts, look at synergies and verify that their suppliers are legitimate. Having a purchasing department or buyer (aka cost cutter) has a bona fide purpose, especially when the items being purchased are commodities. This will entail such things as office supplies, media buying, raw materials, etc.
Partnership & Trust
However, applying the “vendor mindset” onto partners is another kettle of fish. The purchaser is programmed and incentivized to conduct business in a one-way exercise of getting the most out of the “opponent.” Hardly, a framework for building a sustainable relationship or partnership. Successful partnerships are based on trust. Trust is grown out of two-way communication and sharing.
Signs of a vendor mindset
Companies that characterize their partners as “suppliers” or “vendors” will likely display such traits as:
- request lots of pre-work before contracting
- require an excess of paperwork to be filled in
- come late to meetings that they organize
- cancel meetings last-minute
- provide short back-to-back slots for the suppliers to “sell” their concept
- decide slowly (without regard for commitments)
- ask for work to be completed in unreasonable timeframes
- …
Sound familiar at all? Now that I am running a small agency business, I become decidedly wary when companies blithely sic purchasing on us to manage the contract. I tend to worry about their notion of “partnership.” Not that asking for tenders to bid on work is wrong. It’s just about the manner and process. Partnering means that there is some form of equilibrium in the relationship. For example, that the individuals in the “big” company develop empathy in their treatment of the smaller company.
In today’s world, big companies absolutely need the agility and entrepreneurial spirit of smaller companies. {Tweet this!}
Big needs small
In this vein, the big companies need to learn how to work with the smaller outfits. For example, flooding the “vendor” with paperwork can be rather overwhelming. It’s a kind of barrier to entry for very small businesses, especially when the paperwork asks for obscure items that are not relevant in the vendor’s country (versus the client’s country). As such, big companies are wedding themselves to the “bigger” parties by default. This does not appear to be a safe nor healthy business process in today’s fast-moving and competitive environment.
When creating partnerships, there is the mindset that fosters trust, optimizes for the win-win and generates a willingness to go the extra mile. {Tweet this!} And then there is the client-vendor mindset where the supplier is merely a ‘contractor’, ripe only to suck out the most.
Sure, contracts must be negotiated, but I have to believe that in today’s world, there is more to gain on the top line than there is to squeeze out on the bottom line by creating bona fide strategic partnerships. When the arrangement is done intelligently, it is in the 3rd party’s interest to provide a superior long-term value. Their reputation relies on it. After all, word of mouth is everything when it comes to powerful marketing. {Tweet this!}
Your thoughts and reactions are welcome, as always.
