Archive for March, 2010

Trust is the foundation of any good business relationship or alliance. Typically, parties enter into these relationships with high hopes and with a level of trust and respect for the other party. However, trust can easily be lost if you don’t hold up your end of the bargain or if you become difficult to work with.

I realize that I’m mentioning an obvious point, here. After all, of course you build better relationships when there’s trust. But just because something is obvious doesn’t mean that it is a standard. Take this case in point.

Two allies are working together on a 2-year project that is already 1 year past due. The reason for the blown deadline is that one party won’t listen to the other and works independently without consulting with their ally. As a result, pieces of the project are completed incorrectly, and the work has to be undone, redone, and resubmitted.

The party that is responsible for the delays sends an email to the other ally, stating that they need the other ally to trust them. Huh? How is it that one would expect to be trusted just simply by asking for it. They lost the trust over the course of the project by not fulfilling their obligation to do the job they agreed to from the start.

Seriously, trust isn’t something you can ask for; it’s something you have to earn. Good effort and rationalizing mistakes won’t gain trust, either. You have to hold up your end of a deal, fulfill your commitments, meet deadlines, pay up as you promise and so forth in order to earn, gain, or keep trust.

No one wants to be in a situation where they have to raise revenue quickly, but sometimes  that’s just a reality that decision makers have to deal with.  When a past client who does business in a service industry was facing a cash crunch due to price increases from two major vendors, the only solution he could come up with in two month’s time was to push his sales people to sell more contracts. After we spoke a bit longer, he admitted that he’d done the math and that in the back of his mind, he had serious doubts about the sales team’s ability to bring in the targeted funds in the time frame that he needed.

I suggested that he try instituting a nominal price increase to all his clients. He was concerned, stating that he had a client base of 4000 contract holders, and to make such a move would mean that he would have to have reps visit each client to rewrite their contracts, plus, he feared their negative reaction. But that was his assumption, not his challenge or solution.

We took a closer look at the client base and came up with a solution that would assuage his concerns, bring in the revenue quickly, and address any clients who might call to complain. He sent via regular mail and email a notice to clients that they would see a slight price increase on their next billing cycle. For clients who had small contracts of say $40, the price would move to $42. For clients of $400, the price would increase to $420 and so on.

Still worried that he’d have an onslaught of calls, he manned up anyway and braced for the worst. And then….nothing happened. A few dozen customers called and they made what ever arrangements necessary for the new amounts to be remitted. In the end. the client pulled in tens of thousands of dollars of additional revenue per month without much work.

I credit the success of this business owner’s across-the-board price increases to the tactics which included: a pricing model that would cause the customer to say to themselves “who cares,” a well written letter and email campaign, staffing for the ‘just-in-case complaints,’ the right name for the increase, and an accounting system that had no flaws in posting the increase.

There’s always a solution to every challenge. You just have to be willing to open your mind to new ideas and to swirl those ideas around ‘cyclonically’ until you find the best solutions to your challenges.

Have you considered what your organization’s order qualifiers and order winners are? Nearly 3 decades ago, London Business School professor Terry Hill introduced the concept to manufacturers, describing qualifiers as basic characteristics that an organization, product or service needs just to be able to compete and function in the marketplace. They do not cause you to stand out, but they’re essential. Then there are winners. Winners, as their name suggests, are those unique, distinguishing stand-out characteristics that give organizations, products, services, etc. the edge over competitors. For example, they prompt consumers or distributors to buy from one company over another.

Did you know that Jones International was the first full online accredited university? Do you care? Probably not. But their situation is worth noting for the lesson that it teaches. In the 1990′s when online was new and exciting, being the first meant something. Today, being online and first might be a winner only if the organization is developing new and different strategies and tactics to keep them as an industry/sector leader for other winning reasons.   When organization such as Phoenix University and other schools became online resources for education, the public began to see online education as a qualifier. For Jones to retain its winner status, it would have to develop new and innovative winners.

The Madonna Inn, located in San Louis Obispo in CA is a fascinating hotel whose leadership apparently (fortunately) didn’t get the memo on the concept of standardization.   The hotel houses 110 creatively decorated rooms, and each room is different.  My favorite is The Madonna Inn’s Caveman Room; if you’re looking to get away Fred-Flintstone style, this room may be for you.

Caveman Room

Just think of the thought processes planners who developed this project as a fun way to differentiate their product from competitors’ offerings.  If this group’s members were working with an idea bank–electronic or manual collection of ideas–I can’t imagine how creative the ideas were and how much fun they must have had determining the criteria for building their hotel’s rooms. Fun and creativity aside, they still needed a solid process to bring their ideas through the project’s stages and to completion. Just in the early stages, they must have been thinking for a long time about what should they build.  Then they had to ideate about the theme of each room.  What would the theme look like, the selection of the wallpaper or bed style, and more.

This is a perfect example of how often sub ideation occurs within the bigger idea’s ideation.  The broadest ideation includes the type of hotel.  Then sub-ideation occurs where planners are asking about what types of rooms to include, and then even further ideation includes the details for each room. Finally, planners must coordinate the tactics (plans) and the execution of those tactics. Wild!

Madonna Inn Website

Alliance with goals that are out of sync.

When you’re looking to build an alliance with another party, or if you’re already involved in some type of alliance and you’re not seeing the results that you want, be sure that the goals and objectives of each party are either the same or at least complementary, or else trust is lost and rarely regained at a later juncture.

I recently read a newspaper article that told the story of a politician asking for a favor for an agency to help out a failing bank without identifying that the politician’s best friends are investors in that bank; without being honest about his goals up front, trust was lost. A baker supplies baked goods to the planners of a road race with the expectation that the bakery would be placed on a preferred vendor list. When the baker realizes that the planning committee withheld their policy prohibiting donors from being placed on a list of this type, the baker loses trust in the nonprofit organization. A principal agrees to a union contract knowing full well he’s leaving the next year. This sets up a no-win situation for the unknowing incoming principal, who will undoubtedly have to fight the terms with the union every step of the way when he takes his position…the actions of the outgoing principal have set the stage for trust issues and future failure.

Goals that out of sync and that may lead to trust issues arise from a number of starting points:

1. Parties make assumptions that they and their prospective allies understand each others’ goals.
2. Parties are not clear about their own goals upon entering into the alliance.
3. Parties assume that their plans and/or statement of goals are detailed and clear, but in fact, one or both are so unclear that discrepancies are not caught.
4. Individuals within a party don’t know each other or the industry well enough at the onset.
5. One or both parties agree to do one thing, but in reality, they actually do another.
6. Parties select the wrong type of alliance (Ad Hoc, Consortium, Project Joint Venture, Joint Venture, Merger, and Acquisition), so both parties begin the alliance under a veil of  misunderstanding, preventing any goals from being achieved.

Trust is a huge factor when you’re in an alliance with another party. Be sure that everyone is up front about their goals and objectives, their expectations of their allies and of themselves, and what they’re willing to contribute and what they expect to extract from the alliance so that trust remains in tact from start to finish.