Category Archives for "The 5-STAR Business Networks (B2B Networks)"

What is Common Between Enron and Bitcoin?

I was at a Melbourne Cup luncheon yesterday, and someone asked me why I do not write about Bitcoin.

On my mobile, I showed them a paragraph from my book THE 5-STAR BUSINESS NETWORK written in 2013, where I talk about the emerging Digital Currency Networks.

But the truth is that given the attention Bitcoin has garnered over the past 5 years – I have barely written anything more on it. During the period the price of Bitcoin has been very volatile, and every move has been accompanied with millions of words written by the mainstream press as well as the more respected blog writers.

Take a look at the 5-year graph below:

The value of a single bitcoin rose from nearly 0 in 2016 to over 25,000 AUD in late 2017. Since then it has been very volatile, now relatively steady in the range around AUD 9,000 mark.

Lots of people came on TV and explained all the reasons why it was where it was that point in time.

Braver people made predictions too. Some even proved to be right for a period of time. Some of those reasons sounded even plausible.

Many people asked me for my opinion, and I always referred them to Enron. I explained that around the start of the century when Enron was in a similar place, people in parties would ask my view on it.

Enron was the darling of the quick buck brigade at that time. Some people even made money on it. Much more money that anyone would ever make by flipping houses, or companies.

But there were at least two big reasons I did not offer an opinion:

  1. I never give any investment advice, or offer an opinion that could be construed as an investment advice.
  2. I did not understand Enron

Many friends who knew that I scored the only 100% mark ever in the sloggiest finance course in my MBA would not believe either of those too reasons. And, they would press me for an opinion. Perhaps they had money riding on it.

Some, the wiser lot, even took my unwillingness and inability to offer a point of view as a sign, and made the decision which turned out to be right for them. A few even thanked me. Yet, I claim no credit for saving them a buck, or two.

I was merely stating a fact –

I Don’t Understand It.

And, that is all I have to say about the Bitcoin.

If you want to know about more things that I do not understand – feel free to offer suggestions.

 

Why Almost Everybody is Missing the Most Important Point in Their Solution to Amazon’s Threat to Australian Retailers

Yesterday (on 2nd November 2017) I happened to briefly glance at the Australian Financial Review – the key finance newspaper in this country while I was waiting in the lobby for a meeting. No more do I  subscribe to this newspaper,  because it appears to be growing more and more out of touch with business reality, and becoming more a shill for vendors with deep advertising budgets, and small brains.  Its content  in terns of financial and economic news is excellent, but somehow the journalists seems to miss the major shift in the business models to B2B Networks.

Taking a Sword to Fight a Nuclear Missile

Yesterday’s newspaper seemed to be predominantly dedicated to a conference on e-commerce related subjects. I do not remember the specific topic of the conference, and it does not even matter because the entire debate was centered around Amazon’s entry into Australian market place, and the threat it poses to the Australian retailers and businesses.

Indeed, the organisers, and the newspaper, had identified the burning issue of the day for Australian businesses. Looking at the issues, I almost thought of subscribing to the newspaper again.

But a little more unpacking of the pages revealed that almost all the solutions on offer were marketing and sales related, or new age technology related.

Nothing beats a carefully crafted supply chain strategy, executed with precision and flexibility - especially for business transformations in dire circumstances. This point cannot be emphasised enough.

What people forget is that Amazon’s success is even more dependent on its incredible supply chain.

Fighting this successful behemoth without an equally effective supply chain is akin to deciding to fight against nuclear missiles with swords.

Are Australian Retailers Being Led Down A Rosy Path in Their Response to Amazon's Entry?

Most people still do not even know what supply chain really means. If you doubt me – just watch the short (1.5 minutes) video below, and conduct the experiment with 10 people you know:

 

 

Lest I leave you with a wrong conclusion, I am not deriding marketing and technology solutions, because they do have a place in the overall campaign.  But, if you get an impression from the newspaper (or the conference that seemed to dominate yesterday’s paper) that somehow you are going to outmarket Amazon just using such solutions – you better think again.

Nothing beats a carefully crafted supply chain strategy, executed with precision and flexibility – especially for business transformations in dire circumstances. This point cannot be emphasised enough.

I have written extensively in many other blog posts on how to do just that – all you have to do is explore a bit in the categories and tags on the right of this page. Some of the titles from over the year are in the image on top of this page.

For real leaders, who want to make substantial and deep positive impact – I do recommend my book The 5-STAR Business Networks.

If you have the budget, it is also worthwhile asking for a workshop based on the same material – but we only have limited slots, and already have a big backlog for that.

What Two African Entrepreneurs Have Learnt from Amazon.com – Globalization in Action Serving Humanity

Boasting exponential growth since its inception in 2012, Jumia became the first e-commerce site to bring the coveted Play Station 4 to Nigeria. The company announced the offering after just two days of the release in the US. The Nigerian would-be Amazon is following the global giant’s footsteps in becoming a super networked business, although there is still a long way to go.

Jumia started with a relatively similar aim and manifesto to Amazon, which puts customers at the heart of its operation. In the same vein, the Nigerian site also reaps benefits from being one of the pioneers in Africa’s emerging online retail market. “Being first is good, but it is not everything. What fuels Jumia’s success so far is somewhat akin to Amazon’s evolution into a Five-star business network” – said Vivek Sood, CEO of Global Supply Chain Group.

Jumia is not shy of innovation either, given the fact that people are still skeptical about online retailing as well as online payment in Africa. The Lagos-based retailer launched a range of online payment options but steers its technology-shy consumers by accepting cash on delivery and offering free returns. “It’s very important that people know it’s not a scam,” said co-founder Tunde Kehinde. They even take a step further and deploy a direct sales team of 200 to educate Nigerians about secure online shopping, which also serves as a means to build trust. Now with pick-up stations spanning over 6 locations, a warehouse facility, 200 delivery vehicles in Nigeria and 4 other country-specific microsites, Jumia seriously strives to become a one stop shop for retail in Sub-Saharan Africa. “Here you are collecting cash and reconciling payments almost like a bank desk, here you are building a logistics company,” said co-founder Raphel Afaedor.

Both co-founders and Harvard Business School graduates built the business from $75 billion in funding and are bringing “a couple of million” dollars in monthly revenue, a growth rate of nearly 20%. Vivek Sood, author of the book “Move Beyond the Traditional Supply Chains: The 5-STAR Business Network”, said: “Jumia is taking the right steps towards building the five cornerstones of a super networked business: innovation, efficiency, profitability maximisation, product phasing and result-oriented outsourcing. With the promising results so far, perhaps we could see the next perfect example of a 5-star business network besides Amazon.”

Ten Reasons Why Your Business Network is Your Business’ Net Worth, and, How To Make the Most of it?

The simplest definition of business is to sell or buy the goods or services. Though, It may define the trading style of the past centuries but now business is not that much simple. One need to compete strongly to stay in the market, to be the best in every sense and above all being a part of business network is almost inevitable. Joining a network is not at all about catching the bandwagon instead it’s a shield which saves you in more than a dozen ways. In other words you can say that your business network is your business’ net worth. Hows and whys are discussed here:

1. Like Nokia like Network… connecting people

Business network works almost in similar way to the Nokia slogan “ connecting people”. People live in society to avoid isolation and same thing a businessman do by joining an already existing network or creating his/her own network. It serves as a platform to share the ideas and knowledge, to meet new ones, to guide them and get the guidance from the experienced ones. Find out more about how a business network enables connection among the business men here: http://www.forbes.com/sites/geristengel/2013/04/24/6-ways-women-can-power-up-their-businesses-with-networking/

2. Source of practical information

You can learn 100s of the tricks from a book to sell your service or product but only the information which you gained through market research can reveal that what actually the customers want. Loyal and trustworthy friends in a network offer this unique and 100% relevant information. Its better to find few trust worthy people instead of expanding the network to the endless limits.

3. A realm of similar people with similar interests.

In “5-Star Business Networks” Vivek Sood, famous business writer, recalls that how he found a group of trustworthy and loyal people ready to share their ideas at Linkedin.com. You may find it interesting to read the whole story and his view point about how joining networks positively effects the business here. http://www.amazon.com/The-5-STAR-Business-Network-Corporations/dp/061579419X Same thing happens when you become part of a network. Joining a business network enables you to find people with common interests and goals similar to yours. Their knowledge and first hand information improves your understanding towards the business.

4. Makes yourself more visible

You may find it difficult to meet new people but in order to expand your business or to brighten your career it is highly recommended to make yourself as much visible as possible. The easiest way to do so is to join a network where simply interacting with others can do wonders for you and your business as well. Wisely chosen or created business network offers you the right place with the right people, to do the business.

5. Recruiting Platform:

No matter whether you need to recruit or to be recruited, in either sense business network can be helpful. By making yourself visible in your network, you can easily be remained in the mind of those who are the part of this network. Business network works like referral programme where the most visible ones are highly refered as well. Once you get referred or having a referral, respond positively. It will create more chances for you in future.

6. Refines communication skills.

When we discuss business networking, it also means communication between the two individuals. This interaction helps in learning that how a team leader deals with the staff or how a businessman responds in a crucial matters and takes decision. Business networks enable to learn the suitable human behaviour in various situations. Keep interacting with others because only the practice will bring perfection to your communication skills.

7. Refines Target market

Every businessman goes for some market research to find its target market where the offered service or product is highly needed. The loyal and trustworthy members of the business networks help in cutting down the research expenditures and directly targeting the refined market. You may also share your knowledge to strengthen this bond because business network is all about mutual interests.

8. Your network is your personal asset too!

Remember that you are social being at first and to keep socializing is the basic need of any human being. Business network built on pure relationship is one of the most precious assets you have. So don’t hesitate in making strong relationships much more worthy than your business. For more information on the topic , please follow the link: http://www.cbsnews.com/8301-505125_162-28245723/10-reasons-why-your-network-is-your-biggest-asset/

9. Networking ,the top CBM for today’s business

The concept of business rivalry is fading because the concept of business network has made it possible for the key rivals to sit on a same table or to connect via internet and discuss the common interest of each other and threats being faced .Thus, business networking is working like confidence building measure for the two rivals. Not only the rivals, the two strangers connected through a network also start believing in each other because of the connection built through this network.

10. Business Network-a multiplying factor

Business network is all about mutual trust, which leads to cooperation and finally makes it possible to have a multiplying factor in each sense. This mutual cooperation can lead to the joint ventures or increase in investments and much more. You only need to focus on strengthening your relationships with other members of the network. Be loyal and trust them to get the same in return. For more tips you may follow the link: http://business.financialpost.com/2013/05/27/6-tips-on-how-to-get-the-most-out-of-business-networking/ Using the web for your business is an art and those those who are running their business from home, surely needs mastery because here the situation is quite different from the ordinary business. The guardian pays more light on the issue in the following link: http://www.theguardian.com/small-business-network/2013/feb/25/niche-business-networking-groups

Why Business Networks Are Important?

“Call it a clan, call it a network, call it a tribe, call it a family. Whatever you call it, whoever you are, you need one.”

-Jane Howard

Business Networks are important to accelerate and sustain success for any individual or organization. It is imperative to learn from the evolution and success of business networks. Business structures have evolved radically to such a degree that nowadays, most businesses have no option but to create business networks.

Business Networks are more important than your business infrastructure

Naturally your business infrastructure is fixed, rigid and cost accruing. Your business networks, on the other hand, are evolutionary, flexible and revenue accruing.

Business Networks make your business more resilient and responsive – at the same time.

Those businesses which had the most responsive and resilient business networks were the ones to recover from any downfall the quickest. See who survived the global economic downturn during 2008 – 2009.

When Cash is the King – Business Networks Triumph

Data is visibly conclusive that in times of cash crisis, the quality of their business networks saves companies. Those with more robust business networks have far more superior cash conversion cycles, nearly 6 times better. In fact, as pointed out by Aberdeen Group, business network masters improve their cash to cash cycle leading up to the Global Financial Crisis while the rest of the industry went backwards.

In boom times Business Networks Give You Speed

Even relatively smaller businesses can achieve remarkable results quickly based on the responsiveness of their business networks. In economic booms, whether accompanied by economic volatility, or economic stability, business networks allow you to realize higher profits, quickly. The potential of your company’s capabilities are multiplied many times over, by the leverage effect provided by your business network. This is only possible through extensive utilization of business networks that the company has built, nurtured and managed effectively. Most executives grossly under-estimate the value and efficacy of business networks in ramping up capacity rapidly in boom times.

Business Networks Help Smooth out Volatility

Especially during times of extreme volatility, we see airlines and shipping companies forming global service alliances to ride out the season and economic peaks and troughs. In such volatile business environments, budgeting and planning can become a nerve-racking exercise for all companies except those which use their business networks to cushion the lean periods with long term contracts and find scarce capacity during boom periods. Supply chain is unique to every company and industry, formulated over a number of decades in many cases, and is worth several trillions of dollars in value.

Valuation of Business Networks is Astronomical, Though Difficult to Quantify

Estimates range into trillions of dollars, and yet may be underestimating the full extent and power of these hidden business resources. The magic of business networks has made it possible to design, build, launch and sell revolutionary products in less than one-third time of the industry. If you cannot make your business networks more visible and manage them more proactively, you may be silently yielding the competitive advantage to others who can. It is, after all, the obtainable magic.

Want to start now? Create your own 5-Star Business Network today.

What Makes the Business Networks Great?

What Makes Business Networks Great?

Extract from the book The 5-Star Business Network, written by Vivek Sood 02-300x206In 2012, when Facebook’s IPO was being discussed in the media, a range of valuations was put forward by the experts between approximately $50 and more than $100 Billion. Most people in traditional businesses were stunned and asked how could a company with no products, no factories, no customers and no suppliers, be valued more than Siemens, Nokia, US Steel, or even a combination of these traditional, well respected companies. The pundits declared the basis of valuation as the Network Effect and left it at that – leaving people to decipher what exactly the Network Effect is and exactly how does it lead to a valuation of tens of billions of dollars. Networks, of course, can be homogeneous groups of similar people, such as net-savvy, with spare time and willingness to share their lives’ details with others on Facebook (or similar social websites), or they can be heterogeneous networks of a multitude of suppliers around the world that provide a vast range of components and parts, such as those that go into manufacturing the Airbus A380. Networks can even be a combination of homogeneous entities and heterogeneous groups, or vice versa. This point should emphasise in the readers’ minds that there is not one single kind of network, and hence the characteristics will vary accordingly.

The Network Effect

Needless to say, there is no point spending time on a social network website if you are the only person who ever visits it. In fact, if most of your friends are members of a rival social networking site, you would eventually find yourself there, or find yourself a web outcast. This leads to a catch-22. Most nightclub and restaurant owners are long familiar with the predicament – the more popular your establishment becomes, the more people want to get into it. However, the key predicament is always – how to start off the process. An excellent book “The Tipping Point”, by Malcolm Gladwell, discusses this phenomenon in great detail and attributes it to the three rules – getting the first movers (law of the few – the mavens, the connectors and the salesmen), the stickiness factor (simple ways to make things memorable) and the power of context (small factors in the environment and the relationships that create and sustain impetus). If you have not yet read the book , I highly recommend it. It is neither advisable, nor possible, to paraphrase the excellent content, and Gladwell’s writing style is extraordinarily eloquent. So, with every new addition to a network, it becomes a little bit more valuable. This continues to happen until the network reaches a tipping point, a point at which it suddenly becomes a lot more valuable. After this point, the network will generally race past all its rivals and become a de facto standard in its realm. Whether it is a question of which social network website to frequent, or which type of keyboard to use as a standard (the more popular QWERTY or the more efficient Dvorak style), or which type of cooling systems to use in the nuclear power plants (light water, heavy water or gas cooled) – the decision almost always rests on the network effect.

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Conclusion

Networks thrive on trust: they succeed where trust building mechanisms are strong and well adhered to. Well functioning business networks incorporate a secret source – the power that goes beyond the synergy, the multiplier effect, into the realms of synchronicity. Besides, business networks allow businesses to be simultaneously strong in their core strengths and live with their own weaknesses – the other members of their business networks make up for their weaknesses. As businesses move from traditional structure to business networks, the essential co-operation building mechanism moves from control to co-ordinate to co-create.Continue reading

Your Business Network is your Business’ Net Worth

Your-Business-Network-is-your-Business-Net-Worth— Excerpted from the introduction of THE 5-STAR BUSINESS NETWORK

Business Network is now the engine of the society and it will need newer models of commerce to fast track the recovery.

Hollowing out of skills out of entire societies without replacing them with another set of useful skills, very high level of youth unemployment (frequently disguised by serious looking play on iPads and tablets), growing economic imbalances risking implosions of unrest, civil commotion or even a great war have all combined to create a very alarming set of circumstances.

Whatever transpires in the short term, eventually the business people will have to lead the way to recovery around the world. It is evident that I am passionate about newer models that work better. In my projects and work around the world, I have noticed that in almost all circumstances there is always some way to make things better. We only have to look around and see where the guidelines are, what the trends are and which models will suit the trends.

Eleanor Roosevelt (1884-1962) famously said – Great minds discuss ideas, Average minds discuss events, Small minds discuss people.

While it is very tempting to discuss just one of the three key ingredients of life – either ideas, or events or even people, I prefer to discuss all three because all three of these are inextricably linked. People make events and create ideas. Ideas create events and help people become successful. And events shape people and give impetus to ideas. A book full of concepts and ideas but with no stories about people or events would be extremely boring and dry.

On the other hand, a book with just chronicles of events or people would hardly be worth bothering to read unless its authors possessed immensely entertaining style of writing (which I do not) and even then would be of little practical value besides entertainment. I mostly use events and people to illustrate ideas and concepts to make them more tangible for the readers.

Primarily, then, this book is about ideas and concepts – yet you will see enough discussion about people and events to be able to use the concepts. Most of the people and events discussed are relatively well known so that background contextual information is already present in the readers’ domain and I do not have to supply it. Occasionally I had to use events from case studies based on our work – only because we could not find a well known event illustrating the concept.

I do not make apologies for that or for disguising some data or names of the entities for obvious reasons of confidentiality. Every couple of decades powerful juxtaposition of the trends leads to unique and revolutionary way of commerce. Contrary to the portrayal by the gushing accounts and adulation of the commentators, most pioneers merely stumble on the these trends by a process of trial and error. Other companies, the more nimble and hungry ones, follow the pioneers closely and build strong businesses in their lead.

More established companies then follow suit and try and recover lost ground using their financial muscle and market power sometimes succeeding and sometimes failing in this. Many other companies are so caught up in hubris of their past success or internal politics or some other such attention sapping device that they fail to move at all, or move too late, often with disastrous consequences. Chronicles of such disasters would perhaps be more instructive than the starry eyed accounts of success. As Daniel Coyle points out in his book The Talent Code, the only way to succeed massively is by failing repeatedly at progressively more complex smaller tasks till you master them.

However, most writers and authors persist with the formula that has succeeded since the first bard told stories of the victories in war, and I have no doubt that we will continue to see many starry-eyed accounts of success for centuries to come. It is difficult not to get caught up in the current of adulation that surrounds a particular company at a point in time.

Any such apparent adulation in this book is despite my effort to be objective and cognizant of the cyclical nature of success. As defined earlier, the aim of this book is rather more solemn. It is to take a wide and deep perspective on business trends, define the useful trends as seen from user perspectives, and come up with useful information for the business executives and managers.

 

The biggest trend sweeping the world – business and non-business – today is networking. Just last week Facebook has announced its IPO filing, valuing the company at $100 Billion. Analysts, pundits and business school professors are still debating what entitles it to that kind of valuation when many others with similar business model – Orkut, MySpace and a plethora of wannabes – have failed to monetize the eyeballs to any great extent. It is not even validated how many of those numerous Facebook accounts are authentic.

— Excerpted from the introduction of THE 5-STAR BUSINESS NETWORK

To read a synopsis of the book, please click here 

To buy the book, please go here

Is there a lesson for business networks in Brazil’s 7-1 defeat to Germany in the 2014 World Cup?

Not too long ago I wrote a blog series on the transformation of Brazil’s soccer playing model from an individualistic style to a network-oriented style. In the early 90s, more than two decades since the last World Cup championship title and Brazil faced an interesting juxtaposition – continue with what led to past triumphs of Pelé and his peers, or move on with the new rules of the game.

The new rules were clear – minimise the individual wizardry of foot play, dribbling and nimble dexterous touches, and replace these with the power-play of networks of players moving in formations to conquer the opponents by outwitting them, by outsmarting them, and by outnetworking them using a better method. In the in the same series,

I contrasted Brazilian successful transformation with the failure of Indian hockey to transform itself. Under somewhat similar conditions, the Indian selectors, the coaches, the trainers and the players – all struggled to re-produce their stellar success of decades past. Therefore, the blame game has started and now all parties are blaming one another for the failure.

There were a number of useful lessons to be drawn from this successful transformation of the Brazilian soccer which I wrote about in that article series. However, the World Cup 2014 semi-final match between Germany and Brazil proved that their transformation was not as complete as I had thought. No matter how much the world wanted them to win, their traumatic 7-1 loss was a harsh reality still mourned over by many.

This loss, to a formidable networked style play of German team, has at least three important lessons:

A network is only as strong as its weakest link:

Brazil’s defence was always suspect, but without Thiago Silva, there was really no defence left. Everyone at the back, from the goalkeeper to the rest of the defence team was left wringing their hands in futile gestures as the German scoring machine outnetworked them on every front.

Risk-management and security of network is paramount:

If your network relies on one or two stars – watch out. Analysts have been asking a lot of questions about post-Steve Jobs Apple for exactly the same reason. Protect your best network assets – but also try to make them redundant by making rest of your network assets of somewhat equal capability. What would have happened if Neymar and Thiago were playing in the match? More importantly, why was the rest of the team so heavily dependent on them?

When two networks compete – stronger one wins:

No secrets here – except for the fact that the competition in business is also now between two business networks, and not between two individual companies. Those companies that manage to formulate and utilise stronger business networks will always outclass their less well-networked competitors.

10 Ways To Create Value Through Your Business Network

The key to realising value in your business is to use your business network. The marketplace has moved on from the time when competition was just among companies. Your business must now succeed  based on the quality of the your network of suppliers and customers.  You have to leverage trusted connections to help you design, produce, market, sell and maintain your products and services.

Below are ten ways you can leverage these relationships to create value:
  1. Optimise your online network: Business oriented social media like LinkedIn has made maintaining and building your online business network easy. You can source information, pursue warm leads and even ask your online supplier and customer contacts for inspiration for your next venture. You should maintain regular contact with these connections to stay up – to –date with where product trends and innovation are heading in your industry.
  2. Optimise your offline network: Despite the advent of online business networks, offline business networks still provide a very useful medium where you can meet your next supplier or customer. You can join exsiting groups such as the Freemasons, Rotarians and clubs including chambers of commerce.
  3. Understand the principle of the ‘network effect’:  Another way of creating value from your business network is understanding the concept of the ‘network effect’. The ‘network effect’ is the idea that the more value adding supplier and customer connections you make, the more valuable your network becomes, until it dominates others.
  4. Harness the buy-in of online contacts for your product or service: Online contacts such as LinkedIn connections can provide feedback on your business ideas and can provide case studies of their success in developing their own products and services.
  5. Realise that your business network is your most valuable asset: Your business network is your most valuable asset because of the latent energy of the participants in it. If you have a high quality business network, your suppliers and customers will invest in your success or help you to work out how to be successful.
  6. Use a high quality IT system to formalise your network: Your business network requires a high quality IT system and strategy to formalise it.
  7. Adopt the cornerstones of a Five Star Business Network:  A Five-Star Business Network adopts five principles: “fire-aim-ready innovation”, “Speed-to-Store Efficiency”, “Transaction-Optimisation-Profitability”, “Advanced-Product-Phasing” and “Results-focussed outsourcing and Modularisation”. Find out more information about you can add these principles to your business network by buying Global Supply Network’s award winning book 5-Star Business Network.
  8. Keep up to date with market information: Decision making technology has developed so much over the least 40 years that it has demands businesses keep up to date information. The same applies to your decision making. You need up to date information in order to make the best decisions.
  9. Apply the 80/20 rule: You will get 80% of the results in building your business network from 20% of the interactions you have with customers and suppliers. This rule still applies.
  10. Focus on serving deserving customers and suppliers.

Supply Chain Relationships- Partnerships or Partnershaft?

By Stuart Emmett

Business & Relationships Business and supply chain management maybe technically simple, but it is usually managerially difficult. In supply chains for example, there are many technically simple solutions which give better business performance. There are also many “hard” technical systems approaches such as, MRP and SAP, which are most useful and can have a vital impact on efficiency. However to be totally effective, it is usually the things like teamwork, and motivation, which need the closer attention of management. Improving the people relationships is the main key for more effective supply chain management.

Do you for example know of any relationship, (business or otherwise), that cannot be improved? The financial lead view and hard side of business becomes an increasing difficult one to predict in fast changing global economies. Business can however, always look to improve. One way to out perform the competition is to improve people and the way people relate to each other. There are riches to be harvested here that will enhance and improve business and the quality of life.

A view that a company is able to do something by itself is a dangerous myth that obscures the reality that a company only ever does anything as a result of its people doing something. Too many people, usually unconsciously, ignore the plain fact that it is the people who are the key element in all companies. Surely, we can only ever do the core of business through dealing with people relationships? Looking at what has happened when company performance fails dramatically through receivership shows the importance of people relationships. Officially appointed receivers have identified the following three causes of failure:

  • Lack of information, meaning for example, a limited view of options
  • Lack of top team balance, meaning there is little “challenge” and there is negative compliance as boards are too similar and do not have the depth or breadth.
  • Lack of others opinions, for example an autocratic C.E.O. who goes only for say, growth. A one-man rule with non-participating boards is found.

It seems here that wider views from open debate were missing. Autocratic management has prevented any positive conflict of ideas. Company performance and profitability have failed and can be directly linked to the lack of open debate and considering wider viewpoints. If relationships had been improved, then the companies may have survived. Supply Chain Relationships Supply Chain Management has as its key principle, individual businesses coming together to integrate, co-ordinate and control, their supplier/customer activities of buying, making, moving and selling. Relationship handling with all the supply-chain players is fundamental to the overall supply chains effectiveness.

With people relationships however, how many times is the partnership word used only for “spin” and “public relationship” purposes? Traditionally, there is often found an adversary them/us tussle in the supplier/customer activities. Power is not distributed evenly; a major barrier to a full partnerships approach. Even however when there is a more partnership approach, (token or otherwise), this can result in a response from some involved, that the German word for partnership is partnershaft.

This is a reflection of the “you will”, “I win/you loose” viewpoints from this adversary point of view. However, some supply chains do demonstrate a share to gain approach. Here as a basic philosophy, they will recognise that “none of us, are as strong as all of us” and adopts a “win/win” approach. The use of power by the strongest does not dominate in these supply chains. The message can be a need for change from old to new ways. This message for supply chain management shows that the following changes in Figure 1 Supply Chain Changes, (a too brief overview), are needed:

From more Traditional Ways To more Supply Chain Ways
Independent of the next link Each link is dependant on the next one
Links are protective End to end visibility
Uncertainty in demand visibility More certainty
Unresponsive to change Quicker response to change
High cost and low service levels High service with lower costs
transactional partnership
Fragmented internal structures “joined up” structures of extended enterprises
Hierarchical management Collaborative management

The core of these changes, involves changing the way people respond and relate to each other. It is not only hard technical improvements that are needed and companies who see this as the only way forward are scheduled to face real difficulties and future failure in their expectations. Unless of course they are dominantly powerful so “opposition” does not matter. Developing effective people relationships will however, beyond doubt, bring benefit. It is the only eventual way forward to achieve better supply chain management.

Effective Relationships

Effective relationships fundamentally require a total open and trusting environment, with shared beliefs, values and a common identity and purpose. Mechanisms are needed to allow people the right to “agree to disagree” in a supportive and trusting way. The Supply Chain principle of “sharing to gain”, also needs to include differing people’s viewpoints with active listening and the encouragement of open debate. Developing such relationships is certainly not going to be a soft option.

Getting to the “inside” is not easy and can be time consuming and personally difficult to those who are “schooled” in old ways adversary and power based models of relationship handling. Indeed this “soft stuff” so often becomes the hard staff- especially for those who prefer a partnershaft view of supply chain management. Maybe however this is actually “saying it like it is” and is a better reflection of what actually is happening? Hopefully for those who have this partnershaft view, they do not really believe that people relationships in the supply chain is just more “people crap and has no part to play at all”, (comments from a former colleague).

Win the home games first

Effective relationship building needs to start internally. In my experience, the partnershaft view always reflects poor internal relationships. Here the best “knockers” of a company, and its “worst” ambassadors” are its own employees. Companies must “win the home games first”. A business must win on the inside before it can go outside.

Why so many companies appear not to realise this is a surprise.

An efficient and relationship mature internal team of purchasing, production, distribution, marketing, finance is often not found. However such mental preparation is a recognised pre-requisite for sports people, before their outside external and public performance. The battle here is frequently “won on the inside first” and without this internal alignment, going forward to develop external relationships can be fraught with difficulties.

What many internally focussed companies also do not often realise is that their internal divisions will certainly be reflected and be visible externally. External people will be then most rightly uneasy about the effectiveness of any so-called partnership. Where a company sets out as policy to not listen or involve its “partners”, internal or external, then clearly the partnership word should not be used. Using it in these circumstances is dis-honest.

The critical thing to be done before developing external supply chain partnership relationships is to “win the home games first” and to engage the hearts and minds of the employed and contracted; individuals, groups and teams, inside the company.

Can We Agree To Disagree?

To be able to win the home games first, many organisations need to fully recognise that they actually do have people at all levels in the organisation, which do actually go along with events, which they actually disagree with. This is, maybe because they do not want to rock the boat. They have discovered it is safer to keep their head down. Indeed, as noted by the management guru, Peter Drucker, the biggest single hidden aspect in most companies is fear.

When there is such a “going along with syndrome,” then this is really negative for an organisation, as well as for the individuals concerned. The following case study, Figure 2, The ABC Ltd Problem, explores this issue.

Figure 2 The ABC Ltd Problem

  • F (the C.E.O. of ABC Ltd) takes pride in the company mission statement about the positive open communication with everyone pulling together to create new opportunities for the benefit of the customer.
  • G (a senior manager) sees his job is all about exploring new opportunities and that problem are “negative” barriers to this end.
  • H (a middle manager) is keeping quiet about a staff problem, as G never wants to hear about problems and has said before in similar situations to H, that he is a troublemaker who is rocking the boat and needs to stop being negative.
  • I to K (all clerks) have all just left ABC Ltd. They resigned as they felt they could no longer work for a company that will not listen to their concerns and problems and which stopped them from providing service to customers.
  • XYZ Ltd. (a major customer) confirms they are placing orders elsewhere, as they cannot get answers about delayed orders since I to K have left.

What would be your answer to the “problem”?

The simple answer is to say it’s a communication problem. Well for sure, it is a “communication problem” and one answer is to have the C.E.O. to get everyone to talk to each other. But it is deeper than this. Staff has left and an important customer has gone elsewhere, so something more “radical” needs to happen! Discussions-a core element in organisations Discussions and interactions between people are the core component in most organisations. These discussions take place take place at many levels, both internally, between employees/ employers, and externally, between suppliers/ customers.

If such discussions are stifling, restricting, and limiting; then this can result in stagnation, a refusal to learn and change and a refusal to do things differently. To overcome any such difficulties in any people business process, then it must be understood that conflicts, challenges, and compliance are all related interactions. These are important aspects to be efficiently managed and understood.

Challenge and Conflict

As perception is reality, then the words and style used in discussions and interactions, may mean that any “challenges” can be perceived by the giver, as being constructive; however, the receiver may perceive “challenge” as causing conflict. (By conflict, I am meaning the conflict of ideas and not conflict between people, conflict here is meant to be an open disagreement on ideas-I am not in any way taking about any conflict of verbal or other types of, violence!) The following case study, figure 3 Research Findings, will help to clarify my view.

Figure 3 Research Findings

When talking with employees in different companies, researchers noticed that some employees said they avoided conflict whenever possible in discussions, while others seemed to thrive on conflict in much the same circumstances. To confuse the researchers even further, those who seemed “positive” about conflict seemed to perform better in many respects in their jobs (and in overall organisational performance) than those who discussed conflict “negatively”.

Probing further, the researchers found that different people (and organisations) used the term conflict in very different ways. For some, those whom perceived conflict as negative, conflict was personalised and represented destructive personal tensions. For others, those who viewed conflict as positive, conflict was simply an intellectual disagreement to be resolved and had no relation at all with their feelings about the other party. The first approach can be called conflict among people (or destructive conflict) and the latter, conflict of ideas (or constructive conflict). Many people however, will still not like the word conflict, as it will be associated with aggravation and unease between people.

But this is just one possible side, as conflict has positive and negative sides, one which can be both creative and constructive or one side that is, feared and destructive. When conflict is creative, it explores differences and is not a concentration on only one position. Creative constructive criticism can take and build up from a newly discovered “third” position. Here both parties may concede to win or to loose. There will be a common cause, perhaps with tough trust and where “truth” comes from debate and discussion amongst equal friends. When conflict is feared it is so often because it has become personal. This will often happen when partners are treated as being unequal.

Unresolved differences can go onto create stand off’s, which can continue with destructive outcomes, and perhaps even end with “taking the ball and bat” home! (Whoever said that grown ups are children in disguise, was surely right). People can “withdraw” and “curl up into their shell”. They may well comply and “go along” with things. However, this is not really very helpful over the medium term, as it works like an internal cancer, attacking company mission statements about developing positive relationships between people.

Challenge and Compliance

When two people discuss and “face each other”, then without any challenge, there will only ever be an outcome of compliance. Now such compliance may be fine if it is genuine and agreed by both parties, and it may also be fine, if it is has followed from a useful dialogue of constructive criticism. But, positive challenge is needed and is definitely helpful, if there is to be any learning. “Blind”, forced, or negative compliance is really no use at all to anyone wanting to develop and to grow.

When there is only negative compliance around, then there is little learning, as there can be no real change from the current position. With negative compliance, for example, people will learn to keep quiet and cover up anything that will expose them when they put their head over the parapet. Mistakes will be hidden, as this is no place to be where you can learn from mistakes. Furthermore, negative compliance can be covert with “unspoken disagreement”. It can exist amongst unequal partners where, one of the parties does not “want to rock the boat”. The following, figure 4 SCM Ltd., views this further:

Figure 4 SCM Ltd

The managing director of a successful component manufacturer (SCM Limited) has a very simple human resources policy: hire winners and fire losers. In practice being seen as a loser by the MD means demotion, or at worst, termination. Unfortunately, this MD is on a rather short fuse and any employee seen making a mistake will always be a loser. Consequently, the clever employees learnt many astute ways of covering up failures, even when they were genuine ones.

As a result, problems tend to appear too late, when nothing can be done about them. The MD then has to step in, fix them as he can, and look for a scapegoat. He keeps complaining that he spends his time fire fighting rather than dealing with fundamental strategic issues. Effective challenge and conflict is needed to open up differences, as differences can be essential to learning. (The MD, above, for example, needs a good mentor or coach so that the differences can be positively explored). Here each party will be encouraged and supported to arrive at a place and position where there is a mutual awareness of differences.

This then leads to debate and onto a greater level of understanding, finishing perhaps with a compromise where both parties may have conceded, so that they both can win. When this type of challenging approach is used, then it prevents any compliance of false agreement. Here one side thinks it has “won”, or the other side has concluded, “why should I bother, they always want to do it their way?” With negative compliance, each remains with its own position. The others viewpoint is not listened to – there are no seeing the third position. Without any positive compliance, there will be no long term developing and no growth, no learning and no changing.

Yet, some people will foster negative compliance. The employees in the last mentioned case study above are for example, fostering compliance, (although they probably do not see this). This is possibly happening because they do not like the personal conflict, which they see as destructive. Also, the MD is fostering compliance through his personal style and approach, (although he probably does not realise this). Furthermore, some will like negative compliance, as they want to remain where they are, as they do not want to change. Some will also continue to steadfastly not “give up” their position as they cannot “loose face”.

What can be done?

There is clearly a need to expose, with challenge and conflict, the compliance issue. All the people involved, (internally and then externally), need to be clear and agree on the following definitions:

  • Positive conflict

Is constructive as it enables new learning through an open disagreement and discussion on ideas between people. The outcome is either a full agreement about the others position, or, finding a new “third” position. All those involved believe they have gained something from the conflict process.

  • Negative conflict

Is destructive as it inhibits new learning through creating personal tensions among people. The outcome is on “one” position only. Those involved are usually divided, as whilst one side may feel they have gained, the other side feels they have lost something.

  • Positive Compliance

Encourages challenge and conflicts and recognises these are needed for effective learning and changing. People are actively involved in shaping the outcome from a mutual awareness and understanding of the differences. They can change their position in the process.

  • Negative compliance

Encourages blind or forced agreement which hinders effective learning and changing as open challenge and conflict on any differences from the “status quo” are not encouraged. One party remains uninvolved and keeps quiet with “unspoken disagreement”. This gives a “false” agreement, which can encourage mistakes to be repeated, and little change brought to the “status quo”. People will internally remain with their own position, even thought this will unlikely be externally expressed in their false agreement. After understanding the above definitions, then people need encouraging to use and adopt such practices in internal business relationships.

New learning (and changing) is needed. However without any changing, then it will be no surprise that challenge, conflict and compliance issues are often going to be dealt with in a negative way-as the case studies have shown. Effective supply chain management will clearly be a myth for some of the partners and players. There is quite a challenge here, I believe, for most companies, organisations, and many of the people involved. However, in promoting efficient and effective supply chain relationships and going for the “prizes” available, then the challenge has to be faced and overcome – with positive conflict, of course!

Perception is reality

A problem can however still remain. Simply that I believe in dealing with “managerially difficult people”, or by using “partnershaft people management techniques”, that too many managers are just too content to gloss over developing longer term effective people relationships. The “macho kick ass manager” is still around and thriving in short term heavily task oriented business. The contrast between “old “and “new” managing is distinctive, see figure 5.

Figure 5 Old and New Managing “Old” managing represents: – keeping control – holding onto people – being judgmental – “telling” – seeing though a “pinhole” – being directive and more autocratic – using a “push” approach – Mechanistic view of people, they are only a resource.

“New” managing, (some call it leading, coaching, or empowering), represents more of the following: – letting people try – given people a “self release” – being non judgmental – “selling” – seeing the wider view – being supportive and more charismatic – using a “pull” approach – Collaborative view of people, they are what bring innovation and improvement. It is important for a business to have its manager’s face up to viewing these differences and to recognising the ensuing problems and opportunities that occur from the application of the different models. It is critical for individual managers to see just how they look at things, and then to be prepared to change their view.

This can be a most difficult from of learning for many managers. When we view people, we have our “fixed” perception, which can, in effect, block our view. Therefore, if we are able to see differently, we need to change our perception. Remember that perception is reality. The way we see, leads to what we do and what we do, leads to the results we get. So to change the results, we really do need to change the way we see! To help view our own reality of how we manage people, it is useful to take a polarised view, so that we can focus on two “opposites”. After such a “black and white” view, we can then search for the “grey” if we want to. Let me, therefore, put forward another such a polarised stereotype of people that says people run on emotion but justify things by calculation. In other words:

  • The emotion view is seeing people as more “heart”/feelings based. It’s all that “soft stuff’ that is “gut feel” and subjective. It’s “touchy/feely” and not at all, what a “macho manager” or partnershaft supply chain manager likes to deal with.
  • The calculation view is, however, a more “head”/logic based view. It’s the “hard stuff’ that can be proved/quantified and is, therefore, more objective. It’s all those who say, “The numbers speak for themselves”.

I would accept this looks just too “black and white”. I know in the real world we are often more in the “shades of grey” zone. But we have to start somewhere and I am suggesting we should try and start with a polarised view and spend some time looking at the “soft stuff”. I believe it is all this soft stuff that is really the hard stuff. It is not the “technically simple” that causes us major problems in supply chain management, it is that which is more “managerially difficult”. But to get into this, we need to have a view of “where we are at”. We need to be able to have the confidence to view which side we lean towards. Is it the “Emotion Soft Stuff’ or the “Calculative Hard Stuff’?

Are we, ruled by the heart or by the head? It is my belief that these stereotypes view is sound. For me, business heavily involves emotions, (usually though covertly as, after all, it’s not macho and not British for us to show emotions). The calculative “bottom line” is, however, usually more overt. But the “bottom line” is only ever going to an outcome of all the other activities, which for example, involve people showing each other “touchy/feely” mutual respect and trust in their business relationships. So emotions, feelings, behaviour and thinking are all related.

After all, as a person thinks, so they are! Business is, therefore, at its roots, an emotional experience. Trying to pretend people’s emotions don’t exist in business relationships is dangerous. It ignores the way forward to develop better and more effective supply chains for all the partners and the players. To make supply chain management with partnerships a reality for all the partners and players, then we must fully consider how the people relationships are to be handled. To ignore such relationships is folly and frankly plain “daft”. Unless of course, the ending point is not for partnership at all, but for old style supply chain partnershaft.

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training. This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independant mentor/coach, trainer, and consultant. This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog: http://www.learnandchange.com/freestuff_23.html

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