Now available in select “HR supply stores”: IoT (Internet of Things), one of the five tools discussed in my latest POV – “The HR Power Tools 6-Pack for High-Impact Service Delivery.” Much like the double-edged sword nature of its companion power tools, IoT in workforce management can usher in unprecedented and significant business benefits, but only when the right capabilities are selected and potential risks and adverse outcomes are accounted for.
IoT is a process in which people, machines, and devices are connected to one another via a single network in order to automatically exchange data without any manual involvement. IoT can, for example:
track the productivity of workers in the field
confirm overall fitness or fatigue when relevant
assign tasks based on the nearest worker
tie scheduling real-time to customer flow
offer real-time training based on an employee’s time on job, credentials or performance
All of this sounds pretty compelling, but a couple words of caution. The first word: Volkswagen, whose engineers illegally programmed IoT-like software to sense when the car was being tested during an emissions inspection, which then activated more costly equipment that reduced emissions. This resulted in a roughly $3B fine this year. Additionally, IoT solutions will generate lots of new, often very valuable data related to people and how they perform their jobs, and not every HR Department is adequately staffed to handle the current explosion of people data or supported by data scientists.
Cause for Optimism with Early Adopters of IoT in HR
While not many HR Technology solution providers are occupying the IoT market category just yet, one company caught our attention: Triax Technologies, and specifically with their “spot- r” solution for companies with workers in the field, particularly on constructions sites. Certainly, accidents are more common there. My briefing from Triax’ COO Peter Schermerhorn enlightened me that U.S. construction companies pay out $1 billion annually for claims related to slips, trips or falls; that the construction industry pays more than twice the national average for workers’ compensation insurance; and that an estimated $7.2 billion in fraudulent workers’ compensation claims are filed annually in the U.S.
spot-r by Triax provides data-driven, real-time visibility into construction operations and safety incidents, leading to an improved safety culture on site and can result in reduced insurance costs. Automatic, geo-tagged “slip, trip, fall” alerts improve response time to accidents and record surrounding conditions (temperature, height, location of witnesses in the area, etc.), self-alert buttons empower construction workers to stop working due to unsafe conditions and alert supervisors to hazardous conditions, and high-decibel evacuation alerts are included in the mandatory wearable devices used on many of the company’s pilot projects with customers. Peter also offered a glimpse into the near future when the company’s sensors will be used in new ways to promote safety and visibility on the job site. Imagine knowing in real-time where your workers, equipment, machinery, and tools are onsite and how they’re interacting with each other.
Who said technology innovations related to HR and workforce management usually lag other business areas?
Bottom Line: As with all the other power tools (i.e., sophisticated capabilities) recently added to the HR practitioner tool belt, IoT’s potential to be a game-changer cannot be overstated, but neither can the surrounding considerations for avoiding possible misuse or sub-optimal deployment.
“When we first outsourced, our service provider had the newest ideas, but now three years later, we have caught up to them and they’re treading water. So what’s next?”
These are quotes from operations executives over the past months of research, when asked about whether or not they (still) consider their service provider “innovative.” Since the term is open to interpretation, for the sake of this blog, let’s view it as an ongoing improvement in the impact of the work being delivered by doing something differently… something over and above the basics of what you would have expected, beyond the letter of the contract.
And, often, these comments are followed by, “it may be… well it likely is, our organization that is holding us back.”
If you really want what’s next… your service provider might actually have the ideas… but is your leadership willing to listen, invest, give them access to your intimate data, and give it a try? Is your organization genuinely culturally ready for innovative change? And is the service provider capable and culturally aligned as well? If not, maybe you aren’t ready for innovation; or, maybe not with your current partners.
Consider three “Power Ups” to change the face and increase the value of outsourcing: Courage, Budget, and Stories
Harken back to the days of Mario brothers in the video games, when Mario and Luigi tapped into “power ups” to help achieve their goal. (Maybe this is not such a leap in time for you!) “Super mushrooms” gave them temporary size and height advantage, ability to take multiple “hits” before dying, and additional lives. The “super mushrooms” of outsourcing—to achieve innovation and increased value through partnership—are good for use by any player—operations executives, delivery staff, service buyer or service provider:
Courage: The “gumption” as a leader to “allow,” and as an employee to “take” a chance, to leave egos at the door, to experiment, to “play,” to quickly acknowledge and shut down what does not seem to be working.
Budget: Realistically, nothing much will happen without a dedicated budget to finance time and materials that support research, dialogue, and prototypes.
Stories: Visuals and stories connect with our emotions, and are memorable. When you really want someone to understand, appreciate, engage, own, and promote a concept, a result, an idea, or a change, then “show and tell.”
If you want innovation—new ideas implemented to drive step changes in results—you need to be willing to do 1-2-3. If not, you are probably keeping yourself in a dangerous continuous improvement cycle—and also likely to get lost in the dust of other companies that are innovating.
Procurement’s very existence is in trouble. The function must be part of the whole negotiation process, not only to protect the company from making deals that do not benefit the firm but also ensure they are sensible, cordial and well-balanced – and both supplier and buyer realize the outcomes they both want to achieve. Sadly, this is so not the case with so many pivotal business deals today.
The fact of the matter is, for some bizarre reason, most senior executives just don’t care about them, and they seem to show up when the deal is already made and “promises” have been made that are hard to break. All that transpires is both the senior executives from the supplier and the buyer end up frustrated – and feelings of mistrust can really break down what was a blossoming partnership with a very “transactional” experience.
The problem really is two-fold – executives doing the buying probably don’t even think about involving procurement, as they see no value in their contribution – or have no awareness of any potential value. They probably never even thought about involving them. In many cases, they never even intended to include them and procurement only inserted itself when they were asked to make the payment. Which means procurement’s role has been reduced merely to a last minute attempt to sabotage a deal; otherwise, its existence in the company is rendered completely useless, and you might as well phase it out (or replace with some software).
Who’s to blame when procurement comes along to mess everything up? Yourself!
To all executives out there who like to spend company money on things:
Ignoring procurement in the buying process nearly always ends in tears for everyone. I often feel the amount of time, negative energy and lost money tied to the procurement experience is simply not worth the investment of having them in the first place. So stop acting like they don’t exist and start communicating.
This means getting procurement into the loop regarding your intentions, once you know what it is you want to invest company money in. Train your sales people that procurement exists for a reason and that they are not the boogie man from the outset. The reason it often goes wrong at the end of a sales cycle is that procurement people feel they are not participating in the process and need to make last minute changes to the contract (which is usual to try and squeeze the supplier on price, which just pisses everyone off).
When procurement people are feeling ignored, all they will try and do is derail the buying process, as opposed to helping shepherd it through and add some value (or at least a few sensible suggestions) along the way. Procurement needs to feel it has a reason to exist, like any other business function. With HR, we often know it adds no “strategic” value in the hiring process, but at least it will run the background checks, the references, sort out the payroll, etc. At least HR has a role in the company, whereas procurement is in danger of extinction if its contribution is worthless. So while procurement still exists, you must involve it, or it will make everything unravel down the road.
To Procurement Executives:
Be a business relationship manager, not a transactional negotiator. Get off your backsides and serve the people who pay for your salary. Yes, we are a team, but sending these emails such as “No more discount or we need a minimum of 20% margin”, or “We only accept 90 days payment”, do not help at all. You’ve made it clear in the time your profession exists that you are not business people and care nothing for “customer service” or “employee experience”. The fact you feel you are the police of the people that call themselves “sales” is a fairy tale. You should get up and try to understand what your firm is doing, the clients you are serving and the history that exists between your company and your customers. Only looking at making a personal gain is not a solution for anyone but yourself. If you like to have war stories, join the army. Don’t pull this nonsense on the work floor.
Bottom line: Communicating with each other is the first step to getting business done
We all need to live with certain professions within a process. Some we like, some we just have to tolerate. But we can make it nice along the way to work more closely together and stop pretending we do not exist or need each other. If you listen, you will learn, if you keep doing what you always do, you keep getting what you always had. We have enough islands in this world, let us not fight internal battles all the time, but let us communicate and not harm the clients and eventually our business.
This is my all new spot on Horses for Sources. The home of razor-sharp analysis and the place where hypes are crushed and real trends are born. Phil has set the bar incredibly high over the past decade. Inspired by the best analyst blogger around, my aim is to be as edgy as you are used to on Horses for Sources.
What you can expect on Berzerk with Derk I lead the energy, utilities and natural resources practice at HfS. I’m passionate about these industries and the huge shifts they need to make to stay relevant to this world. These are the largest and most fundamental industries in the world. The looming departure from fossil fuels mean the world’s energy systems, which have historically been slow to change, are in an unprecedented period of rapid transformation.
Renewable energy is the next normal – but the world has not woken up to this new reality yet This blog will help you stay abreast of all these fast-moving trends plus cut through all the hype that is out there. We’ll be covering the energy markets and the ongoing energy transition; away from fossil fuels and toward renewables. And specifically zoom in on the transformation of energy companies and service providers. The As-a-Service Economy has arrived in the services world and holds the potential to play a critical role in the energy transition.
The holy triangle of services; People, Process and Technology In my focus areas, besides aforementioned Energy, these are Supply Chain Management and Procurement, we see a fast convergence of people, process and technology, forever changing market demand and the offerings of service providers. Talent is a major topic for enterprises and service providers; there is a deficit of skills needed in the As-a-Service Economy. We need more people who can be strategic, experiment, play with business and revenue models, design new organizational structures and cultures, implement and pivot rapidly. People who have a keen eye for societal, political and technological developments and its ensuing opportunities and threats. There is an enormous opportunity for technology and business service providers to become part of the solution. This requires investment from both sides, real partnerships and the application of leading-edge technologies: intelligent automation, IoT ecosystems, actionable data and analytics are essential ingredients of digital transformations designed to push energy providers forward on the energy transition journey.
Change = new stuff = hype The common theme in much of our work at HfS is change. The old, legacy way of doing things is not cutting it anymore. Labor arbitrage, lift and shift and the traditional models of outsourcing are well past their prime and the services industry is transitioning into this new phase of As-a-Service. Before new things come to fruition, there is often a lot of hype and fluff surrounding them, clouding the view of what is real and what is not (yet). This is where HfS analysts come in… This blog won’t shy away to expose bs, calling out cookie cutter hype and identifying what is real.
All nice and well Mr Erbé, but why should I care? My goal is to tell you something you may not know with every post. I have been in the trenches of technology implementations, business transformations and operating model changes. I’ve managed the backlash of failed implementations on the business, designed business and IT functions. So in a lot of situations where theoretic solutions and vendor promises have broken down and the real issues still need to be fixed.
On this blog I will address the real-world issues screaming for real change, exploring what works, what doesn’t work and what needs to be done.
I will be:
– Harsh (sometimes)
– Real (always)
– Candid (the key to being an analyst isn’t it)
Are you of the curious variety, care about the world around you and the vast opportunities there are for business and you as a professional? I will introduce you to the most intelligent, innovative and forward looking folks in energy, supply chain and procurement. And help you navigate the real-hype divide, which solutions are aspirational and which solutions can bring scale, results and impact now.
Any organization can quickly come up with a list of the top 50 partners with which they would love to work… identifying these opportunities really isn’t hard.
The real trick is to identify what you can offer and align these incentives with a company that fills one of your needs. Look for companies that might be able to bring in valuable customers and give you added credibility. The key is finding a partner with a similar vision who wants to find mutual value, “beyond the press release.” Chances are you are going to be working closely with these companies for extended periods of time, so it’s in everyone’s best interest to make sure the spirit, vision, and culture are all aligned.
Why are the strategic objectives so often forgotten in the hurry to get a deal done?
The stakes are always high: capital is always scarce, management always under pressure, and high-quality talent is in short supply. Challenging economic conditions so often compel those involved to ‘close the deal’ as quickly as they can. Whatever people say, the experience of partnerships is nearly always mixed; how often do partnerships take longer to negotiate and become harder to implement, than expected? We all know how people operate when they rush these things – they may look great on paper, but rarely deliver in practice.
Let’s face it; it’s time for a rethink and a fresh perspective on the structuring of strategic partnerships.
So here are ten questions to make your strategic partnership successful:
1. How does the partnership fit into the bigger strategic picture? The partnership may be significant in itself but should be seen in the context of other partnerships and other strategic activities. Are there under-exploited synergies or conflicting objectives?
2. Is everyone onboard? Cultural fit is often as important as financial fit and is often overlooked. Be sensitive to cultural differences – whether between organizations, industries or countries. The “softer issues” are often the most difficult to tackle, but the most lucrative when you get them right.
3. Are you afraid to iron out your differences? Identify the potential clashes between individuals, and any conflicting goals and ideas between you and your partner. Don’t just stay in the comfort zone; you need to deal with conflict upfront and find your common goals and outcomes.
4. How well do you really know your future partner? Anticipate and evaluate your partner’s value proposition – get inside their head. It will help avoid surprises and enable a solution that works for both parties.
5. How well have you defined and monitored KPIs for the partnership? It’s important that both parties agree on both “what” to measure but also “how” to measure it. Otherwise, you’ll struggle to call your partnership a success, or identify how to improve it.
6. How much ongoing evaluation and analysis are you doing? Continuous analysis and assessment or your partnership make you both more confident, agile and sensitive to differences in culture and approach, in addition to avoiding misunderstandings.
7. How positive and constructive are you in your negotiations? Framing the proposition in a positive, constructive manner makes a huge difference – ‘take-it-or-leave-it’ deals may appeal, but risk alienation and relationship breakdowns.
8. Are you prepared for disagreements? Establish review and dispute steps in the negotiation and implementation process early on – it avoids the potential for litigation and opens up new possibilities for challenge and improvement.
9. How many unanswered questions remain? Always raise questions or issues that have come from the analysis and preparation you have conducted – the path untrodden may have been paved with gold, or at least been an easier journey for all parties.
10. How much sponsorship with all stakeholders do you currently have? Communicating benefits along the way helps to keep up momentum and increase support with the parent companies – it also keeps spirits up when times get tough (which they will, at some point!).
Bottom-line: Creating a strategic partnership is wisdom and art combined. Like all areas of business, perception is still essential. It’s important to choose brands with an excellent reputation, but you also want to work with companies that will make good partners. When assessing a potential partner, look at which brands or individuals they’ve worked with in the past. Reach out to those brands or individuals and ask them how the partnership worked out. And don’t hesitate to reach out to those outside of your industry for a fresh perspective. It is ideal to cooperate with an organization that stays true to your key messages, goals, and demographics. Most of all, enjoy the ride. This “mini-MBA” will enrich your career forever!
At HfS, we’re growing fast in a very competitive and volatile market… and with growth comes change – but change is always good if you ask me! The most fun in jobs is when you have changed – you learn new things, get new ideas and you meet new people to help accommodate the change. Nine months ago, we needed to add more firepower to our sales function. To be precise, we needed top sales quality that could thrive with the HfS mentality and culture. We found that person in Samyr Jriri (see bio), and today I wanted to give you a little more background about him.
Bram Weerts, Chief Commercial Officer, HfS: Samyr, can you share a little about your background and why you have chosen sales as your career path?
Samyr Jriri, Vice President, Global Business Development, HfS: Next to having owned a small restaurant and antique furniture business, I started out working in the Telco sector here in Belgium. That was just at the time when the monopoly held by the – at that point – state-owned Telco provider, was broken up, and I joined it’s first big competitor. After spending about five years working for the two largest Telco providers in Belgium, I joined Microsoft where I focused on the upcoming Dynamics platform and later on became a generalist, managing a portfolio of top and mid-market clients. In those days I wasn’t too familiar with the research industry yet until I moved to London and joined Gartner. There I spent seven years, mainly working with startup and midsized tech providers, as well as helping set up the account management team for their Supply Chain business in Europe post the AMR acquisition during my last year there. After that, I went to Kea Company, a consulting business in the analyst relations industry, before joining the HfS team. Sales were always in my blood I guess, I always had an interest in this multi-faceted discipline, from the perspective of an individual contributor as well as from sales leadership point of view. It’s one of those arty sciences that touches upon many principals that are applicable in daily life. I also always enjoyed the meritocratic character of a pure sales role, where I think this philosophy had a motivating effect on me.
Bram: Why did you choose to join HfS?
Samyr: Being active in the research industry for quite some years, I was already familiar with HfS before joining. I guess HfS had a high likeability factor as a new upcoming brand, but my sympathy for HfS went further than that. The As-a-Service Economy really isn’t covered by any other analyst firm in the way that HfS does it, and it profoundly resonates with where the market is going. On top of that, I liked watching this ‘new kid on the block’ who came to challenge the conventional business models of the bigger analyst firms – and successfully so! Everyone talks about change, innovation, sharing and all that good stuff, but in practice, we often see the low-risk safety approach. So for a young research firm to put out 70% of their punchy and high-quality publications for free, shows a great understanding of how information and insights should be treated these days, as well as courage to do so in today’s economy. That was all before I got to meet the team here, where I discovered the pleasure of being part of the HfS family.
Bram: What are the focus areas on driving your revenue?
Samyr: The research and advisory business are all about the relevant exchange of information and insights that fuel business decision making. What we sell is not transactional, nor is it tangible, so relationship and trust are essential. In our efforts to grow the business, we focus on matching our capabilities against our clients’ priorities, as well as ensure that the ecosystem we build up is compatible with the trends we see happening in the market. Sales are the growth engine, which fuels the investments in talent and content, which in turn fuels business growth and market influence. This principal needs careful discernment.
Bram: What trends and developments are capturing your attention today?
Samyr: I think that we are living in great times, there is great insecurity of course, but great opportunity equally balances that. It’s a cliché sentence, but it seems that the fabric of our current organizational structures is being pressured so much that we will start to see real change in how people organize themselves from the bottom up. It can be observed in the business world as well as socially and politically. The automation trend is a great example; there are many doomsday predictions of disappearing jobs and the redundancy of human labor. This only used to be true for mechanical processes, today it is almost equally applicable to cognitive processes. It’s the organizations’ actual choices that will determine whether we will experience the automation continuum as positive or negative. One thing is for sure, at some point, the entire organizational premise on which automation solutions are built will need to be revisited. This will initiate the real change.
Bram: And what would you like to see different in the research / services industries?
Samyr: We already see the beginning of an important trend that I would like to see move a little bit faster: companies should refrain from taking a directive role towards their service providers by just telling them what they want from them and move towards treating them as equal partners, which allows for more dialogue leading to better solutions. Only when this dynamic is truly in place from both sides will we see real innovation. But it takes some time to learn to let go. It remains hard to let complete control slip through your fingers in exchange for projected innovation and improvement.
Bram: And, what do you do with your spare time?
Samyr: I love cooking; I am a bit of an audiophile, and I enjoy traveling as well as hiking.
Bram: If you could change one thing in Sales what would that be?
Samyr: I think a lot of sales efforts across markets have created a dynamic that is seen as normal when it comes to negotiations. If you can get a 50% discount on a deal, you might be happy with that cut. However, I see that as a total loss of credibility. Every company is trying to create customer loyalty, meaning no matter how transactional your business is, you need to build trust. A correct pricing strategy should therefore not allow for ridiculous discounts, which in the long term only creates unnecessary confusion with the buyer, as well as often cannibalizes long time opportunity for the seller anyway.
Bram: Thank you for your time Samyr, it’s a real delight to have you onboard and work with you in these exciting times!
There was a time when “learning on the job” meant you were an apprentice or a “newbie,” someone with little practical experience. However, today, “learning on the job,” is a critical activity to do all the time, as digital technologies and business models change the way we work, not a little, but quite significantly and often at a breathtaking pace. There is no defined curriculum for the pace of change in today’s businesses—it’s a capability we must all be very adept at—dealing with a constant flow of new ideas, new technologies and ambiguity that takes us outside our comfort zones.
The expectation today to drive faster time to market with new ideas, faster response to queries, and faster results from the work we do is also impacting the services and outsourcing industry. This industry grew up based on a culture of “getting the job done faster, cheaper, more efficiently”… and as those expectations are met… it’s still true. And because many companies can meet the cost reduction baseline, differentiation now depends on quality, innovation, and not meeting but beating expectations. And that means constantly evolving.
Do you need to shake up your outsourcing engagement to redefine the value and create a new way of working together? A way to bring “both sides” back to the table? To build on a trusted relationship, one that is collaborative? Nothing creates a team like solving a problem together. There needs to be some degree of trust in place—either through experience or through reputation and recommendation. Design Thinking is also gaining interest and traction as a way to identify and solve a problem as a team in a services relationship. The bottom line is that the way forward for outsourcing—service buyers and service providers—is based on willingness to learn… experiment… and start over.
On the Job: Learning by Doing is the way forward
To make it work, service providers—and many service buyers too—need to step out of the risk averse and “no fail” “yes” culture. By nature, Design Thinking requires more of a “learning by doing” approach. And it may take awhile to yield measurable results. In one example, a service provider launched a Design Thinking exercise to address a very general interest—to reduce the cost of their collections process. Reducing collections would help the client but also may hurt the service provider as that was their job. But this problem of the cost of collections is not unique to that one client or to one industry, so anything learned could likely be reused.
While the project was focused and undertaken with a specific client, the learnings, regardless of whether they led to more work for the client, would still increase the understanding of the service provider team of the consumers in that industry and the experience they were having at the time. In this way, it became a learning exercise as well. It also focused the service provider on the clients’ consumer base, increasing the understanding of the context of their work.
The interaction between the service provider and the service buyer’s customers brought to light some opportunities and challenges that would not have been noticed without a service provider employee “shadowing” someone living the process that had been in place for years. This effort was not about changing the process per se, but about changing the focal point from the process itself to “who” was in the process—to the experience and the desired outcome. That’s a pretty new way of working in the outsourcing industry.
From the observations and interviews, and studying data collected over time from its call center, the service provider came to the table with the client with an informed, but different, perspective, and with some ideas on what to do next. Some of these ideas were ones that interested the client and led to further plans and projects. Some were not, and others were simply put on hold. The point is, the service provider took the first step to say, let’s try this—with the client’s permission and participation—and invested in those first steps.
The Bottom-line: It’s about courage, budget and stories
This exercise tapped into the three partnership “Power Ups”—the courage of the service buyer to let the service provider get close enough to their customer base to interact with them personally; a budget for the shadowing and testing ideas; and stories—those of the consumers that drove the next steps toward change and business impact—and that of the project overall. Are you ready to tap into your inner “gamer,” and partner to Power Up to drive real, impactful innovation?
Doing business is all about making successful deals happen and negotiating them effectively. Getting deals done right says something about your own personal negotiating capabilities, but most importantly, it speaks volumes for your company’s brand.
By following the following five simple tips, you get a better sense of what to do before entering the process of making a deal.
Understand what you are selling: Make very sure you understand your core business. You can only negotiate what is there and what will ultimately be delivered. Understand what people can do within your firm, or what your software is really capable off. Only when you truly understand your capabilities, can you negotiate the best deals for your firm.
Be aligned with your internal team: Make sure that your team is aware of your progress when entering negotiations. You do not want them to walk into your line of fire because you need to be in control. If you are not aligned internally, then don’t make a deal. If you do not have the support of your team to deliver what you are selling, you are in serious trouble. No one wants to work with a sales person who sells hot air then runs for the hills once the deal is done. You sell a bad deal your firm can’t deliver; you will quickly inherit a terrible reputation that you could get stuck with for a very long time. So make sure your internal agenda is in order before starting the negotiation process. I use the parent approached here. Daddy said no, and so did Mom.
Know your competition: Make very sure you understand the competition in your core business. Know what they offer and their pricing and services that come with it. Never take someone else’s word for it – make sure you know what you’re up against. Deals are often made based on trust, but trust is earned and is never based on assumptions. And really make sure you sell your firm’s value, not just try and react to what your competition is selling (or what your client is claiming your competition is selling). It is not always possible to compare apples with apples, but you need to be able to explain your own firm’s value and approach – and do it very effectively.
Stick to your plan: Never abandon your calculations. This has nothing to do with ego, although people love to play that card. Ego should never be part of negotiations. Only inexperienced people use their egos or job titles, and they always fail in the long run. If you take your clients’ and your own business seriously, your negotiating plan will always back up the numbers.
Make sure it is all about doing business: Don’t you ever make it personal. There is no “me” in negotiations. You deal in the “we” form because it is never personal. Unfortunately, there are many people out there that like to annoy you, but if you follow steps one through four, you will frequently achieve a very positive outcome.
So always stay true to yourself and your company’s values. Keep communicating and only sell based on value. In the end, personal value and business values are the most important aspect of deal negotiations. Value is in the mind of the buyer. If it is not, why are we negotiating?
People love status; that’s just the nature of the beast. But wanting something and then going out and getting it can be an insurmountable hurdle. So sometimes people need to clarify what they want and why they want it. If you see yourself as a leader, have a quick look at the “five questions mirror.” If you can’t get past this list honestly, save yourself some time. You’re not a leader. That’s not all bad—you can still do something cool and be popular some place.
1. Honesty: Do you really think that being a leader in business is a popularity contest? Hell no. You are the messenger of good and bad news, so deal with it. Stop sugarcoating the damn thing and just deal with it. Many times, I have lost confidence in “leaders” that say one thing and then, in the end, they do an 180 and act like nothing needs to be done. Don’t lead if you can’t make decisions. And honesty toward yourself and others is a big part of making decisions.
2. Lead by example: You are no exception. If you think you are an exception to the rules, what do you think the rest of the team will think and eventually do? It is a rhetorical question so do not even answer that one. If you don’t do what you expect others to do, why should they even try? If you want results, make it clear from the start why you can and why others can’t. This can be based on rank, income, type of haircut. I don’t care, as long as you make it clear from the start.
3. Be consistent: The moment you feel you can skip your good advice, just keep it to yourself. You’ll look ridiculous, and you won’t win hearts and minds with this approach. Maybe you should think a bit more about what you meant before you say it. Because clawing back is never the way forward. Pick your losses and learn from them. Telling your folks one thing and doing something different yourself? Come on, don’t waste my time.
4. Listen to others: Listen as much as you can, do it for everyone who has something to tell you. Then, among their stories try to find the moral, the lessons that you wouldn’t have had the chance to learn otherwise. Yes, it is your decision, but it does not always need to be your idea. We are now in the land of making money and pleasing customers, so stop your teen attitude and grow a pair.
5. Emotional stability: If you have some issues back home, or you feel people don’t love you anymore, see a professional who’ll listen. But don’t take that baggage with you to the work floor. Accepting help is professional and very 2016, so don’t feel too proud to give in to it. Stop leading for a while and learn so you can pick leadership back up again when you are back on track. Then you can help people that face the same difficulties through this awkward period in their professional careers. Yes, you are never too old to learn. Pride is all between your ears.
Bottom line: People think that being a leader is just a title and a big paycheck. We have seen so many businesses that rise and fall in the past 16 years because of a lack of real leadership. Proud folks that gave it their best, and thought that was all it took. No one is ever a 100% success. But you can do your utmost to achieve perfection—even if it is elusive. People who always agree with you won’t bring you to a higher level. What do we all gain from this sheep mentality? Stand up and speak your mind. Accept periods in your life that we all have to face, then deal with it and come back even stronger. We are not all leaders, so as long as you make your point and do it with decency, you can tell your leader how he can lead better.
The services industry, and technology industry, are full of ideas that keep coming around. And they often fail several times before they finally succeed. Cloud is a great example, as the groundbreaking successor to hosting and before that timesharing. Many pundits saw the value of renting capacity instead of owning it. The market just needed a few iterations before we found a viable technological AND business model for it.
So here we are, in the services industry talking about outcome-based contracts. Again. Outcome based is pretty important at HfS Research: we think it’s transformative enough to be part of one of the eight ideals of the As-a-Service economy (digital plug and play services require an outcome-based model.) And of course, my first reaction when outcome-based discussion arise is “what’s different this time?”
Here’s what’s NOT different. Outcome-based contract negotiations are a mess. Mostly for some really important reasons in order of when you’ll likely come across them if you want to try outcome based:
You have to know what an outcome is. Seems simple, and in some cases it might be. If you want to sign a BPO deal for claims processing, that’s not too hard. There’s a pretty standard definition of a claim, understanding of how to process it, and if it’s actually been processed. But if you’re going beyond basic transactional outcomes to broader issues like improved customer satisfaction or higher integrity in your supply chain, then you’ll need to spend a boatload of time defining an outcome properly.
Worse than point one, you have to decide what outcomes matter. As soon as someone gets the idea to do an outcome based contract, someone else in your company will come along and ask “why this outcome? Why not that one?” These kinds of discussions bring out some nasty internal arguments. Because sure, everyone can agree that raising the stock price is important and good. But once you get into more operational metrics, every business unit and every executive has different opinions and priorities to get there. Balancing everyone’s priorities to make sure your contract focuses on the right outcomes is a mess.
Then you’ll get into heated discussions about cause and effect. When you start to get into negotiations with your supplier, you’ll get into a debate about whether the supplier can claim victory in ALL instances, or only if the supplier can prove that the outcome was a direct result of its work. If an outcome happens, was it because of the service provider or external factors? Let’s say a supplier offers to reduce your supply chain costs by 15% through a consulting engagement and one of the categories in the engagement is fuel. The cost of oil drops and now your supply chain costs have dropped – having nothing to do with the supplier. This one will go around in circles for weeks.
What does an outcome even cost, exactly? If you’re paying for outcomes with little-to-no knowledge of the supplier’s cost structure then you have no idea what you should be paying for that service. It’s like cloud – take this price or leave it. So maybe the price seems fair compared to what you think you’re spending internally. During the negotiation, your only real negotiation lever will be if the bid is competitive and you can compare across suppliers.
Making services into a “black box” doesn’t wipe out your regulatory and legal obligations. During negotiations and continuously afterwards you have an obligation to vet suppliers for compliance to government regulation, making sure the supplier operates legally and ethically on your behalf, and follows appropriate security measures. You can’t wipe out this responsibility by saying you only get the outcome. If you only focus on an outcome, you can easily play the “I don’t care how you deliver it” card. But if your supplier achieves that outcome by using slave labor or being noncompliant with regulations, then you’re still liable since the supplier is part of your supply chain.
Post contract, you’ll start to resent your supplier BECAUSE THEY SUCCEEDED. Let’s say the contract agrees to pay on an outcome like volumes of sales and then every time sales goes up you have to pay your supplier. It won’t take long for you to decide you’ve paid them enough, in fact probably paid them two times over what you would have paid in a traditional contract structure. And you’ll turn on your provider – who’s doing an amazing job! (Maybe you put in a stop-clause that agrees to pay on outcome up to a certain amount of money, but that’s more likely for consulting/project contracts than ongoing outsourcing ones.)
Good luck during renegotiation. Remember the point about not knowing cost levers? Chances are your bargaining position will be even worse if you just want to renegotiate because without the competitive bids, you have no basis for comparison. Did the supplier use bots and completely automate the process to get the outcome? Are they primarily labor based? Some combination? If the supplier’s costs are going down, how can you know if you’re getting any of that savings back?
If that’s what’s the same, here’s what’s different: The As-a-Service economy depends on outcomes. Outcome-based contracts used to be something leaders did, and even then only in a few relatively rare situations. But now it’s becoming a requirement. Who has time in this fast moving world where everyone wants to just plug into partners and suppliers and go? Part of being plug-and-play means having an outcome pre-defined and ready to deliver.
No one has time for long complex negotiations. And even though today outcome-based contracts are long and laborious negotiation efforts, if we all keep working on them, we’ll get better at them. We’ll find ways to fix the problems I just listed. Just like timesharing, hosting and cloud, the idea is the right one. If we want to change our businesses and build a competitive future, then we need to start our contracts with the end in mind. We need to focus on what has to get done and not micromanage how it gets done. We’re getting closer as an industry all the time. HfS is working hard on research into this space right now. So when it happens, we’ll get there together.
The services industry, and technology industry, are full of ideas that keep coming around. And they often fail several times before they finally succeed. Cloud is a great example, as the groundbreaking successor to hosting and before that timesharing. Many pundits saw the value of renting capacity instead of owning it. The market just needed a few iterations before we found a viable technological AND business model for it.