Selecting the Right Partner for Collaboration

Motivation

Selecting the wrong partner can have dire consequences. Not only will the wrong partners erode the value we come to expect from successful collaborative ventures, but a bad experience with the wrong partners may jeopardise future attempts for collaboration as organisations may become more risk averse and less trusting.  In this blog we will explore strategies to select partners that are most likely to achieve collaborative outcomes. These strategies apply to both the buy and sell side of business.

Engagement Strategies

In the IACCM research report “Unpacking Relational Contracts”, the authors advocate the release of a request for partner rather than the traditional approach of releasing a request for quote or request for proposal.[1] This approach departs from our tradition supplier selection processes with the recognition that technical capability and price are not the only drivers for ensuring successful delivery.  The challenge for buyers then becomes “how do we evaluate supplier behaviours or likely behaviours?” From the sell side, the question becomes “how do I know my customer will engage in positive collaborative behaviours?”  The first point to recognise is that it is exceptionally difficult to evaluate parties’ behaviours in a one-off, remote, ‘paper based’ assessment.  In our blog covering commercial strategies, we recognised that early and ongoing engagement between buyers and suppliers is crucial to establish a shared vision, effectively manage all risks and opportunities, and sow the seeds of collaboration.  Early engagement also offers unique opportunities for the parties to evaluate behaviours and where appropriate, recalibrate these behaviours. 

Evaluation Methodologies

Desktop analysis of bids can reveal some insights into the capability and capacity of a prospective partner’s behaviours and the ability to collaborate.  Exploration of past performance, referee checks, and commitment to collaborative frameworks such as ISO 44001 are all useful indicators, but they are likely to be insufficient for the following reasons:

a.      Past performance may only be relevant where the tendering entity has previously worked within the buyer’s organisation.  Successful collaboration is a two-way street.

b.      Past failures could be largely attributed to adverse buyer or customer behaviours;

c.      New entrants will not have a track record (good or bad) for evaluation; and

d.       Tender responses inherently incorporate a ‘response bias’. If relationships and behaviours are included in the tender evaluation criteria, then no credible tenderer will claim that they are unable to achieve the desired collaborative outcomes.

There is also a more subjective element associated with evaluating supplier behaviours.  Some critics of alliance selection processes have labelled the selection process as a ‘beauty parade’.[2] To make evaluations more robust, a more interactive approach is needed. Not only must evaluation processes focus on measuring potential behaviours, but the process must also be transparent, fair, repeatable, reproducible, practical, and efficient.[3]

Try Before you buy?

Traditional desktop evaluation processes are unsuitable for evaluating supplier behaviours.  A more interactive approach is needed such as workshops and interviews.  Though additional resources and some probity risks may emerge with such approaches, the benefits far outweigh these costs.  Preparation is essential when conducting interviews and workshops. The expectations of all parties also need to be clearly defined.  One of the critical aspects of conducting workshops is to ensure that the actual delivery teams from both the buy and sell side are present.  That is, the actual key personnel who will perform the work will get to interact.  This will discourage suppliers ‘bidding with the A-team then substituting the B-team’. Likewise, this approach ensures the customer team is engaged prior to source selection and discourages arms-length centralised procurement control. Workshops need to explore business as usual as well as high stress scenarios. In my experience, high stress scenarios should be credible and explore how the parties will react collaboratively to achieve enterprise outcomes whilst at the same time cater for the reasonable commercial needs of each party.  Workshops should not degenerate into contract negotiations. More specifically, the workshops should not overly focus on commercial terms.  Nonetheless, Van den Berg and Kamminga[4] recognise that interactive selection process may provide significant insights into the negotiating style of each party.

 What to Measure?

A cynic is a man who knows the price of everything and the value of nothing.” – Oscar Wilde, Lady Windermere’s Fan (1892)

 A key challenge for selecting the right partner is getting the right evaluation criteria.  Great mischief can arise where parties blindly follow prior tender selection criteria for similar activities or simply tack on a relationship management piece to a traditional selection process.  A top down process is recommended with evaluation criteria tailored to ensure the selected partner is most likely to deliver value.  Planning should also anticipate the possibility that no tenderer can deliver value, and hence, the selection process may need to be abandoned.  There is a plethora of checklists, guides, and best practice available to assist in crafting evaluation criteria for collaborative contracts.[5] At a high level, we could use the four-C model[6] of

a.            Cooperative Culture

b.            Complementary skills

c.             Compatible Goals

d.            Commensurate levels of Risk

Alternately, we could use a more comprehensive evaluation process. Peter Simoons offers a helpful partner selection checklist in his book The 4-step Guide to Partner Selection Not only does this checklist include the attributes we would expect from a collaborative partner such as culture, vision and management styles, but the checklist also address the key hygiene factors we need to consider from a collaborative partner.  For example, compatibility with decision making speed is addressed with the criteria “How do you and your partner align in speed of operation and “decision-making?[7] Where the relationship demands agility and flexibility, selecting a local partner who is governed by an overseas parent who makes all financial decisions at the board level could introduce insurmountable problems to delivery.  In summary, checklist and guides should be used as aide-memoirs and should not be blindly copied without suitable tailoring.

Conclusion

Effective partner selection most focus on what is important to the relationship and how this will achieve the desired enterprise outcomes throughout the partnership.  Selecting the right partner for a collaborative venture should involve interactions and dialogue that allows both parties to observe the behaviours of each other and to also reflect upon their own behaviours. 


[1] D. Fydlinger, K. Vitasek, T. Cummins, J. Bergman – IACCM Research Report “Unpacking Relational Contracts (2016) p23.

[2] B. Lloyd-Walker & D. Walker Collaborative Project Procurement Arrangements (2015)

[3] Adapted from NSW Government ‘Tendering Guidelines’ (2011)

[4] Van den Berg, Matton and Kamminga, Peter, ‘Optimizing Contracting for Alliances in Infrastructure Projects’ (2006) 23(1) International Construction Law Review p 18.

[5] See e.g. ISO 44001 Collaborative Business Relationship Management Systems – Requirements And Framework (2017); Australian Government ‘National Alliance Contracting Guidelines – Guide to Alliance Contracting’ (2015);  T. Lendrum Building High Performance Business Relationships (2011); J.M. Geringer, Joint Venture Partner Selection: Strategies for Developed Countries (1988);   P. Simoons “The 4-step Guide to Partner Selection” (2013);  Duncan Haughey “Supplier Selection Checklist” (2014).

[6] Yannis A. Hajidimitriou, Andreas C. Georgiou “Decision Aiding  – A goal programming model for partner selection decisions in international Joint Ventures” European Journal of Operations Research 138 (2000) 650.

[7] P. Simoons “The 4-step Guide to Partner Selection” (2013) p33.

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About John Davies

John is a recognised authority in collaborative contracts, relational contracts, and novel procurement options. John has conducted extensive research into alliance contracts and governance frameworks from both the buy side and sell side. John has authored collaborative contract better practice guides, performance-based contract evaluation guides, and tender evaluation guidelines for major programs. You can find his CV at LinkedIn.