Not long before the corona crisis I read the book ‘Enlightened Capitalism’ by James O’Toole. I wanted to understand more on what I have seen happening for a while now in the area of value creation, co-creation and more even on how the relationship between “earning money” and “being good” was evolving. The book elaborates on some valuable lessons on these topics. How can we apply those lessons to the current corona situation? What’s next after the crisis?
Before I go into that, I must stress the fact that I see a lot of good, empathic, creative and entrepreneurial stuff happening out there. I see people doing great things.That does not necessarily mean I see organizations doing great things. The fact that certain organizations out there gave their shareholders and senior management huge pay outs in January and are now complaining at the door of the government, fills me with horror. I also see individuals, leaders, that realize it is up to them to make a difference and take voluntary pay cuts and not throttle their suppliers. And that last part is what I wanted to talk about in this blog.
How to treat your partners and suppliers in times of unprecedented uncertainty
I aminvolved in contract management and a firm believer of the CATS CM® approach. Also, I strongly believe that for any target – and I really mean any target – you are dependent on your partners and suppliers in the value chain. A contract is the foundation of these collaborations. In most contracts this current crisis is or was not foreseen. To be honest, was there any contract prepared for this? Whilst a lot of legal people will tell you that it is “force majeure” and that you can do a lot. But luckily, I also see smart people who understand that this is the moment to actually stand shoulder to shoulder and survive this together. Let me give you two simple examples.
Let’s hide behind the value chain
Many organizations out there prolong their payment conditions to 90 days instead of maintaining the normal 30 days (according Dutch law). Interesting, right? Certain companie sare making their problem the problem of others. This especially seems to occur at large companies with a strong buying position. For me, this behavior is unacceptable. I understand that if you are with your back against the wall, you need to be tough. But are you really that pushed against the wall, that you need to harm the parties that support your business? Is the bank unwilling to support you?Are you really that much into trouble? And should you decide to this, are you willing to give something in return? Would you be truly helping them out the next time? Would you shop with them in the future?
Let’s help the supply chain
I also see organizations out there that actually pay invoices forward. Organizations that explicitly ask their suppliers and partners for a preliminary invoice, because they understand their pain and problems. Interesting to see, but I do know that theywill have stronger relations with their partners when this crisis is over. They understand the value of a true partnership and being together in these difficult times. They will be victorious.
Managing the ecosystem
Understanding the nature of your partnerships, your contractual relations is not a just pure Pavlovian thing of responding to a crisis. It is about realizing what your position is and how you fit in the ecosystem. Coming back to the ‘enlightened capitalism’, for me enlightened is that you understand your role and you understand that you are more than just a money making machine. It is about taking your role in society as a human being. Understanding and managing your total portfolio of contracts is your business ecosystem; both selling and buying. Now, if you can create more value in there, your organization is unstoppable after the crisis.