Consulting Journal: Methods

Methods: Win-win

by David Blakey

The term 'win-win' applies to a specific kind of deal, and not to any transaction from which both parties benefit.

[Monday 17 December 2007]

Some years ago, when I was introducing clients to the concept of win-win, I was told that it would not work, as one or other party would be selfish. In fact, I helped to put together a number of deals that did work and that were win-win.

These deals usually involved a major client who wanted to outsource some part of their business and an IT company that was eager to move into services. The client was willing to work with the provider because they would get good service. The provider was willing to work with the client because they would be able to establish their services. These were genuine win-win relationships. Each party knew what the other wanted and was prepared to help them to achieve it.

It was clear to me that only a certain kind of relationship between a customer and a supplier could result in a win-win situation.

Business as usual

Recently, however, I have heard people talking about developing a win-win situation with the supplier of a software package. One customer imagined that they could build a win-win relationship with a supplier of a standard accounting package. Now, it is true that both parties will benefit: the customer will get the accounting package and the supplier will get revenue, but this is not the basis for a win-win relationship.

If the customer and supplier are going about their normal business, then they will both benefit, but it is not a win-win relationship. There can only be a win-win relationship if the customer and supplier are both planning to do something together that is outside their normal business and that involves risk to them both. Win-win means innovation and risk and a spirit of co-operation.

Win-win

One of the deals that I put together involved a customer that wanted to outsource its local area networks. One of its suppliers provided the customer with hardware and software: it had not previously provided services. The customer was aware of the risks if it failed to find the right supplier. The supplier was aware of the risks if it failed to take over the customers LANs. They were ideal candidates for a win-win relationship, and that is what I established between them. Both were fully aware of each other's current situation, plans, problems and risks. They worked together to achieve their joint aims. For the customer, one of their aims became that of helping the supplier to become a successful service provider.

As a footnote, and as I write, that deal was formed ten years ago and it is still working today. The customer and the supplier still work on a win-win basis.

Virtual companies

Some years ago, when win-win was being established as a business model, there was discussion of virtual companies and virtual teams. The idea was that two companies would work together by forming a virtual company, consisting of people and resources from both real companies, and that this virtual company would complete the project. It was suggested for some major outsourcing projects.

The problem with forming that third virtual entity was that it established a third culture. All major corporations have a distinct culture. Often, the public is aware of those cultures. Most people have some idea of the cultures within Microsoft and within Google, for example. If two major corporations worked together, it would be extremely difficult to form a culture for a shared virtual company, based on the distinct and powerful cultures of the two partners.

Also, the third culture would only last for as long as the project, and people would then to rejoin one of other of the two original cultures.

I have always found it difficult to imagine the concept of a virtual company working. I prefer the idea of two distinct partners who know each other's strengths and values and are prepared to work together to achieve a shared goal.

Timing

Timing is important to a win-win relationship. When my customer planned to outsource its networks, it had no outsourcing provider available to it locally. It did not wish to outsource offshore. The other partner, the supplier, had established itself selling and supporting the hardware and software for local area networks. It wanted to move into offering an outsourcing service. Both wanted to achieve their goals within two years. That was the time to start a win-win deal.

When they began working together, they both knew that there would be problems in transferring ownership and management of the networks. In order to get good terms in the ongoing contract, the customr was prepared to provide support to the supplier during the transition. The supplier was willing to offer a premium service, including access to new services in the future, in return for the customer's assistance.

Now, any other service provider that wished to challenge the incumbent could not expect to work on a win-win basis. They would have to give the customer a great deal in order to win their business. In the same way, no new customer of the supplier would be able to negotiate the same kind of deal as that first customer. This is no longer the time for any win-win deal.

For any customer and supplier, there is a period of time during which a win-win deal could be possible. After that, no deal of that kind will be possible again. Anyone looking for future win-win deals must keep looking for opportunities as they arise and must act on those opportunities quickly.

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