Dont look up, look down

A lot of people tell me that integration is stalling. They want to work in a collaborative way, but their clients just don't seem to get it and so the cycle of poor profits, products and dissatisfaction continues.

These people tell me that they regularly explain to clients that significant additional value is on offer if they were to be employed earlier, on an open book basis, and in a long-term arrangement. But despite all their remonstrations, they go on receiving lowest cost tenders for isolated elements of projects for which they are uncertain about the actual objectives. How are they supposed to make a difference, they ask?

I sympathise as best I can. It's tremendously frustrating when you believe you have the answers but no one is apparently listening, believe me I know. At this point I may ask "and what is it like for your suppliers?". "Well, you know," they say, "we want to work differently but our clients just aren't asking for it". "Hang on a minute, aren't you a client to your suppliers?" I say. "Oh yes," is the reply "and as soon as our clients change, we'll be right with them".

Now I should point out that this discussion is pretty consistent whoever I'm talking with. It doesn't seem to matter who the supplier is, they are almost all waiting for their client to change. And when you get to the primary clients, apart from the isolated few, most say they aren't really the experts and so they are just doing what everyone else is doing, or what their advisors tell them is the right thing to do.

It's at this point I start to think about leadership. Who really wants this change; I mean really wants it? In my experience people who are absolutely clear about their ambition will allow nothing to get in the way of achieving it, certainly nothing in their control. These people practice ‘blockbusting’: they identify all the barriers in their paths and categorise them into those they have influence over and those they do not. Then they set about systematically changing everything in their control and at the same time trying their hardest to influence those who have the power to change the things they can't control directly.

Identify the barriers; change the things in your control; and influence those who can remove the other blocks.

So how does this apply here? It's simple. You can directly control the way you engage with your suppliers, but you can only influence your clients. You can choose to establish long-term arrangements based on open book frameworks and early and continuous involvement with your suppliers. If Sir John Egan is right, and I believe he is, two thirds of all the opportunities to improve systems and processes and to strip out waste, are available in the heart of the supply chain in tier two and below (if I can use that unsatisfactory, but currently recognisable description).

So how will this benefit you if your clients continue to send you lowest price tenders? The answer is rather exciting. You will be able to win those tenders without having to make suicidal offers. You will be able to make a realistic return whilst beating the prices of your non-integrated competitors. You will understand the real costs and be able to add value to your clients even though you were appointed on a lowest price basis. In short you will have the competitive advantage. And once inside you will be able to influence your clients by opening their eyes to the extra value on offer for them by fully engaging with you and your supply chain.

So the choice is yours. You can either wait around until your clients get it (and hope you're still in existence), or you can decide to take action. Integration isn't stalling for those who really want it, but it is stalling for those who only look up to those they cannot change, instead of down to those they cannot do without.