McKinsey, the strategic consultant and advisory firm, has discovered collaboration. At least, they have discovered collaborative contracting - I don’t know whether that translates to McKinsey itself collaborating with anyone!
While welcoming this ‘discovery’, which is outlined in two recent articles. I would be even more enthused if McKinsey drew on - and perhaps contributed to - the extensive body of existing knowledge and experience in this complicated field. Collaborative contracting is not new. There is a wealth of data on causes both of success and failure. It is implementation that is challenging.
‘Collaboration’ takes many forms (a point that McKinsey acknowledge) and it is therefore perhaps an unhelpful term. After all, why would any organization set out to be deliberately non- collaborative with its customers or suppliers? The point is more about working out the degree of collaboration required and how this will be supported through an appropriately structured relationship. Organizations struggle to build collaborative frameworks because internal systems, data flows and performance measures typically stand in the way.
Data shows that many workers find it more difficult to build collaboration internally than externally. Certainly when it comes to contracting, the diversity of those involved creates real complexity. Without a more holistic approach to the lifecycle of contracts and relationships, it is unlikely that external collaboration will occur on anything other than an exceptional basis.
The good news is that market forces seem likely to change this by forcing a reappraisal of how value is created and delivered. The new mantra of ‘purpose and profit’ will only be achieved through fresh attitudes and behavior. New technologies will play a massive role by simplifying data flows and communications. Transparency is foundational in collaborative relationships and, until now, has been extremely difficult to achieve at scale.
Hence the key point is not that increased collaboration delivers benefit. That has been understood for years. What matters is how to achieve it as an innate and sustainable capability - and this is the question that serious researchers such as IACCM, Kate Vitasek and others have been exploring. Recent work has focused on how to better analyze the type and depth of relationship needed, thereby ensuring an appropriate commercial model and contract terms. We are past the point where proof of concept is needed. It’s time to operationalize.