The Achilles’ Heel of Enterprise Agility: The Business Partners

Business partners and contractors can provide specialized capabilities that help companies meet strategic goals while reducing costs and risk. But problems with these business partners can arise when organizations change their mindset, ways of working or strategy.

A few years ago, I had the opportunity to help a client who wanted to increase enterprise agility. Their executives and management did not have experience with large-scale change, but they did have good intentions and an honest desire to improve the company. In this organization, internal teams belonging to a strategic partner worked in the same offices with the company’s employees. But in reality, they were not part of the staff.
While this arrangement provided a competitive advantage for several years, the organization eventually decided to change its strategy in order to increase enterprise agility. The client asked the strategic partner to split up its highly qualified teams so they could transfer knowledge to the organization’s employees. The strategic partner indicated that his contract did not allow individuals to be separated from their original teams. Initially, this blocked the company’s new strategy, and it took months to unravel.

This situation might seem illogical, but it is not unusual, and it is a great inhibitor of enterprise agility. From the customer’s perspective, replacing a long-term dependency can be costly and extremely risky. I have also seen situations where suppliers with great prestige or unique skills establish a dominant position within a company. In these occasions, they often impose their conditions and ways of working.

Relationships with external partners should always be based on mutual trust and benefit. Reviewing these relationships at the beginning of any major change or business transformation makes it possible to recalibrate the partnership so it aligns with the new objectives and strategy.

Executives and managers should have crucial conversations with their strategic partners. These early meetings must be transparent about expectations and new goals. All of this should happen long before any major change.

New contracts and agreements need to be reached. But above all, organizations must create a new framework of formal and informal working values to govern the new relationship.

During these early meetings, it is also essential to keep in mind that change is difficult, but all parties must support each other to move forward.

This is also a good time for executives and managers to analyze why these skills are outsourced and to ask the rest of the organization for alternatives.

Regarding strategic partners, everyone must be prepared for the following situations:

  • Strategic partners do not want to invest in changing their ways of working.
  • The business models of the strategic partners are not compatible with the new ways of working or with the company’s mindset or objectives.
  • The strategic partners are not ready for the new type of collaboration and cannot offer a relationship like the one requested.

In my opinion, the initial pain of losing a strategic partner or group of contractors is better than sacrificing the organization’s long-term business agility.

Remember that you can find new techniques to increase enterprise agility during a business transformation in my latest book Leading Exponential Change).

Thank you for listening,
Erich

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