We tend to think of business strategy as essentially timeless, but that's not necessarily the case. A lot of times, yesterday's paradigms are worth about 20 cents.
In the last century, for instance, value propositions tended to center on a few themes:
- Price – we are less expensive than the competition (the term "cheaper" was studiously avoided)
- People – we are smarter than anybody else
- Processes and Products – we've built a better mousetrap, and we've built it a better way.
But these days, we're hearing some new themes, such as:
- "We are really easy to work with"
- "You ain't seen nothin' 'til you've seen our service"
- "We help you make things happen"
- "We're in this together."
So what does this mean? Have cost, quality, creativity, and processes fallen off the radar? Not at all. Continuous improvement in value (what the customer gets for the cost, not simply a low unit price) will remain a core objective for companies and for supply chain organizations. Attracting and retaining the right talent will forever be a critical contributor to success. And re-engineering and refining processes for design, planning, execution, quality, communications, and marketplace relevance must be a way of life in a fiercely competitive global economy.
What has changed is that nowadays, everybody claims to have the best people, prices, and processes. And when everyone has them, they're no longer a source of competitive differentiation. They've simply become table stakes—what it takes to be in the game at all.
Enter the Neanderthals
Some are left shaking their heads. "Enough of this soft stuff; we're after hard business results." They've made fun of what they call the "soft stuff" for so long that we've all become a little defensive about it. What they're not getting is that the "soft stuff" is the hard stuff.
To put it another way, what they call the "hard stuff" is not sustainable without the soft stuff. Lowest price might get the first order; shoddy quality might disqualify a supplier from any future sales.
Smart people who are abrasive might get through the bidding process but turn an entire company against them over the course of a working relationship. And bright people will not stay long in a working environment that is not positive and supportive. Perhaps they'll tough it out in a weak economy, but they'll bolt for the door at the first sign of turnaround.
An excellent product without strong service behind it won't score many repeat orders. And processes that don't contribute to strong, timely communications and multi-level relationship building can exhaust an otherwise satisfied customer.
Why is the soft stuff hard?
There are several reasons, and they're all important. And they've got to be mastered before a company can hope to be effective at the hard stuff.
It begins with the reality that people are all wired differently. Left to their own devices, they'll kill off (figuratively) those who aren't pretty much like them. They—at all levels in an organization—need to learn how the "others" are different, and how they can use the differences to create more effective, higher-performing organizations, solutions, products, and processes. In the process, they also need to learn about themselves, their strengths, and their weaknesses.
Then, there's the vital need for alignment, again at all levels. The senior management team has got to be, without reservation, behind a singular vision and mission. Components of the organization must link their efforts with strategic directions and clear supporting objectives. They also need to communicate and collaborate with peer corporate functions for integrated and multi-faceted solutions—and learn to trust those they've been suspicious of in the past.
Finally, all of this vision, collaboration, and communication has to get baked into the corporate DNA. The new way of working together can't afford to be a transient program-of-the-year. Every clerk, every order picker, every salesperson, every IT specialist has to get it.
True story: A company we know of lost one of its best customers because an accounts payable functionary with a bad attitude aggressively dunned the customer for an invoice that had already been paid.
Examples from the real world
You're probably tired of hearing the same old names, but let's give credit where it's due. Who in the brick-and-mortar retail arena is easier to deal with than Nordstrom's? For sure, they don't have the lowest prices. But they are borderline cult-like when it comes to customer service, and their customers are not only happy, but loyal.
How about L.L.Bean in catalog retail? Or Infiniti in automobiles? Or Ritz-Carlton in hospitality?
We'll not name names in the supply chain universe, lest we offend a worthy candidate by omission. But contemplate a logistics service provider (LSP) that thinks more about how to strengthen your position with customers than it does how much to charge for each transaction. Consider the IT specialist who works 24/7, not to finish a "deliverable," but to flush out the bugs in an implementation.
Reflect on your relationship with a service provider who doesn't already "know" the right solution for you, but instead figures out a way to customize a standard solution to fit the needs of both you and your customers. Back to the LSP world, how do you react to a company that wants to invest time and resources in building a long-term relationship with you, rather than try to recoup last year's losses with a series of take-it-or-leave-it rate increases?
The long-term view
In the end, of course, what's important in the hard stuff/soft stuff balancing act is how to do the hard stuff in a way that has legs, in a way that will last over the long pull. The answer lies in beginning with the soft stuff.
Almost any fool can drive a hard bargain once. But he or she is a one-trick pony. Without the foundational infrastructure the soft stuff builds, the bargain is tough to replicate, and impossible to maintain. It's even a Pyrrhic victory in some cases.
We are reminded of the cheese maker that decided to wrestle its carriers to the earth every time out to get the lowest possible rates. Brilliant, until truckload capacity was in short supply in the harvest season, available only to those who had treated the carriers fairly the rest of the year. To quote Monty Python, "Blessed are the cheese makers." Not in this case, though.
Loxo/Planzer