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By Kevin Vaughan-Smith, Joint MD Mutual Value

What the new normal will look like isn’t clear yet, but the broad discussions we have had as a result of our recent seminar series it’s become clear that many of us won’t go back to the transactional thinking that has been at the heart of so much of business and its relationships with others.

Stephen R Covey, in his book ‘The 7 Habits of Highly Effective People,’ published in 1989, contrasted Industrial Age leadership – stick and carrot, win lose and ego centred – with Knowledge Worker leadership – whole person centric, purpose led, synergistic – and concluded that the latter would be critical to our ability to engage and motivate generation Y and Z, digital natives.

Since then we have had countless studies that echoed the need for leaders to create purpose-led organisations, and their performance advantage.  Ricardo Semla, in his book written from his experience of democratic leadership, ‘The 7 day Weekend’, illustrated the power of true collaboration between workers, unions and suppliers and the power of eco-leadership.

The reality however is that no matter how powerful the messages from these great authors, the vast majority of businesses have continued to focus on short term goals, win-lose, expediency, and leadership defined in the narrow interest of the few stakeholders.

This enforced pause of Covid-19 is not only the opportunity to change but it has also demonstrated to people, and hopefully leaders, the value of collaboration and a far stronger sense of human value.

Prior to COVID, we have written about the crisis in the construction industry and referenced the PwC report on lack of profitability as one of many examples of the failure of ego-led and transactional thinking.  It wasn’t only a failure recognised by industry players; it was also showing up as dissatisfaction in the Government and in public results. Government procurement, the result of years of transactional thinking was breaking down, and the Government has committed to change it.

Transactional thinking is evident elsewhere in business – in fact it’s everywhere.  You can observe it in the pay and reward systems that pit one colleague against another, the interdepartmental battle for resources, a silo mentality in so many businesses as to their approach to their Clients, the failure to deeply understand and communicate a common purpose, values and beliefs, attack dog procurement processes, internal audit as an internal police force and risk management as a tick box exercise,  the politics and corridor conversations that betray trust at all levels, etc. etc. None of these is called out, because it’s not unusual – it’s just the way things are – or were.

Forward thinking businesses have an opportunity to take advantage of the power of collaboration.  Leaders will recognise that their businesses will be far more effective, efficient and engaging for their team when considered as an internal eco-system, not a series of departments.  They will create a powerful purpose which engages colleagues with common values, behaviours and language which could result in maximising the application of their resources to the most important priorities, investing in the right platforms for their operation and finding suppliers and customers to whom they can extend this same thinking. 

A recent Harvard study showed that ecosystems are far more resilient to crisis than traditional ego-led and transactional firms. However we believe that crisis is just the magnifying glass that has highlighted their inherent advantage.

By making a conscious choice to move away from transactional thinking, leaders can not only leverage the resources and talent more effectively in their own organisation, they can also combine with others outside of their immediate span of control; but to do so will lead to many of the old institutions – such as procurement, risk, HR and internal audit – rethinking their role, and their approach.  Richard Anderson, ex-Chairman of the Institute of Risk Management, cited one particular change: instead of procuring at the least cost as the low risk option, the ecosystem will procure for maximum benefit and value to the whole constellation – the risk of not doing this being destroying the ecosystem relationship itself.   The risk there is that you miss out on the far greater value which could have been created and put you at a competitive advantage. This is a very different and far more effective perspective.

At the heart of this potential revolution is a belief in the power of human relationships, and the opportunity that is created by unleashing collaboration. 

To finish where we started with a thought from Stephen R Covey on this topic. His definition of synergy “is the idea that the whole is greater than the sum of the parts. One plus one equals three, or six, or sixty”.  COVID has given us the opportunity as leaders to take advantage of what many of us know to be true;  but as leaders we can’t simply tell everybody to be more collaborative, or indeed come up with a new plaque for Reception: we have to start with ourselves and our leadership team.

At Mutual Value we work with organisations who want to be more ambitious about that they can achieve with their customers, suppliers and partners. This is based on a changed mindset, a new skillset and a toolset we have developed, and deliver through consultancy, training and coaching programmes.

If you would like to set up a call to discuss this please email sophie@mutual-value.com