Headline from the Atlanta Journal-Constitution, May 12, 2007
I am often amazed when I see glaring headlines like this one and then read the supporting articles, which often describe what went wrong vs. who went wrong. When Dell, the nation’s biggest maker of PCs, publicly announces that they will discontinue relying on UPS, the world’s biggest package deliverer, to handle its biggest box deliveries in the U.S. and instead will turn to UPS’ biggest rivals – FedEx and DHL – is it any wonder that this is a classic example of dropping the ball in the end zone in a strategic relationship?
Granted, Dell has switched delivery suppliers in the past and UPS will continue to handle its international shipments and logistics issues. None of us knows the whole story, but when you read that the two companies “were simply unable to reach an agreement for pricing for renewal of this particular contract,” doesn’t it make you wonder if pricing only becomes an issue when there is a perceived lack of value?
According to IDC, which tracks data about the technology industry, Dell shipped over 20 million PCs in the U.S. market last year, just over half of its worldwide shipments. Bear Sterns estimates the lost business to UPS at about $150 million a year. But with slipping market share and an effort to streamline operations, and cost cutting efforts from manufacturing to logistics, one can’t help but wonder just where did UPS rank on Dell’s strategic value pyramid and vice versa?
Here are some recommended best practices in your efforts to build and nurture strategic relationships with your most valuable clients:
1. Get your executives out of Mahogany Row and in front of both your current and perspective top clients.
2. Engage those clients in candid discussions about what’s working and what’s not. Specifically, develop a vested interest in each other’s success – not just through empty press releases, but with deep organization-wide felt prioritized initiatives.
3. Succinctly understand and align your valuable resources with not only the fundamental businesses of those key clients today, but also where they are headed moving forward. Strategic relationships, by definition, should elevate your perspective beyond your current contributions to a much broader perspective and access to a much broader group of stakeholders.
4. Develop a strategic dashboard for the progress of mutually agreed upon key initiatives. Develop and leverage what is working and simply pull the plug or modify what is not working to accelerate both organizations’ ability to see quantifiable value from the strategic relationship.
5. Constantly review who should be on the bus and who needs to get off the bus including the executive sponsors. I am amazed how often chemistry, culture and the basic tenets of human interactions are an afterthought in strategic relationships between two organizations. Here’s a Dadism for you: People deal with people they know, like and trust!