Professor Richard Wilding

Centre for Logistics and Supply Chain

Management
Cranfield School of Management
www.cranfield.ac.uk/som
www.richardwilding.info

Sustainability through
collaboration or competition
Is Win/Lose or Lose/Win a sustainable way of working?

John West and his Bear

© 2010 Prof Richard Wilding
Sustainable relationships: C3 behaviour and trust
High
Win/Win [1+1=8 !]

Trust
Compromise [1+1=1.5 !]

Win/Lose or Lose/Win [1+1=1 !]

Low

Low High
C3 behaviour
Co-operation, Co-ordination, Collaboration
© 2010 Prof Richard Wilding Adapted from: Covey, 1989
C3 behaviour and trust in 54 collaborative relationships
110
Highly Creative!
100

90

80

70
Trust

60

50

40

30
Total Disaster!
20
20 30 40 50 60 70 80 90 100 110
3
C Behaviour

© 2010 Prof Richard Wilding

Collaboration spiral of failure
Monopoly
Environment
partners are
trapped by limited
choices

Information
Impactedness Opportunism
deliberately only focus on
confuse to gain your own
advantage objectives

Business Bounded
Myopia Rationality
take a short term do the minimum you
view and avoid risk can get away with

© 2010 Prof Richard Wilding

Collaboration spiral of success
Relationship
Quality
creating a win-win
relationship in which
each side is delighted
to be a part

Relationship Relationship Reliability

Communication concentrating on
frequent, open service and product
dialogue and delivery, lowering
information-sharing joint costs and risks,
building up trust

Relationship Relationship
Stability Creativity
synchronisation of promoting quality,
objectives and innovation and long-term
confidence-building approach by encouraging
high performance

© 2010 Prof Richard Wilding

Who has heard of Oliver Williamson?

© 2010 Prof Richard Wilding

Oliver Williamson – Nobel Prize Winner 2009

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009

Transaction Cost Economics (TCE) provides outsourcing and supply

chain professionals with lessons to understand and practice

© 2010 Prof Richard Wilding

Transaction cost economics

Transaction costs are the costs that occur when participating in a

market.

Transaction costs include actual monetary costs, expertise, flexibility,

risk, asset specificity, the cost of managing the relationship, and
supplier set up and switching costs to name a few.

© 2010 Prof Richard Wilding

 TCE and Williamson – Translated.

Available for FREE download –

http://www.vestedoutsourcing.com/consulting/white-papers-2/

© 2010 Prof Richard Wilding

Your style of contracting matters: be credible

Build Trust: leave money on the table

Leaving money on the table may sound foolish, but when striking a
strong business relationship it can signal a constructive intent to work
cooperatively that will build an environment that is credible from start to
finish. As the old proverb states “Give and it will come back to you,
generosity gives rise to generosity”

© 2010 Prof Richard Wilding

“Shared Vision“ can minimize transaction costs

Shared vision can and does reduce transaction costs. When at all
possible, create a shared vision which will guide how both the
companies will work. Companies should create mutually beneficial
agreements whereby the providers are rewarded financially for
achieving the desired outcomes for the company that is outsourcing.
Develop pricing models that reward and incentivize service providers for
achieving the desired outcomes

© 2010 Prof Richard Wilding

Your style of contracting matters: be credible

Organizations that use their “muscle” to gain an advantage over

suppliers may have a short term win, but they will lose in the long term.
Companies will ultimately face higher market costs and transaction
costs from switching or transitioning suppliers, or at a minimum from
suppliers being forced to use conventional negotiations to put in myopic
and costly contractual provisions and behaviors that simply drive up
hidden costs

© 2010 Prof Richard Wilding

A competitive culture?

“A competitive culture endures by tearing

people down”
Jules Henry, Anthropologist.

ls this a sustainable way of working?

© 2010 Prof Richard Wilding

Issue for sustainability

Propositions

To achieve sustainable supply chains UK companies need to adopt

radical innovations and become more collaborative.

Collaboration in the supply chain can make it more sustainable from an

environmental, social and economic perspective.

Information technology can enable the transition from inter-company

competition to co-operation.

© 2010 Prof Richard Wilding

Issue for sustainability

Questions

What areas of collaboration will enhance competitive advantage for all

players.

What are the internal and external barriers for collaboration?

What needs to be done to overcome the barriers.

© 2010 Prof Richard Wilding

Cranfield School of Management
www.cranfield.ac.uk/som
Videos
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Professor Richard Wilding

www.RichardWilding.info

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© 2010 Prof Richard Wilding

Please keep in touch!
If you would like further information on the techniques described in this
presentation, for example, supporting journal articles, or would like to
discuss the content further, please don’t hesitate to contact the author at
the following address:

Professor Richard Wilding

Cranfield School of Management
Cranfield, Bedford, England, MK43 0AL.
Tel: +44 (0)1234 754170
Fax: +44 (0)1234 752158
Email: Richard.Wilding@cranfield.ac.uk
Web: www.cranfield.ac.uk/som/lscm
www.richardwilding.info

© 2010 Prof Richard Wilding