Is it worth it to collaborate or partner up with some of the players in your supply chain? Can you really trust them? Most likely not. If I am to judge by what Paul D Cousins wrote in 2002, there's not much hope that a collaboration attempt will take you anywhere in the long run. Really?
Cousins contends that
all firms are ‘snakes’; they are maximisers and satisfiers concerned with their own survival and self-interest.
I find that a rather harsh statement. That said, the issue that needs to be addressed is perhaps not so much the problem of trusting each other, but the problem of optimally managing the self-interest of the involved parties. And in the end, competition is maybe better than collaboration, when you think about it for a while.
Business relationships are not complex, they are simple
Using a game theory approach, Cousins develops a model of inter-firm relationships, based on the following key points:
Partnerships do not exist, varying collaborative relationships do.
Organisations do not trust each other, decisions are based on risk assessment.
A relationship is a process, not an entity.
While I personally like to believe that this black-and-white world view on business is not the case, Cousins does make a good case for his approach.
Two strands of research
Cousins identifies two types of business relationships:
a behavioural approach – businesses can interact as humans do in their relations
an economical approach – business interactions are based on economic power
These two relationship approaches seem irreconcilable in that while the latter emphasizes short-term cost reductions as the (only) means to compete and survive, the former advocates long-term partnering as the surefire way to survive in the long run.
The new paradigm
Cousins develops a model of inter-firm relationships, where the level of certainty versus the level of dependency determines four types of relationships:
Independent/Uncertain – Traditional/Adversarial
Dependent/Uncertain – Opportunistic
Independent/Certain – Tactical Collaboration
Dependent/Certain – Strategic Collaboration
Cousins defines Dependency by these terms:
Historic – An established relationship
Economic – One-sided, market leader or technology leader vs. the other(s)
Technological – One-sided, technology supplied vs. technology required
Political – Legal or political obligations to use a certain supplier
Cousins defines Certainty by these terms:
Contractual – will either party really stick to the contract?
Competence – does either party really have the skills or capabilities required?
Goodwill – will either party really help each other out if necessary?
Political – will either party fulfill internal or external issues, related and/or unrelated?
A relationship is an ongoing process
In conclusion, Cousins argues that while collaborations may have their rightful place, it is more useful to think of relationships as a continuous process that moves between the four boxes in the figure above. Relationships are not static, they are dynamic, and dynamic here does not mean disbanding old relationships and forming new ones. rather does it mean to take existing relationships to other levels of dependency and certainty. As Cousins says in one of his final statements: ‘The issue is about choosing the correct relationship process to deliver the desired output.’
The snake citation appears in the last paragraph, in which he writes:
It must be remembered that all firms are ‘snakes’; they are maximisers and satisfiers concerned with their own survival and self-interest. If that self-interest is best served by working closely with another firm then they will do so. However, when that interest is no longer served, rest assured, they will bite you!
Two interpretations come to my mind: 1) There’s really no point in collaboration. You will lose anyway. 2) Unless a you keep your relationships under scrutiny (and change them accordingly), they may backfire before you know it. Either way, collaboration is obviously not THE way to salvation and should not (necessarily) be the first-order strategy for any business. Not according to Cousins.
Interestingly, Göran Svensson, in his 2004 article Vulnerability in business relationships: the gap between dependence and trust, picks up a similar note, when he developed his see-saw model of dependence and trust.
COUSINS, P. (2002). A conceptual model for managing long-term inter-organisational relationships European Journal of Purchasing & Supply Management, 8 (2), 71-82