I just finished reading The Vested Way: How a “What’s In It for We” Mindset Revolutionizes Business Relationships by Kate Vitasek and Karl Manrodt. This invaluable e-book got me thinking about the current state of affairs in our parcel industry. The authors provide a path on how to take collaboration and partnership theories and turn them into real world practices — something that is highly applicable to any parcel shipper, carrier, vendor, or consultant.

Vitasek and Manrodt write and share examples of companies creating successful relationships by changing their perspective. The companies shifted from an “us versus them” to a “we” business philosophy and obtained game-changing results for all involved. This shift is further supported by Nobel economist John Nash’s theory of governing dynamics — how the setting of clear strategy and working together provides the opportunity to win together.

Further evidence on the value of going Vested today and an important part of the above mentioned shift is changing from the old zero-sum game (us versus them) to a non-zero-sum (we) position. We can either continue to fight over what remains of a small piece of pie or work together to bake more pies and expand the opportunity for all. If you read the book, you’ll understand the analogy.

Practicing The Vested Way requires following these five rules. These rules provide a practical framework that all parties can easily understand and follow.

Rule #1: Focus on Outcomes, Not Activities

Business boils down to getting results.

Rule #2: Focus on the What, Not the How

One of the greatest paradoxes in business is that we hire experts to help us and then fall into the trap of telling them how to do their job.

Rule #3: Clearly Defined and Measurable Desired Outcomes

You need to know how success is defined. Remove ambiguity, clearly communicate the desired outcome to all who will be involved, and make sure they know how the outcome(s) will be measured.

Rule #4: Pricing Model and Incentives

The goal here is to optimize value. The provider should be rewarded for delivering a solution. Equally important, pricing should balance risk and reward for all parties.

The true cost of a product or service goes well past its purchase price — sales price, risk, expertise, flexibility, and time are all important components of the transaction cost.

The gain-sharing model is exposed for the risks it presents to all parties and is worth the read in and of itself.

Rule #5: Insight versus Oversight Governance

Since results are delivered over time, they must be managed on an ongoing basis. The structure of an agreement needs to recognize this and provide mechanisms to deal with change.

The authors refer to the Nobel Prize winning work of Dr. Oliver Williamson. A key part of his work is referred to above with regards to helping companies understand true cost: the transaction costs. Another aspect of his work, and one that can be felt by many parcel industry participants today, are his three basic ways of working with customers and suppliers:
• Muscular
• Benign
• Credible

How you play matters. Making risks higher than they need to be, or not properly identifying the risks you face lead to higher prices or contractual safeguards that may not be necessary.

Another applicable lesson from this work is how parties working together bring their unique skills and resources to the relationship. For our industry, the shipper-carrier relationship is one of paramount importance. For providers and consultants, we must offer real expertise, provide a unique skill set, increase availability of resources to resource-strapped companies, and provide a methodology to expand the pie for all involved.

The Story of the Sherpa

On May 29, 1953 Edmund Hillary and Tenzing Norgay became the first people to summit Mount Everest. The question was often asked, which man made it to the top first? The expedition’s leader, Colonel John Hunt’s response was, “They reached it together, as a team.” Years later Norgay wrote that Hillary stepped up first and he followed. But does that really matter? Without working together, would either man have made it?

As we think about where our industry stands today, that story has powerful meaning. Let me paraphrase a line from Vitasek and Manrodt for all of us to consider: What Mount Everest can we conquer by working together?

To learn more about The Vested Way, I encourage you to go to their website: www.vestedway.com. You can also link to the e-book from there.

Doug Kahl is a contributing writer to PARCEL. Contact him at dokahl@cox.net