Sunday, November 27, 2016

Managing External Relationships - The Skill of Balancing Clear Contracts With Open, Long-Term Communications

Open door policy or....

staying well protected....

or...well, like many depends.

Business leaders from the Seattle area and I gathered in Kirkland on Tuesday, November 22nd to talk about the "Managing External Relationships" category of the APQC's Process Classification Framework.  At the event were me (Eric Veal, Owner of AppsJack Corporation); Berry Zimmerman, Owner of BizEnrich; Richard Schurman, an Intellectual Property Attorney; Andy Scott, a Fortune 10 Executive; and Christian Harris, owner of a media and real estate business.  Richard and Andy were first time attendees and it was a pleasure to have them there.

Earlier in the month, AppsJack released its first podcast episode about the same topic.  On that podcast Leo Lam, Scott Davis, James Tuff and I talked about the issue in depth.  More information on the podcast can be found at  After the podcast I was left with a big question: "But what about compensation?  If we were to further understood and analyze the various forms of compensation, would we have a clearer answer about the nature of managing external relationships?"

We talked about a multitude of issues within the category and I noted the following ideas:
  • Andy shared that he prefers contracts to be "open".  Flexibility is a necessary part of business relationships.  Being overly controlling, not so much.
  • Berry shared with us some wonderful models that he has built and promotes:
    • The 7 Stakeholders (in priority order):
      • Employees
      • Customers
      • Owners
      • Suppliers
      • Community
      • Competitors
      • Government 
    • The 3 Assets
      • Relational (At the core)
      • Enrichment
      • Financial
    • More information about these models can be seen on Berry's Gifted Referrals website.
  • Andy has a list of 104 items that he has compiled and he could see how these items in many cases bit into the frameworks that Berry has built.
  • We talked about differences between improving-something-exising and building-something-new.  The Six Sigma process has Define, Measure, Analyze, Improve, Control (DMAIC) for improving-something-existing and Design for Six Sigma for building-something-new.
  • Andy made a good comment that the Japanese are good at continuous improvement but not necessarily quantum leaps.  There is an opportunity to smoothly and reasonably lead quantum leaps (big changes).
  • Someone told me that I should come up with a list of Guiding Principles to help me serve as the core of all of my contracts and business dealings.  Sounds fun.  Here's a first start:
    • Be fair
    • Choose relationships
    • Quality over quantity
    • Level up
    • Choose experience
  • We talked about the correspondence between compensation and identity.  For example, how someone compensates (makes promises) in business is very closely related to who the other party perceives they are.  Compensation is both the offered, promised, and actual value given, therefore it is a pretty loaded term.  Performance is the gap between perceived delivery on compensation (value) promises and what is actually delivered.  This is also known as quality.  There is a very close association between quality and performance.
  • When contracting, quality and performance very much need to be defined through good requirements.  Bodies of work abound about writing and managing requirements.
  • We talked a lot about negotiations.  It used to be about "winning" negotiations, and then it became about "win-win".  This is how I learned it at UW in 2005.  We now believe there is "continuous win-win" or process-oriented selling.
  • Berry liked the ideas of "invested" and "vested" and for employees to have skin in the game to encourage better performance.  But I would suggest that there is a class of worker that just works and has no skin in the game.  It might be best to always manage employees to have skin in the game...if only a little...because it makes work more fun and interesting and motivating.
  • Someone mentioned Daniel S. Peña, who I had never heard of.  Sounds like quite an eccentric fellow.
The next podcast recording is Sunday, Dec 4th at 2 PM and the next open meetup is on Tuesday, December 20th at 4 PM.