Any healthy business relationship is based on encouraging continuous improvement, measured risk-taking and a long-term perspective. A Win-Win approach is the ideal strategy with a principal focus on investment in value rather than the pursuit of cost reduction.
This Win-Win approach can only succeed under two conditions:
- Each party should have the same mindset and each must strive to achieve a positive conclusion.
- The organizations must have a comprehensive understanding of their mutual objectives. This is achievable through active listening, empathy, and trust through time. Clear and honest communication is an absolute necessity for success.
If these two simple conditions are met, then this Win-Win gainshare approach is ultimately possible. Gainsharing is a system of management used by businesses to increase profitability by motivating both parties to improve their performance. It needs mutual participation along with shared goals and it is vital that both entities fully understand what they have agreed to and how the results will be measured. As examples, the goals may be to reduce purchasing spend, improve productivity or a boost in operational performance. It is sure to succeed as long as it’s a shared endeavor.
The methodology has three primary enablers for success:
- Gainsharing requires a high degree of trust between the two parties which is key to establishing the model
- A clear and mutually agreed articulation of the mechanism for sharing risks and gainshare
- A disciplined execution allowing solid tracking and control of business performance or financial results
In a Win-Win model, both parties are equally committed to gainsharing and to each other’s success.
Based on the Win-Win model, the high-performance vendor greatly increases the likelihood of repeat business with the customer. This is a long-term strategy to drive value for the partnership allowing continuous growth and improvement.