As the international Facilities Management community eagerly await the release of ISO 41,001 the first and unifying international standard for Facilities Management systems in April. I would like to draw your attention to another standard that I think will revolutionise collaboration in our industry. ISO 44,001 Collaborative Business Relationships.
Many paragraph inches have been written that make this standard sound like a much-vaunted cure-all remedy for most organisational ills. Claims are made like, improved employee engagement and morale, better communications and alignment across functions, enhanced cooperation between operating units where “silos” have created negative productivity and barriers for high performance. Significantly better supply chains that will remove unnecessary transaction costs. Customer relationships that will result in new revenues lines. Outsourcing contracts, partnerships, mergers and top-notch key account management capability are predicted to lead to increasing contract retention and the inculcation of innovation, leaner operations with better leadership focusing on value creation.
This all sounds wonderful, something akin to a Verimark TV advertorial. So is ISO 44,001 a wonder cure or just more snake oil?
I have previously written a couple of blog posts about collaboration, in 5 Key Steps to Achieve Collaboration, I looked at a simplified approach to the subject. In Why Co-Collaboration is the Future of Outsourcing I talk about a greater demand for help, advice, and innovation from outside our organisations and how we will need to develop a higher capacity for more profound relatedness and authentic partnerships. Today I want to look at why we need a standard and its benefits. In next week’s post, I will delve into a little more detail as to its contents and structure.
In my younger corporate days, there used to be an office game called ‘bullshit bingo.’ This is where you’d be sitting in a presentation, and you have a list of the most overused cliches in business, and you tick them off as the presenter undoubtedly went through a standard raft of office speak and platitudes.
You could be forgiven for playing the same game when reading most of the Facilities Management tender documents issued today. They will almost inevitably contain well-meaning objectives such as innovation, partnership, collaboration, customer centricity, etc.
I am not denigrating these lofty aspirations it is just that the lip service that is paid to them falls way short of either party actually making efforts trying to achieve them.
The decision to adopt collaborative business practices is not easy or cheap and comes with a considerable amount of stress. Changing organisational values, adopting new methods, and reinforcing new behaviours requires excellent leadership, careful planning, and building internal support. ISO 44,001 embraces this need for collaborative leadership and helps guide us in setting up the right preconditions for success.You could be forgiven for playing 'Bullshit Bingo' when reading most of the Facilities Management tender documents issued today. Click To Tweet
Why a Collaboration Standard?
There is no doubt that the need for organisations to work together has never been more critical. Clients are looking for more innovation from their suppliers. Suppliers are looking to deliver solutions to achieve a real partnership with the clients. This is all in a drive to meet the demands of a growing global competitive landscape where both parties are trying to understand the impact of technology and deal with an ever-increasing degree of transparency.
Today’s operating environment is a complex highly networked and fast-moving platform. While collaboration from an entrepreneurial perspective is commonplace between individuals, transitioning this to collaboration between organisations is much more complicated. Unfortunately, this ideal is often exacerbated by our reluctance to move away from a traditional contracting environment.
Where business relationships are measured in years rather than in hours or days, collaboration is absolutely essential. Typically in the facilities management industry contracts may last 3-5 years and up to as long as 25 years in the case of some Public Private Partnerships (PPP’s).
What’s more, that relationship goes through a number of phases in terms of mobilisation, transitioning, improvement through to business as usual, which is often then followed by a period of consolidation, innovation and then continuing improvement again. All of these phases are expected to demonstrate collaboration, partnership, and customer centricity.
Contracting Facilities Management
More often than not FM relationships are governed by procurement processes that are geared towards, either buying commodities whereby something is ordered, something delivered and paid for and then the relationship ends until the next purchase. Or it is geared towards a short-term fixed-price service that is provided on a regular basis.
The standard facilities management contract is neither. Is a variable cost service contract lasting many years requiring a level of delegated authority to be given to the provider. The straitjacket of traditional procurement processes does not facilitate this kind of essential autonomy for the service provider.
Consider the example I was recently faced with whereby the client’s procurement processes force us to get five market-related quotations for ANY expenditure. In real terms, this means that five contractors are required to visit often remote sites at their expense and provide competitive quotations for repairing such small items as a door handle. Ludicrous I know, but this is a real-world example.
Hardly surprising then that the contractors are unwilling to provide service, maintenance grinds to a halt, and the client wonders why his portfolio is in a poor state of repair, yet the Customer continues to demand cost-saving innovation and improvement.
The World is undoubtedly changing faster than most of us could’ve imagined even five years ago. Research by the Institute of Collaborative Working (ICW) identified that by 2020 most business models would embrace collaboration, partnering or some form of alliance.
Having said that the focus is still very much on the traditional contracting environment where tenders and the resultant contracts can be measured by kilograms of paper rather than by output or better yet outcomes.
We have come a long way from the first Industrial Revolution. Indeed we are currently in the fourth Industrial Revolution, but most contractual thinking is still based on what suppliers can do for clients, what we can bring to market rather than behaviours, skills, and expertise.
The ISO standard 44,001, will provide a significant competitive advantage to those organisations on the supply and demand side of an FM contract, which need to form partnerships, alliances, and collaborations. If in any of the situations we have failed to start a collaborative journey we run the risk of being unprepared to deal with, and compete in this is ever accelerating market of change.
ISO 44,001 is the first international standard to address collaborative business relationships providing a consistent framework which can be scaled and adapted to meet particular business needs. The standard focuses on organisational culture and its resultant behaviours, allocating management process that provides a common platform to underpin co-collaboration and sustainable business relationships.
The Standards of Practice are flexible enough to enable adaptation to a wide variety of applications and for innovations to arise.
The most significant implication for collaborative working on a day-to-day basis has to be the relationship customers have with their suppliers. In this instance, these relationships would typically be managed on a day to day basis by procurement. But it would be a mistake to assume that a high level of capability and skill in purchasing that procurement departments have, is sufficient to collaborate successfully on long-term or strategically focused contracts.
Today’s commercial world with the high degree of change, specialisation and agility required, means that fewer and fewer companies have the means at their immediate disposal to meet the challenges they face. Increasingly businesses are looking outside of their talent pool to seek development partners and form alliances to compete effectively.
While a transactional relationship with most customers characterises most supply relationships, it is as true of suppliers as it is of customers that a specific set of skills is required to collaborate on long-term contracts. The sales department have probably long moved on to the next opportunity, and operations are rarely resourced to conduct key account management satisfactorily.
In the same way that companies seek additional capability from external collaborators, sometimes growth and strategic capacity need to be permanently embedded through mergers and acquisitions (M&A). As we all probably know, the successful marriage of two organisations relies on a successful partnering of the two cultures. This requires a high degree of maturity and a collaborative relationship on both sides.
The ISO-standard 44,001, will provide a significant competitive advantage to those organisations on the supply and demand side of an FM contract Click To Tweet
Collaboration in FM
With business changing so quickly and a prevailing contracting ethos that rewards contracting carved in stone, seems to me to be an archaic and dangerous precedent. While innovation, collaboration, partnering are all to be desired. Contracting in this way does not take adequate account of the changes that need to occur in the portfolio over the life of the contract. The contract should be a guiding document, not a constraining one.
ISO 44,001 takes the approach that we need to move from merely buying-in a service guided by a set of specific terms, to channeling the relationship towards mutually better outcomes.
The most evident indicator of the level of collaborative thought on any facilities management contract are the performance indicators that underpin the Service Level Agreement (SLA). It is not uncommon in my experience to have SLA’s that are input driven as opposed to output or preferably outcome focused. And even when these are nominally output driven, there are operationally restrictive.
I once worked on a contract where the landscaping SLA determined that the grass should no more than 10 mm long at all times, i.e., winter and summer, I am unclear as to what beneficial outcome was being delivered here?
Keith Chanter, CEO, EMCOR UK, commented:
“The award of ISO 44001 represents the achievement of a very important strategic objective for EMCOR UK. Collaboration and the principles and practices embodied in the new standard underpins EMCOR UK’s approach to identifying customers’ strategic and operational requirements, thereby providing the means by which we can tailor services to these needs. This has not only allowed us to demonstrate the value we can provide, but has supported the increasing trend for our customers to enter into long-term, collaborative contracts. EMCOR UK is delighted to be amongst only six companies in the world – and the only FM company – to be certified under the new standard as it re-affirms our position as a leader in collaborative business relationships.”
The Collaboration Lifecycle
I will go into more detail in the second post in this series of two, on the structure of the ISO standard and the understanding of the central theme which is the recognition that all collaborative relationships have a lifecycle.
The lifecycle of collaboration recognises a sequence for implementation of the framework over in three principle areas and eight distinctive best practices steps.
1. Operational Awareness
It can be incredibly challenging to be able to relate to external organisations efficiently and can be constrained by internal processes and barriers. It is essential to ensure that all organisational efforts are focused on those most critical relationships where collaboration will deliver real value.
Collaboration is not a soft fuzzy approach it requires strategies that are focused on business objectives and that recognise the risks associated with high levels of integration with external partners. This includes knowledge management and business continuity, all of which are underpinned by the certain knowledge that the relationship will come to an end at some point and so the collaboration lifecycle is underpinned by a detailed exit strategy.
3. Internal Assessment
Collaboration is not for everybody and every contract. Knowing and understanding the strengths and weaknesses of our own organisation is critical if collaboration is to be successful. This will include track record and experience process skills that all need to come together to be compatible with the desired outcomes.
4. Partner Selection
Organisations, like individuals, often assume that long-standing or traditional relationships can simply be migrated into a collaborative relationship. But finding the right partner is critical. More often than not, simply expecting that long-standing cordial relationships will become genuinely collaborative ones is mistaken. It is essential to understand the profile of the organisation you’re looking to collaborate with and how this will be evaluated.
5. Working Together
As Peter Drucker said so wisely “What gets measured gets done”. Understanding the joint objectives of the individual partners and ensuring that the performance indicators, incentives, and measurement will support collaborative behaviour is integral to an effective contracting arrangement.
6. Value Creation
For value to be created in the relationship, both parties need to remain current and drive innovation so that new sources of value can be uncovered through a joint and continual improvement program.
7. Staying Together
As in any marriage, staying together can be the hardest part and disputes will be inevitable, but these can be beneficial and end up strengthening the relationship if handled empathetically. Effective performance and behavioural management that is mature and focuses on supporting people and processes to achieve the objectives is essential.
8. Exit Strategy Activation
Understanding that the collaborative relationship is finite means that as Steven Covey said: “begin with the end in mind”. Contracting with the end in mind is essential. Understanding how both parties will exit the relationship and putting in place clear rules for disengagement from the relationship, keeps the partners focused throughout the life of the relationship and into the future.
Collaborative business relationships have been shown to deliver a wide range of benefits, which enhance competitiveness and performance while adding value to organisations of all sizes.
The adoption of any standard has to be balanced against the value that it can deliver to the organisations that choose to utilise it.
It is a roadmap for relationships that will aid implementation and engagement, and that will develop an increasing level of value over time.
The standard provides a commonality of language and application that aids understanding, together with communication and improved integration.
It acts as a bridge between two different cultures that reduces confusion and provides confidence to the participants that they are laying the foundations for a more robust partnership that builds on the strengths of each partner to deliver innovation.
The standard provides a platform for developing repeatable models to enhance communication and engagement that’s building confidence in the process as well as reducing cost.
Increased customer confidence for both parties comes from a smart relationship based on joint objectives that reduce the likelihood of misunderstandings, hidden agendas and sources of potential conflict, thereby improving risk management.
The creation of a platform that improves governance along with the speed of its application is achieved through a consistent and structured approach to collaborative working inside operational processes and procedures.
In short ISO 44,001 provides a standard framework that promotes increased levels of engagement and effectiveness by strengthening business processes, improving risk management and enhancing dispute resolution that provides the basis for continuing skills development and collaboration to achieve more significant levels of value.
If we are to move towards the lofty ideals of collaboration and partnership set down in most tender documents then ISO 44,001 is a prerequisite for both supply and demand organisations to aspire to.
This weeks question: “What will collaborative working improve in your environment”? Please leave your comments below I will reply to all those that engage!