Don’t Pull Up the Drawbridges! Pave Your Path to Recovery with Key Partners

Negotiations with Partners: We’ll want to work with these external parties again, after the crisis, for all the good reasons we did previously. And to weather the storm, we’ll need to collaborate with partners, old and new.

In scary times, many organizations instinctively pull up the drawbridges, isolating themselves (not just in a health and sanitation sense) to protect the core at all costs. Companies make demands of others, reduce burn rate to preserve cash, and generally externalize as much of the pain as possible. In the name of “self-preservation,” we unilaterally cancel orders or cease payments to suppliers, stuff distribution channels with product they can’t possibly sell during a downturn, and starve external collaborations of resources and support.

And yet we’ll want to work with these external parties again, after the crisis, for all the good reasons we did previously. Who will help us innovate, take products to market, rebuild critical inventories, engage across a changed customer landscape? If to weather the storm we need to collaborate with partners, new and old, take this opportunity lean into those collaborations and ensure they come through it with us.

Yes, we are stretched thin, our resources constrained; we need to be careful about our investments. Still, we can use the same tools that prioritize and focus collaborations in good times to create effective, mutually reinforcing recovery pathways. Use these tools with a bit of empathy, to understand impacts (and likely reactions) beyond ourselves.

US General and President Dwight D. Eisenhower famously said, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” Three inter-connected analysis tools go into the planning that gets us and our essential ecosystem partners ready for recovery. Then, as things unfold, how we execute that plan will make the crucial difference.

1. Understand your own value and risk sensitivities.

The external partners you need most for your recovery are not necessarily your largest suppliers or your most profitable customers. One small supplier’s essential component — single-sourced because of high switching costs — can bring down a lot more output than its share of our bill of materials. A hospitality client winced upon considering the risk of hotel room electronic locks failing just as occupants start to return in numbers.

Risks to our recovery pathways are not just threats to shut down our value chain. What happens if we can’t create value, pivot toward market opportunities, bring new solutions to evolving problems? A financial cybersecurity client said it will be hard to capitalize on pathbreaking authentication capabilities — for them and their bank customers to benefit just as consumers restart to spend again — if the crisis prevents the various signoffs and certifications required by large bank IT departments.

Uncover such risks and opportunities with value-chain mapping, a well-worn tool from partnering strategy development. Map key value chains and their dependencies, not just to identify gaps to be filled through acquisitions or partnerships, but to develop critical paths to recovery. What does the world look like — not just through my customer’s eyes, but through those of their customers? What will be of most value, as the crisis starts to recede, and does that create new opportunities? Which key suppliers or other partners do we depend on to meet and act on those value propositions?

2. Prioritize.

The crisis may bring out some positive, charitable impulses. But the advice here is not about being nice, or generous. It is about preparing for the eventual recovery from a painful and difficult period in our economic and social history. In our “enlightened self-interest,” external perspectives should factor into how we prioritize and allocate our effort and resources. Use value chain mapping to look at various categories of partners on which we depended prior to the crisis (development partners, suppliers, distributors, customers, customers’ customers). Consider which ones of each pose a risk to our recovery or offer an important potential boost.

For a limited segment of those, say the top 20 to 30 percent, consider what likely are their greatest threats and opportunities. Which ones can we most readily impact? Where do the greatest risk or value to us, and our greatest ability to help them, intersect? That Venn diagram highlights the highest leverage opportunities and the greatest returns for our investments in a recovery pathway. Mustering the empathy to understand the vulnerabilities of our partners is neither easy, nor, ultimately, something you can do entirely on your own. But you can start with some reasonable hypotheses about:

• What ecosystem relationships provide the most value for our limited resources?
• Where does our response make the most difference for them, and therefore, in whether they will be there to help us?

In some cases, the answers will be obvious and straight-forward. A supplier may be critical to your effective ramp up. They may need you to relax some IP licensing provisions, offering them a greater potential return on an uncertain investment in new production lines. In other cases, strong hypotheses require variations on tried and true red team-blue team exercises or even multi-player war-gaming. These help us better understand how to influence those we depend on to make the investments or take the actions we need from them to support our recovery. In a somewhat different context, a large pharmaceutical company war-gamed plans to bring innovative therapies to market in a stressed-out, shaken health care delivery system. Standing in counterparts’ shoes provided the visceral experience of what it feels like to persuade a partner being courted by a competitor (a familiar problem), while that partner also worried about whether some critical suppliers would remain viable, how the medical provider community would respond, and how reimbursement models might change.

3. Engage in joint recovery planning

As much as we empathetically understand our ecosystem’s vulnerabilities, especially those on the critical path to our recovery, we are unlikely to get it quite right. We are hyper-aware of our own fears, aspirations, and dependencies. But without direct engagement, our understanding of what others think and feel about crisis or recovery is limited. We know even less about what their own downstream dependencies may be.

Consider the example of outsourced clinical research. Life sciences companies need clinical research organizations, or CROs, to stay on track if they are to meet investor expectations for product pipeline yield. One might imagine some stressors that a pandemic puts on these clinical studies: broken links in the supply chain for drugs and related materials; possible loss of program management resources because of illness, family obligations, or local quarantine regulations. We might not recognize — unless we engage with CROs in the throes of managing such clinical studies — the pandemic’s impact on trust. Consider the research site’s local community relationships. Even already enrolled patients, as well as new participants, reasonably worry about the risk of regular visits to the clinic. Authorities ask that health care resources be reprioritized. Simply assuring the CRO partner that we are doubling down on continuity of supply and oversight may not get us the results we were expecting, and may even miss out on valuable experience they could share on making effective use of virtual trials.

We have no time for resource-intensive joint planning exercises with everyone in our ecosystem. But, with a short, prioritized list of partners, we can make better choices.

It’s not only with whom we engage, but how, that matters.

Great analysis, collaborative intentions, and a well-targeted list are a terrific start, but they may not get the job done without some care as to how we approach those organizations we are counting on.

• If we approach suppliers with new requirements (read: imposed costs) for them to demonstrate their readiness to supply our emergent-recovery needs (read: without any commitment to purchase much at all), we likely will fail.
• If we approach our customers and distributors with promises and discounts (read: desperate search for revenue) that require significant commitments or reductions in ordinary-course-of-business flexibility (read: trying to push your problems onto me), we likely will fail.
• If we approach our R&D partners with accelerated schedules, demands for prioritization that they don’t fully understand or share, or on the other side, with a plan to reduce resources to A (which our partner really values) because we want to prioritize B (about which they are more skeptical), we likely will fail.

These conversations require careful preparation, scripting, practice. Many large life sciences companies, for instance, already recognize that some conversations are different and more important; they engage in multi-day training and strategy sessions prior to entering into reimbursement negotiations with a national health system. The preparation required to discuss recovery pathways is no less intense; it involves extensive analysis and strategizing in advance, and role-playing and practice to validate and prepare to execute those strategies.

These conversations are challenging in their own right. Until social distancing standards change dramatically (which will still take some time), some conversations may occur virtually. What can you do to problem-solve effectively over a videoconferencing app? Our experiences to date suggest a few things are especially helpful:

1. Prepare, prepare, prepare: Coming into conversations “to hear what they have to say” is a recipe for defaulting to reactive, zero-sum behaviors as we each perceive the other as “not forthcoming enough.” Virtual meetings need to be shorter and more efficient than the typical offsite. While open-ended whiteboard discussions have their place, in this case, well-prepared frameworks and even partially populated charts may create a more fruitful conversation.

2. Pre-negotiate some ground rules: Talking in advance about how we will manage a virtual joint planning exercise is critical. Start by proposing a conversation about how to work together; feel free to draft principles or “rules of engagement” intended to improve virtual dialogue, which lacks in-the-room inputs and opportunities of traditional meetings.

3. Share a problem-solving agenda and supporting data: Do what you can to frame the discussion around opportunities to create value together, rather than about what others need to do for you. Share some of your homework, in advance, so they can get up to speed and contribute during the virtual collaboration sessions. For example, if your value chain mapping suggests recovery pathways to prioritize, consider sharing that. If you’ve done some war gaming, what were some key takeaways?

4. Use the tools and enable the principals to focus on the problems: Talking about sensitive issues during stressful times is hard enough; don’t let distance make it impossible. Leverage whatever virtual meeting tools you have at your disposal, including screen-sharing and annotation, private breakouts, chat, and more. Make sure someone on the call is sufficiently familiar with the technology and focused on collaboration mechanics, to ensure technical challenges don’t get in the way of productive collaboration.

It may be hard, in the midst of the crisis, to think about how we will come out of it. But many expect to persevere, learn something, and prepare to succeed in the post-crisis world. To do so, we must recognize that our instinct to cut ourselves off, to shift costs and risks to our partners, may not ultimately serve us well.