MARKETPLACES AND PATHWAYS

Marketplaces and pathways, two of the essential design principles of a partnering network, have been around for tens of thousands of years. They are natural ways in which people connect with each other and exchange goods and services. In effect, a partnering network establishes an open platform for instituting and using the marketplaces and building and using the pathways necessary for rapid, repeatable, direct human interconnections. Although e-mail, cell phones, and wireless networks are the greatest things since fire for bringing people together, there's more to connecting than that. For people to forge, sustain, and grow smart partnerships, they must work face-to-face with some frequency. Ever try dating someone who lives a thousand miles away? Even one hundred miles away? Marketplaces and pathways form the foundation of a Powerhouse Partner.

Marketplaces

Marketplaces hinge on the nitty-gritty question "How do we get what we need?" As such, instituting the right mix of organizational marketplaces challenges us as both the simplest and the most difficult task in creating a partnering network, for we are now talking about people having to give and wanting to get. We have to get clear on what we want, and on how and when to ask for it. As important, we have to know what we can contribute, and how and when to best make that contribution. Basically, marketplaces are places where people exchange what they have—or what they can get—for what they need or want: public markets, trading pits, black markets, gray markets, bartering clubs, swap meets, family meetings, blackjack tables, lunch tables. Most of these different types of marketplaces exist in one form or another inside most organizations, particularly in large corporations, branches of the military, and government agencies. If an organization's leaders do not mold its marketplaces by design, they will take shape by evolution.

People are ever keen to find the exchange venue that best serves their needs and wants. The members of an organization are no different. It is in these arenas of exchange that the process and tools of smart partnering will yield their greatest value to an organization desiring to install a partnering culture. What's fair and what's not? Did you give me what you committed, and did I give you what I promised? How much do we trust each other to make things right if one of us goofs up? Without a systematic, neutral process for governing how exchanges take place and without tools for expediting trades and resolving disagreements, marketplaces are open to corruption, deceit, and greed. In the end it is an enterprise's marketplaces, external and internal, that will make or break any attempt to change an organization's culture. If people do not change how they behave, you have just spent a million dollars and a zillion hours to prove, once again, that culture rules.

Pathways

Pathways are another major material component of an organization's culture. Pathways get right at the practical question "How do we get there from here?" For an organization deciding whether to overhaul its culture, the construction of pathways forces an examination of the avenues your organization has taken historically, those used by your competitors, and new trails to be blazed, as well as shifting combinations of all three. The essential issue is not whether particular pathways, or combinations thereof, constitute the "right" way to go, but whether an organization's leaders agree on which to take—at least in the short term. An organization might choose any number of different paths to get to its destination, and likely will need to abandon old lanes and blaze, or find, new trails at a moment's notice.

Pathways embrace the core and enabling business processes, office locations, workstation design and arrangement, information technology, and so on. Here, the principal challenge for an organization's leaders is to interconnect these components and systems in a manner that produces both the sturdiness required to withstand marketplace shocks and the flexibility needed for ongoing alignment and readjustment. Yes, we know what has been preached, lo, these many years about alignment and integration—get everyone facing the same way, pointed in the same direction, keeping in view both your buddies on the left and on the right. The global business marketplace has already redefined what constitutes both alignment and integration. Compare, for example, how alignment and integration were used by British regulars during the American Revolutionary War with how they were used by the upstart colonial army. The British marched in regimented rows with military discipline, while colonialists hung in trees and hid in ditches. In the twenty-first century, global pathways are not straight, nor are they paved, nor are they long—rather they are short, twisting, and bumpy. In the Dual Age of Information and Connections pathways stretch and twirl, shimmy and shake. Nowadays, global pathways dance. A company wishing to become a partnering organization must create its own pathways that are likewise capable of dancing.

Read through part 3 of the partnering organization case study on the facing page to see how the principles of a partnering network were put into practice.

Design Criteria for Partnering Network—a Starter Set

To create a partnering network suitable for driving implementation of its strategic framework, an organization's leaders must first agree on a set of design criteria. These criteria cannot be dictated from the outside; they cannot be lifted directly from an organization design textbook; they cannot be copied from successful competitors. However, for an organization's structure to serve as a platform for partnering, it must be based on design criteria anchored in the Six Partnering Attributes. Here are some design criteria, so based, for transforming your enterprise into a partnering network:

• Open architecture—build for accessibility, transparency, and involvement (Self-Disclosure and Feedback)

• Free substitution—build so that people can easily find the partners they need, internally or externally (Win-Win Orientation)

• Opportunity and ownership—build both to give people choices and opportunities and to delineate clearly who is accountable for what results (Ability to Trust)

• Creativity and innovation—build for experimentation, risk taking, and tolerating mistakes (Future Orientation)

• Plug, unplug, replug—build connectors that can be quickly unhooked and refastened with minimum resources (Comfort with Change)

• Boundarylessness—borders that are both porous and pliable (Comfort with Interdependence)

PARTNERING ORGANIZATION CASE STUDY: CREATING A WORLD-CLASS SUPPLY-CHAIN ORGANIZATION

Part 3: A Partnering Network

Under the old procurement structure, the company's buyers, lead buyers, senior buyers, and managers had limited spans of pricing control and hard, preset guidelines that required three bids and multiple sign-offs before a purchase transaction could be authorized. At the heart of the company's procurement function was a traditional command-and-control management philosophy wherein buyers were in fact micromanaged by an overwhelming assembly of design-engineers, plant engineers, plant materials managers, manufacturing operations managers, corporate finance officers, service parts managers, and so on. The existing structure of the procurement function reflected these tight management controls: spans of control in the procurement function were extremely narrow (1:2 on average), and the organization had four layers, with instances of one-on-one-one reporting relationships.

Two basic principles of organization design are (1) build from the bottom up and (2) staff from the top down. With the supply manager and supply service representative positions having been established as the key jobs of the company's new supply-chain organization, the overall functional structure took the shape of an interdependent, yet flexible, two-layer partnering network of tightly knit supply management teams. This structure replaced the multilayered organization and streamlined the decision-making process. The structure team felt that a traditional static, two-dimensional wiring diagram would be inadequate for depicting the robust, dynamic, and innovative concept of a partnering network. It created visual aids to illustrate the partnering relationships of the new supply-chain organization by

• Showing the new organization's day-to-day relationships with manufacturing plants worldwide

• Specifying how the supply management team would partner with vendors in various categories of goods and services

• Explaining how the redesigned procurement function would interact with key corporate functions such as parts and service, design engineering, and finance, as well as with the sales organization