Service-based organisations - a better way
Functional organisations tend to be the default, but cause significant problems in a changing market.
At Stance, we’re proud of our SME status. When we step back to consider what we offer our customers and the depth of talent and knowledge in the SME marketplace, a truly vast amount of capability and capacity for good works is available.
We believe that our small nature means that we can deliver incredible value to our customers with an unmatched level of expertise. It comes at a cost to us though - specifically, it makes it harder to win larger contracts where more human beings are needed. And so, like many other SMEs, we turn to like-minded organisations to help win those larger contracts.
But as an SME, it’s often challenging to form those kinds of relationships. Larger organisations have the time and money to encode some of the boundaries of those partnerships in contracts or joint ventures. Typically, SMEs do not - whether it is down to the cost of doing so or just the time between the opportunity arising and needing to be answered. SMEs tend to end up in a situation where one is the prime, and the others are - contractually at least - sub-contractors.
And this has its challenges.
Because we are all reasonably like-minded in the SME space, we often confuse that likeminded-ness with a shared understanding of what an SME partnership looks like. The nature and contractual language of sub-contracting arrangements don’t reflect the spirit of partnership properly, but frequently that is what is used when delivery partnerships are formed. If we’re honest, in the past, that has created challenges to overcome, which should never have arisen.
In an attempt to solve that, we thought it might be an idea to write down what we think is important when we enter into partnership on contracts with like-minded SMEs, so here goes!
We believe that partnership comes into effect when multiple organisations agree to bid together for a contract and answer a tender. When this happens, all parties’ experience, expertise, and capabilities are put forward as one. This happens because partnerships - no matter the comparative size of the parties - are made between equals.
We believe that a partnership is a shared endeavour to deliver value to the customer. Still, beyond that, all organisations have secondary aims - learning a new skill, operating at a different organisational level, working in a different sector, establishing a long term client relationship, and many other things can all be legitimate secondary goals. By entering into a partnership, we believe that all parties’ secondary aims should become part of the shared endeavour and communicating them clearly to each other is critical from the outset.
To maintain a partnership, we believe that regular, honest, and transparent communication needs to occur - between the partners and the customer. In a partnership, it’s not enough for one of the parties to have a relationship with the customer and while partners operate only at arms length. Meetings with the customer where the contract is discussed should include all partners.
Finally, we believe that it is appropriate for the prime partner to uplift the sub-contracting partner’s fees with a margin to cover the costs incurred due to billing. However, we believe this should be a nominal uplift only and not a typical sub-contracting style margin.
We believe that a partnership that operates in the spirit of what we’ve written here isn’t a sub-contracting relationship. It is a shared endeavour to deliver value to the customer and for all parties to feel comfortable working with each other, sharing knowledge, and hopefully, prospering.
We’d love to hear what you think - especially if you’re an SME! Have you encountered these problems before? Do you think this reflects what you would value in a partnership?
