Organizations implementing large digital transformations or complex service delivery operations rely on tens, if not hundreds, of vendors today. But that hasn’t always been the case. Historically, many health and human services (HHS) entities have designated “one throat to choke,” managing the inherent risk that comes with putting all stock in one vendor. This “one throat” strategy is often part of an attempt to minimize project complexity and strengthen defenses if something goes wrong.
Instead, a multiple-vendor strategy offers a higher value path. It reduces the risk of single-vendor dependence leading to a point of failure, minimizes the impact of specific vendor capacity or capability limitations, and creates competition that often leads to better outcomes. While vendor accountability is undoubtedly important, the organizations that produce superior results create an insights-driven culture of trust and accountability with vendors—ultimately improving the customer experience and unleashing the value of the vendor relationship.
Trust, and its effect on outcomes, has been heavily researched. For example, Stephen Covey, author of The SPEED of Trust: The One Thing That Changes Everything, is a prolific advocate of the power of trust in his writing:
“Trust always affects outcomes—speed and cost. When trust goes up, speed will also go up, and costs will go down. When trust goes down, speed will also go down, and costs go up.”
“We tend to get what we expect – both from ourselves and from others. When we expect more, we tend to get more; when we expect less, we tend to get less.”
“Change happens at the speed of trust.”
High-trust environments also have a measurable impact on financial performance and outcomes:
- A Watson Wyatt study showed that high-trust companies outperformed low-trust companies in total return to shareholders by 286 percent.
- A Warwick Business School study in the U.K. showed that outsourcing relationships based on trust is more effective than outsourcing based upon the service agreements in a contract. The trust-based relationships outperform the others by 40 percent.
- A 2019 analysis by a school of management engineering in China on the “Impact of Control and Trust on Mega Project Success” found that both “control and trust” have a positive impact on the success of large projects, but that “trust is more effective than control.”
To illustrate how strategic topics, leading practices, and insights can maximize the outcomes of multi-vendor delivery, think about an interstate highway. In this analogy, vendors are the vehicles that move goods on the journey and lanes provide routes and processes for vendors to transport the goods. Below are concepts you can put into action to create an effective multi-vendor delivery “highway:”
Destination. Provide a clear understanding of the goals, strategy, and objectives to all trail blazers, trail builders, and travelers. Define the rewards of reaching the destination.
Journey. Set and manage expectations about challenges and waypoints along the journey, and select the best drivers for each part of the journey.
Rules of the road. Demonstrate competence and character, while building and maintaining trust through professional interactions.
Lanes of travel. Align lanes of travel to the destination, optimize lanes based on type of traffic, use lane markers to designate when to stay in a lane and when to share lanes. Using lane dividers can reduce distractions (such as existing operational responsibilities, in the case of our analogy).
Delivered goods. Assume ownership to goods throughout the supply chain, rather than upon delivery acceptance. Encourage client branding instead of vendor branding for the goods delivered.
Road signs. Communicate the road ahead with prominent visibility and lead time for action.
Tickets. Use penalties to discourage behaviors that impact traffic flow or risk others. Avoid paying the “insurance” of vendors’ risk of tickets and penalties.
Tailgating. Limit oversight and other vendors from following so closely that it causes rearview focus, risks accidents, slows traffic, and undermines trust.
Speed traps. Avoid “gotcha” behaviors that undermine trust and slow others’ movement.
Road markers. Share and celebrate major accomplishments and the vendors and people that contributed to them.
Instilling a multi-vendor environment marked by trust and customer focus often requires an enabling cultural shift. If employees don’t operate with the appropriate skills, competency, and character, the multi-vendor delivery highway will be susceptible to damage. Communications strategies and delivery techniques play a crucial role in maintaining trust and improving customer visibility.
Multi-vendor environments marked by high levels of trust—where destination and customer journey opportunities are clear—create the foundation of a “delivery highway” that enhances outcomes. On the other hand, environments of distrust, uncertainty, and excessive controls create winding, stop-and-go paths that amplify complexity, frustration, and barriers to delivery. Powered by a well-paved delivery highway, a multiple-vendor approach is a multiplier of value.