Trust, Transparency and Supply Chain

[Transcript]

Jan Griffiths: 00:43

Hello, Today, I'd like to talk about trust and transparency, not only in terms of leadership, internally and with our teams, but externally, with our stakeholders more specifically, with our suppliers. And yes, that's going to lead us into a supply chain discussion, the chip shortage. Let's take a look at it this idea of trust and transparency. These two traits of authentic leadership have been coming up time and time again in the last couple of months. And that's why I wanted to go deeper. I believe that we have to challenge the way that we lead. We have to break the mold in the way that we lead but not just internally with our people, also externally with our stakeholders. Let's go deeper into this.

Transparency. We know that authentic leaders strive for open communication at all levels. And they're not the kind of people that get into gamesmanship, because they're not trying to hide anything. They're just open, comfortable in their own skin, they don't play those games, those gotcha games that we sometimes play, and then trying to make other people look bad, so that we can make ourselves look good, those kinds of games, they don't they don't do that the image they project in public is congruent with who they are in private, there's not much daylight between their two lives. And when you could operate in that way, you don't hide your mistakes or weaknesses. They've got the courage to be who they really are, and put these things out on the table. And that promotes an environment of trust. As Jack Walsh said, Trust happens when leaders are transparent. So let's talk about trust. Trust is a feeling, it's a feeling you know it you know, when you meet somebody if you can trust them. And that's internally within the workplace outside. And I can tell you, I can speak from my supply chain career, when I would meet a supplier representative. I knew I knew exactly the kind of person who would want to play the game and play the negotiation game. And I knew the kind of person where I could just be myself. And we could have an open and honest discussion. And oh, what a different relationship. That would be. Stephen Covey talks about trust being the highest form of human motivation and the impact of trust on the bottom line, the relationship of trust to speed and cost , we know how that plays out. If you have a good relationship with somebody, it's much easier to communicate with them. And if you don't have a good relationship with somebody, there's a lot of extra steps that you go through. And it doesn't feel good, you probably don't want to actually deal with that person when you don't have trust in play. And that's easy for us to relate to. I think when we're dealing with our teams, we can talk about how to foster transparency and trust within our teams. But I really think we have to go deeper, we have to challenge the way that our systems are set up in business today and the way that we lead. Let's go back to the interview that I had with Stefan Krause in the last episode of the Finding Gravitas podcast. And, Stefan believes that our systems today are set up based on mistrust we're always trying to manage that small percent of bad apples and I believe he's absolutely right think about our systems today. We are always trying to manage you know all well you know, I don't know that we could trust people to work from home because what if they didn't. What if they sat on the couch and binge Netflix all day long? You know, what if, what if, - how awful that would be? Hmm. So we have all these systems that we've set up based on mistrust, and then you can extend that extrapolate that out to the supply base as a lot of mistrust between customer, and supplier. And I think back to a relationship that I had with a major global resin supplier, many, many years ago, I was in the purchasing role for a tier-one automotive supplier. And we were trying to wrestle with this idea of a global contract. And it was hard, it was really hard. Because every once in a while somebody on the team, and maybe it was a regional issue. You know, it could be a cultural issue, whatever I mean, things happen in, in life, in our personal lives and our business lives. And every once in a while somebody would step out of line and upset the customer or vice versa, rather than just get mad at each other. And start hurling blame at each other, and then starting to threaten each other. And maybe even you know, head down a path of litigation. We chose not to do that we challenge the way that we saw our roles, and we saw our roles as being a coach. So we knew that we were in this for the long term. And we knew that whatever happened, we would find a way through it. So when people made mistakes or something went wrong, we simply would come together and make sure that the issue was resolved. And I look back at that. And you know, one of the things I did was I, I made sure that the meetings that I had with the supplier were off-site, we would have two to three-hour meetings in a restaurant because I knew that my boss at the time expected me to be yelling and screaming at the supplier. And that's just not the way to handle it. So the way that we handle the contract was very different in the way that we saw our roles. It was not based on mistrust, we established trust and credibility and of course, that built over time. And I look back on that experience, and it was a positive experience. And then I look at what do we need to do? As we look at the future? What does contracting look like in the future? And I refer to Kate Vitasek, who is an expert in this field. She's an author, educator and the architect of the Vested business model. And she's written a book and it's called Contracting in the New Economy, using relational contracts to boost trust and collaboration in strategic business relationships. Wow. Okay. I am in full disclosure, I have to tell you, I haven't read the book yet. It's on my list. But I want to read to you an excerpt that Kelly Barner from buyers meeting point wrote about the book because I think it brings it all home. And Kelly says, you can't create a different kind of contract if you don't think differently and follow a different process. And she says relational contracting accepts the reality of change and unpredictability and strives to balance the need to document or formulate, formalize an agreement without attempting to protect both parties against every eventuality or risk, as this often creates unintended inefficiencies, risks and constraints that limit the value of the agreement. Instead, relational contracting puts the basic transactional details in writing and then seeks to preserve their applicability as an instrument of expectation management by establishing a framework that helps the agreement change over time. And that's exactly what I did many years ago with this resin supplier. We had a basic framework, if you like rules or guiding principles that we operated by, but we knew that there was no way that we could possibly create a document that would handle every single little thing that could go wrong. And that's what we strive to do in contracting. And I think we need to challenge not only how we deal with our suppliers, particularly in terms of developing trust and transparency

Jan Griffiths: 10:00

But how we react, how we respond when something goes wrong. It's the same way that we should react as leaders with our teams. Do we blame? Do we jump down their throats? Do we automatically look to find ways to show that they're wrong? And we're right? No, I believe that we need to take that coaching mentality, that coaching approach to our stakeholders, as well as our people internally. Particularly, as we know, the world of work and the world of business is changing. The new entrants into the automotive industry are taking a different approach. And I heard this at the OESA conference. Just a few weeks ago, I listened to Simon Keeton. Simon is a senior executive with on Onsemi. A semiconductor manufacturer he is right at the heart of this chip shortage, he has seen it as the tier two supplier, he's seen the tier one behavior and the OEM behavior. And he sees that communication as being very linear. And we know that it is from the OEM to the tier one to the tier two. And he saying, hey, you know, we need more trust and transparency. And I'm going to read this straight from his quote, he said the historical supply chain has been broken due to the lack of transparency and trust. And let's not forget that this supply chain issue impacted the automotive industry by over $210 billion in lost revenue. He's asking for long term contracts. No more of this narrow, firm fab and row commitment that really doesn't come anywhere close to the product lead time and certainly doesn't support any type of investment lead time. He is asking for long term contracts, schedule stability, shared investment, many automotive purchasing types would shudder at the thought of making that a reality. But maybe it's time, it's time to consider this idea of trust and transparency in the way we lead the way we work, and how these values, these traits of authentic leadership manifest themselves in our behaviors. And in our contractual relationships. I believe it's time for us to break the mold on trust and transparency. And really think about how these two traits manifest themselves in our lives in our personal lives and our professional lives. It's something to think about. Let's continue to explore and go deeper into the traits of authentic leadership. And I wish you much success on your journey and your quest for your Gravitas.