The Art of the New Deal

Take it from the masters of vendor management: Despite a looming recession, now is the right time to push vendors for a better deal and to make industry consolidation work for you.

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Beware the Word "Partner"

An easy patois floats in the conditioned air inside many companies. You've no doubt spoken it.

"How was your weekend?"

"Send me a note on that."

"It's all good."

It's more light chat than meaningful conversation. To this, now add any phrase containing the word "partner," used as either noun or verb.

There's not a technology sales rep breathing who doesn't want to be the CIO's partner. And certainly, a CIO should expect and coax key vendors to work side by side to reach common goals. But people so wantonly toss the P-word around, it can mean nothing.

Johnson & Johnson, the $61 billion manufacturer of healthcare products, has for 65 years operated according to a "Credo" that outlines J&J's responsibilities to customers, employees, local community and stockholders. The credo, which is on the company's website in 32 languages, talks about respecting individuals' dignity, managing ethically and giving suppliers the chance to make a fair profit while J&J does as well.

It's a how-to guide for becoming a Johnson & Johnson partner, actually, though some slick vendors fail to see it.

Employees at all levels live the credo, according to LaVerne Council, Johnson & Johnson's CIO. The company has received piles of awards for diversity, leadership, opportunities for working mothers and equality in the workplace.

That makes for a nice place to work, Council says. But vendors sometimes misinterpret the conviviality they encounter. Some assume too quickly that they are partners—or they think they can pretend to be.

"J&J is a very collegial company," she says, "and people read that as weakness, frankly." Ouch. A bigger mistake one cannot make with Council. Before joining Johnson & Johnson as CIO in 2006, she was global vice president of IT at Dell and before that a partner at Capgemini. She was also a consultant at Mercer Management and Accenture and holds an MBA in operations management. She knows the game and wastes little time calling someone out (see "Worried About a Recession? How to Hold the Line on Your IT Budget").

For example, if a vendor's developer or consultant working onsite perhaps doesn't live up to the credo, Council talks to that person's manager. "To give them the opportunity to understand the disconnect and give them a chance to step up," she says.

What that manager does then affects the life of the engagement. Council declines to name names, but says that she recently faced a situation in which a vendor continued to tell two divisions within Johnson & Johnson different stories about its product and pricing. Council cited the credo to that person and said she expects her suppliers to act the same way. "You end up very disappointed in certain folks' actions and behaviors. But it doesn't mean we will tolerate it," she says. Things didn't improve. She doesn't do business with that vendor anymore.

The performance of another vendor last year also fell short, but the way that company handled it won Council's favor. The vendor missed deadlines for a key project. Then a leader on the vendor's team made an appointment with Council to talk about the problem. "It wasn't a hostile conversation," she recalls. "He acknowledged the mess and it wasn't about trying to save face. It was about trying to make it right."

They worked out a plan. The vendor didn't run away or ask for more money to bring more people on to fix the project, she says. Come next review time, the vendor had met the mark. That's the behavior Council expects before calling anyone "partner." "We're all really nice people," she says. "But we want really nice people who deliver."

The Lesson:

Partnerships are built on the quality of work delivered, not on personalities and hale handshakes. Define your expectations. And don't use the term partner until you see the vendor produce work that meets the goals —your goals.

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