CoDestiny

An example that pulls many of the key factors for a very successful ownership lifecycle approach all together is that of an industrial refrigeration equipment supplier who sold through distributor refrigeration contractors. Through the process of servicing the equipment they built up very strong close relationships with all of the end users in their area. Thus whenever the end users were considering the purchase of new equipment it was the distributor contractor and therefore the equipment supplier that was always in the know long before it went out to bid, and in many cases it never went out to bid. Hence the ownership lifecycle support approach created a virtuous cycle of repeat sales that was all but impenetrable by the competitors.

Investing in relationship is different in China in a number of ways, all of which are important in that environment and some more broadly. We tend to think of business relationships as being between companies and based on formal agreements. In Asia, relationships are personal not corporate and based on trust not contracts. I would amend the statement above to say that “two people can solve any issues that exist…”

That means large commitments of time and energy in building the relationships that lead to this kind of trust. And it means going to great lengths to not squander that investment. We worked with a client recently who was forced by economic conditions to cut staff in Asia. I met with some customers shortly thereafter; they described not being consulted before those decisions were made using words like “offended”, “hurt”, and “betrayed.” These are words used to describe the ending of close personal relationships, not often used in the west to talk about personnel decisions in a supplier company. Indeed, what we would view as non-events in terms of company-to-company relationships were viewed as a signal that the business relationship wasn't valued or was ending. Consultation and a sharing of the pain of the economic downturn would have been the Asian way of proceeding.

If instead of the negative, we focus on the positive aspects of such a system, I think we can see important lessons and opportunities. Formal agreements have a context that can become irrelevant. But, friends help their trusted friends succeed, whether it is finding new business opportunities for a key supplier or key customer during a downturn, jointly determining how to take costs out of a product in response to a shift in competition, or running the factory over Chinese New Year to deliver a critical order on time. It also explains why major customers expect you to take responsibility for a defective product long after the warranty has expired. They would do the same, knowing that to do otherwise would harm the relationship that facilitates so much other efforts to succeed together.

So, while different in form, relationships in China can be seen as a different way of implementing a number of the important lessons in CoDestiny.