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Tim Costello, Chairman & Chief Executive, Builder Homesite Inc. talks about Servant Leadership as a model for sustainable business growth. He will continue to expand on this theory in future posts.
Having spent over 25 years in a broad range of industries, I have heard the term partnership used in many bilateral business discussions. It is usually presented in an effort to mitigate a company’s fear that the proposed relationship is asymmetrical. While the idea of partnership sounds appealing, it seldom manifests into the mutually beneficial and equally balanced relationship it implies. The problem stems from the fundamental motivation of both parties. As independent companies, driven to maximize their own shareholder’s value and as individuals, motivated to maximize their personal income, the concept of true partnership is handicapped from the outset of the relationship. The incentive structure for both companies and individuals drives them to attempt to gain advantage in partnership, forgoing the potential long term benefits of a true partnership. Think how different negotiations would go if all revenues were to be pooled and shared equally as well as all compensation. This may sound more like a merger than a partnership, but isn’t the intent of a partnership to align two companies completely while keeping them separate entities? Without such alignment the relationship will really be one of negotiation for advantage with the desired appearance of equality.
So, is the fundamental concept of business partnerships flawed? Is the idea that two organizations can exist to form a truly symbiotic relationship where both parties achieve more together than apart merely conceptual? Is it impossible for two companies to really align their interests and act so selflessly? I don’t think so. The problem is not a lack of potential benefit, or structural options. The problem seems to revolve around how we measure success, who we believe we serve and the definition of the system in which we operate. Unfortunately, these are pretty big issues and decades of management training has ingrained a certain uniform set of rules into the consciousness of the world’s industrial leadership. Compounding the situation is the fact that capital markets do not seem to effectively value long term relationships, strategy or the effectiveness and efficiency of the entire value stream.
To remedy this situation, we must engage in systems thinking and adopt the management philosophy of servant leadership. By exploring our role in the value stream through this lens we open ourselves up to a completely new paradigm of how we measure success, how we treat our customers and how economic rents are distributed throughout the value stream. The most important question has always been…..Who is your customer?
