Guts, Part Two: Working with Vendors and Contractors
In my last post I talked about the need for leaders to have guts—in the sense of being willing to make decisions under uncertainty once they’ve gathered enough information. But that’s not the end of the story. In this post I want to talk about gutsy management of vendor relations. In the next post I’ll talk about guts in advancing an agenda with fellow executives when there’s disagreement.
It’s become a cliché in the world of IT that you should seek a “partnership” with your vendors, contractors, and suppliers. Sometimes that is indeed what you want. But I suggest that you be careful with this idea. Vendors, largely, would like to be your “partner.” You should demand a lot more than partnership.
When you work with a vendor, you’re a customer. You should insist on being treated like one, and should have high expectations for customer service. This is true even if your vendor is Amazon Web Services. I say all this because I’ve seen, over and over, IT vendors browbeat customers into accepting less than good service, often in the name of “partnership.” If a vendor says they want to partner with you, point out that all of the money in this so-called partnership is flowing from you to them, and that makes you a customer, not a partner—and you expect to be treated like one.
When I was a CIO in the US federal government, I noticed that the government was especially bad at acting like a customer. We’d often sign multiyear agreements worth hundreds of millions of dollars with large government-focused contractors—agreements that sometimes took us as long as three years to negotiate—after which the contractor knew we couldn’t replace them easily. That gave them an incentive to put mediocre performers on our contracts. If anything went wrong, which it often did, the contractor would immediately find a way to blame the government agency. We weren’t being good “partners,” they’d often say. They knew that the government is intently self-critical, with numerous watchdogs, an often-punitive bureaucratic culture, and a “we’re not as good as private industry” attitude. The idea that the relationship was a partnership worked in the vendor’s favor.
But the government signs contracts to get its work done on behalf of the public. Lots of money changes hands—in one direction only. We learned that we had to stand up to those contractors and insist that they deliver customer satisfaction for the money we were paying them. If we were unhappy with their performance, they had to fix the problem. If they were unhappy with us as a customer, they could bid on another agency’s contract next time. We started the performance period of each contract with a kickoff meeting, where my employees and I would tell them that I expected great service, not finger-pointing. We evaluated their performance and gave them feedback every month—and our evaluation criteria included whether they provided helpful service or pointed fingers at others. They were welcome to give us feedback on how we could do a better job, but that was a separate question from their performance.
We held them to an especially high bar when it came to their expertise. We were paying them to be experts and we expected them to be brilliant, knowledgeable, and forward-leaning. If they didn’t know their own products, couldn’t explain them, didn’t understand digital approaches like DevOps, etc.—we let them know it was a problem.
Today, with cloud and open-source technology, with many well-funded startups and vigorous competition between vendors, you as a customer have choice. You should hold vendors responsible for their service. You should have a high bar. If—just as an example—your database vendor is treating you like an enemy, it’s your job to demand better. There are many choices for databases today, and switching costs are much lower than you may think.
When does it make sense to treat a vendor as a “partner”? I think this is more a matter of language than anything else. You want partnership from a vendor in the sense that you want more comprehensive customer service than just an instantaneous transaction. Customer service in IT should be more than just smiles while signing a multimillion-dollar contract. It’s not that you need to do something for your vendor equal to what they are doing for you—it’s not that kind of partnership. It’s not that you need to share burdens equally. No, what you want is for the vendor to make accommodations for you, to commit resources, to add value to their product by providing you with good advice, to take your feedback and act on it. Am I right? That’s what you’re looking for—not a “partnership” in other senses of the term.
Again let me be clear: this applies to AWS as well. You must hold us to high standards, as you should your other vendors. If we disappoint you, please do something about it.
At AWS, we operate on a principle of “customer obsession,” which means that we’re fully invested in your success as a customer. We provide as much help as we can to empower our customers; we believe that their success is our success. That’s why we have events focused on education rather than marketing; why we have account teams that are intent on helping customers make the most of AWS; why we encourage customers to save money through cost optimization techniques we teach them; and, indeed, why my team, the AWS Enterprise Strategists, exists—we write blogs, articles, and books, speak at conferences, and advise enterprise executives on what we’ve learned about how to succeed in the digital world.
What we mean by customer obsession is something stronger than simple “partnership”—we want to be aligned with you in making you successful. And we also want to treat you as a customer should expect to be treated. Go ahead, tell us if we are succeeding and how we can improve. Please. If something strikes you, send us your feedback.
It’s sometimes difficult to be a strong customer today. IT has become extremely complex. Change is rapid. There are information asymmetries; vendors know things about their products that you don’t know. They can sow fear, uncertainty, and doubt. But you are the customer. You are the one paying the money. It’s important to have the guts to demand performance and service.