Post on 28-Dec-2015
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• The Compatibility and Trust Assessment (CaT) was developed by Jerry Ledlow Ph.D. and Karl Manrodt Ph.D. to measure the strength of business relationships
• Based on research – Supports Dr. Oliver Williamson’s assertion that style
matters
• Seeks to show buyers and suppliers where they have gaps in order to help foster better a stronger wonder relationship
About the Researchers
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
Avoidance
Empathetic
Competitive
Adaptive
Vested
BenignStyles
MuscularStyles
Credible
The CaT Assessment Identifies Each Parties Style
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©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
Value Building
Value Fading
Less Aligned More Aligned
More Aligned
Less Aligned
Compatibility Alignment
Relationship Dynamics
Value Holding
Value Seeking
Value TippingBuyer
Supplier
We Then Map Each Parties Approach…
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Misalignment
…And Look for Alignment
Alignment
Misalignment: Increased transaction cost, smaller solution/agreement set of options
Alignment: Decreased transaction cost, larger solution/agreement set of options
Firm A
Firm B
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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• Trust: Performance to promise and meeting commitments is the foundation of trust. Without performance, trust cannot exist.
• Innovation: Strong and trusting relationships allow the parties to share risks and rewards, investing in each other’s capabilities and collaborating to achieve common goals.
• Communication: The open and timely sharing of all information that is relevant to a partner’s decision-making ability.
• Team Orientation: Both sides of a relationship believe in the relationship. Efforts are made to view decisions from the partner’s perspective to mitigate opportunism and promote collaboration.
• Focus: There is common purpose and direction.
Five Dimensions of Compatibility and Trust
When the five dimensions of compatibility and trust are cultivated, relationships can prosper due to greater collaboration and better performance.
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• The assessment is conducted using a 360 degree “two-world view” where:– The buying company provides responses about their own
organization, and their perspective of the service provider – The service provider provides responses about their own
organization, and their perspective of buying company
• We ask participants to rank statements related to the relationship on a scale from “not at all” to “always”
• In addition to the questions, we ask for a bit of demographic data which describes the individuals role in the Buying Company/ Service Provider relationship to help us compile the results
• The survey is typically anonymous – but can be set up to identify individuals for coaching purposes
The Structure of the Assessment
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
• Assessments are conducted using Qualtrics - a confidential internet based survey service– We create a web link to the assessment for each company– It takes about 15 minutes to complete– The link to the survey is typically kept open for 2 weeks– Individual responses are kept confidential
• Buyer-Supplier teams receive a unique link that allows us to pair their data and create a 360 degree view of the relationship
The Web Based Trust Survey
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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• We recommend broad participation by both companies, including individuals with varying responsibilities at various levels (leadership, management, operations)– Multi-level responses will make for better results– The assessment format allows for a reasonably large number of
people to take the survey
• The more wide-ranging the responses the better we are able to capture the rhythm of the relationship between the parties.
• We typically see between 7 and 50 responses from both buyers and suppliers.
More is Better
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Vested Deal Readiness Index By Dimension
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
The Vested Deal Readiness Index by dimension scores each dimension considering the differences in scores between the parties.
Companies are ready for Vested when they have a solid relationship as indicated by a Vested index over 0.70. The relationship should be improved before moving to a Vested Agreement if the index is below 0.70.
Vested Readiness
Index0.64 ± 0.08
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Visualizing the Scores – Average Score
The combined relationship scores show that the parties should work on improving…
Focus, Team Orientation, Communication and Innovation.
Looking at the average scores indicates areas the parties need to improve together, in order to have a Vested relationship.
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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Scores by 360 Degree View
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
The total compatibility and trust score is measured across the four views. Differences in total score need to be investigated by the parties, and the relationship improved.
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Visualizing the Scores – All Views
Scoring shows where the strengths and weaknesses lie in the relationship.
Two world view is based on each company performing a self assessment and assessing their partner.
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
— Company— Company Perception of Service Provider
— Company— Company Perception of Service Provider
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Visualizing the Scores – Small Gaps
Little Gap In Views
In a good relationship the views of each party show little gap in scoring across all 5 dimensions of compatibility and trust.
When the parties’ views align. The level of trust is improved and the potential of the relationship enhanced.
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
— Company— Service Provider Perception of Company
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Visualizing the Scores – Large Gaps
Large Gaps
When the views of each party show a large gap in scoring across the 5 dimensions of compatibility and trust the relationship needs work.
Regardless of the score it is important that the parties’ views align.
Gaps show issues with perception that erode trust and impact communication and cooperation.
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
— Service Provider— Company Perception of Service Provider
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Visualizing the Scores – Self Views
Understanding how the parties view themselves is an important step in driving improvement.
Both companies rank themselves high in Trust
The Buyer ranked itself low in Focus, Team Orientation and Communication
The Supplier ranked itself fairly high across all dimensions.
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
— Company— Service Provider
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• The Compatibility and Trust Assessment helps the parties to open a dialog so that they can improve their relationship– Addressing gaps in how each party views the other– Addressing low scores across the 5 dimensions of
compatibility and trust– Ensuring the relationship is mature enough to
progress to a Vested agreement
• A strong relationship is needed for a successful Vested journey
Using the Results to Focus Improvement
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Contact Us to Learn More or Get Started
Want to learn more about the CaT Assessment?
Email Kate Vitasek, lead faculty and researcher at kvitasek@utk.edu
Kate VitasekVested Lead Faculty/ResearcherUniversity of Tennessee,
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• When an issue is trivial or more important issues are pressing
• When you perceive no chance of satisfying your needs• When potential disruption outweighs the benefits of
resolution• When tempers are high and time is needed to let people
cool down and regain perspective• When gathering information supersedes immediate
decision• When the relationship could be damaging to the
organization and is not critical• When partnering or contracting seems rushed or pushed
as a result of other issues; short term strategy to buy time
Tendencies of Avoidance Style
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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• When issues are more important to others than to you; to satisfy others and maintain cooperation
• To build social capital for later issues. • To minimize loss when you are outmatched and
lack any competitive advantage• When harmony and stability are especially
important; when you are building up a weaker partner in the market
• To allow subordinates to develop by learning from their mistakes
Tendencies of Empathetic Style
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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• When quick, decisive action is vital to the organization (e.g., emergency situations such as a disaster or terrorism incident or accident)
• On important issues where unpopular actions need implementing (e.g., cost cutting, enforcing unpopular rules, discipline)
• On issues vital to company welfare and survival when you know you're in a state of advantage
• Against people who take advantage of noncompetitive behavior
Tendencies of Competitive Style
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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• When goals are important, but not worth the effort or potential disruption of competing but worth a more collaborative approach
• When opponents with equal power are committed to mutually exclusive goals; you adapt to the contract / partnership situation and create the most advantageous position
• To achieve temporary settlements to complex issues• To arrive at expedient solutions under time pressure • As a backup when a Vested or Competitive style is
unsuccessful
Tendencies of Adaptive Styles
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
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Tendencies of Vested Style
©2011 Jerry Ledlow Ph.D. and Karl Manrodt Ph.D.- Used with permission
• Feel a better solution can be achieved through problem-based collaboration
• Focus on solving problems, enhancing benefits, not on accommodating differing views
• Flexible, understanding that solutions have positive & negative aspects
• Ability to understand other parties issues • Problems are looked at objectively, not personally • A solid knowledgeable about the relationship and transparent
view of cost structure to help drive problem solving • Understanding the need to occasionally “save face” • Celebrate successful outcomes openly • Find innovative solutions when both sets of concerns are
important