Collaboration and Benefit: the No Discount Policy
Just like people, companies have relationships with each other. Whether you are a supplier or a customer, the agreements you sign rule the relationships you have.
Agreements are commonly written by lawyers whose job is to try and define what could happen in the worst case scenario — when things go wrong or parties don’t agree. These scenarios are negotiated between two different departments: procurement and legal. Procurement’s job is to work on statement and price whilst Legal and Compliance legally enforce the statement if things go wrong.
Negotiating the :m way
In mondora.com we believe that such negotiations are lacking something fundamental. We understand that a negotiation is made on volumes and discounts, terms and conditions. We also understand that this is limiting to the relationship and creates exclusivity. The supplier is the supplier and the customer is still the customer. This is perfectly true in every case, when a buyer is buying a good and a seller is selling it.
But how can such an agreement become interdependent? How do the customer and the supplier contribute to making a better world as a result of their trade? How are they using business as a force for good together? How do they include each other in the creation of a better world? This is how a Benefit Officer should think: how do I translate everything in order to create benefit for the world through the relationship I’m creating?
This is what happens when we discuss an agreement with a customer or a supplier in mondora. We want to know how we are taking care of the World or of Society or any stakeholder together. We work on this and try to add a clause to the agreement that we identify as Interdependence Clause.
How we negotiated an Interdependence Agreement with a large Bank
Last Friday I was negotiating with one of our customers, which happens to be a large bank, for providing a service. We’re very proud to be working with this bank, and we’re very proud of working together to build a better world.
When speaking with procurement they initially asked for a 25% discount. 25% is a lot of money, even considering how proud we are to be working with this Bank. In a normal negotiation we would have worked on percentages, volumes, etc. However, our idea is that if we can work together to identify something that is helpful to the world, and commit to getting there together, 25% of fees allocated for this purpose is money well spent.
The application we’re working on for this customer is similar to a home banking service and one of its features is that it allows users to print documents. We proposed to customize the print option with a message that encourages the user to have the documents sent in pdf format by email rather than printing them on paper. We could then count the number of trees saved for every pdf document choice, collect this information and make users aware that they are savings trees. We wrote this in a clause of the service agreement: the interdependence clause. The clause also states that should the bank stop this awareness campaign, they are to reimburse the 25% we allocated to the interdependence agreement. The purpose is clear: together we believe that we can take steps towards reducing deforestation.
Interdependence with local software suppliers
Interdependence agreements are also negotiated with Suppliers. We currently rely on some software development help from a local provider and two weeks ago I called them to renegotiate the agreement. Our understanding is that we are working together to improve the technological skills of local people. Normally, local talents have to travel 150 km away to study Computer Science, and once they graduate they can’t move back because there is very limited space for their profession in Valtellina.
We both agreed that through our work we are creating that space together and giving new emerging companies the possibility of starting up in the Valley. This is a wonderful purpose for our collaboration and we decided that mondora, as the customer, would like to pay more for the service if the supplier also agreed to keep working towards this with us.
The first step would be for the supplier to monitor and report employee happiness over time, so that the company could become a great place to work and attract more local talents. This interdependence agreement requires much more money and effort, it must follow a purpose and have a process that meters happiness inside the company. The agreement states that the supplier must provide a report every quarter with the happiness index of the company.
The supplier will not be penalised if the happiness index is not positive: our aim is to create awareness that if we are to follow our shared purpose, we need to build a happy workplace. Similarly to the agreement with the bank, if mondora does not receive the happiness index report from the supplier, the negotiated amount of money used for benefit will return to us, so that we can invest it in other impact creating activities.
Creating an Ecosystem with a Purpose
These are just two examples of how we are working on creating an ecosystem between customers and suppliers, and we firmly believe that our shared purpose is to use business as a force for good.
Antonio Genovesi, the thinker of Civic Economy, once considered the relationship between nations and trade and said that if two countries were to sign a statement like this in their trade agreements they would never make war. This because if a problem occurred, they would analyse the “why” of their relationship and refocus to what they were building together through this relationship.
This is very exclusive for us! This is the ONLY way to love and include anyone with a higher purpose.
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