Page 230 - Performance Leadership

Chapter 12 Performance Networks • 219

operational and the analytical dimensions of the performance leader-
ship framework constitute traditional performance management.
The social dimension demands the relationship between stakehold-
ers to be reciprocal. The performance of the enterprise depends on the
performance of its partners in the value chain. Not only should we
measure to which extent we are making our targets, but also to which
extent we enable our stakeholders to make their targets. This tells us
how effective we are in our collaboration.
The values dimension suggests that there is more to a relationship
than contracts and deals. Based on the understanding of the relation-
ship, transparency, and reciprocity, the other stakeholders are either
comfortable working with the organization or not. Stakeholders have
a choice of whom they would like to work with; their trust needs to be
earned. Trust exists when stakeholders understand each other’s motives,
values and—in general—their way of thinking. In summary, the four
pillars of the performance network are: understanding the nature of the
relationship, transparency, reciprocity, and trust.

Nature of the Relationship
At the core of the performance network is the belief that not all rela-
tionships are the same, although all of them are important. Some rela-
tionships are very transactional, such as managing the cafeteria in
facilities management, or desktop management in IT, or some forms of
logistics. These can often simply be outsourced. Other relationships are
more strategic, as these support the core competencies of the firm directly
or involve innovation through cocreation. These types of relationships
require more advanced management. Within the performance network,
we distinguish three types of relationships: transactional relationships,
added-value relationships, and joint-value relationships. See Figure 12.2.
Transactional relationships have a clear customer/supplier basis.
Usually the switching costs, the costs incurred when you move from one
supplier to another, are low. The customer simply will evaluate the
speed, quality, price, and convenience of doing business with the sup-
plier and, if there are any problems, find another supplier. The sup-
plier will try to optimize profit and growth from the customer, and it is
not overly interested in a continuous customer relationship, other than