Page 234 - Performance Leadership

Chapter 12 Performance Networks • 223

success in the market. Think of Senseo, a one-touch-of-a-button
espresso system where the machine is built by Philips, and the coffee
pads with special coffee are supplied by Douwe Egberts. Each of the
two firms offers unique skills to this joint-value proposition. The prof-
itability comes from the special relationship, which started without a
finished product or service. Specialists of both firms combined forces
and cocreated a new product, where each firm also contributed their
brand name to make the product a success, and created collaborative
processes to maintain the offering over time and perhaps also created
new collaborative products and services.
Power or dominance is an important factor connected to the level of
the relationship. There are different factors that allow a stakeholder to
become dominant. These can include the size of the organization (like
a huge oil company), the brand value and recognition it has (to attract
customers), a certain legal protection (state-regulated organizations or
unions), a crucial position in the network (for instance, owning cus-
tomer information), or technological advantage (offering a unique
product). A dominant organization in the performance network can
effectively drive transactional relationships; others have little choice
but to follow the dominant partner. Suppliers that have a dependent
relationship with a more powerful partner may wish to seek a more
added-value relationship, to increase customer loyalty—being embed-
ded in its customer’s processes, raising the switching cost. In many
cases, cocreated products and services come from a power-neutral rela-
tionship. Each partner has its own unique skills and resources, and it
contributes its brand name.
Regardless of how powerful one organization is, all parties need to
agree on the level of relationship they have, in order to collaborate well.
If there is no agreement on the level of a relationship, it is most likely
not sustainable over the long term and may succumb to opportunistic
behavior. For instance, one of the partners opens up to the other, trying
to build a relationship, which then is immediately returned by the other
in terms of a new opportunity for price renegotiation. This will teach
the first partner not to be that transparent anymore, whether it has the
power or not. If there is no agreement on the level of relationship, recip-
rocal performance indicators put in place by one of the partners will not
be recognized or appreciated for the value they provide. When there is