Walking through the bazaar in Istanbul recently, I had a sustainability moment. It had nothing to do with packaging or organic farming or even fair trade. It had to do with good old-fashioned trade.
The bazaar is not a place for the shy. Sellers and buyers engage directly. There are no intermediaries. There are no pre-qualification documents or bid specs. If you want to buy it, you buy it. If you want to buy it at a lower price, you bargain. If you want to sell it, you hustle. You draw in customers. You figure out what matters to them. You talk about everything possible to create a relationship before you get to price. Hopefully, everybody walks away happy. Sometimes there’s even time for a glass of tea.
It’s messy, but business gets done. That’s what happens in a marketplace when you combine willing buyers and motivated sellers.
That’s not what happens around sustainability in many B2B (business-to-business) marketplaces. Clearly, lots of good work has been done and good progress made. Influential buyers like Walmart, Kaiser Permanente and even the US Government have sent out strong sustainability signals about what they do – and don’t – want to buy. Groups like The Sustainability Consortium are working to improve the marketplace. Organizations like US BCSD are even trying to create new marketplaces.
But for all that progress, most B2B deals still get done in a transaction between Company A’s Purchasing people and Company B’s Sales people. If you try to force sustainability into that transaction, you’re forcing skeptical buyers to deal with unwilling sellers. Not much business gets done that way.
I see it first-hand. I can spend a morning with a company’s Purchasing people who hesitate to raise sustainability issues with their suppliers. (They often settle for sending out more questionnaires to their suppliers.) I can then spend that afternoon with the same company’s Sales people who hesitate to raise sustainability issues with their customers. (They also complain about all the questionnaires they get from customers.) I spend the morning trying to get Purchasing to listen, and the afternoon trying to get Sales to talk.
In some cases, sustainability really is a bad use of their time. For some customers and suppliers, the sustainability opportunities and risks really are too far down the list of priorities.
More often, though, sustainability leaders have failed to overcome serious organizational imperatives and cultural barriers. Over generations, both Sales and Purchasing have evolved strong beliefs that are reinforced by functional silos and metrics.
Sales historically believes:
- Don’t ask questions if you don’t have a good answer
- Sell features not benefits
- Purchasing cares about five things: price, price, service, price and price
- Success is measured in the sales you can book now
Purchasing historically believes:
- Don’t believe most of what your suppliers’ Sales people say
- Don’t get too close to your suppliers, Keep them at arm’s length.
- Success is measured in the price reductions you can book now
Both Sales and Purchasing organizations are evolving beyond those stereotypes. However, those beliefs are still powerful in many companies, in the cultural DNA if not in the formal processes. To succeed, sustainability leaders have to help Sales and Purchasing move ahead.
Sales organizations increasingly focus on building great client relationships, finding ways to escape the commodity death spiral. Help them do that:
- Give Sales good training to be conversant with – not experts in – sustainability
- Coach Sales people to ask questions, especially the open-ended questions that can start important conversations with customers – including conversations that go beyond Purchasing without burning bridges
- Arm Sales with benefits not features. Don’t just talk about your carbon reduction or product life cycle, but how that can help the customer reduce their footprint, minimize their risk, and achieve their goals
- Respect Sales’ scarce time. Help them prioritize which customers really might care about your sustainability attributes
Purchasing organizations increasingly focus on building a truly sustainable supply base in all senses of “sustainable”. Help them do that:
- Don’t just give them more lists of questions to ask, or boxes to tick
- Don’t ask for data unless you know what you’re going to do with it
- Do work with them to identify the risks that really matter (especially for reputation and business continuity) and to prioritize the categories of suppliers who can give rise to those risks
- Help integrate sustainability concerns into their existing processes, don’t just add more work on top
Success may come more from great customer-supplier conversations than from immediate deals booked. In fact, success may look like a loud, messy bazaar with lots of people talking with lots more people. And that’s just what a vibrant marketplace looks like.
[Scott Nadler is a Senior Partner at ERM. To share this post, see additional posts on Scott’s blog or to subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM, its partners or clients]