Skill Definition – The ability to construct a workabale cost / value ratio for both O2 and the partner/s. The cost value ratio is defined as the amount that each partner receives back for each commercial unit invested in the relationship (e.g. £, $, €, etc.). The key word in this skill is expected. The best collaborating organisations know in advance what the cost value ration should be for relationships that they are managing. Not just Transactional ones but the other partnering types also.
A demonstration of this ability would probably involve the following:
§ This skill is near impossible without a good grasp of Co8 Commercial Benefit and Co7 Commercial Cost.
§ Many organisations give up on the process of identifying value and cost believing it to be ‘too hard’ to accomplish. But without some commercial and percentage rigour around relationships, organisations will have no way of: prioritising investments, spotting underperforming relationships quickly, taking appropriate remedial action and exiting underperforming relationships if necessary.
§ Many organisations are now using this equation to;
o Satisfy their CEOs that alliances are a valuable commercial model
o Comparing internal results and taking action accordingly
o Building business cases to secure investment in alliance relationships
o Manage internal and external expectations
o Brief industry analysts
o Compare similar relationships stage by stage
§ Notice that the factor is ‘expected’ cost value. This suggests that a preconceived figure is already in one or both / all partner minds.