It is increasingly clear for entrepreneurs and business leaders the importance of designing value propositions that resonate with the true needs for progress of our clients.
But in my consultative processes, I often discover that they forget to include other key actors in the listening and co-creation process: suppliers, distributors, strategic partners and collaborators.
The motivation and commitment of these actors is crucial for the sustainability and anti-fragility of the business. When they become allies, they are an engine of co-creation.
I have learned that a virtuous business model does not only depend on the first validations and fine-tuning the sales funnel. It also requires building solid and synergistic relationships with business actors over time.
Designing appropriate incentives for those who make our value delivery possible (in a complementary way with our collaborators) is not generosity; It is a strategic decision connected to our personal and business purpose.
When we abandon short-term blindness, we discover that if our allies win, we win.
If they perceive progress and lower risks, our proposal is strengthened. If they join the project everything is simplified, we gain agility and flexibility. If we make their lives easier, their commitment and collaboration increases.
Félix Oberholzer-Gee, professor at Harvard (I was fortunate to learn from him) and author of Better, Simpler Strategy explains it fabulously. Strategy is essentially a series of value decisions. Any decision that does not increase the value of clients, suppliers or collaborators (business actors) does not make sense.
He presents us with a fabulous tool that we use in Scalabl® within our methodology. The same one used in almost all Harvard cases: the Value-Stick (I share a video at the end of the article)
What does designing incentives really mean?
It's not just about paying more. It is reducing the "willingness to sell" (WTS or willingness to work) of our suppliers and collaborators: the minimum threshold at which they are willing to offer their product, service or effort. When your experience working with us is profitable, with lower risk, with learning and rewarding, we encourage your participation based on shared value. In this way we strengthen the antifragility of the ecosystem while increasing our profitability, capacity for innovation and flexibility.
Some types of incentives (don't stop with this, explore and generate yours)
* Economic and financial: Balanced margins, advance payments, stability in demand and bonuses based on real results. These incentives are effective when they clearly respond to the objectives that your allies really value, not just the volume or time invested (don't be left alone with these incentives).
* Efficiency and reduction of friction Facilitates billing, minimizes bureaucracy and clearly defines processes and roles to provide predictability. If the suppliers are small, support them with the cash, and encourage their growth. This reduces their effort and allows them to focus on activities that generate value. Understanding their critical tasks well allows you to simplify or automate key points in their interaction with you.
* Reputation and visibility Publicly recognize your allies, link their brands with yours and highlight their role in your success. Many times, the most powerful incentive is to feel part of a project with purpose and visibility.
* Learning and development is key. It offers training, mentoring, technological integration and constant feedback. Allow your allies to access valuable information or tools, such as integrating your systems with theirs, gaining efficiencies, thus facilitating their work and supporting their continuous development.
* Trust, good treatment and genuine relationship Always keep your promises, respect your commitments and respond with empathy. Ask open-ended questions, take time to have coffee. Go deeper into their companies, what can help them. Consistency, interest in each other and good treatment strengthen lasting relationships, creating an environment where allies prefer to bet and stay.
Real example: Patagonia and its ethical network of suppliers
Patagonia works with suppliers who share its social and environmental commitment. You don't just choose them for cost; accompanies them, audits, makes visible and improves processes with them. The result is a virtuous cycle: committed suppliers, superior products, a strong brand and loyal customers. It's all part of the shared incentive to build something bigger than a commercial contract.
How to implement this in your business
* Use problem interviews not only with customers, but with all key stakeholders. He knows deeply their jobs, pains and gains. This way you will discover clear opportunities to design effective incentives. What is the progress you are looking for? What situations or risks do they face? What do they prioritize?
* Continually ask yourself (and them) how your allies feel about working with you: are you making their lives easier and winning, or are you creating friction? (in a dynamic world with many opportunities, your monopolistic/oligopolistic position today can quickly weaken in a disruption tomorrow)
* Design your value proposition for third parties with the same empathy and care that you apply with end customers.
* Look for fit among all your activities (a strategy embodied in the business model that integrates, coordinates, optimizes and reinforces the activities that generate value for the various actors).
Business is generation, exchange and capture of value (among all actors).
It is clear that a supplier that feels part of the project contributes more. An ally who progresses with you will defend your business. A collaborator who grows alongside you will actively contribute to your continuous improvement.
But in a dynamic world and with new types of relationships, an actor who innovates, learns and develops can make a huge difference if he is your ally and has the incentives to stay by your side.
Designing strategic incentives is not giving away; is multiply. It is aligning the success of other actors with our purpose and sustainability. A truly virtuous business model is sustained when all its actors move forward together.
Today I invite you to take a small step: identify a key ally and think about what simple action you can take this week to strengthen that relationship based on shared value. What incentives can you design today to boost your network?
