08 May 2006

It's OK, they've signed the contract ...

A couple of years ago, I helped one of my clients win a good-sized BPO job from a mobile telecommunications company. I got a call today from my client who was unhappy to find that his customer - famous name plc - wanted to renege on its contract which still has 3 years to run.

A contract is a major stepping stone in most relationships - we sign contracts when we are in the honeymoon period and confident that things will go well and we call on contracts when the relationship sours. He wants me to act as a 3rd party for him in the negotiation to bring them back to the agreement so that he can use plausible deniability if my 'misinterpretation of his position' threatens to get him into trouble.

This happens more often than you might expect in dealings between small companies and larger businesses. I met a very interesting owner of a courier business about four years ago and she had just lost a major piece of business which had been taken on at suspiciciously low rates by a large carrier. She managed to restructure her business virtually overnight and was able to continue trading profitably despite losing 55% of her top line.

Not all businesses are able to demonstrate that degree of flexibility in operations or indeed, that level of ruthlessness in carrying out pruning exercises. In this case, famous carrier plc assumed quite rightly that she didn't have the stomach to enforce her contract with her original customer and didn't have the resources to go to court. Although they didn't realise it, they would have been much better making her an offer of employment than stealing business from her - she was a phenomenal manager and the fact that she was able to take all the complexity out her operations at short notice and continue to trade profitably says heaps about her talent. She was worth much more to them as an employee then she ever was as a wounded competitor. By the way, she has tripled the size of her original business and continues to trade profitably. She might even be able to afford a court case, now.

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