Presented by Kate Vitasek of Vested as a Keynote session at the 2017 PG Customer Summit in Nashville, TN

1. Five Rules For Transforming
Business Relationships

2. Adam Smith
The Wealth of Nations
Adam Smith
Father of
Modern
Economics

3. Ronald Coase
Nature of the Firm
Ronald Coase
Total Cost
of Ownership
Source: Wikipedia

4. Total Cost of Ownership
Coase received a Nobel Prize in Economics in 1991

5. Robert Solow
Solow’s Law
Robert Solow
Economic
Wealth
Is Driven by
Innovation

6. Innovation Matters
Robert Solow earned a Nobel Prize in 1987
Labor & physical
capital 13%
Innovation &
Technical
Change 87%

7. John Nash
Nash Equilibrium
John Nash
Grow The Pie
vs.
Fight Over It

8. Win-Win Is Steeped In Research
John Nash received a
Nobel Prize in 1994
There have been a total
of 8 Nobel Prizes
awarded for the study of
behavioral
economics/cooperation.
Source: http://en.wikipedia.org/wiki/A_Beautiful_Mind_(film)

9. Win-Win Thinking is Steeped in Research…
Command Cooperate
Cooperate
Command
Buyer
Supplier

10. Oliver Williamson
Transaction Cost
Economics
Oliver Williamson
Transaction
Cost
Economics

11. Style Matters: Be Credible, Not Muscular
“Muscular buyers not
only use their suppliers,
but they often ‘use up’
their suppliers and
discard them.
“The muscular approach
to outsourcing of goods
and services is myopic
and inefficient.”
11
Williamson received a Nobel Prize in Economics in 2009

12. Steven Levitt
The Power of (Perverse)
Incentives
Steven Levitt
Photo Source: http://www-news.uchicago.edu/releases/05/050428.levitt.shtml

13. Perverse Incentives Are Real
“One of the most powerful
laws of the universe is the
law of unintended
consequences. This
applies to schoolteachers,
realtors, crack dealers,
expectant mothers….. ”

14. Perverse Incentives….

15. Dan Ariely
Duke University
Dan Ariely
The
Importance
of Trust
Photo Source: Wikipedia

16. Perverse Incentives Are Real
“We are adept at
rationalizing
our pettiness”

17. Changing the Game
So just how do
the world’s
best redefine
winning in
business
relationship?

18. Photo by Alison Levine
First and Foremost, They Have a Vested Mindset

19. And They Follow Five Simple Rules

20. 1.
Outcome
Based vs.
Transaction
Based
Model

21. CASE STUDY
In their words…ExampleinAction
P&G–JonesLangLaSalle
21
William Reeves
Dir. of Employee & Workplace
Design & Delivery Services
Procter and Gamble
“We wanted a
supplier that
could take
Charge of the
buildings, not just
take care of
them”

22. 2.
Focus
on the
WHAT
not the
HOW

23. CASE STUDY
ExampleinAction
RockyFlatsCleanUp

24. CASE STUDY
InfinityRoomProblem
24

25. CASE STUDY
GloveBoxCleanup&Removal
25

26. 3.
Clearly
defined and
measurable
outcomes
You got to be very careful if you
don't know where you're going,
because you might not get there.
- Yogi Berra

27. CASE STUDY
27
ExampleinAction
MnDOT1-35BridgeRebuild

28. CASE STUDY
• Safety – safe project area
• Quality – reduce future maintenance
costs
• Schedule – open for use by Dec 24th,
2008
• Environmental Compliance – minimal
impacts to the environment while using
context sensitive solutions
• Budget – maximize return on taxpayer
investment (don’t go over budget!)
• Aesthetics – incorporate bridge into
surrounding environment
28
ExampleinAction
MnDOT1-35BridgeRebuild

29. 4.
Pricing
Model
with
Incentives
to
Optimize
the
Business

30. CASE STUDY
In their words…
30
Taylor Hawes
General Manager and
Controller
Finance Ops. Microsoft
Photo Source: Taylor Hawes - https://twimg0-
a.akamaihd.net/profile_images/355558082/Taylor_Hawes_casual-
small.jpg
“We could “lift and shift”
where the service
provider would as
quickly as possible
determine a clear and
accurate baseline
which they would be
expected to improve
with Microsoft.
The service provider
would then be highly
compensated for
achieving
transformational
results.”
ExampleinAction
Microsoft–Accenture

31. CASE STUDY
In their words…
31
Henric Häggquist
Senior Director
OneFinance
ExampleinAction
Microsoft–Accenture

32. 5.
Insight
vs
Oversight
Governance
Structure
WEME
Manage the Business…
Not Just the Supplier

33. CASE STUDY
In their words…
“None of
us is as
good as
all of us.”
33
Ray Kroc
Founder
McDonald’s
Source: http://www.biography.com/people/ray-kroc-9369349
ExampleinAction
McDonald’s

34. CASE STUDY
Who ran out
of chicken
during the
Asian Avian
Flu crisis?
34
Source: Used with permission from McDonald’s
ExampleinAction
McDonald’s

35. • P&G (Real Estate/Facilities Management)
• Microsoft (BPO)
• McDonald’s (Supply Chain)
• U.S. Dept. of Energy (Environmental
Services)
• State of Minnesota Dept. of Transportation
(Construction)
• Integrated Management Services
(Staffing)
• Diversey (IT)
• Water for People (non-profit NGO support
in developing countries)
The Results Are Real!
3

36. What Is Your Mt. Everest?
3
Photo by Alison Levine

37. Contact Me with Questions!
kvitasek@utk.edu
www.vestedway.com