The one thing Pink Floyd got wrong

It’s a dreary autumnal afternoon in 1999.  I’m somewhere in Northamptonshire.

There’s no colour going on at all in what I’m wearing: from my suit to tie to socks, things are almost funereal.  Which matches the sombre mood that hangs heavy over the meeting room.

It wasn’t always like this. This room has certainly seen more than its fair share of happiness, positivity, fun. After all, you don’t build a multi-million pound business that’s been handed down from founder to son to grandson over several decades without plenty of good times and good vibes.

But today that journey is coming to an abrupt end. Because today the bank is formally calling in its loans and exercising its security to take control of this business. This is very early in my career, but I’m already hoping I never have to see this kind of day again. I know its something that will stay with me for a long time.

How it came to this is obviously a complicated story, with many strands. But the one that is shouting at me, even as a ‘green round the gills’ lawyer, is how this business has been treated by its much, much bigger customers.

This business knows how to do what it does. Its quality hasn’t dropped, it hasn’t made a big mistake or let anyone down from a product or operational perspective. It’s only ‘crime’ is being unable to live within the lower & lower prices those giant customers have demanded.

It had tried hard to do so. Damn hard. It had even managed it for a number of years. But, as was inevitable, eventually the bottom of the well was reached. There was no more to give. Not that that stopped the demands, no matter how often or eloquently this business explained its position to those customers.

And in a whirlwind that went faster than anyone expected, the dumbfounded directors of that business suddenly found themselves having to sign documents handing their grandfather’s brainchild over to someone else.

If the big customers cared, they certainly didn’t show it. And I guess it didn’t therefore cause them any hardship whatsoever in the short term, which is what “justified” pushing this long-standing family business to the wall. 

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Still, that’s their prerogative, I suppose. Back then, there was absolutely nothing that legally required those bigger customers to give even a second’s thought to the fate of their suppliers (and, even now, I’d argue that what little legal protection we do have isn’t much better).

And that’s just the way business is, isn’t it? I don’t care whether you’re doing OK: after all, you’re an adult, it’s up to you to take care of yourself. ‘Buyer beware’ and all that jazz. I’ve got enough on my plate trying to work out what I need & want and then trying to make sure you don’t find out about that in advance. I have to keep my side a secret – after all, it’ll only be harder for me to get what I want if you find out how much I’ve already banked or what else I’d like to get. For me to win, we have to fight over every point in a contract and you have to lose. Deals and contracts are a battle.

Or, as Pink Floyd eloquently puts it in their song ‘Money’, “I'm alright, Jack, keep your hands off of my stack”. 

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But that attitude makes feel incredibly depressed. Because I just don’t see how that’s a good thing.

Let’s say we’ve had just closed a deal with a supplier. We’ve negotiated hard, and we’ve ‘won’ way more points and much better positions that we expected or than we needed. We’ve really got one over on them. Go us! Let’s hit the pub and celebrate.

But what about that other side? Yes, there’s a deal. But deep down, they’re not sure they’re happy about it. They’re definitely concerned about the “deal”. They’re down the pub too, but they’re not celebrating. They’re hoping that some Dutch courage will help them convince themselves that the wind will be in their favour and this all work out OK, so they can make some kind of return.  Is that really a great way to start a business relationship?

Then let’s say we’re a few months into the business arrangement and the wind is not the favour of that supplier. Their margin is wafer thin, if it exists at all. They’re putting in a lot of effort, for little to no return, all while we sit back, rolling in it. How does that help make sure that we get their best effort, their best service? How does that get us the quality that we need? Doesn’t that encourage them to find a corner or two to cut?

And ultimately, isn’t that likely to cause them to want to get out of our deal as quickly as possible, by fair means or otherwise, bringing our short-term gravy train to a halt? 

And if you push things all the way to the end in a one-eyed, self-interested approach (like the big customers and the bank did in my example above), you just erase a long-term supplier, leaving a space where a partner once sat.

I don’t see how any of that makes sense.

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A selfish combative approach presents business as a pie that doesn’t grow. So that for me to get more, I must take from you.

But isn’t the whole point of capitalism that the pie grows ever bigger? Meaning that we can both win, at the same time?

And surely its much better if we both win? Because then we’ll work together, we’ll work for each other, we’ll work to make this thing between us a success, and we’ll do so for a long time.  In that case, we’ll have a genuinely prosperous, long-standing relationship.

Me, I’d rather live in that kind of ‘relationship first’ world.  And I also think that kind of world is completely possible. Because it’s actually within the gift of each business to build that kind of world, through two key steps:

· First, by being open about what we need and what’s in it for us; and

· Secondly, by actively looking to build a deal structure that clearly works and delivers for both businesses, not just ours.

Yes, the first of those steps means that I do want you to actually tell your business partner what profit you’re looking to make, what return you’re expecting to receive. No more keeping that a secret, no more ‘umm-ing’ and ‘ah-ing’ and prevaricating whenever you’re asked about it.  After all, you’re much more likely to make that profit or get that return if the other side know that’s what you want!

For the second one, I want you to be genuinely interested in making sure that your business partner is making enough profit and return themselves in this arrangement.  Not just a courteous request about that, a genuine deep interest. If they’re not happy, you shouldn’t be happy. Because you should see that unhappiness as a very clear and present threat to the long-term success of your relationship.

Or, to also borrow from Pink Floyd in Money, no more grabbing that cash with both hands and making a stash.

The hard part about both of those things is actually remembering to do it: that base instinct to fight is well entrenched and hard to resist. To help you with that, here’s a free Win-Win Checklist to help you both set out clearly your side of the deal and actively find out about and capture your business partner’s side.

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I’d love to say that those bigger customers that led to the demise of my client way back in 1999 were now using tools like this Win-Win Checklist. But unfortunately I came across them again in my first in-house role. And again found them still just issuing demand after demand after demand, with no consideration whatsoever for the other business.

I won’t lie: I wished them ill way back in 1999. I still wish them ill, to this day. They’re clearly listening to Dark Side of the Moon all wrong.

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I hope you’re enjoying The Collaborative Legal Way. If you are, it would really help us if you could forward this to anyone in your network who you think might find this thought-provoking. If you’re aren’t – or if you’ve got any questions on anything ‘relationship first-related – please do let me know. While I enjoy writing these newsletters, the most important thing is that they are actually useful and valuable to you.

Wishing you and your business a great run-in to Xmas.

Andrew

PS: If you know of anyone you know who has legal stuff hitting their desk and who isn’t quite sure what the best way forward is, please do send ‘AI Andrew’ to them.