I have a question for you. And yes this is one of this dumb black-or-white questions which don’t take into consideration the world is just gray.
If you had to choose a vendor among the one which you trust more and the one which can be paid less what would be your choice?
I pretty much expect most of us would say we would choose the trusted one. However what I see everyday people do the opposite. They tend to base on a price heavily.
Of course the question is flawed since it assumes that everything else is equal which is never true. However the message I’m trying to send here is that, despite what we say, we tend to make our decision basing on things we are able to measure. We can easily say this offer is $10000 cheaper than the other; we can easily say that this schedule is a month shorter than that etc.
Unfortunately we can’t say that our trust for the company A is at 5 and for the company B is at 7 (whatever 5 and 7 means). Personally I would probably be able to state that I trust one vendor somewhat more than another but it would be totally personal and your opinion about these companies will likely to differ much. And even if we both agreed we would have hard time trying to describe what exactly “somewhat more trust” means and why it is worth ten thousands more to our decision-makers.
And that’s why I’m not really surprised we tend to act differently than we use to say we’d do. The reason is simple.
Trust isn’t measurable.
Every time we face the task to compare few things we tend to base on aspects we can measure and that’s where trust falls short.
Luckily enough sometimes we are able to forget about this whole comparison thing and decide we just want to do business with a trusted partner. Even if they would be more expensive if we took an effort to compare their offer to others, which we don’t do anyway because, well, we decided to go with these trusted folks in the first place.
With trust in place business relationships tend to be significantly better. And yes, I can explain it. More trust means more transparency. More transparency means more information shared. More information shared means better knowledge about the situation. Better knowledge about the situation means better planning. Better planning means better outcomes. And better outcomes usually strengthen business relationship.
I would choose trust over price. If I stated I’d do it every single time I would lie (I did actually) but when it’s my own call or I’m strong enough to defend the decision trust trumps the price.
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8 comments… add one
You touch upon two important things:
1. You cannot measure what matters most
2. Complex decisions are best made using intuition, not logic.
The things we can easily measure such as: money, time, number features etc. are actually not what matters most. A vendor should give you things that: fit the organization, offer more value than it costs, work and understand you as a customer. Those last 3 things are hard to measure and even harder to define up front. I think trust is a good indicator to rely on.
Trust also has another dimension, apart from being hard to measure it’s part of a range of intuitive feelings and instinct that stem from your sub-conscience, which is more powerful and faster than our logic. In our society we put too little faith in our gut and official procedures rarely rely on arguments like ‘We trust this vendor more than the others’.
Machiel,
I’m not sure whether every complex decision should be driven more by intuition than by logic, even though I personally tend to act this way.
As long as you get to the same point both analyzing measurable aspects and following gut feelings that’s an easy call. The problem starts when intuition tells you to choose something other than measures do. Then much depends on a specific situation, i.e. if I have to defend the decision in front of senior management I may decide to follow measures since gut feelings aren’t the strongest argument you can have in discussion.
Anyway I like your perspective. I didn’t look at the role of trust this way but I agree it is one of strongest drivers for intuition-based decision. I share your opinion we follow intuition to rarely too.
Pawel,
You highlight one of the really difficult aspects of project management; dealing with an ineffective host.
Solutions to the problems you are discussing can be found if a proactive PMO or procurement team is in place.
Measure and rate each engagement against performance metrics such as planned versus actual schedule and budget, or customer satisfaction. That way you build a profile of the organisations you partner with and can avoid the pitfalls of overzealous tenders.
Also, pick partners rather than suppliers that will work with you across multiple projects rather than on a job by job basis.
As a project manager with no organisational infrastructure you have to go with the hunch your instinct and experience drives you to. But there is a better way.
Craig,
Customer satisfaction, strength of partnership or vendor attitude are all unmeasurable and measures usually used to rate organizations on those don’t result in anything valuable. At least I haven’t seen it working well yet.
I agree that history of cooperation can help much to decide which partner to choose, but it should go beyond being on schedule and on budget (the latter in fixed price projects are pretty common). You should judge how the partner responded to changes, what was quality of the product (which is pretty hard to measure when it comes to software), whether they worked proactively or were just waiting for you to tell them what to do etc.
To put it short: would you hire them if it was your own money you spent? This isn’t something you can cover with precise measures or proactive procurement.
Does the measurement need to be very precise to be useful? What about a simple approach – say a 1-5 score on three measures; satisfaction with product, satisfaction with performance and satisfaction with relationship?
Simple is fine when you start this process. Add the complexity later when subtlety matters.
The question of whether I’d put my money down on a supplier is one I face today. I prefer a systematic approach.
I disagree that we can’t measure trust. We measure it all the time, intuitively, as suggested. We just do not document that measurement. Since trust is a key component in all decisions we do have to find a way to express it, or most of our decisions are hard to understand.
Example: why do we use pieces of paper (money) for exchange? Because we trust what it represents. How much? A lot. How frequently? All the time.
I agree with Craig that we should keep it simple and I prefer 3 point scale: Never, Sometimes, All the time.
Sandy,
I like your 3-point scale but I don’t find it as easy as you do to measure trust. And I don’t buy money metaphor. I would if I knew at least one vendor with a track record as good and as long as I have with others accepting these fancy pieces of paper from me. And I would like to work with a vendor whose quality is guaranteed by government and central bank (actually central bank works better as a guarantor).
Basically vast most of potential partners out there fall into “sometimes” category and the thing is to decide how often this “sometimes” happens.
Besides I’m pretty reluctant to call gut feeling a measure.
Craig,
If measure isn’t precise it isn’t a measure anymore. Yes, I know 5 is better than 3 and it is better than 1. But how do you decide that someone is at 3 and some other at 5?
As you say – judge satisfaction with relationship. Well, mine is 5 out of 5. My wife reads the blog sometimes so I have to say that. OK, just joking, I really do think so. But if you had to compare your first two girlfriend back then when we were young and beautiful would that be a reliable measure? I guess we would go with some vague feelings based on even more vague premises.
I don’t really call it a measure.
But yes, I judge it. And I’m able to say I prefer this over that. But it can be hard to convince my wife why I my first girlfriend was better than the second one (and why I started this argument at all) since all I have is my totally subjective opinions and not some reliable measures.
Of course we tend to make our decisions basing on trust. But it is more of guesstimate than real measure.