I must have missed the memo, telling me it was OK to cheat in business (for those of you who first entered the workplace less than 20 years ago, a memo was a written message used to communicate within an organisation, popular pre-email). As a general rule in life cheating is frowned upon: from Chis Sutton on 5-Live’s 606 phone-in telling the football premiership’s weekly divers ‘you’re better than that’, to the family sulks when someone pinches extra money at Monopoly. Yet in my business sector of production and print management, and marketing services, cheating is endemic and possibly institutionalised.
Today I was inspired by Seth Godin’s blog entitled ‘The first rule of the game’ to revisit the subject. In it he points out how easy it is to violate the first rule of the game; ‘All players must agree to not cheat’. In my industry, violation of that rule translates into agreeing a fixed % to deliver a service and then finding lots of other ways to charge more than the agreed amount for that service. More often than not that is in terms of hidden charges for technology platforms or undeclared rebates from suppliers, overcharging for new items or changes to products and in the worst cases, simply charging more than you have agreed and hoping no one will check.
I have had many discussions with colleagues and friends in the industry often resulting in being told that what I would call ‘cheating’ is what they call a ‘commercial necessity’. While I have sympathy with those who argue the client (often aimed at procurement) don’t want to know the true cost of service, I don’t believe that condones subverting the rules and not telling the client the truth.
Please don’t get me wrong, this is not a ‘holier than thou moment’; I have in my time managed margin and led organisations where these practices were common. I have also tried to change these practices from the inside and arguably that cost me major clients and at least one job I loved.
But overall on the subject of cheating I keep coming back to the same basic question: just because everyone is doing it does that make it right?
Personally I would like to do business on a level playing field, one where everyone agrees the rules and is judged on their service, ability to buy or manufacture efficiently, innovation, technology and effectiveness in delivering on what was promised. Price is important, but the price a client should be paying for products or services can be independently agreed and objectively measured. Price for the delivery of that service should be calculated against the perceived, as well as measurable, value it delivers.
There are some very big players in my industry, corporations like Xerox and Konica Minolta, large independently owned business like HH Global, Paragon and Altavia, corporate finance owned businesses like Tag (Williams Lea) and Adare, as well as publicly listed companies like Communisis PLC (a subsidiary of OSG). However when I completed my last review of the leading marketing services/print management suppliers in the UK and Europe, both with or without manufacturing, I counted only 27 with a turnover of over £10 million.
Could they all come together and agree the rules? What positive impact would that have on our multibillion pound industry? This is a call to action. theSPC are going to propose a set of principles of fair play for adoption as the basic rules of the game for the marketing services/ production and print management industry. They will sit under ‘The Godin Principle: All players must agree to not cheat’.
With the client’s agreement, any service provider who participates in a tender or supplier selection process managed by theSPC will be asked to sign up to these principles. Whilst signing up to them will be recommended, it will not be mandatory, as we would rather suppliers only agreed to principles which they genuinely believed in and have the commitment to stick to.
If a supplier signs up to and is found to be transgressing these principles then there will be contractual and financial penalties, as well as reputational damage.
So here is our starter for 10, and we welcome industry input into these rules, before they are finalised:
The Godin Principle: All players must agree to not cheat.
Which in the marketing services/production and print management industry means:
1. We offer absolute transparency of cost of service – a commitment to declare all supplier rebates and other charges
2. We do not manage margin – a commitment to a fair and sustainable pricing of products throughout the length of the contract
3. We welcome ongoing audit – a commitment to open our books for regular audit by an independent third party to prove we are doing what we promised
There is a big caveat to this principle and that is client buy in. For example: a focus purely on cost reduction; reluctance to allow suppliers to make a reasonable contribution to profit; extended payment terms or not paying on time; all drive the wrong behaviour in suppliers. The net result is institutionalised cheating: the suppliers tell the client what they think they want to hear while making the money up elsewhere. I will leave that thought there as this is a subject worthy of another blog in its own right.
At theSPC standing for something is exactly what we are trying to do. Our stand is to leverage industry experience, expertise and insight to help brands, their agencies and suppliers to do the right thing, when it comes to their marketing production. We strongly believe that there is a right way to manage production and the production supply chain for each of our clients and we commit to uncover and implement it.