Far too many companies have developed business agreements that were created for a bygone century. Or worse, they are buying strategic services using an overly simplified commodity approach.
When we studied how the world’s most successful strategic business relationships approach contracting, we uncovered some of the best strategies, tactics and tools that organizations have in common. These methods help them create contracts that accelerate the pace of innovation and competitive advantage in an era of dynamic market changes and transformational shifts.
Out of that groundwork came the “Vested Outsourcing,” or Vested methodology. Two of the five books in the Vested library were the immediate result: Vested Outsourcing: Five Rules That Will Transform Outsourcing, which is now in its second edition and describes the five seminal “Rules” of the Vested business model, and The Vested Outsourcing Manual, which is the basic implementation guide to creating successful business agreements.
The Manual provides the essential components —which we call the 10 Elements— that companies should integrate into their Vested Agreements. The elements align to the Five Rules as the following chart illustrates.
10 Elements of a Vested Agreement
Rule 1: Outcome-Based vs. Transaction-Based Business Model
Element 1: Business Model Map
Element 2: Shared Vision Statement and Statement of Intent
Rule 2: Focus on the WHAT, not the HOW
Element 3: Statement of Objectives/Workload Allocation
Rule 3: Clearly Defined and Measurable Desired Outcomes
Element 4: Clearly Defined and Measurable Desired Outcomes
Element 5: Performance Management
Rule 4: Optimize Pricing Model Incentives
Element 6: Pricing Model and Incentives
Rule 5: Insight vs. Oversight Governance Structure
Element 7: Relationship Management
Element 8: Transformation Management
Element 9: Exit Management
Element 10: Special Concerns and External Requirements
The next ten blogs in this series flesh out in some detail exactly what the 10 Elements are and what they will do, which is to take you to a successful Vested Agreement. It provides an overview of each of the elements, why that element is important, and how to integrate the element your agreements.
The 10 Elements Series is designed to work in conjunction with Vested’s free online self-assessment, which will help you benchmark your own agreements with the goal to identify structural flaws that may be holding you back from achieving transformation success.