A very powerful best practice to teach, reinforce, and proliferate in our culture is bought right is half sold. It is a fact that at all levels in our enterprise where negotiations occur and transactions are made, we are either buying and selling right, or we are not. The difference can be staggering enterprise wide.
Let’s focus today on buying. Buying right implies that we drive costs down on our transactions. We teach and embed in our culture that we negotiate well to get solid prices and terms on all expenditures. We look at spending as investing. Are we going to make money on this cost or are we wasting money? Have we searched the marketplace in a best practice way to compare multiple options and bids, or are we acting impulsively and lazily?
Buying right implies that we drive costs down on our transactions. We teach and embed in our culture that we negotiate well to get solid prices and terms on all expenditures. We look at spending as investing.
Half sold implies that by buying right, we are already halfway to the goal of being able to make money on the transaction. We have nothing to recover or makeup due to overpaying or buying something nobody else wants.
Common sense comes into play here to balance the effort to buy right with the importance of the expenditure. We want to avoid what I call toilet paper management in our culture. Rationing squares of toilet paper or spending time and energy on low priority, menial expenses is not best practice. Prioritizing and focusing are critical leadership skills. It can be futile and low ROI to take cost control to the extreme because the return is not worth the energy and focus. Likewise, it can be oppressing and absurd to our team to see us sweating small and insignificant expenditures and practices.
We want to avoid what I call toilet paper management in our culture. Rationing squares of toilet paper or spending time and energy on low priority, menial expenses is not best practice.
Bought Right is half sold can lead our enterprise and culture to another high-end best practice that I call being the High Quality, Low Cost provider. In this reality, we drive our costs down through smart enterprise-wide negotiating and buying whilst we keep our quality standards on-brand. Quality is a strategic decision. So in your enterprise and your brand, the quality can be anywhere on the strategic spectrum. Some brands are premium. Some brands are mid-line. Some brands are economical. This is neutral, so long as it is intentional, strategic, and well entrenched in your culture and brand.
A quick clarification: price is not cost. Cost is what you pay to create your product or service. Your price is what you charge the customer. So by driving your costs down, you can either pass along those savings in a lower price, or not lower the price and put the extra margin in your pocket. This is another strategic decision.
High Quality, Low Cost provider: In this reality, we drive our costs down through smart enterprise-wide negotiating and buying whilst we keep our quality standards on-brand.
In my background, we have intentionally chosen to be premium brands in most cases. So the example below we will use the assumption that our enterprise goal and brand standard are top tier quality. So our goal is to be the High Quality, Low Cost Provider. All of our efforts will focus on being the high quality choice for our clients and the marketplace. We set our price to meet our internal goals and profit standards, and we can because we buy so well. We drive costs down while intentionally holding our quality standards steady. We meet market demands on the price and nail high profitability. So we entrench in our culture three complimentary actions:
- Drive all costs associated with our top shelf quality as low as we can within reason.
- Assure the marketplace that our quality is bought right and it is the absolute best value. Nobody overpays for our quality because we did not either.
- Stick to our price and do not lower it in competitive scenarios. We know we have a quality edge and nobody can profitably sustain undercutting our price and meet our quality standards.
This resonates well internally and externally. It reinforces the brand and proliferates the message that we choose to meet our quality standards, and we do it in a smart way. By buying right we are actually negotiating in advance for our clients.
This is how we bring bought right is half sold to life in our culture, tie it to our brand, and use it to communicate with the marketplace. It is very powerful stuff.
In closing, remember that all good things can be taken to the absurd. So avoid toilet paper management. Also remember that your quality standards are a strategic decision along the spectrum from top to mid to economical. That is neutral. What matters is that you set the quality standard, and it is understood and accepted by your team and ingrained in your culture. From there you drive down all costs associated with delivering your target level of quality. You teach the bought right is half sold mentality top down. Vendors will know to sharpen their pencils walking in your doors because they will know that you know how to buy right. Then you can assure your clients and potential clients that when they buy your products and services that they are not overpaying for your quality.