Careless talk costs margins

Published: Jul 18 , 2013
Author: Alan Smith

While I love the sight of a Chinese lantern drifting off aimlessly into a moonlit night on a lovely summers evening, I am not sure I will ever light one again.

The apocalyptic blaze caused by one of these burning lanterns landing on the Jayplus recycling unit in Smethwick near Birmingham was captured live on CCTV. The resulting wall of flames could be seen from 80 miles away and the damage cost a reported £6 million. Not to mention the risk to life and limb bourn by the heroic fire service trying to manage the disaster.

Of course the butterfly effect suggests that we may not always be able to predict or foresee the outcomes of our actions, but that does not mean we should not even try.

An advertising client of mine was negotiating a major global contract with one of his organizations biggest clients. The numbers were large and the contract was lucrative but margins were below that of other clients and my client was keen to get a small fee increase to enable his company to continue to deliver exceptional service and high quality work.

In his first meeting with the buying director he was told to cut the crap.

One of the agencies client service people had allegedly told one of his regional procurement guys both how lucrative the clients business was and how important it was to the agency going forward. In fact they had even been told the margin the business had been making from supplying this client, which the client did not share.

As you can imagine this really put the cat amongst the pigeons. Immediately on the back foot, my client managed to manfully regain his composure, but his expectations had been firmly set that the price was not open to any changes other than down!

My client asked me what I would have done.

I do not want to appear smug, but my first question would be to manage my own beliefs. I know for example within my business that as a guiding principal we do not share such information with our clients. That puts me in the powerful position of knowing that such a ploy would have been just that. Utter faith in your colleagues across the organization.

We would walk away from business before breaking that principal.

What principals do you have in your organization? How are they shared? What stories do you tell new people to ensure they are part of your corporate culture?

Without these things we have to be constantly on our guard for Chinese lanterns potentially going off all over the place.

Alan Smith


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