Paladin Blog

’m a Sunday morning news junkie and a few weekends ago I was watching Meet the Press (not nearly as good since Tim passed) and a panelist Alex Castellanos reminded me of a term I had not heard in many years – Resentful Dependence. Resentful Dependence is an old marketing term that typically comes into vogue when a consumer (business or person) has too few choices and they are quite literally forced, resentfully, to depend upon on a vendor for critical services that they don’t appreciate for any number of reasons ranging from poor services and products to just the sheer perception of arrogance by the vendor. For example, At my home I resent the fact that I must depend on PG&E for my energy needs because the government (PUC) says so. At work I resent the fact that no matter where I turn to for legal assistance I have this feeling my bills are padded; hours duplicated across attorneys for tasks that should take moments and not hours and nothing seems to ever get done that I could have done myself.

“How do you do that and make money?” “Are you crazy, why would you give away what you know?” “There has got to be a catch – really…for free?” These were the top three questions heard from bankers after we announced that all of our national market research on Core & IT providers was accessible to CEOs and CFOs for no cost or obligation. Yes, we even provide our analysts’ time up front to discuss the entirety of your Core & IT contract renewal options, make recommendations to the bank and specifically detail what steps you should take even if you do it on your own. Is it crazy consulting? No. It’s called Naked Consulting and while not a new concept in business, this model is quite rare in a community banking industry accustomed to the rote approach of paranoid vendors holding back the answers until after you have signed their contract. Coined by a old friend of mine and best-selling author Pat Lencioni (Five Temptations of a CEO, Five Dysfunctions of a Team, Death by Meeting) it describes a way of consulting whereby you build trust, confidence and respect with bank leaders [in you] by being vulnerable, disclosing and completely honest in advance. And yes, you do give away proprietary business intelligence, insights, advice and direction in the early stages of earning business relationship and without expecting a penny of compensation in return.

I had the great fortune of hiring Patrick as my CEO Coach for about 2 years (circa 1998) just as he was publishing his first book. I learned a lot from him about being vulnerable, completely clear and not being afraid of saying what I thought was important even if it meant taking a slightly weaker negotiating position. This style of management and consulting has served me well over the years and while he had not yet invented the concept of naked consulting back then – his most recent book Getting Naked finally does and I recommend it strongly.

In my last article we summarized that there are two initial steps necessary to successfully renegotiate a new or renewal service agreement with any Core or IT vendor. Step One: Admit that you’re a banker and not a CIO. The deck is stacked against you. These multi-billion dollar corporations have forgotten more about writing a obnoxiously favorable vendor-leaning agreement than you might ever know in your entire career as a banker. That’s nothing to be embarrassed about – it’s reality. Begin with the humility of “knowing you don’t know what they know.” Step Two: Don’t believe for a second that beating up your vendor will get you anything that might not be gained with a more partnering approach. Using an RFP process or overtly entertaining other vendor pricing (when you genuinely have no real intention of ever leaving your current provider) is a crime and a shame. Speaking as a former vendor…there exists a silent code amongst vendors for treatment of bankers that use this water boarding tactic to extract improved pricing, terms and conditions. That is, you may get the pricing you want – but the partnership is over. Forget ever calling in a favor or receiving anything that resembles a “deal” in the future. Unlike terrorists, you can get you want out of Core & IT vendors without the torture of an RFP or public hearing with their competitors.

So then, if you are ready to be humble and show your vendors respect, then you have a chance of executing the next steps successfully.

More than ever in the history of American banking, bankers are looking for sensible costs of doing business. They want to pay a fair price to attract and retain solid core clients.