More often than I can count, I hear the phrase best value for money brought up. It is rarely used to mean what it is supposed to mean.
When an organisation brings up that phrase, it is supposed to mean they want to get what they pay for, but it usually means they simply want to pay the lowest possible price. If they are buying a commodity where quality is not of paramount importance, looking for the low cost provider is understandable.
But I repeatedly hear the phrase best value used to squeeze a provider of something highly valuable, perhaps unique. In the most stunning recent incident, a buyer had already gotten a sole source provider to offer an initial contract with ongoing services into the future at cost. The provider hoped to make a profit on later deals that the buyer’s exemplar case would help to land. But the buyer complained that getting unique intellectual property to improve their own bottom line at cost from the provider was not of sufficient value. The buyer wanted to change the contract so the provider would sell at a loss – only then would it be best value.
Such behavior is foolish and reckless. When a company is buying something unique and of high value that will improve the bottom line, but that requires ongoing service, the price must allow the provider to continue doing business. Even the original offer at cost was not best value for money because it allowed no profit margin at all for the provider. It put the provider’s survival at risk. But insisting on a price below the cost of provision is suicidal for both parties. Such a deal is designed to feast upon the provider and then cause the buyer to wither away because the provider will no longer exist to provide ongoing service.
The most important decisions a high level executive makes are not about getting something at the lowest possible price. They are about deciding upon strategies that will lead to success and moving the organisation in line with those strategies. The most important outside expenditures needed to support that effort will seldom be purchases of commodities – they will be more akin to partnerships that bring in something clever that the competition lacks.
In a civilized world, partners do not cannibalize each other. They collaborate with each other, and each is boosted when the other thrives, and there is no room for Doublespeak use of the phrase best value.