Dean Kashiwagi created the Best Value Approach to procurement more than 20 years ago. It is a method which emphasizes quality and efficiency for customers. The Netherlands is one of the early adapters of the model. That is why ISS Facilities Services Nederland chose to interview Dr. Dean Kashiwagi.
Dean Kashiwagi served in the United State Air Force (1978-1992) . He started his scientific career at Arizona State University in 1992. His ideas are widely spread, also in Europe. Kashiwagi developed a philosophy and procurement model for the delivery of services. With the Best Value-model, parties have more entrepreneurial space to demonstrate their expertise. Best Value helps clients to select the best supplier utilizing the expertise of the supplier, who creates transparency to show quality. In the Netherlands, Dutch governmental and commercial organizations use the model with all types of projects.
Wisse Stenchlak, Senior Solutions Development Manager bij ISS, was very interested in Best Value because of the very promising results. Via Skype he had a conversation with Kashiwagi.
Why did you develop the Best Value-model?
‘With the outsourcing of services, you can see a common mistake happening all the time. The facility management sector is no different. Companies outsource their facility management and services, because they think it’s cheaper. But the company which is then responsible for the job, does exactly the same work as the client did before. So, why does the outsourcing in and of itself lower the cost of work? It does not. The company responsible for the job is going to cut down on costs, which makes the work “cheaper”. This is not the right answer, because it deteriorates the quality of the service.
What solution does Best Value offer?
‘In the Best Value-model everything centers around the optimization of services or a product due to expertise of the supplier efficiency. It offers us lower prices, but not at the expense of quality. It offers a win-win situation for both supplier and client.
To be efficient, you need experts, who can predict future developments and come up with rational solutions. The real experts always work for the supplier, not for the client. Transparency in contracts is equally important. It ensures that the supplier has enough room to show his entrepreneurial skills. Expertise and transparency are key elements in the Best Value-model.’
How do you stop hybrids of Best Value from forming?
‘I can’t and it’s not my goal. The purpose of the model is that it enables experts to implement their knowledge and thus create best value. It’s okay if this process occurs in a hybrid form. As long as the hybrid form upholds the key elements of Best Value’
Past performance ‘metrics’ – play an important role in BV. How does this apply to innovation? For new products or services there is no “proof”.
‘An innovator always has a track record. If he innovates, he uses earlier examples of innovation. When people know what they are doing, they can demonstrate what they did in the past, also with statistics and figures. These are the people you need: the experts. There is always something which brought the innovator to the specific time and place where he is now, even if it’s a start up.
Is there any room in Best Value to make mistakes? Innovating does not work without making mistakes.
I hear that all the time: to innovate means that we have to make mistakes. But that is absolute nonsense! Off course, mistakes are being made, even when the BV model is used. But it is not a boundary condition. Falling, over and over again is something only blind people do. If Best value is used in a good way, then mistakes will be minimized. The benefits will be maximized. Because the experts get enough room to use their knowledge and skills. And because the experts show the way for others to follow.
It is crucial that we separate the blind from the seeing in an organization. In other words, we have to separate the reactive from the pro-active. Experts look into the future based upon their knowledge and expertise. You only need a small group of visionary experts to get answers for the most simple questions. Such as: what does our future looks like? What risks do we encounter? How can we improve our results?
What about the future of Facility Management : do you see a need for change?
Absolutely. A lot has to change in your business. Facility services companies, like ISS, encounter large risks because companies pay too much attention on the financial side of a contract. Instead they should focus on the performance. Also for their client, because the customers knowledge of the facility management business is declining. We should encourage a culture of professionalism. With contracts which have to be managed on the main components. And with proven track records and off course a very good relation between parties. Only then we can minimize risks and maximize value.