Interdependence and the Art of Resilient Business

The Price Tag Fallacy

We've all been there. A customer asks for a 20% discount, and suddenly the conversation shifts entirely to cost. But here's the thing: when you're on the receiving end of that request, you don't want to compete on price alone. You want to talk about value, relationship, quality delivered over time. So why do we turn around and do the exact opposite with our own suppliers?

Deming was right when he said to end the practice of awarding business based solely on price. Instead, we should maximize total cost by moving toward a single supplier for any one item. Yes, this introduces risk, but it also introduces something far more valuable: deep specialization and mutual interdependence.

The Pencil's Hidden Complexity

Consider something as simple as a pencil. You pick it up, expecting it to work immediately. If it breaks or won't write, you throw it away without a second thought. That's the standard we've set for quality, a standard that says "this should just work."

But behind that simple pencil lies an intricate web of specialists: loggers harvesting wood, sawmill workers cutting it, machine designers, miners extracting graphite, chemists creating erasers. Not a single person on earth knows how to make a pencil entirely on their own. That's interdependence in action.

The same principle applies to software, manufacturing, services, everything we build. When something works seamlessly, when Google returns your search results in milliseconds or when you turn on a light switch, you're experiencing the output of countless specialized relationships working in harmony. Simplicity for the user requires enormous complexity underneath, complexity that only thrives through specialization and interdependence.

The Dichotomy We Must Navigate

Here's where it gets interesting: when everything works, interdependence works beautifully. When things don't go as planned, interdependence can shut everything down. We saw this during the COVID supply chain disruptions. We're seeing it now with reshoring conversations and fault tolerance concerns.

But does that mean we should avoid specialization and deep supplier relationships? Not at all. It means we need to understand the dichotomy, the yin and yang. Both things can be true: interdependence creates vulnerability and interdependence creates strength. The key is awareness, understanding the system we're operating within and making conscious decisions rather than defaulting to the established way of doing things.

When oil prices dropped in the 1930s due to abundant wells, the cascading effects rippled far beyond the oil industry itself. Homes switched from coal to oil heating. Coal mine employment fell. Steel prices rose. Railway usage declined as people drove more. Towns dependent on coal stagnated while oil towns boomed. This is what happens when we manage by visible figures alone without considering the unknown, the unknowable, and the interconnected effects of our decisions.

Let’s Think this Through Together

If you take one thing from all this, let it be this: resilience isn’t about picking “the right” side in every debate. It’s about being honest about the trade-offs, owning that push and pull, and keeping your antenna up for what’s changing around you. You and I—none of us—can control every ripple, but we can choose to see further, ask better questions, and share what we learn. Drop me a note anytime with your thoughts or what you’re seeing in your own world. I love it when we get to puzzle through this together.