A Pragmatic Approach to Partners

by John Mehrmann

Reverse Logistics Magazine, March/April 2007

The Reverse Logistics Trade Show Conference and Expo offers more than the standard fare of entertainment or a chance to connect with peers. RLTS is an educational experience that provides visionary insight from some of the brightest minds in the industry.

A focal point among the many issues and opportunities addressed by the panel members and speakers is a common theme that centers on the importance of partnerships. It is a theme echoed repeatedly as an observation and as a need for the next step in the evolution of Reverse Logistics. The complexity of the supply chain requires more than integration, it requires a culture of collaboration.

The first challenge to developing a culture of collaboration is overcoming the very nature of the competitive commercial environment. To provide best-in-class solutions for a customer, companies frequently find themselves in the uncomfortable position of a partnership with potential competitors. We believe that we are unique, that our individual capabilities are the best, and that our product or service is substantially different in the market. In reality, the flattening of the world economy and technology has leveled the playing field. Differentiation between many competitors is subtle at best, primarily identified by a collection of core competencies and a reputation for delivering results. In sports, no matter how strong or talented an athlete may be, the individual would not succeed on a court or on the playing field if facing an opposing team alone. Individual companies may compete independently, but teamwork is essential to a partnership approach that maximizes collaborative performance.

Creating a culture of collaboration is the core component to a successful partnership. The partnership may only exist for the purpose of a single customer, a single bid or a single solution. Regardless of the extent of the partnership, it is necessary to align the vision, clearly state the goals, share the risk, share the reward and share the spotlight. Communication and trust are critical.

The TRIAD Project

In 1994 three competing companies, Toshiba, IBM and Siemens determined to work together on a joint venture project with 100 leading scientists and the purpose of developing the Next Generation Computer Memory Chip. Despite the common chosen field of practice, a commitment of intellectual resources and common goal with potential for substantial financial gain, the project deteriorated over a period of three years and ended without success. How did the personal and cultural differences interfere with the business objectives to such a degree that the organizations could not overcome the diversity? What should have been different in the strategy or implementation to avoid these mistakes? In any joint business efforts, alliances or partnerships there is diversity in culture. Managing diversity can be an enormous impact on the degree of your success.

Speculation was that the goal of inventing a revolutionary memory chip would be enough to develop synergy between the scientists from the three diverse organizations. In the beginning of the project excitement of the scientific atmosphere and the promise of the future were enough to sustain good will and communication. However, with time, the three groups became more isolated in methods, processes and behavior. The diversity of regional cultural differences escalated the company culture differences.

Scientists from all three organizations lived and worked together on this important project in a campus environment in upstate New York. Each organization solicited the top scientists to represent their company and invested equally in the project. They believed that placing all of this talent in one place would be enough to generate results. On the contrary, each of the three groups strongly believed that their own individual company and culture was superior to the other two. Rather than achieve collaboration, the intense competition created fragmentation, distrust, secrecy and isolation between the three groups.

One effort to bridge the differences backfired. In an attempt to overcome personal differences in the workplace by developing teamwork outside of work, the Triad Project coordinated a softball event. The Americans and Japanese knew the game well, but the Germans did not. Highly motivated to represent the German culture, one scientist hit the ball and raced to the first base. He beat the throw, but made the mistake of hitting the base stiff-legged and fractured his hip. A Japanese co-worker took the German scientist to the hospital. An American colleague loaned him a laptop computer to use while at home nursing the injury. As a result, the groups finally reached consensus on canceling any further cross-cultural softball projects. In the end, the most significant collaborative consensus between the groups was a mutual commitment to end the Triad Project and stop the failed investment without any further expense.

The story of the TRIAD PROJECT is most remarkable because it was not successful. IBM, Siemens and Toshiba have been partners on many successful projects, in many industries and in many geographic regions. Although the three companies are competitors in certain product categories, technologies and markets, they also understand the intrinsic value of collaborative partnerships as a strategic opportunity to achieve targeted results. Sometimes the targeted result is to overcome a common competitor, or to design a solution that makes all other competition irrelevant. Occasionally the targeted result is a communal effort to reduce costs by leveraging core competencies. These three organizations have a history of remarkable repeated successes with partnerships, so why should we study one example of an endeavor that did not end well?

In the words of Thomas Edison, "I have not failed. I've just found 10,000 ways that won't work."

Steps to Developing a Successful Partnership

First, identify and document the common goal. In Reverse Logistics, the common goal is often a specific customer or opportunity. The common goal should be focused, clear and concise. It must have a measurable purpose and value. A goal ‘to be the best' is vague and meaningless. However, establishing a target to eliminate specific expenses, reduce time or enhance specific performance metrics may have value for all of the partners and the mutual customer. This common goal becomes the mission and defines the culture of the partnership with a purpose.

Establish guidelines and boundaries for the relationship. There may be confidential or proprietary information shared between partners. In some cases, it may be necessary to share intellectual property. In other cases, the partners may need to segregate access to confidential or proprietary information or relationships. Work together to quickly define which aspects of the relationship are included in the collaborative efforts and which other aspects of the business are mutually exclusive. This short but important step helps to define the boundaries between secrecy, confidentiality and collaboration.

Define core competencies, roles and responsibilities that pertain specifically to the common measurable goals outlined in the first step. There is a reason for the partnership. Quite often, partners may have overlapping capabilities, technologies, resources or experience. The purpose of the partnership is to leverage the unique strengths of each partner to achieve a defined set of common goals. Review the mutual core competencies that pertain to the common goals, not as competitors, but as a collaborative union to select the capabilities that maximize performance. It is important to set aside organizational pride and prejudice for the purpose of mutual success.

Develop the milestones and metrics that will be used to measure mutual success. Metrics may include the schedule for design and implementation. When selecting the metrics, be sure to include the ancillary result of other performance goals impacted by the intended improved process. In other words, consider the domino effect of the intended actions and include measurements of related performance. If the goal is to reduce time to receive and process returns, also measure the impact on resulting sales and margins. If the common goal is to reduce cost or resources, also consider the potential impact on speed, quality and output. Gather historical data to identify trends and share measurements with all partners for mutual support and aligned effort. Promote a common culture based on the aligned vision, measured by shared metrics and milestones. For example, if three companies collaborate on a common purpose, the result should be the development of a fourth unique culture that blends the core competencies of the three contributing member organizations. This is not a philosophical utopia, but it is a pragmatic approach to partnership. Segregation by cultural differences breeds distrust and contempt. To build a strong foundation of collaboration, partners must share unique individual capabilities in a common culture of integrity.

Plan, Do, See

A reliable partnership requires continuous effort and attention to the performance of the relationship. Prepare a plan together. Commit and implement changes according to the common plan and communicate progress. Measure the results of the performance and progress in a mutually supportive community effort for continuous improvement. See the results as measured by the metrics and return to plan again.

Reverse Logistics offers a plethora of potential partners. Collaboration can exist between complimentary and competitive companies based on applying core competencies toward a common aligned vision. There are organizations with expertise in freight, warehousing, technology, repair, boxes, resale, asset management, Vendor Managed Inventory, component procurement and waste management, just to name a few. Ease of doing business for common customers require uncommon teamwork and collaboration. Even superstar athletes rely on team effort. In the evolution of Reverse Logistics, integration is only the beginning of collaboration. To achieve best-in-class performance, it is necessary to apply a pragmatic approach to partners.

John Mehrmann has more than 20 years of management experience that spans logistics, operations, e-commerce, finance, customer relations, marketing, training and consulting. John has served the business community as Regional Sales Director at Data Exchange Corp, Director or Service Operations for Toshiba America Information Systems, Inc, Toshiba Imaging Systems Division, Toshiba America Consumer Products, and SatisFusion.

John Mehrmann is President of Executive Blueprints Inc., an organization devoted to improving business practices and developing human capital.

Reverse Logistics Magazine, March/April 2007