It’s early days but companies are becoming more comfortable with working together to tackle common challenges – and how to operate sustainably is among them
When it comes to sustainability collaboration, business-to-business partnerships are late to the game, especially in the realm of brand collaboration around new products and services.
This should come as no surprise. Successful private enterprise is built upon competition. It drives innovation and the pursuit of competitive advantage is ingrained in the managerial psyche. Woe betide the product manager or salesperson who forgets it.
Business-to-business sustainability collaboration seems to work directly against these tenets of the market. It is also difficult – the skills and experience required to set up and shape value-generating business-to-business collaborations are hard to come by. Few business schools are teaching their students how to identify the pre-competitive stages of a sustainability-oriented supply chain or brand collaboration.
Yet business-to-business collaboration is on the rise. Ask any business leader working on sustainability-related issues and he or she will predict more, not less, collaboration in the coming years. Individual corporate-NGO or business-to-business collaborations are, in particular, expected to grow most, according to ongoing research conducted by GlobeScan, the global opinion research consultancy.
If more business-to-business collaboration is expected, the question then becomes in which sectors and industries are we most likely to see more of it? What lessons do we take from existing collaboration and what skills and attributes do business managers need to shape it most effectively?
Matt Gorman is sustainability director for Heathrow Airport Holdings, formerly known as BAA. For the past three years he has been co-ordinating the development of the Heathrow Sustainability Partnership, a business-to-business collaboration focused on the sustainability of Heathrow airport.
Established in 2010, and then trialled in 2011, the partnership brings together 15 companies from a diverse range of sectors including airlines, retailers, construction companies, food service providers and car rental businesses. Together, the 15 companies represent about three-quarters of all the staff working at Heathrow.
Partnerships taking off
The partnership is still in its very early days, but has already chalked up some successes. An employment and skills academy for construction, logistics and aviation was established in its pilot year and Heathrow now boasts the world’s largest employee car-sharing scheme.
Could the partnership be the incubator for heightened single business-to-business collaboration around new, joint sustainable products and services? It is possible, says Gorman, who has noticed an initial clustering of businesses around specific issues. But scaling up this type of collaboration to make it relevant beyond the airport’s boundaries would be difficult, because of Heathrow’s unique context, he says.
With 76,000 people, Heathrow Airport is the largest single employment site in the UK, and the value of the collaboration is clear to its members.
“We have the benefit of being a very site specific business – we’re an airport. For us it’s all about Heathrow and the surrounding area. So in a sense it’s relatively easy to get people on board. The business case for that on a site level is pretty strong.”
Gorman is also quick to highlight the collaborative nature of Heathrow’s working environment. While getting such a diverse range of companies to partner in this way was new, collaboration is not new to Heathrow. The success of the airport is dependent on the 300 companies working there pulling in the same direction.
A new wave
The question of whether multi-business sustainability collaborations and coalitions might be the spark required for deeper brand collaboration around new products and services is a valid one.
The past 10-15 years has seen a steady sharpening in business-to-business collaboration away from broad-based sustainability coalitions, towards sector- or issue-specific collaboration. Could single business-to-business collaboration around new products and services be the logical third wave of this collaboration evolution?
The possibility is not missed by David Grayson, professor of corporate responsibility and co-author of a new book Corporate Responsibility Coalitions: The Past, Present and Future of Alliances for Sustainable Capitalism.
According to Grayson, whereas the generalist business-led responsibility coalitions have been focused on the need to raise awareness around responsible business practice – and the business case for doing so – the move to sector- and issue-specific collaboration is being driven by the industry-specific and technically focused nature of many of the problems.
“One of the reasons that we’re seeing more specialisation in these types of business-to-business collaborations is that the issues are becoming much more business-critical,” says Grayson. “It’s natural for business to look at better ways to solve these.”
The degree to which sector- and issue-specific business-led coalitions are fostering pre-competitive information sharing would surprise many, particularly in the apparel sector where organisations such as the Sustainable Apparel Coalition and the Fair Factories Clearinghouse share highly complex and valuable data around materials sustainability and factory audits.
At a minimum, these types of collaborations are making companies more comfortable engaging and sharing information with their competitors. They are also equipping business managers with the skills and confidence required to navigate competitive boundaries and competition-related legal challenges.
Confidence is critical. Individuals spearheading many of the data-sharing platforms in the apparel sector attribute their growth in the past few years to a critical mass of trust and confidence. Once their members become comfortable that competition laws are not being broken, and they see the value in the collaboration, they become more willing to collaborate.
Peder Michael Pruzan-Jorgensen is EMEA vice-president at Business for Social Responsibility (BSR), the business-led coalition. BSR has in recent years formalised a number of sector- and issue-specific working groups focused on areas such as shipping and cargo, coal, water and procurement. These groups operate as sub-coalitions within the larger BSR coalition and in some cases such as Bettercoal, have spun off as separate legal entities.
Pruzan-Jorgensen supports the view that business-to-business collaboration will grow, but he believes it will take place in different settings from the issue- or sector-specific business collaborations. He also argues that the future of business-to-business partnership is going to be less focused on products and more focused on systems.
“Businesses will collaborate around systems-based issues rather than products because ultimately product collaboration remains a competitive issue. Systems-based collaborations will focus around the need for high levels of investment to address issues common to the whole industry,” says Pruzan-Jorgensen.
Reverse logistics is one area to watch, he adds, saying clothes and textiles take-back is already in retailers’ sights.
The idea that business-to-business collaboration will be driven by a need to address systemic blockages across whole markets is supported by Doug Miller, chairman of GlobeScan. He says product and service collaboration will occur where it is supported by a compelling business case and in those industries where a step-change in sustainability is needed.
“Incremental change has been something that companies can do within their own R&D budgets and see it related to their own competitive advantage. But when you start looking at step function change – for example, how you go from combustion engines to electric – then you get a whole order of magnitude difference in terms of the cost and the risk of choosing the wrong technology.” This, Miller says, is when B2B collaboration occurs.
Skills and corporate culture
Sharing risk and pooling investment will therefore be key drivers of product and service collaboration. Skills and corporate culture will play an important role too. Successful business-to-business collaborations will ultimately be dependent on the managers and executives who have the confidence to engage in them and the skills to shape them.
“Partnerships and collaborations require new management skills to make them work,” says Grayson. “This will be a key part of a successful managers’ toolkit moving forward. Companies need to ask themselves: do we have the skill sets in our management and operational teams in order to make a collaboration work and for it to be beneficial?”
For Doug Miller, it is as much a question of corporate culture and organisational coherence as it is one of hard skills and management know-how.
He argues that it will be those companies that, through early adoption, have built up a stock of confidence and experience in collaborative working methods that will be best placed to shape and leverage collaborations for a market leadership position in the next 10 years.
“The real challenge for many companies is they are very hard around the edges and don’t have the competencies, the corporate culture or the other attributes required not just to be successful, but to thrive in a collaborative economy environment,” Miller says.
Collaborative working methods are also shaped by generational attitudes and approaches as well as the prevailing culture in particular industries or sectors. Skills and training can only go so far.
Miller notes how quickly a culture of openness and collaboration can be shut down by senior managers if it is not part of their own experience. He says the younger generation of managers is much more likely to engage in, and see the value of, collaboration, simply because they have grown up more accustomed to information sharing and collaborative ways of working.
Pruzan-Jorgensen of BSR says not all sectors are necessarily geared up for collaboration, as some work in strict regulatory environments. Highly regulated sectors such as energy, for example, will approach collaboration more cautiously through fear of breaching competition law and the risk of financial penalty.
Cross-fertilisation of ideas
Perhaps the most interesting development likely to drive greater collaboration around products and services in the next two to five years is the cross-fertilisation of ideas that has started to take place across business disciplines.
Whereas most business collaborations tend to see managers within the same discipline interacting, the exciting innovations occur when designers and product developers from one company cross-fertilise with sustainability, sales and marketing experts from another.
Common sense though it sounds, businesses are remarkably siloed and hierarchical in their interaction with one other. Sales talk to buyers and sustainability managers talk to suppliers.
A number of companies have started to challenge this dynamic. One large consumer goods company recently piloted a sales team training programme designed to encourage brand sales teams to break out of the sales-buyer silo.
Beyond understanding the sustainability commitments and policies of their own company, sales teams were encouraged to think about ways those commitments could reinforce, or add critical mass to, the sustainability programmes of the buyer companies. Identifying and talking to decision-makers outside of the buying teams was a critical element in sparking this collaborative working process.
Desso, the Dutch carpet manufacturer – recognised for its commitment to cradle-to-cradle manufacturing processes – has likewise encouraged its sales teams to expand their conversations beyond contractors to include building designers, architects and sustainability managers.
These conversations are fostering dialogue and product collaboration between Desso and other building suppliers such as Philips. Desso has actively sought to encourage this type of dialogue through Circles of Architects, a collaborative platform bringing together stakeholders from the design community to discuss and exchange new ideas in material design and architecture.
Collaborating for the future
Predicting the future course of business-to-business collaboration is difficult, other than to say we can expect more of it.
Sector- and issue-specific business-led coalitions are undoubtedly helping companies become more comfortable and practised at collaboration even if they are not geared up towards fomenting single business-to-business product and service partnerships.
The most promising trend is the cross-fertilisation of ideas between companies and across disciplines. Like in nature, it is only when new ideas rub up against others that alternatives and hybrids emerge.
According to Mike Barry, head of sustainable business at Marks & Spencer, greater business to business collaboration will be driven by the sheer scale of the sustainability challenge and by the need to normalise sustainable behaviour in supply chains and in markets.
“Changing every product, factory and raw material source in your supply chain and encouraging every customer to consume differently defies the ability of even the largest business alone.”
The new economy will also be horizontal, not vertical, argues Barry. This will require the formation of new alliances and new partnerships. Traditional barriers between industrial sectors will breakdown as a circular economy forms, he adds.
Expect more collaboration around commodities Barry says. No single business purchases enough volume to shift the market alone. There will be greater collaboration around waste and raw materials too, as one company seeks to convert waste into another company’s raw materials and vice versa.
The technology sector is also likely to witness greater business to business collaboration. Mobile phone technology, for example, can offer the solutions to other industrial sectors’ sustainability challenges. Supply chain transparency may be just one of these areas, Barry says.Bob Biles business strategy sustainability sustainable future