Speech: Collaboration Generates Innovation and Competitiveness – Working, Learning, and Improving Together Enlarges Advantages for All

This speech is one of my favourites. It is long, it is dense, it is repetitious in places – but it drives home a powerful message effectively, I think. Some points are worth repeating. Sometimes a longer speech is justified, because brevity forces the exclusion of nuance. There is complexity in this speech too, but the definitions and the repetitions address this. The message is serious but clear, and positive! I break a few of my own rules in this speech, but knowingly so. Impact, clarification, and reassurance are what I was aiming to deliver, and this speech worked well.

At the time of its writing (the early 2000s), there was a “collaboration” craze. Books espousing the benefits of cooperative working and collaborative supply chain management were appearing in airport stores. The company that I wrote this speech for is strongly influenced by Toyota – they regard their suppliers as critical components of a big machine (because that is exactly what they are) and treat them well. There is quite a lot of exposition in this speech, and even a fairly long (by my standards, at least) anecodote. The exposition is there to remind the audience that what they do already is “collaboration”, and that they probably collaborate far more than they know. In a way, this speech preaches to the choir. But this fad was getting people concerned: people were anxious that the company wasn’t as collaborative as it should be, when in fact it was (and still is) far more collaborative than most, and has been that way for decades: all of this company’s advanced products come through supply chains in which suppliers feed forward design suggestions and respond to feedback.

(As usual, for reasons of confidentiality, I have redacted some parts of this speech.)

• Themes: collaboration is working together for system-wide capability enhancement and added value, which elevates customer satisfaction.
• Concepts/vision: working closely with our partners, to generate advantages for all; learning from those who can teach us; teaching those who can learn from us; investing in partnerships is self-investment; stronger relationships bring stronger performance; utilizing and maximizing the power of specialization that effective collaboration enables is key to sustained competitive performance.
• Message: collaboration is a competence; collaboration in the right ways with the right partners constitutes a competitive asset. Collaborating with customers is as important as collaborating with upstream and downstream partners. Learning from all sources and sharing knowledge and technology are the ingredients of mutual betterment, which is the way to improvement of the entirety.

We have long had a culture of innovation and quality. Most of you know that. We’ve said it often enough, and we’ve never changed. Nowadays, there is much talk about competing through close cooperation with upstream and downstream partners. They call it “collaboration”. It’s nothing new to us, so before you think this is a good time to slip out for coffee and doughnuts, wait. Because I am going to speak about why and how we achieve that culture. Today, I am going to tell you precisely what collaboration is to us, and how we do it and why we will always do it. (Oh, and the coffee and doughnuts aren’t out yet, so that’s another reason to stick around.) 

If you’ve been with us for a few years, you will know that we collaborate as standard practice. If you know, well done – you’re a collaborator in a collaborative machine, and you don’t take it for granted. You know it requires work. But you know that the effort pays off.

First, we need to remind ourselves why we collaborate – and it’s nothing to do with buzzwords or fads…

We collaborate because by doing so, we achieve the groundbreaking innovation and unbeatable quality that our products and services are famous for. By working collaboratively, bidirectionally with all our upstream and downstream partners, and that includes our customers, we put better product in the market.

So when we say we “collaborate”, what does that really mean in terms of practice? 

It’s simple: 

We work with and invest in all our partners, from blue-sky researchers, who are as upstream as it is possible to be; to logistics companies who carry our products to stores and homes. We extend a helping hand as far upstream and as far downstream as we can. We cooperate with and invest in suppliers, wholesalers, agents, retailers – online and high street, digital marketers, and, as mentioned, even delivery companies.

With our customers, we collaborate both formally and informally – through feedback, customer journey monitoring, sales analysis, and generally exploiting the big data in every way imaginable, but always ethically, and always with the customers’ interests foremost.

This way, we transform the chain into a circle, a loop. By conscientiously bridging whatever gaps and removing whatever obstacles separate the entities and elements involved in our provision of value to our customers, we “close the loop”. (That’s a phrase you hear often these days too, but the concept behind it isn’t new to us.) 

Every part and person in the loop has a recognised and valued function, so plays a crucial role in connecting customer to producer. Through collaboration, we enable that part or person to work in the best way possible.

Even though up and down don’t mean much in our supply loops, Let’s begin upstream. 

We integrate – we get as close as we can to our key suppliers. If we can fully integrate them by merger or acquisition, then we try to do exactly that. Those who we cannot integrate in such a way but whose products and skills are essential to our business, we will upgrade and upskill in whatever way we can, according to whatever they tell us will help them perform better. And those who we cannot integrate or invest in? Well, we earn their loyalty and even become their priority partner through large orders that give them security in uncertain times and help them lock in those vital economies of scale, which will ultimately benefit our end customers in the form of competitively priced products. When necessary, we will assist any important supplier with helpful technology and knowhow.
 
In return, we reap the benefits of their specialisms. Suppliers bring an understanding of materials, processes, and other input factors that we – as concept creators, aggregators, and designers – could never achieve to the same degree. In return for our orders and assistance, our suppliers consistently and dependably create the excellent products that our customers adore and that invigorate and strengthen our brand.

So how about downstream? 

Wherever knowledge and process efficiencies can be found in our downstream chains, we will be humbly and gratefully learning. Those who are close to our customers may know them in ways that we do not. They might know how our customers discover our products, learn about them, discuss them, journey toward – and away – from them. They may know our customers’ options and preferences regarding product, service, and specifications in ways too granular or nuanced for us to imagine. Moreover, they may be aware of our customers’ niggles, complaints, and frustrations regarding not only our products and services but – and this is just as important – those of our competitors too. Our customers are a rich source of competitor intelligence! They are also the prime mover of the whole process and our raison d’être, not to mention the primary source of our revenue! And if we do not listen to them, we will not benefit from the critical information they possess. We may even neglect the obvious. For example, we could be unaware of how seriously our customers take delivery punctuality, packaging, environmental factors, the provenance of components, the ethics of manufacturing, the carbon footprint of the transportation of our products, and the various interactions they have with our company’s representatives.

We pursue seamless transparency upstream and downstream, since this turns the traditional supply chain into a supply-demand loop – with products and services going forward to customers exactly how they want them, and high value, differentiating customer feedback travelling backward to us, and then to all relevant parties, no matter how seemingly small or trivial their role. No activity is too small to be improved by feedback. If the system works well, which it does, it is because it is feedback-driven, self-correcting, and aligned. This kind of system is collaborative.

Collaboration is possible only when all partners in the loop share a common culture of purposeful, systematic improvement in response to customer information – whether that be the end consumer or a partner company in the loop. 

Collaboration is possible only when each partner in the loop knows how to work best with the partner behind or in front of them in the sequence of work.

Collaboration is possible only when partners share all relevant information. This way, optimization is achieved, waste is reduced, lead times shorten, and margins increase.

This collaborative culture approach is far superior to any top-down, centralised, command-and-control system. This company does not want to drive its loop in hub-and-spoke, carrot-and-stick fashion. This is a resoundingly inferior approach. This company wants each of its partners to work as best they can, not by overseeing their operations and marshalling them with crude incentives or threats, but by facilitating their improvement through knowledge sharing, technology transfer, process knowhow, and any other positive contribution. Command-and-control stresses the core as much as the periphery. Command-and-control models burden the controller with minutiae and inflict unwelcome scrutiny and interference on the company under control. And who knows? The supplier might know more than us about what they have been doing successfully for years! We shouldn’t fix what isn’t broken. We should trust the specialists. So we prefer a collaborative, communicative, relationship-driven format, where flexibility occurs on all sides and all members assist each other. This way, imbalances and bottlenecks and blame storms are averted. 

In my student days, five thousand years ago, I interviewed procurement managers about their relationships with their suppliers. I wanted to know how different types of supplier-buyer relationships influence the quality of work. To this end, I interviewed a manager at a telecoms company. He was tasked with securing the services of a company who would dig up roads for the laying of cable. (You thought I was going to say something about pharaohs hiring pyramid builders, didn’t you? It wasn’t quite that long ago!) Anyway, this manager’s style was combative and, he was proud to say, his suppliers feared negotiating with him since they would always leave meetings with far less than they hoped for. This manager told me that he liked to finish every meeting by giving his “opponent” a “bloody nose”. He was sure that this meant he was getting a good deal. He was driving down costs, so his manager would be pleased because the work could be done within-budget. However, he admitted, the supplier did the bare minimum, was reluctant to provide updates, demonstrated no initiative, and offered zero assistance in the planning of the work. In fact, he told me that the time and effort involved in managing the road diggers heavily outweighed whatever gains the low price brought. Forcing information out of the diggers about progress and problems, and constantly having to direct their work complicated what should have been a straightforward management job. By the end, they were stressed, behind schedule, swamped with complaints from customers, road users, and the local council, and seriously overbudget. What was cheap became horribly expensive, and the work done was as basic as could be. The supplier’s behaviour was fully natural, however. People who feel bullied and undervalued behave as such – their working style is passive and perfunctory. What results will be substandard. At the end of my research, I concluded that the main casualty of non-collaborative relationships is value, and that adversarial supplier-buyer relationships and buying on price alone yield the very worst results. They invariably produce false economies; they generate significant hidden costs and extra work for the buyer. I doubt this equation will ever change.

In collaborative relationships, adversarial control, minimalist working styles, and price-based selection are impossibilities. In collaborative relationships, suppliers and buyers see the transaction from each other’s perspective and work toward achieving positive sum outcomes.

Based on studies far better – and more recent! – than mine, and the experiences of our competitors, we know that engaged, rewarded, margin-making suppliers work more independently, efficiently, and effectively. They know that our customers are their customers, and they want to please them as much as we do. Repeat business and fair prices, which are what every supplier wants, come easily that way. We don’t want bloody noses; we want smiling faces. The best companies treat their partners like their customers. In other words, they keep their suppliers close and happy, they listen to them, support them, and reward them. Whenever they can assist them, they do. That is how we work. 

Our most advanced products contain thousands of sophisticated components, very few of which are made in-house. Every piece of the jigsaw is vital, and the quality of every piece is fundamental to the performance and experience of the whole. Every component is the result of complex design, sourcing, and manufacturing processes, the like of which we could never manage alone. This is what our suppliers provide, so we see them not as adversaries but as valuable allies. After all, if we don’t, our competitors will, and we will find ourselves bogged down in the risky and costly process of searching for and vetting alternative suppliers. 

Most importantly – and this demonstrates the potential of the feedback loop – our customers come to us, not our suppliers, when their products fail. They blame us, and rightly so. They will not accept the excuse that a supplier’s quality failure caused their product to malfunction. They will not accept buck-passing. We are responsible for our supplier choices, and we are putting sophisticated consumer electronics containing their products into the hands of millions of consumers, all of whom recognise our brand, and have probably never heard of our suppliers. 

Our customers trust us because we have a history of excellence. Our customers expect us to get it right, because more often than not, we do get it right. We rely on our suppliers to get us there. 

This is the outcome of collaboration. This is why we collaborate. Collaboration works for all of us.