|Can B2B collaboration make cars like the BMW i3 seriously profitable?|
Everywhere you look these days, some kind of potentially system-changing B2B sustainability collaboration is taking place.
I say potentially because these are nascent, early-stage groupings in all cases.
From apparel design to factory safety, to palm oil basics and innovation, these groups are emerging all over the place. Some, such as in electronics, have been around for years. Others, such as in internet freedom, or global web access, are still finding their way.
The latest is in the automotive sector, where I started my career back in the late 1990s.
Then we have the commodity groupings beyond just palm oil. Cotton, soy, leather, there are many others, too many to name here. One recent one of interest is deforestation free clothing.
Some, like the Heathrow Sustainability Partnership, are incredibly focused. Others, much broader.
More than a few of these groups have the potential to be system changing. That magical idea.
In short, in business terms alone, it means thinking holistically about inputs (R&D, sourcing, incentives, logistics design) to drive much improved outputs in the supply chain (safer buildings, less carbon, better conditions, managed agriculture etc). Over time, these can change the system. What I mean here is that if the top ten companies persuade the top fifty companies in a sector to adapt together, consistently, then we may have system change. And that can form the basis of a whole new set of global, sector expectations.
The obvious tests for these groups, if they are to be taken seriously, will be the following:
- Pace – How quickly can five or ten companies make a deal, substantive, measured difference?
- Depth – How deep can they really go beyond their own operations into the supply chain?
- Governance – How well managed are they, and how transparent on a regular basis?
- Communication on failure and success – How far can they push members to report, and aggregate that in a credible way?
- Accountability – What they do with laggard members. This is one of the hardest areas. Carrot usually wins over stick, but without some of the NGO and media ‘stick’ attention, some of this stuff wouldn’t happen, so the balance is key
- Influence – How they use their work to raise the bar elsewhere
The multi-stakeholder groups that have made a difference to date, such as the Ethical Trading Initiative, The Kimberley Process and the Extractive Industries Transparency Initiative, each took at least five, and more like ten years to gain real traction.
In their own way they are also still at early stages.
These newer, focused B2B groups, monitored by NGOs in some cases, catalysed in others (or both) have a significant advantage over the classic, slower moving “one member one vote” style models of the multi-stakeholder initiatives. They can move faster. There’s greater potential for understanding, and the competitive spirit can be invoked.
Not that any of this is easy. In their own way Nike is as different to H&M as Shell is from Statoil.
And some of these groups are just not well run enough. Some pretend to think big, but don’t, and will need to be discarded by companies. Some will fail, and should do so.
But on some of the really big issues, some of which I mentioned at the top of this post, I sense genuine momentum building in large companies with sustainability vulnerabilities.
They are recognising that if we truly want to create opportunity, be that in circular economy business models or in tackling supply chain working conditions, the much discussed ‘collaboration’, we’ve all been hearing about endlessly at conferences for a decade actually has to finally happen, properly.
Now we know governments will largely only reflect business progress on sustainability, rather than drive it, we also need to show them how to catalyse it.
Government can push business to drive systemic change. This can and will be done much quicker than it is today. But business has to demonstrate how the credible models will work, or risk the blunt instrument of government policy or regulation.
(I am working on this with the Government of Ghana right now, as I did for the current UK Government a few years back)
I hope my rather obvious six principles above, which are in no way original, may shed some kind of dim light on how these accepted and effective models for eventual systemic change can be developed.
On the pre-competitive base of sustainability and governance challenges collaboration, will sit the layer of brand competition which the ‘market’, CEOs and investors all love so much. We are just not quite there yet. We though, a lot closer than we were five years ago, and that is something to be celebrated.
(Here’s a post I wrote a couple of years back called “B2B Sustainability Collaboration: 16 lessons for managers“which may be of some minor use)