Trusted Partners: How Companies Build Mutual Trust to Succeed and Grow - Couverture rigide

Lewis, Jordan D.

Couverture rigide

ISBN 10 : 0684836513 ISBN 13 : 9780684836515

Editeur : Free Press, 2000

Synopsis

Jordan Lewis draws upon his experience of working with some of the world's leading firms on three continents to produce this volume that not only analyzes the nature of trust between corporate "rivals", but which also lays out the steps to achieve it.

A propos du livre

Extrait

Chapter One: Build Trust

Two giant rivals in the shipping business -- Maersk and SeaLand -- launched a great undertaking, one of worldwide creative collaboration. Maersk, a division of Denmark's A.P. Moeller, and SeaLand, a division of the United States' CSX Corporation, concluded that the best way for them to compete in an increasingly difficult global market was to form an alliance.

Although they kept their sales and marketing separate, the firms in 1996 began rationalizing their port facilities and combined their two hundred container ships in networks that span the globe. So smoothly do these links work that a customer who hires Maersk, say, to transport machinery from Seattle to Shanghai, or from Rotterdam to Rio, might never know that for part of the journey the cargo passes through SeaLand terminals, is handled by SeaLand longshoremen, and travels in SeaLand ships.

What the two container companies know is that the alliance has enabled them to extend their geographic reach, drive down their costs, and step up their shipping frequency. And as the firms continue working together, their results keep getting better.

Maersk and SeaLand have forged a successful alliance. That is what Trusted Partners is about -- how businesses can build successful alliances. The same conditions and procedures are essential whether an alliance is between rivals, as in the case of Maersk and SeaLand, between customer and supplier, or for any combination of firms. They apply as well to alliances between divisions within a company, and to mergers and acquisitions.

Let's start with an important distinction. There is a night-and-day difference between transactions and alliances. In transactions, contracts spell out everything. Negotiations may be divisive because neither firm cares about the other's well-being. With transactions, information sharing is limited to what is needed to close the deal, because divulging more could yield an advantage to the other side. Transactions also encourage finger pointing rather than creative problem solving.

In an alliance, you can't define every detail. Success depends on creatively joining the ideas and energies of two firms, sometimes more. Though negotiations may be trying, alliances are framed by an understanding that it is in neither firm's interest to hurt the other. Most important of all, alliances depend on trust. No contract can anticipate what two groups must do to be creative together.

I use the term alliance to mean cooperation between groups that produces better results than can be gained from a transaction. Because competitive markets keep improving what you can get from transactions, an alliance must stay ahead of the market by making continuing advances.

This definition identifies an alliance by its outcome and implies needed behavior. For superior results you can't simply call each other partners. You must actually function as partners. Alliances go beyond doing things between firms that become transactions afterward -- like licensing, co-locating resources, starting to outsource, or trading a lower price for a longer term. Such tactics may be involved in alliances; alone they produce one-time gains. In an alliance, continued joint creativity leads to regular improvement, outperforming what any single change can do.

Alliances are structured various ways, depending on their purpose. Direct cooperation is the most common form. Joint ventures, where partners create a separate unit they own and control together, are also widely used. Minority investments, a third form, are less common. Regardless, the principles of trust are the same.

Despite the growing popularity of alliances, there are many failures. Consider the arrangement between Northwest Airlines and KLM Royal Dutch Airlines to combine their networks linking Holland and the United States, to build more volume for each carrier. Though the airlines' arrangement is now successful, behind the scenes when it began was what Fortune magazine dubbed "an eye-gouging, rabbit-punching slugfest, with accusations flying like dinner plates."

The seeds of this hostility were planted at the start. Soon after taking their own financial stakes in Northwest, co-chairmen Al Checchi and Gary Wilson persuaded KLM to help finance a leveraged buy-out at six times the per share price Checchi and Wilson had paid. Although such premiums are common in U.S. financial circles, they were unusual to KLM's managers, who viewed the arrangement as unfair.

This attitude, plus a growing concern that their partners seemed more like deal makers than airline operators, led the Dutch to try ousting Checchi and Wilson from Northwest and increase their own control. Northwest responded by attempting to limit the stake any shareholder could hold. The upshot: KLM sued Northwest, Checchi, and Wilson. So bitter was the clash that it jeopardized an alliance producing $200 million a year in operating profits. The feud also halted plans to integrate their cargo operations and reservation systems.

For KLM, the alliance had been a key step in forming a global airline. To realize that goal, the Dutch took several steps. Besides buying more stock in Northwest, they lobbied the U.S. government to relax foreign ownership rules, rejected other European carriers that wanted KLM to drop Northwest in favor of a different linkup, and sought changes in Northwest to support more integration of the two carriers.

For Northwest, though Checchi and Wilson never publicized their longer-term objectives, their leveraged ownership and prior record of skillful financial engineering led KLM to assume they would sell out when their contracts permitted or, as was expected in the industry, when another wave of acquisitions swept through. Further integration with KLM could undermine the financial flexibility needed to sell their stakes.

Seen in this light, both sides were consistent with their separate objectives. Apparently, they never discussed what they knew at the time -- the immediate logic of an alliance was overshadowed by basic differences in those objectives. Only after top executives left both companies did repair become possible.

What went wrong with the KLM-Northwest alliance was a lack of trust at the start. Aside from technical or marketing problems, that's what causes alliances to fail. Trust makes successful alliances work. This book shows how to initiate, sustain, and increase trust throughout the life of an alliance.

WHAT IS TRUST BETWEEN ORGANIZATIONS?

Mutual trust is a shared belief that you can depend on each other to achieve a common purpose. In an alliance, where your purpose is to get results that exceed what a transaction can do, mutual trust also means you can depend on each other to adapt as necessary. That involves more than keeping promises, because it entails changes that can't be planned in advance.

An alliance between Canon and Hewlett-Packard in the laser printer business illustrates. In the late 1970s HP was one of a few firms having both computer expertise and a successful peripherals business. At the same time, Canon had developed laser technology for its copier products; laser printing did not yet exist. Frustrated in its own efforts to develop a reliable low-cost printer, HP accepted an invitation from Canon to combine HP's computer skills with Canon's laser know-how.

After some iteration, the firms introduced their first desktop model in 1984. Early sales, forecast to be a few hundred units per month, actually were 3,000 units and soon rose to more than 40,000 per month. Volume grew so fast that the alliance quickly became an important part of each company's business.

Since then, the partners have become major rivals in the bubble jet and ink jet printer business, while their laser printer alliance has blossomed. Today, their collaboration involves many products and more than a thousand people in both firms. Still, they have no contract. Their alliance is too dynamic and involved for that. Rather, it is based entirely on trust.

Trust does not imply easy harmony. Obviously, business is too complex to expect ready agreement on all issues. However, in a trusting relationship conflicts motivate you to probe for deeper understandings and search for constructive solutions. Trust creates good will, which sustains the relationship when one firm does something the other dislikes. Having trust gives you confidence in a relationship and makes it easier to build even more.

"We would not have our results without trust," says Dick Murphy, SeaLand's senior vice president for corporate marketing and chief commercial officer, speaking about his firm's alliance with Maersk. "It is the cornerstone of our relationship."

THE EIGHT CONDITIONS FOR TRUST

As the KLM-Northwest affair suggests, trust exists only under specific circumstances -- such as having shared objectives. A logical way to discover these is to start with the definition of trust in an alliance: Each firm can depend on the other to get results that exceed what a transaction could do. That notion leads to a set of eight conditions for trust.

1. Mutual Need Creates the Opportunity

As alliances go, they don't get much better than Hewlett-Packard's and Canon's. For two decades, the firms have enjoyed a thriving relationship. HP has built a world market-leading laser printer business with annual revenues exceeding $2 billion, while Canon has gained handsome earnings supplying components to HP. "While we would be in the same business without Canon," says Doug Carnahan, an HP senior vice president, "we would be behind the pack in the marketplace. With them, we lead the pack."

The laser printer partners illustrate a central feature of alliances: It's not enough for two companies to ally just because they need each other. In an alliance, companies must share valuable resources and adjust their organizations to support joint activities. The management attention needed to do that is not likely to be available unless each firm concludes that the task is important, and that joining forces is the best way to go. In the case of Canon and HP, both firms regard each other as the right choice for meeting important objectives, a condition I'll refer to as a priority mutual need.

Take, for example Nypro, a leading injection molder of plastics and one of the fastest-growing and most profitable. Nypro has ten joint ventures in its core business worldwide, all outstanding performers, plus five in related businesses. Serious conflict with partners is rare. "In forming a JV, we always made sure it is so important to both of us that we would want to work through difficult issues to make it successful," says Gordon Lankton, president.

pardA priority mutual need is a source of respect, a building block of trust: Each side is bringing unique and significant value to the other and deserves to be heard. If mutual need is not a priority, forget about trust.

One of the first questions I ask companies that seek help with alliances is why they chose each other. The most frequent answers I've received in many years of experience are that it seemed like a good idea or that some executives decided to do a deal. More often than not, that vague starting point has led to failure.

An early step in weighing a possible alliance is to determine whether it will serve an important objective in your firm. Next, determine the best way to achieve that objective. Compare the merits of internal development, alliances, and acquisitions. Before discussions get serious, your firm and a prospective partner should confirm to each other that you are the best candidate for meeting the other's needs.

To get started in the right direction, the units that an alliance will serve must lead partner selection and conclude that the arrangement is their favored choice. Taking that role wins their acceptance and, because they are closest to the action, helps find the best partner. Further, since the alliance will affect their performance, these units must be accountable for its results. Nothing discourages teamwork more than imposing an unwanted partner on people who have a better alternative.

2. Interpersonal Relationships Make the Connection

Alliances live through people -- this is how all the parts come together. Deep trust -- the essential ingredient for creating the most value and solving the toughest problems -- grows as interpersonal relationships strengthen.

Listen to a mid-level manager at HP describe his ties with his counterpart at Canon: "I liked him. We developed a personal relationship. We could always solve the big issues constructively. We became candid with each other because at the heart of many issues were people's attitudes and personalities."

To appreciate the role relationships have in alliances, reflect on your own career. Have you ever been so comfortable with a colleague that you could candidly discuss the politics and personalities in your organization and how things really worked? If you answered yes (which most people do), did these understandings help you do your job more effectively? Did mutual comfort make it easier to tackle tough issues? Again, your reply probably was yes.

Each of us knows that good relationships enhance our performance and that they aren't always possible. But think about this: Inside an organization, if people can't resolve conflicts between them, a higher authority or political process may do so. Even if issues don't get resolved, the firm keeps moving along, carried by its own momentum. These solutions don't exist between separate companies.

3. Joint Leaders Deliver Both Firms

Our experience within companies offers useful lessons for cooperation between them. When top executives work closely together, staffers below know it is safe to cross internal boundaries. By contrast, polarization at the top virtually assures conflicts below, because people respect the turf of those above them. Similarly, an alliance will fail without joint leadership.

For HP and Canon, Doug Carnahan and Takashi Kitamura, now chief executive of Canon's Peripheral Products Operations, led the alliance during its early years of rapid growth. "The two of them could always cut through problems together," says someone who worked with Carnahan at the time. "They got along incredibly well. They really liked each other -- it was clear to everyone. In joint meetings they attended there was always a positive feeling that things would work out. The atmosphere was always one of creative problem solving to do what was best for our firms' mutual interest."

Reinforcing this sentiment, corporate presidents Lew Platt and Fujio Mitarai have had a high-quality relationship of mutual trust and confidence that continued even after Platt retired. "This symbol of collaboration at the highest level is important to all of us," says Carnahan.

4. Shared Objectives Guide Performance

Just as mutual need creates an opportunity to cooperate, having a set of mutually agreed-upon objectives guides your performance together. If your objectives are not aligned, expect discord.

Recall what happened to KLM and Northwest Airlines, whose alliance is one of many that have been weakened by conflicting objectives. More than half the underperforming alliances I have seen suffered from hazy or inconsistent objectives.

On the surface, having common objectives seems obvious. But they can be surprisingly hard to develop and the task often gets too little attention when alliances are built. To appreciate this, reflect on what it takes to find common objectives for separate groups within your...

Présentation de l'éditeur

Jordan Lewis has been helping businesses to forge successful strategic alliances for more than four decades. These creative collaborations often are the best way for companies to thrive in an increasingly difficult global market. But despite the growing popularity of alliances, a great many end in failure. The reason, says Lewis, is deceptive in its seeming simplicity: 'Cooperation requires trust, and there have to be guidelines for building it' Until now.
In TRUSTED PARTNERS, Lewis draws upon his vast experience working with some of the world's leading firms on three continents to produce, for the first time, a book that not only analyses the nature of trust between corporate 'rivals', but which also lays out the steps to achieve it.

Détails de l'édition

• Éditeur: Free Press
• Date d'édition: 2000
• Langue: anglais
• ISBN 10: 0684836513
• ISBN 13: 9780684836515
• Reliure: Relié
• Numéro d'édition: 1
• Nombre de pages: 304
• Coordonnées du fabricant: non disponible
• Personne responsable: non disponible