Cooperating to Compete

March 1 st 1994

For people working in business firms, 1994 may well be a replay of 1934 when, in the depths of the Great Depression, and in many countries, they were rediscovering the virtues of cooperation. My own first foray into the world of business took place in a large farmers' cooperative—the biggest of its kind in the southern hemisphere. We processed a variety of fruits and vegetables in nine factories, where, at the height of the season, we employed 10,000 people on highly labour-intensive production lines. Our products were marketed in 70 countries. I remember dealing with an order due to be delivered by camel in the deserts of Saudi Arabia. We discovered the hard way that our celebrated black and yellow label for baked beans was offensive to people in countries where those colours were associated with funerals.

Our members—30,000 in all—were mainly small farmers. They were too small to be of interest to the large multinational companies who took their raw materials from big corporate farms. By any standard our business was supposed to be inefficient. We were, in effect, performing a social service by helping to keep small farmers on the land. But we were still able to compete. In our line of business we had the largest market share in the British isles. We supplied products meeting the highest quality standards of American firms such as Dole and Del Monte. We designed and built our own machines that were capable of slicing pineapples into rings that left not the slightest trace of fraying on the edges. Yet we had few illusions and perhaps it was not irrelevant that no meeting of the board of directors and no general meeting of members ever opened without a moment for prayer.

It was perhaps true that circumstances not only kept people humble but also forced them to cooperate. But whether based on necessity or virtue, cooperation was the order of the day. Hand in hand with that sentiment went a constant quest for improvement and self-improvement. We modernized our corporate image, from the way our fleet of 100 heavy trucks was painted to the design of our corporate logo, letterhead, and entire range of proprietary labels. So advanced were those designs that they are still in use.

A common purpose

Now, thirty years later, people are again learning the truth of the paradox that in business, cooperation goes hand in hand with competition. While Christians are supposed to have learned that lesson long ago, no less than the Harvard Business Review (March-April 1994) has highlighted the same discovery by the New Age movement in the world of business. Suddenly we are being treated to a "new morality tale" of a "need for true community" growing out of "a shared higher purpose" reflecting a "quest for meaning." No longer is self-actualization an effective rule of conduct. In their newly discovered "age of paradox" the high priests of the New Age gospel for business could have been reading the parables of the New Testament.

The lesson? In times of relentless international competition affecting everybody in the workplace, the theory and practice of cooperation (the active aspect of community) is again under scrutiny. But real cooperation among otherwise independent and competing agents should not be confused with the common buzzwords of our time, namely, networking and communication. Here may be a pitfall resembling the standard cry for more or better "education" as the cure for social and moral decay, ranging from the problem of AIDS to domestic violence. In other words (it is claimed), if only we had more information, using vast information highways and a profusion of communication media, we would be more productive and more competitive.

Already I am so overwhelmed by a flood of (mostly discordant) data that I am less and less interested in my right to know and becoming more and more interested in my right not to know! We actually need filtering agents to shield us from the task of having to use precious time and energy to process or sift through growing mounds of information in order to find the few true nuggets that they may contain. Those nuggets we usually recognize as words of wisdom inasmuch as they have meaning. In other words, real communication and real cooperation has to be meaningful. On their own, and despite the modern psychobabble focused on relationships, neither has intrinsic meaning. They must reflect a common, external, purpose. Such a common purpose is the usual hallmark of a successful business enterprise. Given a common purpose, people can cooperate profitably. In the workplace (internally to the firm) this has been the central message and raison d'etre of the Christian Labour Association of Canada for over forty years—a message that has not sat well with the big labour unions.

On working together

On the same principle, two or more businesses can also work together without sacrificing their individuality or independence. Now, and rather suddenly, the paradox of "cooperating to compete" is being accepted by an increasing number of enterprises, both large and small. While the Japanese had already developed cooperation to a fine art, governments and entrepreneurs alike in Europe, North America, and the Antipodes are actively promoting the merits of inter-corporate alliances and strategic partnerships.

In Europe, the governmental push behind this phenomenon has also been politically motivated. The argument is that if the European economy has to be integrated and made more efficient, European companies have to be encouraged to work together by entering into cross-border alliances. Thus, big industrial incentive programs with names like ESPRIT and EUREKA make it conditional that the partners in any subsidized business alliance should be based in different European countries.

In Canada, the federal government broke new ground with its Strategic Technology Program (administered by the Department of Industry) whose purpose is to promote the development and use of important new technologies that cut across many industry sectors—notably the information technologies, biotechnology, and advanced industrial materials. Subsidies (in the form of repayable contributions of up to 50 per cent of eligible costs) are conditional on companies forming alliances with other companies or with universities or other research agencies.

The primary purpose is to help Canadian companies become more technologically competitive, in addition to diffusing technology to others and creating employment. But a major objective is also to help companies and research agencies to discover, or improve their understanding of, the art and craft of partnering. Once firms are familiar with the possibilities and the pitfalls of working through alliances, they tend to be more willing to form new partnerships, either on new projects with the same partners, or with new sets of partners. They learn that excellence in business does not just depend on new technology, or lower costs, but on organizational factors and, specifically, on an ability to work with other entities towards a common goal.

Traditionally (and understandably), most companies would rather do things on their own. Large firms are keen to guard their proprietary knowledge and exploit their ability to control market share. Small business owners are often reluctant to share control with others. In other words, for them partnering is often a case of working against nature. To plan, devise, launch, and manage a full-fledged alliance is not easy. And yet, more and more companies are discovering how necessary and indeed rewarding inter-corporate partnerships can be. Typically they permit a sharing of costs and risks and a way of supplying an asset that a particular partner may be lacking, whether it concerns technology, production, or access to markets. But if it is a case of necessity, it also demands a type of virtue because such alliances rarely work in the absence of mutual trust.

Trust is essential

No legal contract, however elaborate, can compensate for a lack of trust in any significant partnership. This is especially true in those most difficult situations of all, namely, partnerships between or among competitors who are in the same or similar lines of business (horizontal alliances). Vertical alliances are far more plentiful. They usually involve a formal relationship between a supplier and a user or customer where cooperation comes far more naturally.

Cooperation has taken on a new and more urgent meaning, but it is also making tougher demands than those that had faced the cooperative suppliers of farm products in the years of the Great Depression. The demand for cooperation also goes beyond the familiar field of labour-management relations. Yet the underlying sentiments have not essentially changed. Above all, we require a renewed respect for the common purpose—beyond our own immediate self-interest—and for trust, which can only be achieved when we are committed to the truth. And, as in the old days, some may even discover a need to combine work with prayer.


Dirk de Vos