New growth: Fostering collaborative business relationships

Journal for Quality and Participation, The, May/Jun 2000 by LaBerge, Myriam, Svendsen, Ann

Find out why companies with strong stakeholder relationships are more profitable and sustainable than companies whose focus is exclusively on the bottom line.

In 1993, some 9,000 people blockaded the road into the town of Clayoquot on the west coast of Vancouver Island, British Columbia, Canada. They were protesting forest company MacMillan Bloedel's (MB) intention to log old-growth forests. Loggers, native bands, and environmental groups from across North America and Europe joined forces to launch this bitter, high profile, and ultimately successful worldwide campaign. The blockades captured the attention of the international media, as well as some of MB's largest customers.

Was Pacific Bell alarmed about their customers finding out their phone books were made from 1,000-year-old trees? You bet-MB was faced with an international boycott. Share prices fell and employee morale hit rock bottom.

This, too, could happen to you. Environmental groups joining forces around the globe to launch a boycott of your products. Plummeting share prices and company morale. Thousands of protesters spotlighted nightly on national television and in full-page New York Times ads, eroding your hard-won corporate reputation and threatening your profitability.

Six years later, in June 1999, something astounding happened. MacMillan Bloedel signed a memorandum of understanding with the leaders of these same organizations to jointly market MB's forest products.

MacMillan Bloedel won the war in the woods by building relationships with internal and external stakeholders. A transformation in the company's relationships (and also its profits) began in 1997 when MB's new CEO, Tom Stephens, set three goals for the company: to be the safest, most profitable, and most respected forest company in North America.

Instrumental to the turnaround started by Stephens was a new set of corporate values developed with input from all employees, which included a commitment to integrity, involvement, and open communication. These values served as a solid foundation for an intense and often painful transformation that saw MB move from an insular, hierarchical organization with old-style forestmanagement practices to a much more collaborative, values-driven, progressive, and-perhaps not coincidentally-financially successful company.

How to build collaborative stakeholder relationships

Much of the emphasis in the quality movement has been on internal relationships in work and business processes. Equally important is the creation of trusting and cooperative relationships with external stakeholders, including customers, suppliers, and communities.

According to a recent survey of 200 chief executives conducted by the National Quality Institute and American Express, relationships lie at the heart of corporate profit making and sustainability in today's global, knowledge economy.

To help one remember the importance of the following six steps for building a stakeholder relationship, the acronym FOSTER conveys the nourishment and care needed for relationships to develop.

F: Foundation of values. A company's values provide a solid foundation for improving existing relationships and creating new, positive, long-term relationships. Corporate values start at the top with the company's leaders who have-and demonstrate-a clear and compelling vision for the organization, along with a strong set of values. They care about people and are able to clearly communicate a vision that is driven by ethical principles. They create a corporate culture that fosters reciprocity, ethical behavior, and mutual respect.

O: Organizational alignment.

Creating internal structures and systems that support collaboration helps to ensure effective relationship building. Essential systems include:

* Rewards and recognition for collaborative initiatives;

* Information systems to promote and support group dialogue;

* Training and mentoring to ensure staff have the necessary attitudes and skills;

* 360-degree communication to foster cross-functional, multilevel internal partnerships; and

* Participative decision-making, so that employees can respond quickly to the opportunities and needs of stakeholder partners.

S: Stakeholder strategy. A stakeholder strategy is the mechanism by which companies define their stakeholder goals, expectations, and commitments. It is based on the company's core values, overall business plan, information about the external environment, and dialogue with stakeholders.

T: Trust building. Establishing powerful collaborative relationships is not easy or quick. Time is needed for people to get to know one another, build trust, deal with organizational issues, negotiate agreements, and manage the logistics of working together.

Partners must clarify their expectations ("What's in it for me?"); they must develop structures, roles, and responsibilities that work for everyone; and they must establish milestones to evaluate progress. People must also be willing to learn from each other and have the skills to communicate effectively.