In Scotland, a construction business asks for (and receives) the ash waste from a nearby coal-fired electric plant, which it uses to manufacture building materials. In Australia, a building designer teams with a rival architectural firm, a renewable energy supply business and a construction company to create affordable, energy efficient homes. In the United States, a business that produces merchandise from wood enters into talks with a plastics injection firm to discuss recyclable packaging ideas. Further north, a consortium of northeastern and mid-Atlantic states create a cap-and-trade programme to curb carbon emissions. What in the world is going on?
Anyone who thinks sustainability is about being independent could not be more wrong. With increasing frequency, businesses (and governments) are discovering that by working together with carefully chosen partners each can accomplish what was impossible for just one on its own. This is particularly true with small businesses that need help with large-scale projects or those that lack the funding to take on more sustainable activities. The term used to describe this is cooperative networking.
The notion of working together to achieve a common goal has been around for thousands of years and is similar to cooperatives, co-ops, or collectives, in that a group of individual entities join together to undertake an activity for the mutual benefit of all. One or more businesses can combine forces with either a competitor or a seemingly unrelated business (or both) to work together on a temporary or permanent basis. Not long ago, I conducted a survey in 14 countries which revealed that 42% of the small business operators questioned had at one time or another joined with other businesses (including competitors) in order to maximise profits. 7% of those who had not said they would like to do so in the near future.
For the most part, the reason for joining a co-operative network is because going it alone requires considerable cost, effort and risk - all of which can be reduced when others get involved. In practice, the number of businesses co-operating together can range from two to over 100.
Common goals include:
The notion of cooperative networking often becomes more palatable once it’s understood that cooperating is not about giving away trade secrets or merging with another business. Rather, it’s about working with others in a complimentary fashion. The idea is to enhance the competitiveness of members, reduce costs, create new capital bases, increase advantages of scale, scope, and speed, and open up new markets. For example, the Recycled Products Purchasing Cooperative operating out of Encinitas, California works to promote the use of recycled paper in both the public and private sectors by running a purchasing cooperative that offers members information on services, prices, shipping, and the cost benefits of reusing paper waste.
As with most ‘new’ business practices, joining a cooperative network requires a different way of thinking – one that debunks the traditional go-it-alone business mind-set, which dictates that every company must supply its own research, product design, marketing, office support, supply routes, financial functions, production processes, and management. For example, many agricultural producers have discovered that by working together they can purchase and share expensive planting and harvesting equipment, decide which crops should be farmed, work to reduce water usage, and even set a fixed price for wholesalers. This prevents having to needlessly compete against other growers. It also lowers costs, decreases risk in the marketplace, and ensures a fair outcome for each participant. The reported success and stability of cooperative networks, however, is perhaps the most enticing factor to those that join. Although cooperative networks are not infallible, businesses that cooperate are more apt to satisfy social and entrepreneurial objectives, avoid ethical and legal lapses, and, in general, be more economically vigorous and competitive, especially against larger rivals.
The foremost indicator of a successful business network is a common purpose. For example, the Tokyo Metropolitan Government’s ‘Municipal Environmental Protection Ordinance’ in Japan developed a series of cooperative networks one of which involves a shared delivery system enjoyed by 15 different retail companies. By consolidating deliveries to the 30 stores owned by the 15 companies, the network reduced the amount of delivery vehicles on Tokyo’s roads by 50%, which eased traffic congestion and reduced carbon emissions by 4,000 tons per year.
How do networks begin? Two methods seem to dominate. The first method uses a third party such as a business development centre or a chamber of commerce to bring different entities together and propose working in unison. The Chamber of Commerce in Henrietta, New York, for example, initiated an education and assistance programme with the Audubon International Sustainable Communities Programme to help foster energy and waste reduction programmes between local government, business, and the community. The San Francisco Bay Area Green Business Programme offers similar networking support.
The second approach to the creation of a network is more personal and involves the introduction of two or more like-minded businesspeople at a social gathering or a personal agreement between long-term acquaintances. Either way, the ingredients for a successful cooperating network revolve around mutual interests (and trust) combined with a can-do attitude.
Of course, not every cooperative network is filled with sunshine and smiles. As with any group endeavour, cooperative networks are susceptible to people problems. For example, a network can collapse when a key player leaves or if members grow too like-minded and become immune to new ideas and new ways of thinking. Similarly, networks can contain some participants who take more than they give or there might be a general falling out between individuals that results in the taking of sides. Claims have also surfaced, which state that business networks can take a great deal of time to make decisions.
Supporters counter these arguments by insisting that it is easy to dismiss unproductive or disruptive participants and that the more brains that are brought to the table for the purpose of making a decision the better the resolution. Moreover, proponents of co-operative networking say that once decisions are made they are often carried out quicker and with more enthusiasm than those made in big corporations. This is because commitments and involvement tend to be stronger when they come from people who share a mutual interest and reach an agreement together. By most accounts it appears that cooperative business networks operate under much the same principles, and therefore need the same forms of maintenance, as those required by teams. Additional advantages include:
Most cooperative business networks rely heavily on relationship building. In other words, the same elements that create and foster human relationships (honesty, communication, straight forwardness, integrity, wisdom, honour, etc…) appear to be no different from those needed to maintain successful business relationships. Unfortunately, with marital divorce rates as high as 50% (or more) around the world, many people seem to be in the dark when it comes to relationship building. Perhaps the expectation is that a good relationship can unfold on its own with no real effort from the parties involved. The following suggestions have been designed to help avoid problems: