Fifty years ago, my grandmother had the solution for today’s industry woes. To give each of her four grandsons a larger piece of her famous apple pie, she made the pie bigger.
I listened as professor Dr. Barry Nalebuff delivered this same message last month. His book is Co-Opetition: A Revolution Mindset that Combines Competition and Cooperation. The audience was several hundred automotive industry managers, from OEMs down to tier-X. The event was AutoTech, a more-or-less annual gathering sponsored by the Automotive Industry Action Group (AIAG), Southfield, Mich.
Nalebuff’s message is as simple as it is complex: By working together, auto companies (Or, fill in the name of your industry.) can increase the size of the pie they’re competing for, thus making everyone’s slice of that pie bigger. Why beat each other up for a bigger slice of the same size pie, as competitors currently do?
Nalebuff’s theory is refreshing at a time in our history when the news is dominated by unending stories of war. According to the Yale professor, you can be rewarded for doing well, not necessarily for beating the stuffing out of your competitors. The message is: Business is not war; it’s cooperation. And, while winning and losing are the usual extremes by which we measure success in the game of business, the truth is found someplace in between.
When he said, “Your competition does not have to fail for you to win,” pens came out of pockets and purses to start taking notes on napkins. These were automobile builders. And, while it might appear they use more software than hardware these days, they still work with metal—hard stuff. They like solid examples.
In this case, AIAG fills the role of pie maker for the industry. It has a history of showing competitor
s how to cooperate for the good of the industry, meaning themselves and the end user. It “collaborates horizontally,” was a phrase I heard.
Its more than 1,400 supply chain companies are actively engaged in numerous AIAG initiatives. For example, it has developed a number of specifications and guidelines for returnable containers—fastener containers in particular—that help reduce the expense of shipping parts common to all manufacturers. The system— container, pallet and top cap—has been accepted by the industry members of the AIAG and by members of the Automotive Industrial Fastener Institute (AIFI). It’s to be used for fastener shipments whenever a returnable container program has been established for shipping to a customer.
An AIAG survey (with AMR Research) of 50 OEMs and suppliers indicated they were spending $750 million annually to replace returnable containers misplaced throughout the supply chain. It has launched a revision to its Returnable Container Tracking Guideline that will incorporate the use of automatic identification technologies, possibly RFID, to increase visibility of containers.
Certainly, the auto companies realize if they don’t work together to make the pie bigger, foreign competition is going eat their lunch.