A case study from NBS’s upcoming report on Collaborating with Competitors. Register to receive the report first.
“When you have protesters in front of your shop windows, you react quickly.”
So observed one fashion industry leader when reflecting on his company’s decision to partner with former competitors.
Activists pressure fashion brands to stop polluting.
In 2011 Greenpeace identified textile manufacturers in China as major polluters of hazardous chemicals. Greenpeace wrote open letters to large multinational fashion brands – such as Nike, H&M, and Zara – that were outsourcing production to these polluting plants.
Greenpeace challenged the brands to “detox” their manufacturing process. Specifically, they encouraged the companies to:
- eliminate 11 most hazardous chemicals in the manufacturing process by 2020, and
- communicate transparently about their outsourced production suppliers.
One brand after another committed to Greenpeace’s Detox campaign.
The campaign did not oblige member companies to work together. But the participating fashion brands quickly realized they could only change their manufacturers’ use of hazardous chemicals by cooperating with companies they historically viewed as competitors.
“We have been trying for 20 years to improve our supply chain,” one industry representative said. “The more we do, the more we realize you can only do this collectively—as an industry.”
Form an industry-wide alliance like ZDHC.
Key players in the apparel, outdoor and footwear industries joined forces to establish Zero Discharge of Hazardous Chemicals in 2011. The group included Adidas Group, C&A, G‐Star Raw, H&M, Jack Wolfskin, Levis Strauss & Co., Li Ning, Nike, and Puma SE.
ZDHC created a Joint Roadmap that focused on eliminating and reducing the 11 priority chemicals. ZDHC also aims to inventory and assess other hazardous chemicals while helping the member companies transition to greener chemicals.
Compete on products—cooperate to beat pollution.
Today, ZDHC has 20 apparel brand members and dozens of associate members including suppliers. In June 2014, ZDHC brands reached their first milestone by publishing the Manufacturing Restricted Substances List (MRSL) for the apparel and footwear industries. The list provides the brands and their suppliers with a standardized approach for processing raw materials, and identifying the priority chemicals and the maximum concentration limit for each.
ZDHC became a non-profit entity in 2015, hiring an independent executive director and recently appointing a Board of Directors. The dialogue between ZDHC and Greenpeace continues; Greenpeace has appreciated individual brands’ efforts but asks more of the collaboration. ZDHC brands describe their work as ongoing and invite feedback from Greenpeace on ZDHC’s progress.
Factors that made the collaboration hard for ZDHC signatories:
- Initially, the brands had a strong common interest but didn’t know each other well.
- The brands had different ways of communicating and of making and approving decisions.
- As the group grew in membership, reaching consensus and agreement became complicated. An initial ad hoc approach needed to become more formalized.
Lessons learned from the ZDHC industry collaboration (excerpted from NBS’s upcoming report on Collaborating with Competitors for Sustainability):
- Remind other participants of your common interests.
- Create equal sense of urgency around the issue for all participating companies.
- Understand that progress will be slow—different companies work at different paces.
- Find a neutral party, such as a not-for-profit organization, that can formalize decision-making and manage membership growth.
Companies would be wise to draw upon these lessons. Interacting with industry peers does not mean a company needs to make a binary decision between competition and cooperation. Indeed, there is much to gain from collaborating with even your closest competitors.
For more on this topic, check out the video in which Dr. Lori DiVito illustrates what managers need to know when considering competitor collaborations. For examples and best practices on industry collaborations, watch for the upcoming report, Collaborating with Competitors.