Company Goes Crazy over Partnerships, Gets Committed
Small businesses distrust big ones. So how was it that corporate behemoth Motorola taught Bruce Bendoff's little company how to grow by trusting giants?
Well, it didn't start that way. When Motorola announced in the late 1980s that it planned to pare down its supplier base and turn the survivors into "partners," Bendoff feared that that was yet another ploy by a cost-conscious corporation to strong-arm its suppliers. But his 275-employee sheet-metal-bending company, Craftsman Custom Metal Fabricators Inc., in Schiller Park, Ill., had no choice but to start sharing its secrets with "the enemy": it depended on Motorola for roughly half its business.
It was scary stuff. Once Craftsman had put even more of its eggs into Motorola's basket, as the partnership demanded, what was to prevent Motorola from pulling a reduce-your-prices-or-else power play? Or pulling the industrial equivalent of a kiss-and-tell by sharing Craftsman's trade secrets with competitors? "It all came down to the word trust," says Bendoff.
But then, despite himself, he started appreciating the benefits of the marriage. With the two companies collaborating on parts design--from sketches on a napkin to shipment--cycle time dropped dramatically. "Something that took five weeks before," he says, "could now be produced in literally one or two days." And an adversarial, arms-length relationship slowly turned mutually supportive; Motorola even invited the Craftsman night-shift workers over to see how the company used their parts, and they obliged, roaring up on their motorcycles.
Bendoff was converted. And in a fitful moment of bravery, he decided to make partnering a way of life, dragging his other customers and his own suppliers to the altar. The move now looks good: Craftsman has grown fivefold in the past decade, to $30 million in revenues.
Largely in the past decade, big corporations have experimented with customer/supplier alliances as a cost-cutting device. But only recently have small companies like Craftsman learned to take the lead, using partnerships not as a money saver but as a sales strategy. "Craftsman isn't just selling products," says Jordan Lewis, a consultant based in Washington, D.C., who studies such partnerships, "it's selling alliance relationships."
Indeed, Craftsman now markets the notion that by cozying up to other companies, it can ferret out all sorts of savings and innovations for its clients, thereby reducing their total cost (and, it is hoped, making Craftsman less vulnerable to price pressures). "Before, everything was reactive," says Bendoff. "We'd wait until the customer had enough problems with a part that things would come downhill back to us." Now specifications are zipped back and forth on an IGES data-transfer system, and Craftsman brings its own suppliers onto the floor of customers' facilities. Salespeople have mutated into "customer advocates," and Craftsman engineer Al Krempels runs trust-building seminars at clients' sites. Says Krempels, "The customer is starting to realize that to get good parts, it needs to get us good information."
The big trick is getting customers to overcome that initial fear of commitment. It took 18 months for one customer to come around, says Krempels. "We have to be the initiator."
Trust does break down from time to time, degenerating into mutual recriminations. "Whenever something goes wrong," says Bendoff, "I can almost bet money that there's an ego issue behind it." Bendoff thinks inveterate egotists should be reeducated, booted, or made to wear buttons with a red slash through the word ego.
But for Bendoff, there's been no looking back. "Motorola's program was a little scary for us," he reflects, "but it was also a huge opportunity."
Though it's weighted heavily toward large companies, Jordan Lewis's The Connected Corporation: How Leading Companies Win Through Customer-Supplier Alliances (Free Press, 800-223-2336, 1995, $30) provides a practical look at the dos and don'ts of partnerships. On a far more abstract plane is the book Trust (Free Press, 800-223-2336, 1995, $25), by Francis Fukuyama, the celebrated social scientist and spinner of profound theories. He argues that trust is the lubricant of capitalism, the vital social capital that fosters economic cooperation and reduces transaction costs. It's grandiose yet fascinating. Trust us.
CRAFTSMAN CUSTOM METAL FABRICATORS, Bruce Bendoff and Al Krempels, 3838 N. River Rd., Schiller Park, IL 60176; 847-678-4430 24
JORDAN D. LEWIS, Jordan D. Lewis and Co., 3707 33rd Pl. NW, Washington, DC 20008; 202-364-0333 24