Today’s companies face a host of complex social and environmental challenges, in their supply chains and beyond. And meaningful solutions—more and more—will demand partnership.
Pre-competitive partnerships involve companies in the same industry or supply chain ecosystem coming together to solve shared problems or pain points (without impacting direct business competition). We believe such collaboration will be an increasingly vital tool as companies look to transform their industries or address sustainability challenges that span overlapping supply chains.
Below we share three questions you can ask to determine when and why pre-competitive partnerships may be right for your company. The points below will help you understand and communicate when and why partnering can unlock better results.
3 Questions to Determine If Pre-Competitive Partnerships May Be Right for Your Company
1. Do your stated goals depend on shared assets or systems change?
More and more companies are setting goals that go beyond their traditional spheres of influence, requiring new partnerships and collaborations to reach the desired scale.
Some are moving to overhaul their own operations, like Amazon installing solar panels on rooftops of fulfillment centers or GM sourcing onsite renewables to power its assembly plants. While these are critical investments on the Net Zero journey, how does a company address more embedded sustainability challenges influencing Scope 3 emissions, for example, which do not come from a company’s assets but are indirectly generated through its value chain?
To tackle these kinds of “tragedy of the commons” dilemmas, we are seeing cooperation amongst peer companies to aggregate demand, influence, and investment for shared infrastructure, policy change, or other critical mobilizing elements.
An excellent example of this is the Clean Energy Investment Accelerator (CEIA) which brings together corporate buyers of renewable energy through innovative demand and procurement models to grow the clean energy pipeline in specific markets. The CEIA unites company partners in a systems approach: It works to aggregate demand and unlock finance for renewable energy while also building market capacity and strengthening relevant policy frameworks at regional and national levels. In short, through collaboration, companies can co-invest in the shared infrastructure and enabling environments they need for individual success.
2. Is your challenge embedded in overlapping sourcing regions or supply chains?
Corporate sustainability teams work across multifaceted supply chains where procurement of parts or sourcing of commodity crop ingredients comes from thousands of producers or farmers—many of whom sell their goods to multiple buyers. Understanding the full extent of the challenges and barriers to change therefore depends on learning from suppliers and alongside peer companies.
Individual companies may not have the influence or visibility to independently drive change, but when they join with other companies that share the same sourcing regions or suppliers, these partnerships can build the needed momentum to transform complex systems.
The Midwest Crop Row Collaborative is an example where pre-competitive companies with overlapping supply chains have joined forces to tackle a shared challenge. Companies including Cargill, Unilever, and PepsiCo are working to test and demonstrate solutions for removing barriers to widespread adoption of regenerative agriculture to help improve soil health, nutrient loading into waterways, contamination and depletion of groundwater resources, declining water quality and biodiversity, and associated climate impacts in the Midwest of the United States.
3. Does your solution require industry buy-in and reinforcement?
Recently we spoke with the head of sustainability at a large multinational retailer of personal care and beauty products who expressed frustration over the lack of clarity around best practices for understanding chemical allowances in makeup and beauty products. What this sustainability leader spoke about is something we hear often: The need for industry-wide standards, certification, or clarity on best practices.
Pre-competitive collaboration is especially useful when change is needed at the industry level. Companies, together, can help shape and drive new standards and create new tools that help level-up sustainability performance for both their suppliers and their peers.
Leveraging Pre-Competitive Partnerships to Meet Business Goals and Scale Sustainable Development
Sometimes, getting serious about reaching sustainability, sourcing, and business goals means going beyond traditional partnerships and collaborating with your competitors.
This does not mean giving up market advantages or sharing company innovations and proprietary information. In fact, most successful pre-competitive partnerships engage a neutral third-party, partly to ensure data transparency and protection.
As powerful as pre-competitive partnerships can be, they may not be right for all companies or situations. If you answered no to all of the questions above, then you may want to consider another way forward.
However, if you answered yes to any of the above questions, then you should consider building or joining pre-competitive partnerships. Whether you engage in an existing pre-competitive collaboration platform or initiate your own, through partnership and cooperation, you can drive significant progress on the most complex sustainability, sourcing, and business challenges facing your company and the world.