Never come alone to a gang fight: Lessons on supply chain trust from nature’s amazing allies

In the early 1990s, General Motors stood at the brink. Japanese rivals, namely Toyota and Honda, had disrupted the market, taking share from GM and pummeling its profits. GM lost $1.99 billion in 1990. Losses doubled in 1991 to a record $4.45 billion. Fighting to survive, GM turned to Jack Smith, then president of GM Europe, to bolster the onetime industrial power. Smith turned to J. Ignacio (Inaki) Lopez.

Lopez’s task: Revamp GM’s $50-billion North American purchasing operations to free up desperately needed cash. Lopez moved aggressively, putting existing supply contracts out to bid. Pitted against one another—and dependent on GM for their own survival—suppliers competed fiercely for business. In just two years, GM’s materials costs declined by $4 billion.

Lopez had bought GM time, but he had doubled down on GM’s adversarial supplier relations. Simply put, before Lopez, supplier relationships were rocky. After Lopez, they cratered. Viewing GM as a foe, not a partner, suppliers deeply resented GM’s bullying—a feeling that endured. On 2005’s annual Working Relations Index, suppliers gave GM a score of 114. No OEM ever scored lower. Toyota, by contrast, earned a 415. Although suppliers still sold to GM, they reserved their most innovative technologies—and best engineering talent—for Honda and Toyota, their customers of choice.

Sadly, despite supplier pushback, GM’s modus operandi didn’t change, nor did its prospects for survival. On June 1, 2009, GM went bankrupt. Only a government bailout averted extinction. Yet, leaders at GM failed to grasp they were fighting a losing battle: Competition was no longer company versus company but supply chain versus supply chain. Engaged in a global gang fight, GM persisted in going it alone.

By 2013, the auto industry had shifted toward autonomy and EVs, forcing GM to face a brutal fact: GM didn’t possess the skills to survive in an evolving industry. Now sourcing 70% of the cost of each vehicle—not 30% as in the 1980s—GM’s leadership realized they needed suppliers’ A teams to survive. Changing gears, GM sought to improve supplier relations. The goal: Build trust to become a customer of choice. It was time to adapt or die.

Fast forward a decade: GM had evolved supplier relations but still lagged Honda and Toyota as a customer of choice. The auto industry had also evolved, becoming more chaotic and cutthroat. Thus, GM’s quest, and challenge, remained: “Build a SC team capable of fending off emerging threats, i.e., China’s EV dynamos.” You likely face a similar competitive challenge. The good news: Nature’s amazing allies offer key insights into the process of evolving the trust you need to assure your SC team has your back in today’s rough-and-tumble marketplace.

Nature’s amazing allies

You’ve heard the term symbiotic relationship. But do you know what it means? If you’re thinking “win-win” relationship, think again. Symbiosis really refers to how species interact with one another. Four main symbiotic relationships exist.

1. Competition: We wrangle for resources, often harming each other.
2. Parasitism: I win, you lose (or vice versa).
3. Commensalism: I benefit without harming you.
4. Mutualism: We win together.

Based on 30-plus years of experience working with supply chain leaders, we suspect your supply chains include all four relationship types. Why should you care? By their descriptions—and your experience—you know not all relationships are created equal. Costs and benefits vary greatly. And the odds are many of your SC relationships don’t deliver a winning cost/benefit ratio. If your goal is to not just survive, but thrive, you need stronger SC relationships. Mutualism is the key.

With this in mind, ask: “Are our supply chains built to last?” Too often, the answer is, “not really.” Many relationships are built to support going-concern operations. They neither cultivate unique value nor enable staying power. The reality is true win-win—i.e., collaborative, innovative and resilient—relationships are rare. Why, you ask? Simple answer: They are hard to nurture. Few managers know how to build them. And they are resource-intensive.

Now, let’s make one point clear. Google mutualism and you’ll read something like, “mutualistic relationships are common.” Here’s the catch: The common variety is passive and transactional—think bees and flowers. Bees seek nectar from flowers. Then, as incidental pollinators, they carry pollen from flower to flower. Many SC relationships act this way. Much rarer are nature’s amazing allies. Consider three examples.

1. Clownfish and anemones. The anemone’s sting is deadly to small sea creatures. Yet, Pixar’s Finding Nemo shows clownfish securely at home in an anemone’s tentacles. What’s going on? The clownfish secretes mucus to protect it from the anemone’s sting. The anemone, in turn, receives nutrients from the clownfish’s waste. Clownfish also chase away butterflyfish, which prey on anemones. The outcome: Anemones with clownfish allies grow faster and suffer lower mortality than those that go it alone.
2. Pitcher plants and woolly bats. Pitcher plants evolved in regions with nitrogen-deficient soil. To survive, they became carnivores, obtaining nutrients from trapped insects. One species, nepenthes hemsleyana, evolved differently, becoming the daytime roost for woolly bats. In exchange for a safe place to rest, the bat nourishes the plant with its droppings. Now, consider this: Though the bat has other roosting options, the pitcher needs the bat. The plant survives because it is the roosting option of choice.
3. Nile crocodile and Egyptian plover. Back in 459 BC, Herodotus noticed a small bird picking food from the open mouth of a crocodile. The win-win: The tiny plover gets a quick, if risky, meal. The giant reptile gets much-needed dental care as the plover removes bits of flesh and parasites from its teeth, keeping the croc’s mouth infection-free. Now, ponder this: Could this relationship have evolved if the croc had abused its massive power advantage?

Your takeaway: Nature has done the improbable, enabling diverse species to evolve amazing ways to work together. The result: They’ve become partners in survival. Honda and Toyota grasped mutualism’s advantages long ago. GM is finally trying to figure it out. How about you? Are you ready to invest in new ways of working together?

Adapt or die, but how fast?

Before we explore trust’s evolutionary dynamics, let’s offer a warning: Nature’s amazing allies didn’t emerge overnight. They evolved unique capabilities iteratively over eons via a process called gradualism. The SC parallel: Post-industrial revolution, competitive rules have tended to evolve gradually. If you improved incrementally, you survived, and maybe even thrived—think Lean Six Sigma exemplars.

Occasionally, however, evolution takes a different path. A triggering event—e.g., a meteor striking the earth—dictates swift adaptation. This punctuated-equilibrium version of evolution brings extinction to slow-to-change species. The SC parallel: As disruptions arise—e.g., geopolitical shocks or new tech hitting the market—rules change quickly. You adapt swiftly or risk demise. Dell missed the tablet’s emergence, Nokia the smartphone’s. Both suffered near-death experiences.

Your takeaway: The evolutionary environment—gradualism or punctuated equilibrium—sets the stage for survival. Since competition, almost always and everywhere, resembles a gang fight, you need a strong, cohesive SC team. You need the know-how to nurture trust. And if yours is a punctuated-equilibrium world, you need to be able to build swift trust. You must match the speed of relationship evolution to the pace of market change.

Trust’s evolutionary dynamics

Just as nature’s amazing allies didn’t emerge overnight, neither do highly evolved trust-based SC relationships. The emergence of amazing working relationships, whether in nature or business, follows a developmental path built on evolution’s three essential elements.

1. Evolution is iterative. Natural selection is an iterative process, with winning traits passed on from one generation to the next, over and over and over, again and again.
2. Evolution is outcome-driven. Which traits get passed on via natural selection? Answer: Those that enable organisms to survive and reproduce. Positive outcomes drive evolution. Negative outcomes invite extinction.
3. Evolution takes time. The emergence of species takes time—eons in a gradualist setting; thousands of years in punctuated equilibrium (quite swift in geological time).

To help you infuse trust into your supply chain’s DNA, let’s explore these elements.

 

Essential element #1: Iteration

Managers view competition—i.e., survival of the fittest—as the market’s natural state. Thus, trust and collaboration don’t come naturally. If you want them, you have to pursue them. Here are your first steps.

Step 1. You have to demonstrate you are trustworthy. After all, trust invites vulnerability, just ask the Egyptian plover. Answer this: Can my SC partners trust me, and my company, enough to take the risks required to create amazing value?

Step 2: As you exhibit trustworthy behaviors, are your partners reciprocating? And if they are, are you able to assess their commitment to you?

As these steps argue, trust evolution is an iterative process. You demonstrate trustworthiness, and your partner reciprocates—or not. Reciprocation starts trust’s evolutionary journey. Opportunism ends it. Because the process is iterative, baby steps can drive early trust-evolution initiatives. Through persistent reciprocation over time, breakthrough trust can emerge, leading to truly unique capabilities—and market opportunities.

Now, a caveat: Science still has much to discover about evolution’s dynamics. Only recently did researchers realize clownfish waste, rich in ammonia, fertilizes anemones, helping them grow and reproduce. So too, signaling among nature’s amazing allies has only recently been observed, though poorly understood. Interactions between the crocodile and plover, for instance, are marked by “vocalizations, body postures, eye contact, head movements, and tactile stimuli.” Yet, scientists can only guess the whys and hows motivating these behaviors.

Now, the good news: Our research takes the guesswork out of trust evolution. The result: Unlike nature’s amazing allies, you can proactively evolve trust to build a cohesive SC team and bring amazing capabilities to market. Proactive trust evolution revolves around five signals.

1. Perform to promise. Trust means performance. Do you do what you say you are going to do the first time, every time? We aren’t just talking about on-time delivery (or any other metric). You need to perform to promise at every touch point, recognizing each is a moment of truth. Simply put, if you don’t perform to promise, other signals are meaningless.
2. Share all relevant information. Sharing information sounds like a no-brainer. However, few managers openly share information. Why not? They view information as power. Now, ask, “Do I like giving up power?” Because better information improves decision-making—and outcomes—isn’t shared information a highly valued investment in partners’ performance?
3. Invest in partner skills. Here’s a key point: Trust may be the most abused word in the SC lexicon. You need to remember that trust is more than a word. Trust is behavior that says, “We value you—and what you bring to the team.” Honda and Toyota are famous for sharing resources, including engineering talent, with suppliers—typically at no cost to the suppliers.
4. Be empathetic. Nature isn’t benevolent; neither are companies. One manager noted, “Companies don’t have friends, they have interests.” That said, partners of choice do ask, “How will this decision affect our partners?” If the impact is negative—and painful—they seek another way to achieve their goals. You earn trust as you diminish your partners’ pain points.
5. Build interpersonal relationships. Honda’s Teruyuki Maruo stressed, “Suppliers don’t trust purchasing because purchasing means cost, but they must trust you. Suppliers must develop confidence in you.” Even in our digital age, there is no replacement for the personal touch—and face-to-face time. When things go wrong, you turn to people you trust.

One final thought: Did you notice that trust evolution builds on your capabilities, a reality that parallels nature’s amazing allies. The clownfish, for instance, secretes a protective mucus. The pitcher plant uses an echo reflector to attract bats. The plover has tough, scaly skin on its legs—and a quick reaction time—to protect it from the crocodile’s sharp teeth. If you want to achieve breakthrough trust, intent is not enough. You need to cultivate performance and relationship-commitment capabilities.

 

Essential element #2: Outcomes

Getting to breakthrough trust can be a tough and costly slog. Patient and persistent signaling is a prerequisite. That makes trust evolution a strategic choice. Managers thus ask, “Is trust worth the effort? What is the ROI?” In nature, the evolutionary process yields a non-trivial return: Improved survivability. It’s a matter of life or death.

The decisions you make regarding trust evolution likewise influence your company’s survivability. Consider three ways breakthrough trust improves your survival prospects.

1. Profitability effect. Some years ago, Holiday Inn evaluated its survivability. What did it learn? One factor had a huge impact on hotel profitability. The factor: Trust. A one-eighth-point increase in behavioral integrity led to a 2.5% increase in profits. No other factor came close. Lost trust meant lost profits—i.e., a grimmer future.
2. Innovation effect. Survival in the brutal CPG industry requires repetitive renewal. So P&G’s A.G. Lafley launched Connect+Develop. The goal: Obtain 50% of innovation from outside. Trust was the key to persuading SC partners to share great ideas. What happened? Amazingly, P&G’s innovation success rate doubled as R&D investment dropped by 30%.
3. Got-your-back effect. The 1998 Accord launch is Honda folklore. The car the design team proposed was ideal but too costly—by 25%. To take costs out, Honda turned to its suppliers. What happened? Suppliers helped Honda reduce costs 30%. The launch was a smash. By investing in suppliers’ success, Honda earned their trust. Suppliers had Honda’s back.

The bottom line: Success breeds success. Small wins invite stronger signaling. Over time, trust’s outcomes—a stronger, more cohesive SC team, markedly better innovation, and higher profits—create real market advantages, improving your company’s odds of outlasting rivals. In a survival-of-the-fittest marketplace, highly evolved trust is a trait worth infusing into your decision-making DNA.

 

Let’s pause briefly to add a little nuance to our discussion of trust as a strategic choice. When pundits talk about trust, they typically focus on the amount, i.e., lost trust, low trust, deep trust, et cetera. This view is incomplete. Certainly, trust strength varies across SC relationships. The more interesting story, however, revolves around the signals you share with partners. Your signaling pattern can take you down different evolutionary paths, and thus different outcomes, both in terms of trust type and organizational capability.

Consider the animal kingdom. Mutualism can be classified based on outcomes, i.e., what each ally gets from the relationship, typically a resource or a service. Think back to the bond between bees and flowers. Bees obtain a resource (nectar); flowers receive a service (help with pollination). Although more idiosyncratic, the pitcher/bat and crocodile/plover relationships follow a similar pattern (see Table 2). The clownfish/anemone connection, by contrast, is more intensive and intricate. Each contributor derives resources and services from the collaboration.

Shifting to the SC world, if we view the five signals as bits of DNA, you earn recognition as a trustworthy partner if you combine a reputation “for doing what you say you are going to do” with two relatively low-cost signaling behaviors—i.e., information sharing and empathy. This pattern opens the possibility for you to become a partner of choice. The signal(s) you add shape the type of trust—and benefits—you obtain. Consider O.C. Tanner’s and Walmart’s additions.

1.  A secure source of resources. O.C. Tanner, a leader in employee appreciation, relies heavily on strong interpersonal relationships. The goal: Assure all suppliers feel appreciated. The result: Supplier reps praise buyer availability and responsiveness, and call O.C. Tanner’s collegiality “refreshing.” They say O.C. Tanner is a “great company to do business with,” and go out of their way to prioritize O.C. Tanner’s orders.
2. A source of success. Walmart likewise stresses positive interpersonal relationships, but it also invests in supplier capabilities. The goal: Spur supplier innovation. The result: Walmart collaborates with “select” suppliers to co-create value, a vital source of success in the quest to fend off fierce rivals like Aldi and Amazon. Suppliers don’t always appreciate Walmart’s power differential and its “tough-but-fair” approach, but they admit the relationship helps them stay on the cutting edge, improving their chances of survival.

Your takeaway: As you develop your SC relationship strategy, ask, “What type of trust do we need?” Your answer will help you define your desired evolutionary path. Figure 2 depicts three options. If yours is a dynamic world filled with competitive threats, you will need both secure access to resources and a strong innovative capacity. 

 

Essential element #3: Time

Natural selection, nature’s evolutionary process, takes time—and lots of it. Over generations, positive traits get passed on; negative traits get removed. It’s the cumulative effect that drives deep adaptation, enabling the emergence of our amazing allies.

If you want to nurture a trust-enabling ecosystem, you need to follow natural selection’s lead and mimic both processes. It’s not enough to patiently and persistently embed the right signaling behavior in your daily decision-making culture. You also need to remove the negative traits that stymie trust evolution. Consider two negative behavioral traits.

• Limited vision. Few SC leaders grasp the governance power of trust. Even fewer envision trust’s influence on value creation. Breakthrough trust doesn’t just lower costs, it enables unique capabilities that enhance revenue. Leaders that don’t “get” the power of trust neither set the tone nor mobilize the resources to nurture trust as an organization-wide capability.
• Distracted attention. Metrics, set by senior leaders, promote counterproductive behaviors. One result: Many company cultures are “too finance” and “too short-run oriented.” When this happens, managers know trust is not a strategic priority. They opt out of the hard work—especially the patient and persistent signaling—needed to pursue breakthrough trust.

Organisms with poor vision and distracted attention don’t fare well in a chaotic, competitive setting. Your efforts to achieve breakthrough trust won’t succeed if you don’t delete these traits.

Now, a question: Have you noticed that natural selection is rather passive? You can’t be. You need to proactively shape ecological conditions to achieve breakthrough trust. Trust leaders share three proactivity traits.

1. They leverage relationship intensity. Proactive leaders know not all relationships are created equal. Nor should they be. They treat transactional SC relationships, the ones that offer little value-creation potential, fairly and support them with efficient processes. They don’t waste scarce resources but make connections that can evolve swiftly if needed.
2. They evaluate value-creation potential. Proactive leaders know value-creation potential is the “if” they must assess to evaluate needed trust. As they detect value-creation opportunities, they move to the “then” response, i.e., they signal via process and relationship investments.
3. They trust the process. Possessing the know-how to nurture trust, proactive leaders engage persistently in the trust-signaling process, confident the ROI will emerge (in time).

Your takeaway: Although trust evolution requires time (and lots of it), your proactivity—not time—is the real driver of breakthrough trust. Let’s take a closer look.                 

Check out Figure 3, which derives from trust leaders’ proactivity traits. It maps your journey to breakthrough trust, specifying the signaling investments you need to nurture your desired trust ecosystem.  

 

Now, consider a cold, hard reality: Fewer than 5% of companies make it to breakthrough trust. Why so few? Our research identifies three barriers that companies bump into as they seek to evolve trust as the bond that brings their SC team together.

1. Right-sizing trust. Many SC relationships never evolve beyond limited trust—and rightly so. If value co-creation potential is limited, transaction volumes low, or partners can’t/won’t collaborate, seeking deeper trust wastes scarce resources. Credibility is lost as costs go up, but your ROI doesn’t. Right-sizing trust is critical, a reality that confounds many companies.
2. Bridging the confidence gap. Evolving to Stage 2, Transactional Trust, is within the grasp of any company that wants to improve SC relationships. Advancing to Stage 3 is harder. GM’s story makes this point clear.

 

Leaders at GM realized suppliers didn’t like working with the company. Their response: Launch a Strategic Supplier Engagement (SSE) program. SSE focused on a scorecard to measure and provide feedback on business and cultural performance. The goal: Increase transparency. Dialogue improved as suppliers engaged with GM to find ways to mitigate low scores. Via SSE GM signaled it wanted better relations. Other signals followed.

• GM introduced SSE 360°, a tool to enable suppliers to score GM as a customer. SSE 360° mirrored the SSE scorecard in content and process. Specifically, a supplier rep had to sign off on the score they gave GM, creating a point of contact.
• GM assigned an executive champion to each of its Top 50 suppliers. Cadence calls gave the GM champion and a supplier counterpart the chance to address performance gaps and explore ways to keep the relationship—and the supplier—healthy.
• GM added two new supplier awards: The Innovation Award and the Overdrive Award (for “going above and beyond the call of duty”).

Now, map GM’s efforts to our trust signals. Here’s our take: GM invested a lot in better information sharing, and a little in empathy and improved interpersonal relationships. This is the path to secure resource access, one of GM’s core goals. GM achieved transactional trust, evolving beyond its most-hated OEM status. GM, however, still hasn’t attained Honda and Toyota’s status as a customer of choice.

Most companies, like GM, lack the know-how or confidence to invest in the signaling process needed to make the leap from transactional to relational trust. The ability to bridge the confidence gap is the missing link to breakthrough trust.

3.  Leveraging reputation. Trust leaders don’t just evolve trust one relationship at a time. They proactively infuse trust into their organizational DNA. The payoff: SC partners recognize, and value, their distinctive DNA. The result: Partners have the confidence to shortcut trust evolution in the onboarding process. After all, isn’t it natural to accept vulnerability when you are confident your partner has your back? Reputation is the key to swift trust.

Now, a warning from nature: Client fish swiftly recognize the bluestreak cleaner wrasse as a valued partner by its unique signaling—streaky coloring and dance-like behavior. Other cleaners—e.g., gobies, scarlet cleaner shrimp, and yellowline arrow crabs—possess similar signaling traits (nature’s version of swift trust). Because the signaling works, some fish like the blenny mimic it to exploit potential victims. False signals will destroy your reputation.

The bottom line: If you trust the process, evolving trust as a competitive weapon is within your grasp. By nurturing deep trust, you will help your company become a partner of choice, one that other great companies want to work with. You will build a team that has your back, one capable of winning tomorrow’s toughest gang fights.

New ways of working together

Evolution is about adaptation—and survival. For our amazing allies, developing truly unique ways of working together has helped them thrive in a relentlessly vicious world. Their evolution provides a pattern for you. The process is hard. We therefore offer a final reason for you to embark on trust’s evolutionary journey.

Figure 5 depicts the risk/benefit profile for companies that choose to pursue trust as an enabler of collaborative innovation. Check it out and answer two questions.

1.  How would you interpret the risk profile? As trust increases from Stage 1 to Stage 2, risks drop. Better communication and better relationships reduce the odds something goes wrong. And when the unthinkable occurs, your team can respond more rapidly and effectively.

Now, the hard part: Risk goes up as companies move toward Stage 4. Why, you ask? Answer: As partners approach breakthrough trust, they pool resources to pursue new initiatives—the ones rivals are unwilling or unable to try. These are, by nature, risky. Sometimes they fail.

 

2.  Is breakthrough trust really worth it? As companies bridge the confidence gap, something cool happens (see Panel B). Confidence enables SC members, working together, to do things rivals can’t. They begin to manage partners’ capacity and capabilities holistically. The result: They develop new capabilities, the SC world’s version of symbiogenesis, the process of “becoming by living together.” First-mover advantages change the rules. Rivals can’t keep pace, a game-changing reward that delivers a potent ROI.

You now possess an ability not unlike CRSPR, i.e., the ability to proactively infuse trust in your organizational DNA. You can now pursue new ways of working together. Will you? Before responding, consider this fact: Tough rivals will press the fight. Isn’t it time for you to help your company become an amazing ally? If you do, you’ll never have to fight alone again.

About the authors

Stanley E. Fawcett, Ph.D., is a professor of global supply chain management at Logistikum Steyr, University of Applied Sciences, Upper Austria, and Chief Engagement Officer, ENGAGE2E.... He can be reached at [email protected].

Sebastian Brockhaus Ph.D., is an assistant professor of supply chain management at the Monte Ahuja College of Business at Cleveland State University. He can be reached at [email protected].

Amydee M. Fawcett, Ph.D., CEO, ENGAGE2E.... She can be reached at [email protected].

A. Michael Knemeyer, Ph.D., is a professor of logistics at Fisher College of Business at The Ohio State University. He can be reached at [email protected].

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