One of my favorite radio programs is “This American Life” on NPR. I have been listening to it for years and recently I re-heard one of my favorite episodes. It was about the NUMMI auto plant in Fremont California, which remains one of the most relevant case studies for businesses on the value of mutually beneficial relationships with third parties. “NUMMI” stood for New United Motor Manufacturing, Inc. Starting in 1984, it was an amazing and historic joint venture between two blood enemies — General Motors and Toyota. The big advantage of the project from GM’s perspective was that it was going to learn all of the secrets of “The Toyota Way” of building high quality cars. Toyota was quite willing to teach them but, as you might guess, it was challenging to implement the new strategies throughout GM’s entire company.
It turns out that one of GM’s big problems with “The Toyota Way” was that it wasn’t just a system of manufacturing. It represented a whole worldview of product development and creation that included deep and trusting relationships with suppliers and partners. Toyota always felt that in order for it to succeed as a company, its parts suppliers and other partners also had to succeed. Everyone had to buy into one, mutually-reinforcing idea of success. In contrast, GM had famously difficult relationships with many of its suppliers at the time and frequently viewed them as independent economic actors. With this mindset, supplier relationships continued to deteriorate until GM’s recent efforts to prioritize trust, engagement and mutuality with its partners.
The NUMMI example is relevant for another industry in transition: News media. As the industry forges new relationships with technology vendors and social media platforms, the role of these new partnerships is a topic of constant debate. I recently moderated a panel on social media platforms at the MediaFutures Summit, organized by MediaPost and The Wharton School. The common view was that newspapers have a product (journalism) that people want and need, and big social media platforms (Facebook being a prime example) have an amazingly large audience hungry for that product. An easy basis for a mutually-beneficial partnership, right?
Well, it might be. The companies represented on my panel (The Washington Post, The New York Times and Bauer Xcel Media) certainly thought that engagement with the big platforms was the better choice now. But there was also the latent fear (reflected in questions from the audience) that the social media companies will change the rules over time and slowly drive news originators to their lowest possible marginal level of success. In short, will the social media companies be as invested in the success of news organizations, as the news organizations are becoming invested in the success of the platforms?
The answer to that question is obviously still open, and may never be conclusively answered. However, I encourage all media platforms to think about Toyota and other companies that have had major, long-term success (well beyond the current age of any of these platforms). Making sure your partners make money too — and therefore stay invested in your success — is generally a real good idea. Pushing them to the edge is a short-term strategy, at best, that eventually ensures that you can’t deliver what your customers really want.
David Chavern is former President & CEO of the News/Media Alliance. Chavern has 30 years of experience in executive strategic and operational roles. Prior to the Alliance, he completed a decade-long tenure at the U.S. Chamber of Commerce.
