“As a strategic partner we’re asking you to invest in our business to the tune of 1700bps.”
“Beginning the 1st of the month, costs on our products are increasing 27%.”
Sound familiar? After all, its JBP season.
As originally conceived, Joint Business Planning (JBP) was meant as a way for strategically and financially aligned retailers and brands to collaborate on plans that would drive out-sized sales, innovation, and profit. And it worked – for years we saw JBP’s yield significant value to both retailers and brands.
Unfortunately, the JBP process has devolved into a game where both sides attempt to beat the other. Indeed, it has become nothing more than a competitive contract negotiation process or “tug of war”. This has resulted in the destruction of relationships, cooperative problem-solving and value-creating opportunities. One major retail SVP recently confided they are seeing less innovation opportunities, and sales growth decelerating with brands they formerly worked closely with to expand the market.
There are several reasons why former growth partners have turned to more combative, value destroying tactics.
Over the last years, the COVID pandemic and the resulting supply chain issues, including allocation reductions, have been a major stress on retail-brand relationships. Inflation and major cost increases have only added to the stress. Neither side has responded to the challenges in a strategic, problem-solving way. Instead, they have hunkered down, and lobbed threats and increasingly unreasonable demands back and forth via Zoom and email.
In addition, both sides have turned to consultants and trainers that seek to expand the gap between partners. These consultants tell their clients they can beat the other through manipulative tactics or showering them with data. They are costing everyone millions. No one cares about arguments or “reasons”, the data is ignored, and everyone is resentful of manipulative or bullying tactics. In fact, no one is satisfied except the bigwig consultants.
So how can we change this game and return to value-creating plans that are truly “joint”, and allow all parties to win?
First, return to what made JBPs so successful in the beginning. This starts with taking the time to understand each other’s respective goals, strategies, plans and needs, BEFORE exchanging proposals on how to proceed. It requires time to brainstorm and an exchange of ideas before making a demand or committing to a position.
It also requires participation by higher level executives on both sides that can break rules, unlock resources, and change direction when new opportunities present themselves in JBP discussions. It requires regular meetings to review the joint plan, including one meeting solely dedicated to innovation and another meeting to work on the supply chain.
One major retailer changed its approach to JBPs last year from a competitive game with most of its suppliers to a more collaborative discussion with just a handful of their most important suppliers. Not only did this save a tremendous amount of time for buyers, but it also resulted in significantly higher investments from its JBP partners, and a return to growth outpacing the market.
Second, approach key relationships and negotiations more strategically. There are certainly those situations where both sides should use their power and leverage to obtain the best results in a more competitive way, especially where the relationship is less important. Yet there are many instances where a more nuanced approach would suggest more cooperation and problem-solving tactics that result in growth. Successful companies are developing more nuanced, strategic approaches to their negotiations, rejecting a “one-size-fits-all” approach.
Finally, where the relationship is important strategically and financially, change the game by simply refusing to engage in combative tactics. A major national brand was recently told by one of its most important retailers that the JBP process would unfold as follows: There would be no meetings and all negotiations would be done by email. The retailer made an extreme (and very unreasonable) demand on the advice of consultants as a starting point, and insisted the brand comply…. or else. All these threats in the midst of peaking COVID disruption rang particularly hollow.
Naturally, there was nothing “joint” or value-creating about this. Instead, the brand told the retailer there would be no response until there was an opportunity for both sides to meet and share their respective goals, strategies, and needs. Eventually, the retailer listened to the Brand and met to discuss joint growth opportunities. Even so, the retailer lost millions of dollars of investment due to their extreme positioning.
If you are unhappy with how the JBP game is currently played, you can change the game. While there may be resistance at first from your counterpart, educating them on the benefits of more cooperative discussions, refusing to engage in bad tactics, and exhibiting the behaviors you expect to see in JBPs, you can truly change the game for the betterment of all – most importantly, the ultimate consumer.