How Collaborative Leadership Helped Former Competitors Profit

Industry rivals need to strike a balance between maximizing profits through competition and cooperating on ways to strengthen their market. Become overly competitive, and they risk fostering conflict and constricting innovation. Collaborate in the wrong ways, and they could end up cutting ethical corners or even breaking the law.

Strategic collaborative leadership can balance these issues and help all parties benefit. But when an industry is struggling, this balance can be especially difficult to maintain, a case study reported by Jonah Engel Bromwich in the New York Times shows.Top of Form

Stealing the Pie?

In 2017, when Harry Overly became the CEO of Sun-Maid, the leading U.S. raisin producer, the $500 million U.S. raisin industry had been in decline for years amid growing competition from other snack foods and foreign raisin producers. An industry newcomer, Overly arrived in California’s Central Valley eager to explore ways to convince millennials to eat more of the healthy snack.

But when he first met with other raisin industry leaders to discuss how they might engage in collaborative leadership to increase sales, Overly told the Times, the ideas they came up with were “completely illegal” and “nothing short of collusion.”

It soon became clear to Overly that California’s compact community of raisin farmers, packers, and executives was riven with distrust due to long-standing disputes. The California Dancing Raisins, Claymation characters used to promote U.S. raisins, had been a wildly popular sales booster decades ago. But after the head of Sun-Maid restricted his competitors’ use of the characters, raisin sellers had resisted collaborating on advertising. Industry fault lines deepened in 2015 after a Supreme Court decision prompted the end of a system in which raisin farmers shared the risk of low raisin supply in off years.

“What I figured out fast was that this was not an industry [that] was interested in figuring out how you grow the size of the pie,” Overly told the Times. “It is one where they figure out how to just steal different slices of the pie from each other.”

Heard It Through the Grapevine

As is common for other U.S. agricultural crops, raisin growers are allowed to collectively set industry prices within a certain range. To try to preserve profits, they generally have responded to shrinking consumer demand for raisins by raising prices.

But to boost sales, Overly believed, Sun-Maid would need to lower the baseline price of raisins. In late 2018, he launched negotiations with Kalem Barserian, the head of the Raisin Bargaining Association (RBA), which represents raisin farmers and raisin producers. Raisin supply had rebounded from 2017’s heat-damaged crop, and Barserian, a 50-year industry veteran, wanted to raise the base price of raisins to a record high. Overly objected. “I don’t know [in] what world … supply goes up and price is supposed to go along with it!” he told the Times.

In California’s insular raisin community, “the gossip was that Sun-Maid’s new chief executive didn’t want to pay a fair price to farmers,” writes Bromwich. With negotiations at an impasse, Overly pulled Sun-Maid out of the RBA in October 2018. He claims he was then the subject of intimidation, harassing phone calls, and even death threats.

With industry tensions at an all-time high, Overly and Barserian followed through on a commitment to appear on an industry panel the following month. Addressing the crowd of raisin growers, Barserian warned about growing global competition and falling demand for U.S. raisins.

Overly talked about the need to raise raisin prices sustainably. He then appealed to the audience: “We need to spend more time focusing on growing the pie than fighting over our piece of [the] pie within this industry. This fighting needs to stop.”

At the forum, growers offered their support for Overly’s collaborative vision. American Vineyard magazine reported that raisin growers left “with their blood pumping fast in excitement for the industry to finally get together and trigger some much-needed changes.”

Growers agreed to lower the baseline price of raisins. Tensions began to ease. In April 2019, a delegation of raisin-industry leaders took a lobbying trip to Washington, D.C. Many federal officials expressed surprise at the display of unity and collaborative leadership within the raisin industry, according to Overly, who then had more time and energy to focus on new-product development and marketing.

Collaborative Leadership Strategies

Here are some lessons about collaborative leadership from the raisin industry’s breakthrough:

• Reframe the game.Rather than looking at negotiations with competitors as a scramble for scarce resources, try to reframe them as opportunities for parties to grow the value of the pie through collaborative negotiation so that everyone can claim more.
• Keep your ethics at the forefront. Recognize that collaborative leadership can morph into collusion when it goes unchecked. Run draft agreements by your lawyers to make sure the agreements don’t run afoul of the law.
• Address conflict head-on. Unresolved disputes can fester and taint interactions between parties for years, even decades. Whether through negotiation, mediation, or some other forum, allow parties to air and get to the root of their grievances.

How have you used collaborative leadership in business negotiations and disputes?