The role of collaboration in building a sustainable Nursery & Garden Industry

The Nursery and Garden Industry is a diverse network of businesses of all sizes that compete for market share in the production, retail and allied sectors of the industry. This articles aims to identify some emerging areas of opportunity for business both small and large within the nursery and garden industry (NGI).

Partnerships

Increasingly, large publicly listed companies are engaging in communities as a means of demonstrating their social and environmental responsibilities which is driven by increasing internal (employees) and external (shareholders) pressures. Partnerships as a form of community involvement have been studied by many in the academic arena and have found that they can have the following returns to a business.
1. Brand differentiation
2. Enhanced brand/image and maintained community trust
3. Enhanced community reputation
4. Improved employee recruitment
5. Employee morale and retention
6. Enhanced government/community relationships
7. Improved competitive context
8. and the ability to reach new customer segments

Many of the above benefits relate to the sustainable management of a businesses risk with regard to reputation and subsequent consumer market share.

In identifying and characterising current community partnerships, which in the NGI often are at a philanthropic level where there is simply an exchange of money, the following Cross Sector Collaboration Continuum (Austin 2000) may be utilised:

Philanthropic – There is a level of altruistic motive and limited or no strategic value. i.e. donations. An example of this includes simply giving to a local charity in any form as a one off donation.

Transactional – Relationship increases beyond basic philanthropy, and may involve a particular project that demonstrates community involvement. An example of this may be support via fundraising initiatives.

Integrative – Embedded relationships with motives from both parties being strategic alliance. Value alignment between missions of the non profit and the business also exists in the activities that are undertaken. An example of this is an ongoing relationship spanning multiple years.

Collaboration

The act of working together and the outcomes that may be the result of a joint relationship has been studied and theorised in detail. If we take a step back and look at human nature for a moment, a theorist called Howard Rheingold stated that ‘biology is war in which only the fiercest survive. Businesses and nations succeed only by defeating, destroying and dominating competition.’ While this is historically true, the argument exists that through collaboration of complex interdependencies, the issue of competition may be somewhat diminished.
Another theorist (Rowland 2009) looked to the makeup of businesses stating that the ‘entity [business] exhibits behaviours that emerge from the complex interactions of subsystems or individuals…[and] the emergent entity is more than the sum of its parts.’ This analogy would suggest that there is a collective of working parts (the employees) which work together to attain greater power for a given outcome.

This may also be applied to the culmination of multiple businesses at an industry macro level. Therefore, it may be said that businesses that come together in the form of a partnership may together be stronger, producing greater outcomes than when one is operating in its own individual context. Without taking this too literally, let me explain what this might look like, and the importance of specialisation.

Specialisation

A mutually beneficial collaborative relationship will only ever be such if the values of each business are aligned to one another. It is inevitable in our industry that each of our driving goals is to sell more of our own garden related product.

Specialisation can play an important role in this process. Businesses that are experts in their area are those that hold a level of credibility and subsequently have a reputation of producing a quality product that ultimately fetches a premium price. If two such specialised businesses were to collaborate together to leverage resources from one another (i.e. they are non-competitive and yet complimentary products), you may see:

• Streamlined stock ranges which causes a reduction in your production costs (simpler systems, reduced pest and diseases - monocultures while at an uneducated level can be riskier, they are easier to manage).
• Improved supply chain management resulting again in reduced costs for delivery and sales runs.
• Improved operating systems and a streamlined process of production.
• Greater product offering to the retailer, greater marketing power and reduced sales costs.

Comparative Advantage

This notion of an increasing amount of collaborative relationships based upon specialisation needs one other significant factor to succeed – Innovation. It takes just one mind to have an idea, but it takes a collaborative set of minds to exchange ideas that will have resulting impact. This was outlined by a presentation by British author Matt Ridley titled ‘When Ideas Have Sex’. Ridley draws on a concept called Comparative Advantage which refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party. The following demonstrates this concept in the context of the Nursery and Garden Industry:

Production Nursery Owner Jim takes:
4 hours to pot 1000 pansies
3 hours to pot 1000 chillies

Production Nursery Owner Ken takes:
1 hour to pot 1000 pansies
2 hours to pot 1000 chillies

Ken doesn’t really need Jim because his level of productivity is much greater already. However, if they decided to collaborate and trade their stock then:

If Ken pots 2000 chillies (2 hours), and Jim pots 2000 (8 hours) pansies and then they trade, they will each have saved an hour of work. The more that they collaborate together and act out such exchanges the more efficient they will become in their area of specialisation, reducing costs on both sides. The mutual gains from trade will therefore grow.

The Nursery and Garden Industry has immense opportunity for improved supply chain logistics, competitive advantage, specialisation and innovation. The result of this over the coming years will be a self sustaining, organically comprised system of interlinked relationships providingg mutual benefit to all and subsequent industry growth.

Case Study: Far Plants UK

Farplants is said to be the UK’s largest wholesale supplier for garden plants to the horticultural retail market. Farplants has a turnover of £16 million annually (2008), with a significant proportion of this being generated in Spring.

The organisation is essentially a cooperative (not for profit) of independent companies set up in 1978 and comprising of 7 production nurseries spanning across 13 different production sites (110 acres of mixed facilities). The growers have a board of their own by which they purchase common materials such as pots and media as one sole group, and not independent companies. Farplants works on behalf of the nurseries to carry out three main tasks – Sales, Marketing and Distribution.

The foundation of this working dynamic collaboration of relationships is that of trust amongst each primary stakeholder. Trust plays a key role at Farplants with specific regard to stock management. Each business produces specialised lines that compliment the Far Plants product mix. This product mix is negotiated through round table discussions with a supportive connotation of assisting one another for the greater benefit. With 25 different sites, there is the ability to grow a very wide range of plants that fill the market year round. Additionally, with the majority of stock produced on contract, the relationship and trust between producers and retailers is also significant.
Essentially the producers do what they do best, and that is grow plants while the Farplants organisation does the rest.

References:

1 - Austin, J., 2000, ‘Strategic collaboration between nonprofits and businesses’, Nonprofit and Voluntary Sector Quarterly, 29 (supplement)

2 - http://www.ted.com/

Further Watching: