Mastering partnerships in the age of Zero Distance

Today, more than ever, our business success relies on our ability to partner as much as to compete.

Jammie Damon, CEO of JPMorgan, recently interviewed on Bloomberg.com, acknowledged that even the world’s largest bank, with over $4Trillion in assets, and having unmatched global capabilities at its disposal, relies on an extensive web (or ecosystem) or partnerships, to succeed.

Acknowledging this growing phenomenon is only part of the story. Why so many firms experience a shift towards partnering is based on something deeper and more profound. We find, across many industries, that the distance between organisations and the users of their products and services is shortening, at a rate we have not seen before - a phenomenon called Zero Distance. Since 2015, when Harvard Professor Dennis Campbell, has coined the term, significant research into this area has yielded many new insights, and organizational seizing what we have come to call a Zero Distance advantage. The implications for both producers and consumers are profound.

You may think that Zero Distance is a phenomenon reserved for consumer industries, where the distance is presumed short, or ?the ICT sector, where technology integrations have taken place over many years. The race towards zero distance and the value it unlocks is much broader that what appears at first instance. Let's look at a few more varied examples, to illustrate:

Caterpillar is known for its construction and mining equipment. A global leader in its industry, the company's portfolio includes a wide array of heavy-duty machinery, from asphalt pavers, loaders, and compactors of various types, to integrated systems. Yet, its digitisation drive has brought the company has more than improved internal efficiencies. Caterpillar now has more than 1.5 million connected assets, working on client sites. Each is equipped with wear tracking sensors that are monitoring equipment performance and can highlight what are called Prioritised Service Events (PSEs), connecting dealers and field staff with customers where wear is detected, well before equipment performance is affected.

This brings the company and its ecosystem of partners, be it data analytics firms, logistics providers, dealers, field agents, and others, to close the distance between its extended network of people, and the user of its products, on site. Not surprisingly, we see a corresponding rise in the number of Caterpillar customers using its eCommerce channels, to interact with the company. There is far less of a need to 'push' ?customers towards these channels, in the interest of lower-cost self-service. Instead, the company orchestrates intelligent interactions that reveal latent demand and enable producers and consumers of its products and services to interact. Caterpillar recently raised its target for eCommerce customers, first set in 2020, as a result.

In agriculture, we see similar examples, where producers and consumers are closing the distance, to generate new value, while innovating. Vertical farming projects are sprouting up in many parts of the world. Cities with high population densities and little available land, are finding new ways to grow fresh foods in a way that is closer to the point of consumption. Beyond the technological advances made in this area, from the widespread use of hydroponics to climate-controlled indoor farming operations, special LED lighting to spur plant growth, and others, what we find are innovative business models, whereby traditional and vertical farming operations grow alongside each other.

In Singapore, for example, the need for food security, has intensified in the wake of the COVID-19 pandemic. It has brought significant investment into the sector since. To illustrate, the country produced around 10% of its food locally in 2019. Its target is to reach 30% local production by 2030. Much of it would need to be achieved by vertical farming methods. In 2023, Dutch AgriTech firm Growy joined several international and local companies to develop vertical farms in Changi Logistics Centre (right next to the country's international airport). It aims to produce up to 500 tons of leafy greens annually, supporting Singapore’s “30 by 30” sustainable food security goal.

What stands then in the way of effective partnerships, and especially as they traverse new market spaces and capabilities that are growing in scale? How can we best close the distance – with our customers, the end-users of our products and services, and yes…our partners? Mastering this ability provides organisations with a Zero Distance advantage.

Ask yourself:

• Have you looked at a potential partnership, but chose to keep to internal collaborations instead, because they seem easier to manage?
• Looking back, what do you estimate you have left behind? Did your speed to market suffer? Could you tap the opportunity in full? What about financial outcomes that could have been within reach?
• Did your potential partner(s) seize the advantage with someone else, in an ever-evolving market space?

On Wednesday, 28th August, we will be hosting a unique Executive Masterclass, to explore these questions and practice partnering in the age of Zero Distance. Join us? Feel free to DM me, to learn more.

Have a good week ahead.

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