1.6 Cultivate the Right Relationships—Build Identity and Trust

Having the right players in the right roles guarantees one thing—that your team looks good on paper. Sadly, looking good on paper is no guarantee your team will perform, and win, once the game begins. What separates paper tigers from competitive champions, both on the sporting field and in the boardroom? Answer: Champions possess chemistry; that is, a common vision backed by a willingness to work together to achieve strategic goals—even if someone has to play a less visible role. Critically, chemistry derives from trust. To fully sense the value of trust, consider this key fact from the auto industry: The most trusted automakers are also the most profitable. Your takeaway: Ultimate success requires that you invest in a culture of trust.

Theo Epstein is a culture guy. He views culture as a differentiator—and invests accordingly. Organizational culture, after all, endures beyond the departure of talent. So, what are the core tenets of an Epstein-inspired culture? For starters, Epstein believes people perform best, especially under pressure, when they are part of something bigger than themselves. He also believes that environment matters. That’s why the Cub’s new $300 million stadium renovation included a round clubhouse—60 feet, 6 inches in diameter (the exact distance from the pitcher’s mound to home plate). Epstein wanted to promote collaboration by putting everyone within eyesight of each other and encouraging serendipitous conversations. The space eliminated hierarchy, engendering camaraderie and team identity. David Ross, the Cubs catcher, described the design as “a subliminal message they’re sending.”

Beyond facilities, Epstein cultivates “lever points”—other people who help drive the culture. Epstein then steps back and lets them do some heavy lifting. Joe Maddon, the Cub’s manager, is an ideal lever for an Epstein-built team. “Try not to suck,” a key Maddonism, communicates big-time expectations without big-time pressure. Madden helped nurture the Cub’s culture: Trust each other; do the right things consistently, including stretching for better results; have fun, but hold each other accountable; and expect greatness. Epstein and Maddon know that if you build the right culture, come crunch time, someone will step up.

And that’s exactly what happened in game seven of the World Series. After digging out of a 1–3 deficit and building a commanding 3-run lead going into the bottom of the eighth inning, the Cubs did the unimaginable—they gave up the lead and gave away the momentum. The 103 wins didn’t matter anymore; the dream was slipping away. Then, it began to rain—and culture took over. As the grounds crew came on the field, the Cubs exited toward the locker room. Jason Heyward impulsively called his teammates into a weight room for a players-only meeting. Never the outspoken leader, and struggling at the plate throughout the playoffs, Heyward reminded his teammates who they were—who the Cubs were. David Ross recounted Heyward’s message, saying,

What would’ve happened if Heyward hadn’t spoken up? The Cubs may still have won. But, Epstein knows that you leave less to chance when you invest in the right culture.

Honda is a Cubs type of culture warrior. More reliant on suppliers than rival carmakers, Honda’s buyer-supplier culture is truly unique. You might call it a little quirky. Honda treats strategic suppliers as an extension of Honda itself. Simply put, Honda invests in supply partners as if it is buying their capacity and capabilities, not just their parts. By the way, 90% of Honda’s spend is with strategic partners. To help these partners succeed, Honda sends engineering teams to work on-site at suppliers for three months—at no cost to the supplier. (Honda has shared engineering talent for up to 12 to 24 months.) The goal: Help suppliers optimize manufacturing and business processes. A typical best practices (BP) improvement initiative improves quality by 30% and labor productivity by 50%. More importantly, under Honda’s coaching, suppliers develop critical skills. Honda, in turn, gains stronger supply partners. Cost savings are shared 50/50 with the supplier.

Honda’s investments aren’t limited to BP projects. Honda expects supply partners to participate in corporate training, senior-leader business reviews, and new product and target costing programs. You may be wondering, “Why does Honda invest so much in suppliers instead of switching to more capable suppliers?” Honda’s response: Other suppliers would have similar problems. The nuanced answer, however, runs deeper. Like Epstein, Honda is playing the long game, building a trusted team that can compete the “Honda Way.” Identity is critical. One result: Among suppliers, Honda is the most trusted carmaker. Almost 40 years after launching U.S. operations, nearly all of Honda’s original supply team remains intact. The trust also shows up in Honda’s profitability. Despite Toyota’s superior scale—producing twice as many cars per year—Honda has consistently delivered higher profit margins.

Now, let’s go back to the early 1990s. J. Ignacio Lopez, General Motors’ purchasing czar, tore up supplier contracts, putting everything out to bid. By saving $4 billion dollars, Lopez saved GM from bankruptcy. But, Lopez alienated suppliers, solidifying a culture of mistrust. Over a decade later, supplier resentment still ran hot. Suppliers scored GM a 114 on the 2005 Supplier Working Relations Index (the lowest score ever—300 points behind Toyota’s 415). The real cost: Suppliers were holding back on GM, dedicating their best engineers and sharing their latest technology with more trusted partners like Honda and Toyota. The rise of autonomous vehicles, however, forced GM in 2015 to acknowledge an existential threat—its future depended on supplier innovation. Compelled to change, GM began offering longer-term contracts to urge suppliers to more openly share their best ideas. Two years later, GM’s 2017 WRI score reached its all-time high of 290, lagging behind only Toyota and Honda.