Keep That 'Corrugated' Pie Large - Packaging-Online

Apr 21, 2007
By: Mark Arzoumanian
Official Board Markets

Can you compete and cooperate simultaneously? Yes, says Barry Nalebuff, Yale University professor, who spoke at the Fibre Box Association's (FBA) Annual Meeting in Orlando last week.

Business is often thought of as war. Or, put another way, I win, you lose. But Nalebuff says it is wiser to try to cooperate better (without colluding). Try to increase the pie, not capture it. As an example of this he asked meeting attendees to devise ways the Chicago Tribune could work in "co-opetition" with USA Today to increase the greater pie of newspaper readers in Chicagoland. Ideas generated included promoting newspaper readership at schools and even having the Tribune print USA Today on its Sunday printing presses, which aren't used every day.

"It's about growing the whole pie," Nalebuff states. "You don't have to like your competitors. But recognize that they're not going away. Your goal isn't to beat others but to do well for yourself."

So how can such thinking be applied to the corrugated container industry? In fact, the industry has been already thinking this way through its development of a common corrugated footprint (in its competition with plastic returnable crates) and even its current dealings with sustainability issues (working closely with Wal-Mart on its efforts to develop a packaging scorecard). It's all about increasing total demand for your products.

Sometimes the pricing mechanisms an industry uses are wrong, he says. For example, for decades containerboard pricing has been by the ton. Maybe the pricing should be calculated by the square meter.

"To expand demand you have to create new markets, standards and complements," he states. "You have to have a set of complements that can't be beat and determine any weak links in your chain. You have the ability to change the rules.

"Ask how your packaging will help your customers sell their products more effectively. How fast can you open your box? How fast can you unload it?"