In today’s volatile landscape, building business resilience through relationships isn’t just a good idea, it’s a fundamental strategy for survival and growth. This principle was powerfully articulated by Fanatics CEO Michael Rubin during a “How I Built This Podcast” with Guy Raz. He stated, “Relationships matter in good times, but in bad times, they’re everything.” This wisdom rings particularly true for industries facing unpredictable supply shocks or widespread economic turmoil.
When crises inevitably strike, companies that have nurtured long-term, trust-based partnerships consistently fare better. In contrast, businesses relying on ad-hoc, transactional deals often struggle. Strong supplier and customer relationships translate into crucial advantages. These include priority access to scarce resources, greater flexibility on terms, and a collaborative spirit for mutual problem-solving.
The Benefits of Strong Business Relationships in a Crisis
Cultivating robust connections offers several clear advantages when challenges arise:
Priority Access to Scare Supplies:
Long-term partners often become “customers of choice” during crises. As an insightful post by Jabil highlights, “suppliers often prioritize deliveries of scarce materials to long-term, reliable partners” when supply chains face disruption. Essentially, these trusted partners receive preferential treatment, gaining access to limited inventory during shortages. This is because loyalty earns them a degree of slack others don’t receive.
Enabling Flexible Renegotiation and Enhanced Support:
When markets take a downturn, collaborative partners are far more likely to negotiate constructively. Businesses that focus on understanding and addressing shared pain points generally report better outcomes. Furthermore, research from Harvard PON points out that empathizing with your counterparty’s situation significantly eases contract renegotiations. Crucially, such empathy thrives within a trusting relationship. For instance, a Chicago Booth Review survey of entrepreneurs revealed that during the COVID-19 pandemic, many buyers and sellers demonstrated increased flexibility. They adjusted pricing, terms, and scheduling more readily than usual, choosing to negotiate side-by-side rather than pulling away.
Loyalty & Reciprocity:
Reciprocity stands as one of the most potent factors in influence and persuasion. When you actively support key partners during their hard times, they are highly motivated to repay that favor. For example, during the 2008–09 downturn, industry giants like LG Electronics and Cisco made strategic advance purchases and provided loans to help their vital suppliers survive. In return, those suppliers rewarded them “with immeasurable loyalty…giving them preferential treatment to meet their needs, notifying them early about looming supply issues, and offering bigger discounts.” Consequently, firms that actively nurture these ties emerge from crises with stronger reputations and enhanced supply security.
Consider another real-world example: one long-time Watershed client made the strategic decision to pay their suppliers in less than 30 days. This is a stark contrast to their large competitors, who often work on 60- or even 90-day payment terms. While these quicker payment terms carry a financial cost, the benefit of rapidly paying suppliers has paid off immensely in terms of supplier loyalty. Indeed, it has proven to be a brilliant strategic move for our client in building business resilience through relationships.
Trust: The Cornerstone of Crisis Negotiation and Procurement
Best practices in both crisis negotiation and procurement consistently emphasize the paramount importance of trust. We’re seeing a shift where procurement leaders are moving away from purely cost-cutting tactics. Instead, they are increasingly focusing on stakeholder engagement and proactive relationship-building, and they are seeing positive results.
A recent Harvard Business Review case study notes that procurement teams are significantly improving alignment by “building trusted relationships with stakeholders” and taking the time to understand their priorities thoroughly. This approach is also a core component of Watershed Associates negotiation framework. Specifically, the “Prepare” stage of any negotiation explicitly focuses on researching stakeholders and, critically, “building a relationship based on trust.” Watershed encourages a proactive stance: plan the relationship you want to cultivate. Define how you will build trust before any hard bargaining begins.
Importantly, always remember that once a deal is made, the work isn’t over. Parties should not “waste all the relationship capital” by disengaging and assuming the job is done. Continued contact and ongoing relationship-building are essential. They help reinforce trust and sustain goodwill, creating a strong foundation for any future crises.
Proactive Relationship Building: A Non-Negotiable Resilience Strategy
In these volatile times, astute business leaders must invest in their relationships before trouble hits. This means fostering frequent communication, engaging in joint problem-solving initiatives, and offering mutual assistance during stable periods. By doing so, you build a reservoir of goodwill that you can draw upon when a crisis emerges.
Numerous studies and corporate examples confirm this: firms that actively maintained deep, strategic partnerships weathered recent global shocks much better than those that treated relationships as expendable. Conversely, if your primary approach is a short-sighted “lowest bidder wins” mentality, you are inherently putting your business at greater risk.
As Michael Rubin’s insight powerfully suggests, cultivating trust is not merely a “nice-to-have.” It is a core resilience strategy. Therefore, executives in both sales and procurement roles need to champion long-term engagement and collaborative negotiation. This ensures that when disruptions inevitably arrive, a solid foundation of loyalty and flexibility is already in place to keep the business running smoothly and effectively, building business resilience through relationships that last.