Managing collaborative ventures is rarely easy. Poor communications, clashes of culture and temperament between partners, differences of opinion as to how the venture should be run; all these and other factors combine to create a centrifugal force which can tear a collaboration apart. Too often, managers put the interests of their own business first, forgetting that the essence of collaboration is creating benefits for everyone, not just themselves.
Academic discussions of collaboration often focus on how ventures should be organised and structured. While this is important, it is necessary first to understand the purpose of a collaborative relationship, and then to create a climate in which people are willing to work together. In his book Understanding Organizations, management thinker Charles Handy refers to “collaborative ecologies”, a set of conditions in which collaboration can flourish.
Purpose and meaning are just as important as structure, if not more so. Successful collaboration requires a degree of trust between partners and this can often mean each party must be prepared to relinquish a certain amount of power and responsibility.
Ruth Rowan, head of customer relationship management (CRM) worldwide for BT, argues that finding the “right” type of collaboration is not a black and white choice. Instead, there is a range of possible forms, from simple agreements for collaborating on a project or providing a service, to complex joint ventures involving several companies and even so-called “collaborative communities”.
The identity of the collaborative partner can influence the choice of structure and format of the relationship. Collaborations with suppliers, for example, often take the form of bilateral or multilateral agreements. This contractual arrangement can in turn become the vehicle for closer working relationship. In the car industry, for example, Toyota frequently collaborates with its suppliers, sharing R&D and management expertise.
Collaboration with competitors is also becoming more common. Richard Wilding, a supply chain specialist at the Cranfield School of Management, calls this form of partnership “co-opetition”. In complex fields such as pharmaceuticals and electronics, individual companies often lack the knowledge, skills and resources required for rapid innovation. High-technology projects such as the Bluetooth wireless communications system were only possible because several companies were prepared to work together to solve development problems. Prof Wilding points to beer makers Heineken and Guinness. Despite competing in a fierce sector, the companies jointly build breweries in developing countries to avoid the burden of shouldering the massive cost on their own.
In cases of collaboration between competitors, each party needs to ensure that proprietary knowledge is respected and that both partners are rewarded fairly. This has clear implications for the contractual arrangement. Limited-life consortia, for example, are vehicles by which companies can work together for a defined period of time. When that expires, the venture is dissolved and all parties take an agreed share of any profits or capital. Or consider joint ventures, which are separate business entities in which each of the owning partners contributes staff and management and takes an agreed share of the profits.
Collaboration is increasingly popular with customers, too. This has been standard practice in sectors such as software development for many years, but is now is spreading beyond technology. When Maxwell House, for example, wanted to develop a new brand of instant coffee, it avoided the classic market testing model. Instead, the company went to customers first to gather data and help create a model for the “ideal” coffee before it started developing the product.
Examples of customer collaboration range from simple models to complex “collaborative communities”, whereby people volunteer skills and knowledge on an ongoing basis. A good example of this is Linux, an open source software development project which is available for free and can be modified by any user. Unlike collaborations with suppliers and competitors, these are not strictly speaking commercial arrangements. Customers receive little or no payment, and participate out of interest and curiosity rather than in the hope of commercial gain.
Like much else in business, the rules of collaboration are changing. Whereas collaboration used to be a matter of integrating organisations, now it is increasingly seen as a matter of integrating activities. In other words, tasks are carried out by the person or organisation that is most suited to the specific issue.
Collaboration can yield many benefits but companies need to put aside the idea that there is “one best way” to collaborate, and instead look for the specific solution for each need. That means: first, identifying needs; second, looking for the right partner to meet those needs; and third, developing a collaborative arrangement that suits all concerned. Whether this is a handshake over lunch or a formal joint venture, will depend on the “collaborative ecology”.
