To be effective, the modern organisation needs to collaborate, whether through joint ventures, outsourcing relationships, or single projects for a shared customer.
Most organisations will have a number of partners, who may come from different sectors or countries. Each member of the relationship will often have significantly different structures and processes. So what can go wrong, and what can companies do to make the process of collaboration as harmonious as possible?
Rule number one, argues Daniel Baettig, the chief financial officer (CFO) of Swiss Post International (SPI), is: “Be careful who you do business with.” SPI has a presence in every country in the world through its postal network. In some of those countries, SPI has subsidiaries; in others it has safe agents or franchisees. It takes great care in choosing its partners because of the risk to its own reputation if it chooses a weak counterpart.
As Mr Baettig diplomatically puts it: “The attitude towards quality is not the same everywhere.” Potential partners are, therefore, given a trial period in which their performance is assessed: partners who cannot (literally) deliver on time are not used.
Because of the inevitable cultural differences that arise when doing business in several regions, SPI has a policy of exchanging personnel with their partners. While it is important, says Mr Baettig, to retain a local CEO and head of sales because of their familiarity with local markets, SPI often sends its own staff to act as CFO or chief operating officer (COO) to subsidiaries. It is not uncommon for seconded employees to transfer to another country after a stint abroad, rather than coming back to HQ.
In the process, says Mr Baettig, they learn valuable skills and information that can be transferred to other countries. This policy of sharing and spreading best practice is supported by a programme of continual training, both for SPI’s own staff and its partners.
SPI has the advantage of being able to choose partners who share similar values to its own. Collaborations in which the partners are of equal status can be tougher. A prerequisite of success is a shared vision, says Markys Cain, principal research scientist and materials knowledge leader at the National Physical Laboratory (NPL).
Mr Cain is an executive board member of the EU’s MIND Network of Excellence, a research collaboration between organisations from the UK, France, Germany, Switzerland, Italy, Latvia, Spain, Denmark and Slovenia. The aim of the network, formed two years ago, is to form the European Institute of Piezoelectric Materials and Devices. (Piezoelectric materials generate an electric charge in response to mechanical stress, and have wide application as sensors in the automotive and healthcare industries.)
A collaboration that involves parties from nine countries is inevitably going to have particular challenges – especially when the cultural mix includes both universities and businesses, which have very different raisons d’être. That the partnership is progressing well and is on target to achieve its aims is partly because all partners are aiming at the same goal.
“If you spend the time working out what that vision is, and what you want to achieve, and you get that right from as early as possible, you have a much greater chance of succeeding,” explains Mr Cain.
Moreover, each organisation in the collaboration needs to recognise its own niche or unique selling point. “If everyone knows their position within a collaboration,” he adds, “it makes it much easier to discuss things.”
With such a large-scale venture, there is a danger that it will collapse under the weight of different opinions. “Decision-making in a large collaborative project can be difficult,” says Mr Cain. “If you are so democratic that you are taking referendums all the time, things take an awfully long time to change. You have leaders in place to assist in that. Being decisive is extremely important.”
The partnership has dealt with this by devising and implementing particular mechanisms. Face-to-face meetings take place quarterly – or once a month during important phases of a project – and are reserved for taking decisions. Outside of those meetings, smaller teams work on individual projects, and discussions take place through collaboration tools such as teleconferencing and videoconferencing, virtual workshops and shared document areas on the web. Together, these speed up the processes and decision-making, says Mr Cain.
When organisational cultures are at odds with each other, it is not surprising that collaborations can go disastrously wrong. The problems that occurred when German car manufacturer Daimler-Benz purchased the US’s Chrysler, for example, were a result of merging two very different companies that had few potential synergies. According to Matthias Holweg, director of the Centre for Competitiveness and Innovation at Cambridge University: “Two consecutive CEOs wanted to build a technology empire, and ignored commonsense advice that putting two companies together that had very little to share was not the right way to go.”
It was impossible for the two companies to share components, he argues, because their vehicles were designed in completely different ways. Moreover, he adds, Daimler-Benz was unwilling to learn from Chrysler’s expertise, and so any opportunity to gain from the merger was wasted. Ultimately, the German company lost billions of euros through the venture, and earlier this year sold Chrysler for a fifth of the price it paid for it.
By contrast, says Mr Holweg, the Renault-Nissan merger was a success because the French carmaker showed respect for the strengths of Japan’s Nissan. More recently, he adds, the automotive industry has eschewed merger activity in favour of joint ventures, because collaboration on a single vehicle is a much more efficient way of creating synergies.
An adversarial approach to collaboration is all too common, says Graham Cooper, a procurement consultant with CityIQ. This is particularly true of customer-supplier relationships, which are often characterised by mutual suspicion. “There is an awful lot of waste where companies stick too rigidly to their own procedures, and don’t want to share ideas with each other or share processes,” he says.
Mr Cooper argues that a good supplier-customer relationship should be allowed to develop over the long term in a way that enables both sides to derive value from the partnership.
Successful collaborations all share certain features: not just a joint goal, but a sense of trust and mutual respect. Even in business, personalities matter, and the ability of partners to get on with each other is crucial. The Russian software company Luxoft, for example, has recently completed a successful customer relationship management (CRM) implementation for Deutsche Bank, and is now collaborating with the bank to market the system to other investment banks. “It is important to have the right people in place. The people who run the collaboration on each side should have a good rapport – they should trust each other,” says Dmitri Loschinin, CEO of Luxoft.
Collaboration also needs a good supporting structure. “The collaboration should have very clear rules, with a strong framework,” he adds. “Everyone should be trained in the methodology we are using, such as the tools we use, how often we meet and how often we communicate.”
Increasingly, firms can find themselves working together, not out of choice but out of necessity. Sanjiv Gossain, UK managing director of Cognizant, the outsourcing specialist, points out that one corporate may outsource a software project to two or three providers who have to work together to implement it. In this situation, it is more important than ever to have clarity.
“It requires clear roles and responsibilities, a sound governance structure, a sound escalation structure and, above all, a clear statement of what I am accountable for and what the other partner is accountable for,” he says.
In an ideal collaboration, each partner will play to its strengths. It is not necessary for two organisations to have identical approaches, or identical cultures: indeed, if they did, it would limit the opportunity for each to benefit from the other’s expertise. The trick is to find a way of working that benefits both parties. As Mr Cooper puts it, the keys to a successful project are “mutual trust, a shared goal and a fair proportion of the profits”
