Collaboration: the key driver for organisational success

The world is increasingly volatile, uncertain, complex and ambiguous (VUCA). Complex issues, increasing inter-dependence and the increasing need for greater innovation confound even the most superbly efficient and well-controlled organisations. To put it simply there is a ‘dense fog’ through which organisations must navigate their way. Consequently, organisations must not only be efficient, they must be effective. As Peter Drucker said, ‘efficiency is doings things right whilst effectiveness is doing the right thing’. For most organisations one of the ‘right thing’ is to enter into strategic partnerships. This can radically improve their organisational agility to identify and capture opportunities more quickly and effectively than their rivals. The trick is, to do it well.

Collaboration allows organisations to achieve goals and objectives that they are not able to do on their own. Some key drivers for collaboration include:

  • Access to new technology
  • Ability to strengthen innovation capabilities
  • Access to new markets and customers
  • Access to larger contracts
  • Risks Reduction

According to a recent McKinsey report over 70% of CEOs expect to engage in new joint ventures in the next 5 years. However, another recent report, cited in the Harvard Business Review is that over 55% of joint ventures fail! Moreover, many of the ‘succeeding’ joint ventures fail to achieve the expected results. Indeed 70% to 80% of mergers and acquisitions fail in terms of creating extra stock market value (strategic Management Journal investigation covering 75 years). Collaboration is a strategic issue, yet organisations are not very good at it.

Some of the major reasons for this failure are:

  • Insufficient attention to setting clear goals for the collaboration
  • Not discovering strategic conflicts early enough
  • Not recognising that everyone must be a winner: the need for mutual benefit
  • Insufficient attention to building trust and demonstrating transparency
  • Not knowing when and how to exit

Underpinning these reasons for failure is the prevailing organisational business model or as Professor Donald Sull in his book ‘The upside of Turbulence’ calls it, the organisations mental map of how the world works. This is a set of assumptions which is ‘hard wired’ into the organisation’s way of thinking. Peter Drucker says, ‘the assumptions on which the organisation was founded will not be the ones which take it forward’.  Yet leaders make sense of situations, taking speedy and appropriate action based on their understanding of what happened in the past.  They try to simplify a complex world. Innovative solutions for customers are therefore limited by what people at the top imagine! This is not because they are incompetent but is because every human being tries to simplify and give the illusion that they can predict and control the future. Encouraging both external and internal collaboration widens the assumptions and makes the business model more fit for the future.

Current assumptions, ‘gut feel decisions’ and a lawyer led contracts often characterise many strategic collaborations. The reasons for collaborative failures demonstrate the need for a better approach. It must be a systematic approach all the way from an organisation’s strategy to a collectively agreed way of working. After much research, we now have a comprehensive framework for successful collaboration. This is ISO44001, the newly created international standard for Collaborative Business Relationships (superseding BS11000). It challenges organisations to have an overarching rationale for strategic collaboration with its senior leadership fully committed. It also requires collaboration risks and opportunities fully integrated into its corporate planning and resourcing. A more detailed approach can then be developed for specific collaborations, resulting in a Relationship Management Plan for that collaboration. This approach has 8 stages namely:

  1. 1.Strategic awareness of specific areas for collaboration, their associated benefits and its alignment with the organisation’s goals
  2. 2.Knowledge of the risks of specific strategic collaborations and the key requirements for successful implementation
  3. 3.Internal assessment of the organisation’s capacity and ability to collaborate
  4. 4.A structured process for partner selection
  5. 5.A structured approach to define how the organisations will collaboratively work together
  6. 6.A joint focus for innovation and the creation of mutual added value
  7. 7.A well thought out way for monitoring and sustaining the relationship over time and through different challenges
  8. 8.A mutually agreed set of conditions and way of ‘exiting’ the relationship.

Each stage has a full list of requirements but this article is a reflection on some critical elements of strategic collaboration.

The business rationale for collaboration, rather than relying on a single focus on competitiveness is being repeatedly reinforced by not only academic studies but ‘real world’ examples. William Muir of MIT observed egg productivity outcomes of 2 groups of chickens: one was cooperative, the other very competitive. Over time, the cooperative chickens thrived and outperformed the other group. In the war in Iraq, General McCrystal formulated his ‘team of teams’ strategy for sharing and developing collective intelligence, empowering junior officers and executing swift, collaborative missions. This proved to be extremely successful. The highly influential speaker, Margaret Heffernan gives numerous examples of the effectiveness of a culture based on ‘helpfulness’. When organisations collaborate, they must purposely create a culture of mutual ‘helpfulness’. This creates a ‘safe’ environment which naturally lends itself to people sharing ideas and trying different things. It is the foundation for more and better innovation. If organisations identify innovation as critical for their survival then the rationale for collaboration is undeniable.

Potential collaborative partners will have different views of the market place and different experiences, perspectives and ways of working. Before any extra added value can be mutually created, these differences and each other’s expectations need to be to be identified and discussed at the beginning of a relationship, well before any contract is signed. Too often organisations ‘jump’ into strategic relationships without first having these difficult discussions. These are the first steps in building a trusting relationship. Having built trust, it is very easy to lose it. Consequently, agreement on how each party benefits from the relationship, measures trust, and shares governance are important points to agree at this early stage to sustain the relationship over its duration.

The types of strategic collaboration can be quite varied. The aim is to establish extra mutual value. They could be with:

  • Suppliers, both large and small
  • Suppliers in different market or product areas
  • Joint ventures
  • Customer led projects
  • Research establishments
  • Professional organisations
  • Different businesses or functions within large organisations.

Building this structure of strategic collaborations helps to create network advantage and business solutions which are more difficult to replicate by competitors. Collaboration means sharing both the ‘pain and the gain’ and finding those collective ways to ensure the relationship succeeds.  Some of the most difficult challenges are to be found within organisations. Too often, organisations are subject to ‘silo thinking’ and an unwillingness to share and adapt for the greater good.  This can create a suspicion in the collaborative partner that the collaboration is only superficial and that the whole organisation is not ‘signed up to it’. Organisational agility to support collaborative partners and the ability to respond to different market conditions are severely hampered. Organisational and cultural change is frequently required yet often poorly done.

Change is complex and subject to being undermined at a surprising number of levels. It is too reliant on a ‘top down’ approach which continually under-estimates the strength and number of these barriers. Not only does it need good leadership but also the active involvement of change champions. Research has shown that in 80% of change programmes directors choose the wrong change champions as they are not well respected or trusted by the organisation’s staff. Consequently, finding the right change champions is vital. Professor Adrian Furnham of UCL, refers to these people as ‘politically savvy’. He states that an ’X’ ray of the organisation should be undertaken to find these people. An analysis of the organisation’s informal networks provides a firm foundation for identifying key enablers and innovators throughout the organisation. The fundamental truth about Informal networks is that they are all based on trust and mutual respect. They provide the real ‘glue’ that keeps organisations together. They are used by people to make their jobs easier and to expand their knowledge. Within these networks there are special people who:

  • Are very well connected (network hubs) and are highly influential
  • Can be considered ‘knowledge diamonds’
  • Naturally collaborate across silos and can leverage these contacts
  • Are natural innovators and are constantly identifying new ways to improve
  • Communicate extremely well with their peers, by putting it into language they understand

Involving these people in designing and implementing the changes required for collaboration significantly improves the chances of success. Nick Chater, a leading behavioural scientist and once a member of the British Government’s ‘Nudge Unit’ describes people’s perception of fairness as being based on their perception that a fair bargain has been made. Involving these influential people creates a sense of fairness in the proposed change. It is referred to as a ‘virtual bargain’. These people are trusted and are capable of being relied upon by the organisation’s leadership. They provide:

  • a safe form of diversity to help challenge existing assumptions and mental maps: for example, actions needed to implement change
  • Discretionary creativity and energy to overcome barriers to change
  • Role model behaviours
  • Knowledgeable feedback
  • Attraction to others as they appeal to people’s ‘head and the heart’: a powerful combination

Leadership (more so than management) is vital to successful collaboration. Leaders need to recognise that collaboration involves cultural change. However, there is a big challenge organisations need to address: it is called ‘wilful blindness’. Recent studies have shown that 85% of managers do not voice their concerns over the way an organisation is led. Consequently, the CEO ‘flies blind’ in a fog within this VUCA world! As General McCrystal realised, he had to dramatically increase his collective intelligence and see more clearly what was happening as quickly as possible. Leadership has been likened to the shadow we produce, meaning the overall environment to allow people to flourish. The collaborative environment leaders need to create is based on the key values of openness and transparency and a powerful common purpose (great collaboration). They also need to be highly connected and used to developing good relationships. In short, they need to be collaborative leaders who easily and willingly share leadership and give positive permissions for others to take up that responsibility. This ability to share is not only important internally (across ‘silos’) but also externally with collaborative partners. The organisation needs a leadership model to which all its directors and managers can aspire to.

Organisational learning and innovation are important ingredients for making collaboration work and deliver added value. Organisations should be ‘organisationally humble’ and willing to adapt. Organisations must not be blind to others’ perceptions and subject to their own ‘group think’. Having a knowledge management system reinforces the collaborative culture of ‘safety and helpfulness’with new organisational habits which will more regularly identify shared learning. This gives leaders new ideas for how to develop their collaborative relationships and to trigger innovation. Innovation is not just product innovation but can arise from different perceptions and learning in such areas as:

  • Logistics
  • Customer experience
  • Whole life performance and costs
  • Outsourcing
  • Design modelling and testing
  • Legacy to the community
  • Etc.

The influencers and innovators in informal networks can help innovation as they are highly connected. Encouraging these networks by higher levels of inter-action will result in the emergence of ingenious solutions to large business challenges and complex problems (sometimes referred to as ‘wicked problems’). This is often termed ‘unpredictable creativity’ and is a direct result of a more connected organisation.

Our increasingly turbulent world brings both big challenges and new opportunities. Strategic collaboration improves organisational agility to respond more effectively to new opportunities. ISO44001 (BS11000) is a very helpful framework to avoid the mistakes of the past and maximise the potential of partnerships. Collaboration does involve change, both organisational and cultural, requiring greater emphasis on collaborative leadership and the involvement of trusted change champions. Mutual added value is the prime motivation for collaboration, and by increasing inter and intra connectivity innovation will significantly increase often creating unexpected solutions in many different areas.  Done well, collaboration will make the organisation fit for the future.

Peter Westbrook

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