In this blog entry, we look at the ideas and forces shaping modern collaboration. The new success factors are presented as well as diffentent schools of thought regarding collaboration and alliances.
Outlaw journalist Hunter S. Thompson once said ”we live in fast strange times and we have to move in fast, strange ways…”
Tom Peters, one of the world’s most revered management thinkers, is similarly quoted as saying “Strange times require strange measures”. Ashkenas et al. (1995) put it more formally by saying that
many[1] organizations were faced with a rate of change that exceeded their capability to respond and had to attempt to retool their organization in order to meet an entirely new set of criteria for success.
Essentially, companies are facing change and are continuously looking for ways to adapt. One solution available to companies is to adopt strategic alliance strategies in order to more effectively cope with change (Adler, 1966). According to Adler’s research, further to enabling an organization to better deal with market change, important strategic benefits can be achieved through partnering because they:
- Enable companies to capitalize on the marketing opportunities opened up by scientific breakthroughs.
- Cut the costs of R & D, new product development, setting up new distribution channels, and hiring and training sales staffs.
- Provide a company with production, technical, or marketing skills that might otherwise be out of reach.
- Stimulate synergism, particularly in achieving more customer orientation and enhancing sales appeal.
- Assure stable, economical sources of raw materials.
- Open new markets.
- Create new avenues for diversification.
- Reduce risks.
- Stimulate executive thinking by bringing together management groups with different skills, outlooks, and values.
Though the benefits might have remained relatively unchanged, the strategies to integrate with other partners have not. According to Casseres (1994), collaboration in business “is no longer confined to conventional two-company alliances, such as joint ventures or marketing accords”, they now include collaborative arrangements such as networks, clusters, constellations, or virtual corporations. Casseres further states that the “individual companies in any group differ in size and focus, but they fulfill specific roles within their group”. Moreover, he suggests that within the network or group, companies may be linked to one another through various kinds of alliances, ranging from the formality of an equity joint venture to the informality of a loose collaboration. In addition, the success factors (see below)
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Old CSFs
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New CSFs
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Size
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Speed
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Role Clarity
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Flexibility
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Specialization
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Integration
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Control
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Innovation
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E-business is perceived as a strategy to integrate partners. Numerous papers and books have been written about e-business and how this concept will change the way companies interact, characterized by rapid exchange of information within a virtual network of customers and suppliers working together to create value-added processes (Hammer, 2001; Champy, 2002; Hagel, 2003; Barnes et al., 2002; Ash & Burn, 2001).
Ward and Peppard (2002) state that business drivers are a set of critical forces for change that a business must respond to. They may represent short-term (reduction of the cost base), medium-term (increased market share), or long-term (zero-defect quality) factors that an organization must focus on to meet business objectives and satisfy critical success factors
[i].
Even though the success factors have changed, business drivers have not. When we compare the list of business drivers [Managers’ critical business objectives and drivers when adopting collaborative technologies such as e-business.] cited by Line56 in
[4], we can see that they are very similar in content and scope. However, Farrell adds that fierce competition spurs innovation in both technology or business processes
[ii].
While Partnering is a well-established strategy, the Internet has made it much more widespread (Porter, 2001). In this regard, organizations pursue collaborative strategies (new and not so new strategies) with various partners in a quest to reap the rewards of inter-business synergies: Virtual organizing (Venkatraman & Henderson, 1998), Integrated management (Barnes et al.,2002)
[iii], Management by process
[iv] [v] / Business Process Re-engineering (Hammer and Champy, 1993; Harrington, 1991), X–Engineering and Inter-organizational processes (Champy, 2002; Hammer, 2001), The Learning Organization
[vi] [vii] [viii] (Senge,1991; Sharkie, 2003; Roth, 2003), The Lean Enterprise
[ix] (Womack and Jones, 1994), Modularity
[x] (Baldwin and Clark, 1997) and Symbiotic Marketing (Adler, 1966).
Yet as more and more established organizations realize that they need to form alliances with their customers, partners and suppliers over the Internet, e-business integration with other organization’s systems becomes a critical issue (Ash & Burn, 2001; Porter, 2001). However, according to Kanter (1994) Integration isn’t simply a technology issue; it requires integration at many levels (Strategic, Tactical, Operational, Interpersonal and Cultural)
Without this holistic approach to integration, the very reliance of virtual companies on partners, suppliers and other outside companies exposes them to strategic hazards (Chesbrough and Teece, 1996). Therefore, given the multitude of business relationships that virtual organizations have to maintain in order to effectively and efficiently deliver their products and services to the customer, the key strategic tasks for managers and executives now focus on:
- Correctly identifying and selecting compatible organizations in terms of culture, business objectives, processes and technology. (Inmon et al., 2001; Barnes et al., 2002)
- Reconfiguring roles and relationships among a constellation of actors (suppliers, partners, customers) in order to mobilize the creation of value (development, improvement or distribution of innovative products and services) by new combinations of players.[xi] (Normann & Ramirez, 1993)
- Integrating on a process and systems level (Champy, 2002; Venkatraman 1993
- Managing the risk associated under-performing partners (Normann & Ramirez, 1993)
- Enhancing and develop collaborative efforts and relationships with partners (Kanter, 1994)
- Ensuring the clients and partners understand and benefit from the value created through the collaboration (Normann & Ramirez, 1993)
[1] I.e. IBM, Philips, Mazda, Sony, Lloyd's of London, Volkswagen, Eastern Airlines, Pan Am, Sears, Aetna, General Motors, Digital Equipment Corporation, Westinghouse, Eastman Kodak, Citicorp, …
[2] The CSFs - critical success factors presented by Ashkenas et al. (1995) are in essence a response to the expectations of customer in the global marketplace. A more complete version of this table can be found in
Figure 19 in Appendix A: Models and Frameworks
[3] Figure 2 is extracted from a Line56 survey published in 2002, 524 information technology executives were surveyed on the business drivers that most influenced e-business and web services strategy and deployment within their organizations.
[4] See
Figure 16 in Appendix A: Models and Frameworks
[i] Strategic Planning for Information Systems – Third Edition, John Ward, Joe Peppard, John Wiley & Sons 2002
[ii] The Real New Economy, Diana Farrell, Harvard Business Review October 2003 p106
[iii] Developing a Framework to Investigate the Impact of E-commerce on the Management of Internal Business Processes, David Barnes, Matthew Hinton and Suzanne Mieczkowska, Knowledge and Process Management Volume 9 Number 3 pp 133–142 (2002)
[iv] Business Process Improvement, H. James Harrington, McGraw-Hill, 1991
[v] Reengineering the corporation – Michael Hammer & James Champy, HarperBusiness 1993
[vi] The Fifth Discipline: The Art & Practice of the Learning Organization, Peter M. Senge, Currency-Doubleday (1990)
[vii] Knowledge creation and its place in the development of sustainable competitive advantage, Sharkie, Rob (2003), , Journal of Knowledge ,Managemeflt, vol. 7, no.1, pp. 20-31.
[viii] Enabling knowledge creation: learning from an R&D organization, Roth, Jonas (2003), , Journal of Knowledge Management, vol. 7, no.1, pp. 32-48
[ix] From Lean Production to the Lean Enterprise, James P. Womack, Daniel T. Jones, Harvard Business Review, March-April 1994
[x] Managing in an Age of Modularity, Carliss Y. Baldwin, Kim B. Clark, Harvard Business Review, September-October 1997
[xi] From Value Chain, To Value Constellation: Designing Interactive Strategy, Richard Normann, Rafael Ramirez, Harvard Business Review July-August 1993