What can go wrong?
First up, I'm always perplexed by why collaboration is touted as a viable solution to managerial problems. Sometimes it is, but most of the time we have to wonder how a weaker organisation has been able to form a collaboration. Who is the partner that doesn't mind this lopsided relationship? Is there something else a weaker organisation can offer that will sustain the relationship?
A partnership between unequal partners is unstable, unless some intangibles are holding the partnership together. Even when two organisations at an equal level in terms of performance come together, there is still a question about the effect on their reputation. A reputable organisation is able to provide a less reputable organisation with legitimacy - although organisations will tend to choose other similarly reputable organisations for collaboration.
Who your organisation partners with can have effects on the market perception of your organisation and its potential. Partners in collaboration often assume that the initial set-up of the partnership will dictate the proceedings of the collaboration.
The fact is that collaborative relationships evolve. This means that an organisation has to constantly manage the collaboration, and interact with its partner, regardless of the governance structure of the collaboration put in place.
Is co-opetition a good idea?
"Co-opetition" is a term coined to describe a situation where an organisation simultaneously competes and collaborates with another organisation.
Is collaboration with your competitor(s) a good idea?
As competitive landscapes become tougher, organisations may find that growing in size gives them a lot more market power and ability to manoeuvre. Collaboration with competitors will achieve that in an instant. A good example of this is Samsung supplying microchips to key competitors such as Apple and LG.
To successfully collaborate with a competitor, an organisation needs to establish a good level of trust, as well as clarity on how the partnership will work.
The difficult part is that collaboration can often fail thanks to partners exploiting and stealing more than their fair share in the relationship. It is plausible that when competition becomes tough, a collaboration between competitors will break down as a zero-sum mentality ("your gain is my loss") comes into play. Such a possibility is high but by doing that, an organisation loses the value that collaboration provides.
Learning about collaboration
These days, many multinational companies have their own alliance departments and managers, and the number of collaborations established by organisations is rising.
The rise of collaboration has made the setting up of alliance departments a necessity. These departments analyse how collaboration works and how multiple collaborations within an organisation can potentially align.
In some Asian markets certain industries need to collaborate because of regulatory requirements. For example, in China it is necessary to form joint ventures with local partners in industries such as entertainment and printing and publishing because a Chinese partner has to be the majority shareholder.
Learning how collaborations are established, how they are best governed, how a collaboration evolves over time, and how to manage that change is essential for any international manager. This goes hand in hand with the need to learn about institutional and cultural aspects of the markets.
Given that most Asian markets are collectivistic by nature, New Zealand organisations won't lose by learning more about collaboration and collaborative dynamics.
Professor Siah Hwee Ang is BNZ Chair in Business in Asia, at Victoria University of Wellington.
