Relevance and importance

Collaboration can be particularly important to SMEs as they may have limited ability to grow in their domestic markets and limited access to resources to enable them to expand through acquisition. Alliances have become more common and the number of cross-border alliances has seen significant growth in recent times. Partnerships may be formed to either exploit current resources and competences or to explore new possibilities.

Some typical motives for collaboration are:

	The need for critical mass and economies of scale. This can lead to cost or risk reduction, improved customer offering and access to new markets.
	Co-specialisation. Allowing each partner to concentrate on areas that match their resources and activities best.
	Learning from partners, developing competences and innovation which can be used to advance the company.

Overview

In instigating a collaboration you could use the following process:

Strategy formulation

Understand clearly the reasons why the alliance option has been chosen

Selection

Identify potential partners, evaluate, approach and agree terms

Structuring

Agreements, objectives, scope, contributions, monitoring, communication and conflict resolution.

Implementation

Appoint a collaboration management framework, share information and integrate the appropriate operations.

Top

Recommendations and practical tips

Successful collaborations are not necessarily easy to implement however the likelihood of success can be increased by the following factors:

Partner search

This should be consistent with the basic goals of the alliance and reasonable compatibility between cultures and management systems.

Trust and Commitment

Competence-based i.e. both parties believe the other party has the resources and competence to fulfil their share of the partnership, and character-based i.e. the partners trust each others' motives.

Senior management support

Alliances require good relationships to be built internally to avoid cultural or political blockages.

Clear goals and organisational agreements

Particularly for joint activities.

Compatibility

Strong interpersonal relationships not just between senior managers, and especially in cross-border collaborations. This helps achieve the successful outcomes both parties seek from the partnership, for example, learning. There must be mutual benefit.

Flexibility

Allow the alliance to evolve and change to ensure it remains appropriate and relevant to the changing environment. Retain the ability to take advantage of opportunities which emerge.

Warnings and potential pitfalls

Many partnerships break-up before achieving their objectives. Some common reasons are:

	Strategic shifts - the value of the collaboration changes as the partners change their strategies.
	Internal politics - inside the partners' organisations.
	Uneven benefits or commitment - one partner gets more than the other.
	Premature Trust - one partner abuses the other's trust, for example, access to other's data.
	Conflicting Loyalties - partners engaged in other collaborations at the same time.
	Conflicts over Scope - partners disagree over what is included in the agreement.
	Under-resourced - partners do not provide the necessary resources.
	Under-management - alliances formed but then neglected or left unmanaged.
	Acquisition - many unbalanced alliances end with one partner acquiring the other!

Top