Collaboration Strategy

The nature of work has changed. The majority of the US workforce is no longer engaged in routine tasks such as assembly line manufacturing or filling supermarket shelves. Instead most companies are engaged in—often more sophisticated—non-routine activities such as design, development, marketing, sales and project management.

The problem is, we haven't yet learned to organize these non-routine activities to get the work done effectively. As a result, whole industries—banking, pharmaceuticals, construction and IT—have been performing badly. Non-routine work demands innovative approaches to business organization.

Collaboration Strategy: How to Get What You Want from Employees, Suppliers and Business Partners (Bloomsbury, November 2014) by Felix Barber and Michael Goold, two former Partners at The Boston Consulting Group, argues that organizations of the future are less about employees that you direct and control and external suppliers who produce well defined outputs to your specifications but more about business partners with whom you contract to share ownership of the work, such as pain/gain sharing alliances, venture capital, private equity, hedge funds, franchising, strategic R&D partnerships, open source licensing, production sharing contracts, etc.

Collaboration Strategy looks at how to set up the business and make your strategy happen in this new business world. Barber and Goold detail a 'collaboration framework' including 10 requirements for setting up profitable collaboration to get the work done, and a structured process and kit of tactics for designing a good solution to meet these requirements.

Barber and Goold base their findings on a seven year period of research at Ashridge Business School in which they interviewed over 200 businesses including, for example, Cisco, Citigroup, GE, Goldman Sachs, GlaxoSmithKline, Google, IBM, KKR, Microsoft, Nokia, Pfizer, TPG and Unilever

The collaboration framework looks at three main elements: what you want, how to choose and work with partners, and how to set up agreements with those partners that will lead to the best results. With this framework in place, Collaboration Strategy addresses many topics, including:

• How to solve problems in setting up to get the work done effectively and efficiently in key industries such as fashion retailing, banking, pharmaceutical R&D, or large construction and IT projects
• How to exploit opportunities to go further in focusing where you have the greatest potential for advantage, using approaches such as franchising in consumer services, production sharing in oil exploration and development or assets for equity partnerships in real estate
• How to organize industry platforms and networks such as computer and mobile phone operating systems or bank trading platforms so that you prevent market concentration in the hands of just one or two 'monopolists' who capture much of the industry value-added, using approaches such as consortium joint-ventures or open-source licensing
• Should there be more focus on relevant specialist experience in choosing CEOs? While specialist skills are recognized as critical for middle managers, CEOs are chosen more for their general management and leadership abilities. For example, although new product development is a key to big pharma companies' success, over the past decade, only one in five CEOs of big pharma companies have had a background in pharmaceutical R&D. And many CEOs of fashion retailers have no experience in fashion design or buying.
• What is the trade-off between private equity and public companies? Some have claimed that private equity is good for fund investors but bad for the businesses private equity firms invest in. Collaboration Strategy argues instead that the private equity ownership form is good for the businesses in the buyout sweet-spot that private equity funds focus on but it is private equity firms and not fund investors that capture most of the benefits.

ABOUT THE AUTHORS:

Felix Barber and Michael Goold are both currently Directors of the Strategic Management Centre at Ashridge Business School and former Partners of The Boston Consulting Group.