Collaborate With Your Competitors and Win

1
Collaborate With Your Competitors and Win

• Gary Hamel, Yves L. Doz, and C.K. Prahalad
• (Adil Minocherhomjee)

2
What are Strategic Alliances?

• A quick, low-cost route for new competitors to
  gain access to new technology and markets
• Saves RD costs and time
• Strengthens both companies against outsiders
• Usually, weakens one partner

3
Principals of successful collaboration

• Collaboration is competition in a different form
• Successful collaborators enter alliances with
  clear strategic objectives and understand their
  partners objectives
• Harmony is not important measure for success
• Occasional conflict may be the best evidence of
  successful collaboration

4
Principals of successful collaboration

• Cooperation has limits
• Must defend against competitive compromise, with
  on and off-limits knowledge clearly identified
  and monitored by all employees
• Learning from partners is paramount
• Successful companies view each alliance as a
  window into their partners broad capabilities
  and build skills in areas outside the formal
  agreement diffuse this knowledge into their own
  company

5
Why Collaborate?

• When commitment to learning is one-sided,
  collaboration invariably leads to one side taking
  advantage of the other
• Western companies enter just to avoid investments
  abroad
• Eastern companies attempt to learn core skills of
  collaborating company
• The strategic goals converge while competitive
  goals diverge

6
Why Collaborate?

• Both partners must contribute something
  distinctive
• Basic research
• Product development skills
• Manufacturing capacity
• Distribution channel access
• The size and market power of both partners is
  modest compared with industry leaders
• Partners believe they can learn from each other
  and limit access to proprietary skills

7
How to build Secure Defenses

• Challenge share enough skills to create
  advantage vis-à-vis companies outside the
  alliance while preventing a transfer of core
  skills to partner
• Potential for transfer is greater when one
  partners contribution is easily transported,
  easily interpreted, and easily absorbed
• A discrete, stand-alone technology is more easily
  transferred than a process competence such as
  manufacturing excellence

8
Guidelines to build Secure defenses

• Limit the scope of the formal agreement to cover
  only a single technology
• Part of a product line rather than an entire line
• Limit distribution to a few markets at a time
• Limit unintended transfers at the operating level
  
• Have a collaboration division
• Control information flows to a partner
• Limit the number of gateways
• Restrict access to key facilities and people
• Declare sensitive laboratories and factories
  off-limits to partners
• Make sure all participating/non-participating
  employees understand the objectives and risks of
  the alliance

9
Enhancing the Capacity to Learn

• Learning begins at the top
• Have a desire to learn but dont always play
  teacher
• Learn about as many areas as possible
• Inform employees on partners strengths and
  weaknesses
• Acquire particular skills to bolster competitive
  position
• Develop precise benchmarks of partners
  performance
• Diffuse skills acquired from partner through
  organization
• Predict how rivals behave when alliance unravels
  its course
• Proceed with care-but proceed

10
Proceeding with care

• Collaboration may sometimes be unavoidable
  surrendering too much information is not
• Do not be obsessed with the legal ownership
  structure of the alliance
• Companies confident in their ability to learn
  prefer ambiguity in alliances legal structure
• Running from collaboration is not the answer
• Remember, collaboration can be a low-cost
  strategy for building new process capabilities
  and winning new product and technology battles