Raising the Standard for Collaboration

Harnessing the benefits of BS 1 1 000:

Collaborative Business Relationships

David E Hawkins
Raising the standard for collaboration

Developing effective collaborative relationships

through the implementation of BS 1 1 000 to enhance
business performance
Rai s ing the s tan d a rd fo r
collabo ration
Developing effective collaborative
relationships through the implementation
of BS 1 1 000 to enhance business
performance

By David E Hawkins
 F i rs t p u b l i s h e d in th e UK in 2 01 3

By

B SI S t a n d a rd s Li m i te d

3 89 C h i swi ck H i g h Roa d

Lo n d o n W4 4AL

© Th e B ri t i s h S t a n d a rd s I n st i tu ti o n 2 01 3

Al l ri g h t s re se rve d . E xc e p t a s p e rm i t te d u n d e r th e C o p yri g h t , D esi g n s a n d P a te n ts

Act 1 9 8 8 , no p a rt o f th i s p u b l i ca t i o n m a y be re p ro d u ce d , s to re d in a re t ri e va l

sys te m o r tra n sm i tt e d in a n y fo rm o r b y a n y m e a n s – e l e c tro n i c , p h o to co p yi n g ,

re co rd i n g o r o th e rwi s e – wi t h o u t p ri o r p e rm i s si o n in wri ti n g fro m th e p u b l i s h e r.

Wh i l st e ve ry ca re h a s been ta ke n in d e ve l o p i n g and com p i l i n g t h i s p u b l i ca ti o n , B SI

a cce p ts n o l i a b i l i t y fo r a n y l o ss o r d a m a g e ca u se d , a ri s i n g d i re ct l y o r i n d i re ct l y i n

co n n e c ti o n wi t h re l i a n ce on i ts c o n te n ts e xce p t to th e e xte n t th a t su ch l i a b i l i ty

m a y n ot be e xcl u d e d in l a w.

Wh i l e e ve ry e ffo rt h a s b e e n made to tra ce all co p yri g h t h o l d e rs , a n yo n e cl a i m i n g

co p yri g h t sh o u l d g et i n to u ch wi t h th e B SI a t th e a b o ve a d d re s s.

B SI has no re s p o n s i b i l i ty fo r t h e p e rs i st e n ce o r a ccu ra cy o f U RLs fo r e xt e rn a l or

th i rd - p a rty i n t e rn e t we b si te s re fe rre d to in th i s b o o k, and d o e s n o t g u a ra n t e e th a t

a n y co n te n t o n su ch we b si t e s i s , o r wi l l re m a i n , a ccu ra te o r a p p ro p ri a te .

Typ e se t i n G re a t B ri ta i n b y Le t te rp a rt Li m i te d

P ri n t e d in G re a t B ri ta i n b y B e rfo rts G ro u p , www. b e rfo rt s. co . u k

British Library Cataloguing in Publication Data

A ca ta l o g u e re co rd fo r th i s b o o k i s a va i l a b l e fro m th e B ri t i sh Li b ra ry

I SB N 9 7 8-0 -5 80 -7 87 3 7 -9
Con tent s

About the author vii

Acknowledgements ix
Preface x
Introduction xii

PART 1 : Wh y? 1
Chapter 1 – The importance of relationships 1
Chapter 2 – Collaboration 9
Chapter 3 – Relationship risk and opportunity 19
Chapter 4 – Culture 31
Chapter 5 – Creating trust 43
Chapter 6 – Collaborative leadership 57
Chapter 7 – Positioning relationships 69

PART 2 : H ow? 81
Chapter 8 – Background and introduction to BS 1 1 000 81
Chapter 9 – Awareness 95
Chapter 1 0 – Knowledge 1 03
Chapter 1 1 – Internal assessment 1 09
Chapter 1 2 – Partner selection 117
Chapter 1 3 – Working together 1 23
Chapter 1 4 – Value creation 1 33
Chapter 1 5 – Staying together 1 43
Chapter 1 6 – Exit strategy 1 51
Chapter 1 7 – Implementing collaborative certification programmes 1 59

PART 3 : Wh e re? 1 71
Chapter 18 – Customer engagement 1 71
Chapter 19 – Supply chain 1 81
Chapter 20 – Outsourcing 1 91
Chapter 21 – Collaborative contracting 203
Chapter 22 – Alliance modelling 21 9
Chapter 23 – Collaborative maturity 233
Chapter 24 – M ergers and acquisitions 245
Chapter 25 – SM E collaborative clusters 255
Chapter 26 – Collaborating for sustainability 263
Chapter 27 – Third sector 277
Chapter 28 – Future of collaboration 283

v
F u rthe r in fo rmation 286
Index 287

vi
Abo u t the a u tho r

D a vi d E H a wki n s FCI PS

D a vi d h a s a n exten si ve ca reer i n proj ects a n d procu rem en t wi th i n th e

con stru cti on i n d u stry. For over 40 yea rs h e h a s been a ssoci a ted wi th th e
d evel opm en t a n d i m pl em en ta ti on of m a j or proj ects i n m a n y pa rts of th e
worl d , wh i ch h a s provi d ed a n i n si g h t i n to th e m a n y org a n i za ti on a l a n d
cu l tu ra l ch a l l en g es th a t proj ects ca n g en era te. O ver th e pa st d eca d e h e
h a s been a n a cti ve prom oter of col l a bora ti on a n d pa rtn eri n g con cepts,
tog eth er wi th th e d evel opm en t of exten d ed en terpri ses th rou g h th e
bu i l d i n g of a l l i a n ces.

As a stra teg i c th i n ker h e h a s d epl oyed th ese a pproa ch es to su pport from

m a n u fa ctu ri n g to ou tsou rci n g prog ra m m es, ca pi ta l i zi n g on th e
opportu n i ti es wi th i n proj ect opera ti on s to expl oi t g l oba l sou rci n g .
B u i l d i n g on th ese experi en ces h e h a s h el ped a n u m ber of m a j or
org a n i za ti on s to i m pl em en t ch a n g e m a n a g em en t prog ra m m es i n
d i fferen t i n d u stri a l a ren a s i n cl u d i n g ch em i ca l processi n g , oi l a n d g a s,
power g en era ti on a n d m i n i n g a n d m i n era l s processi n g .

H e wa s th e a rch i tect a n d a u th or of th e CRAFT col l a bora ti ve m eth od ol og y

a n d tech n i ca l a u th or of th e B ri ti sh Sta n d a rd s I n sti tu ti on (B SI ) PAS 1 1 000
fra m ework, th e worl d ’s fi rst col l a bora ti ve bu si n ess rel a ti on sh i p sta n d a rd .
H e wa s th e d ri vi n g force beh i n d th e crea ti on of B S 1 1 000-1 : 2 01 0
Collaborative business relationships – Part 1 : A framework specification ,
a n d ch a i rm a n of th e B SI com m i ttee wh o d evel oped th e sta n d a rd . I n 2 009
h e wa s a ckn owl ed g ed a s on e of th e worl d ’s top 1 00 th ou g h t l ea d ers on
corpora te soci a l respon si bi l i ty (CSR) . As a n esta bl i sh ed a u th or h e h a s
severa l pu bl i ca ti on s to h i s cred i t i n cl u d i n g :

vi i
A b out th e a uth o r

• Sun Tzu a n d th e Pro ject Ba ttlegro un d: Crea tin g Pro ject Stra tegy

usin g th e A rt o f Wa r, P a l g ra ve M a cm i l l a n , 2 0 0 4;

• Th e Ben din g Mo m en t: En ergisin g Co rp o ra te Stra tegy, P a l g ra ve

M a cm i l l a n , 2 005 ;

• Co rp o ra te So cia l Resp o n sib ility: Ba la n cin g To m o rro w’s Susta in a b ility

with To da y’s Pro fita b ility, P a l g ra ve M a cm i l l a n , 2 006.

vi i i
Acknowle d gements

Th e a u th or wou l d l i ke to a ckn owl ed g e a n d exten d a ppreci a ti on to th ose

col l ea g u es, em pl oyers, cu stom ers a n d su ppl i ers wh o th rou g h ou t h i s
ca reer h a ve provi d ed i n pu t to th e l ea rn i n g experi en ce a n d provi d ed
m a n y ch a l l en g es, wh i ch h a ve con tri bu ted to th e th i n ki n g beh i n d th i s
book. A speci a l th a n ks to th e I n sti tu te for Col l a bora ti ve Worki n g (I CW)
(form erl y PSL) E xecu ti ve N etwork for provi d i n g a broa d ra n g e of i n pu ts
to th e d evel opm en t of CRAFT, wh i ch wa s th e fou n d a ti on for
B S 1 1 000-1 : 2 01 0. Th a n ks a l so to fel l ow com m i ttee m em bers wh o
brou g h t th ei r experti se a n d worked h a rd to d evel op th e sta n d a rd
a l on g si d e th e B SI sta n d a rd s tea m . An d a speci a l th a n ks to th ose
org a n i za ti on s wh o provi d ed ca se stu d i es wh i ch a d d g rea t pra cti ca l i n si g h t
to th e va l u e of th e sta n d a rd .

ix
Pre face

The bene fits o f a collabo rative s tan d a rd

Th ere ca n be few execu ti ves or sen i or m a n a g ers i n th e g l oba l bu si n ess

com m u n i ty wh o wou l d n ot recog n i ze th e i m porta n ce of rel a ti on sh i ps a s
a key i n g red i en t for su ccess, wh eth er th ese rel a ti on sh i ps a re wi th
con su m ers, bu si n ess cu stom ers, key su ppl i ers, bu si n ess pa rtn ers or
i n tern a l l y a cross l a rg e org a n i za ti on s. Th ese rel a ti on sh i ps a re a cri ti ca l
su ccess fa ctor bu t a l so a m a j or sou rce of ri sk, wh ere th e ben efi ts a n d
ch a l l en g es of i n terd epen d en cy n eed to be recog n i zed to u n d erpi n
su sta i n a bl e bu si n ess. Th e con cept of worki n g i n col l a bora ti on i s
recog n i zed for i ts con tri bu ti on to both th e effecti ven ess a n d effi ci en cy of
th ese rel a ti on sh i ps.

I f you a sk a n y g rou p of bu si n ess peopl e h ow effi ci en t th ey bel i eve th ei r

own org a n i za ti on i s, th e respon se i s freq u en tl y: ‘Lower th a n 7 0 per cen t’.
I f you th en con si d er two or m ore org a n i za ti on s worki n g tog eth er, th e
poten ti a l to en h a n ce perform a n ce i s ea sy to see. Col l a bora ti ve worki n g
sou n d s worth wh i l e, bu t th e ch a l l en g e i s to h a rn ess a n d d epl oy th i s
a pproa ch wh ere i t ca n a d d va l u e to th e bu si n ess. Th e poten ti a l i m pa cts
(both posi ti ve a n d n eg a ti ve) of rel a ti on sh i p m a n a g em en t a re si g n i fi ca n t,
bu t often th e topi c i s n ot reg a rd ed a s a m a i n strea m i ssu e for m a rket
d evel opm en t or ski l l s en h a n cem en t.

Col l a bora ti ve worki n g i s n ot n ew, bu t to a l a rg e exten t i t h a s been

org a n i ca l l y i m pl em en ted a s a n a d j u n ct to tra d i ti on a l bu si n ess m od el s.
E vi d en ce from a cross a l l sectors of i n d u stry i d en ti fi es th e poten ti a l
com m erci a l ben efi ts a n d effi ci en ci es of col l a bora ti ve worki n g for
com pa n i es l a rg e a n d sm a l l , ra n g i n g from £ bi l l i on cost sa vi n g s to £1 00 K
opera ti on a l i m provem en ts by worki n g i n a m ore i n teg ra ted wa y.

Wh i l e th e fu n d a m en ta l s of col l a bora ti on m a y be u n d erstood , th e ti m e i s

n ow ri g h t to m ore effecti vel y h a rn ess th e ben efi ts a n d m ove th ese
con cepts from a d h oc a pproa ch es to m a i n strea m bu si n ess opera ti on s. Th e
pressu res of econ om i c stress, i n crea sed com peti ti on a n d d em a n d for
g rea ter effi ci en cy presen t a si g n i fi ca n t ch a l l en g e to org a n i za ti on s i n both
th e pu bl i c a n d pri va te sectors. To a ccel era te en g a g em en t, a com m on
l a n g u a g e a n d stru ctu re th rou g h a recog n i za bl e sta n d a rd provi d es th e
pl a tform on wh i ch to bu i l d m u tu a l l y ben efi ci a l rel a ti on sh i ps i n a ra pi d l y
expa n d i n g a n d ch a n g i n g bu si n ess en vi ron m en t; th i s ca n be i n trod u ced a t
every l evel of th e tra d i n g spectru m from sm a l l to m ed i u m en terpri ses

x
 Preface

(SM E s) to m u l ti n a ti on a l corpora ti on s a n d g overn m en ts. We a re seei n g th e

crea ti on of n ew tra d i n g m od el s wh ose su ccess i s l a rg el y d epen d en t on
th e a bi l i ty of d i verse org a n i za ti on s to work tog eth er. Th i s n ew econ om i c
a g e, u si n g th e con n ecti vi ty of tech n ol og y, a l so n eed s to em bra ce th e
cri ti ca l i m pa ct of rel a ti on sh i ps to a ch i eve i ts g oa l s.

Th e n ext d eca d e – a n d beyon d – offers a com pl ex a n d ch a n g i n g vi sta of

rel a ti on sh i p ch a l l en g es a s g l oba l i za ti on a n d tech n ol og y d ra w th e bu si n ess
worl d cl oser, wh i l e i n crea si n g th e ri sk of con fl i ct on m a n y l evel s. Th ere i s
cl ea rl y a si g n i fi ca n t rol e for rel a ti on sh i p m a n a g em en t: i t m u st focu s on
q u a l i ty i n m a i n ta i n i n g perform a n ce of peopl e a n d prod u cts, tog eth er
wi th su pporti n g th e org a n i za ti on a l ch a n g e th a t wi l l be n ecessa ry to
d el i ver th e n ew bu si n ess m od el s.

B S 1 1 000-1 : 2 01 0 provi d es a pl a tform to bu i l d ca pa bi l i ty i n a ch a n g i n g

worl d . I n th i s d yn a m i c en vi ron m en t, a g i l i ty, fl exi bi l i ty a n d col l a bora ti on
a re key i n g red i en ts to m a i n ta i n com peti ti ve a d va n ta g e. Ad opti n g a
stru ctu red a pproa ch wi l l a ccel era te en g a g em en t a n d effecti ven ess.

D a vi d E H a wki n s

NOTE Al l ta bl es, ch a rts a n d m od el s con ta i n ed i n th i s book, u n l ess

oth erwi se sta ted , a re i n cl u d ed cou rtesy of M i d a s Proj ects Li m i ted a n d
sh a l l n ot be reprod u ced wi th ou t pri or wri tten a g reem en t.

xi
I ntro du ction

Aim o f thi s book

Th e a i m of th i s book i s to i n trod u ce rea d ers to a broa d er perspecti ve of
rel a ti on sh i p m a n a g em en t (col l a bora ti ve worki n g ) a n d to en cou ra g e
sen i or execu ti ves to con si d er h ow th ei r org a n i za ti on s ca n better expl oi t
i ts poten ti a l . Th e em erg en ce of th e n a ti on a l sta n d a rd B S 1 1 000-1 : 2 01 0,
d ri ven by both U K a n d m u l ti n a ti on a l org a n i za ti on s, provi d es a
fou n d a ti on to ta ke a d va n ta g e of th e ben efi ts of worki n g wi th extern a l
org a n i za ti on s to bu i l d a l tern a ti ve bu si n ess m od el s. Com pa n i es th a t
com bi n e resou rces a n d ca pa bi l i ti es ca n d evel op n ew com peti ti ve a n d
cost-effecti ve va l u e proposi ti on s, red u ci n g opera ti n g costs a n d ri sk wh i l e
en h a n ci n g m a rket com peti ti ven ess.

Th e a pproa ch i n th i s book i s to i n vesti g a te col l a bora ti on from th ree

perspecti ves:

• Why? Looki n g a t th e ben efi ts of a col l a bora ti ve sta n d a rd ,

opportu n i ti es a n d ri sks i n th e con text of col l a bora ti ve worki n g a n d
h ow th i s ca n su pport a bu si n ess d evel opm en t stra teg y th a t posi ti on s
rel a ti on sh i ps to m a xi m u m effect;
• H ow? E xpl ori n g th e ben efi ts, stru ctu re a n d i m pl em en ta ti on of
B S 1 1 000 to provi d e a robu st fra m ework for col l a bora ti ve worki n g to
en su re a su sta i n a bl e bu si n ess;
• Whe re? To expl ore th e poten ti a l a ppl i ca ti on s of th e a pproa ch i n
en su ri n g th e crea ti on of bu si n ess va l u e.

B S 1 1 000 provi d es a pl a tform to bu i l d ca pa bi l i ty i n a ch a n g i n g worl d . Th i s

book h a s been crea ted to h el p th ose seeki n g to en h a n ce th ei r
col l a bora ti ve ca pa bi l i ty a n d esta bl i sh th e fou n d a ti on s to m eet th e
st
ch a l l en g es of th e 2 1 cen tu ry. Th e i n ten ti on of th e book i s to h el p
rea d ers to u n d ersta n d wh a t m a kes som e col l a bora ti on s work a n d n ot
oth ers – u p to 80 per cen t of a l l col l a bora ti on s fa i l beca u se of u n cl ea r
expecta ti on s a n d u n d efi n ed bu si n ess processes th a t d i d n ot crea te a n
effecti ve en vi ron m en t for col l a bora ti on .

Who i s thi s book aime d at?

Th i s book sh ou l d be of va l u e i n pa rti cu l a r to th ose wh ose rem i t i s to
d evel op a n d m a n a g e sta keh ol d er rel a ti on sh i ps ei th er wi th i n l a rg e
m u l ti n a ti on a l org a n i za ti on s or extern a l to th ose org a n i za ti on s. Th e j ob
fu n cti on s of m a rketi n g a n d procu rem en t i n pa rti cu l a r sh ou l d ben efi t

xi i
 In troductio n

fro m th e s u b j e ct m a tte r b u t i t s h o u l d a l so be o f i n te re s t to all th o se at

d i re ct o r l e ve l in l a rg e o rg a n i z a t i o n s th a t re q u i re a m o re s t ru ctu re d

a p p ro a ch to re l a t i o n s h i p m a n a g e m e n t.

Ab o u t B S 1 1 0 0 0 : th e b e n e fi ts o f a co l l a b o ra ti ve s ta n d a rd

C o l l a b o ra ti ve b u s i n e s s re l a t i o n s h i p s h a ve been s h o wn to d e l i ve r a wi d e

ra n g e o f b e n e fi t s , wh i ch e n h a n ce co m p e ti t i ve n e s s a n d p e rfo rm a n c e wh i l e

adding va l u e to o rg a n i z a t i o n s o f a l l si z e s. Th e p u b l i ca ti o n of B S 1 1 000 is

a l a n d m a rk fo r b u s i n e s s . I t i s th e fi rs t n a t i o n a l s ta n d a rd in th e wo rl d to

a d d re s s co l l a b o ra ti ve b u s i n e s s re l a ti o n s h i p s . Th e s tru ctu re o f th e

fra m e wo rk i s d ra wn fro m p ra cti ca l e xp e ri e n ce , wh i ch h a s been

e s ta b l i s h e d o ve r 2 1 ye a rs o f i n vo l ve m e n t i n re l a ti o n s h i p m a n a g e m e n t. It

d o e s n o t re p re s e n t a o n e -si z e s o l u ti o n , b u t ra t h e r p ro vi d e s a co n s i s te n t

fra m e wo rk th a t ca n be s ca l e d and a d a p te d to m e e t p a rti cu l a r b u s i n e s s

n e ed s. C o l l a b o ra t i o n b e twe e n o rg a n i z a ti o n s m a y ta ke m a n y fo rm s fro m

l o o se t a cti ca l a p p ro a ch e s th ro u g h to l o n g e r- te rm a l l i a n ce s o r j o i n t

ve n tu re s .

Fi g u re 0 . 1 – I m p a cts o f B S 1 1 0 0

BS 1 1 000 d o e s n o t e n fo rce a si n g l e ri g i d a p p ro a ch b u t fo c u s e s o n

p ro vi d i n g a fra m e wo rk th a t ca n co m p l e m e n t e xi s ti n g a p p ro a ch e s , wh e re

th e s e a re a l re a d y i n p l a ce . I t re co g n i z e s th a t e ve ry re l a t i o n s h i p h a s i ts

o wn unique co n s i d e ra ti o n s wh i l e a ch i e vi n g a ra n g e o f b e n e fi t s a s s h o wn

xi i i
In tro ductio n

i n Fi g u re 0. 1 . For th ose org a n i za ti on s wi th wel l -esta bl i sh ed processes th e

fra m ework provi d es a com m on l a n g u a g e th a t ca n a i d i m pl em en ta ti on
a n d en g a g em en t. For th ose sta rti n g ou t on th e j ou rn ey, th e fra m ework
crea tes a roa d m a p for d evel opm en t.

Th e a d opti on of a n y sta n d a rd h a s to be ba l a n ced a g a i n st th e va l u e th a t

i t ca n d el i ver to th e org a n i za ti on s th a t ch oose to a d opt i t, wh eth er th i s i s
for i m provi n g i n tern a l perform a n ce or to en h a n ce con fi d en ce i n th e
m a rket. I n th i s respect B S 1 1 000 i s n o d i fferen t from oth er i n tern a ti on a l l y
recog n i zed sta n d a rd s su ch a s I SO 9 000. Th e B SI certi fi ca ti on prog ra m m e,
l a u n ch ed i n Apri l 2 009 , esta bl i sh es a m ea su ra bl e i n d epen d en t a ssessm en t
for i n tern a l ben ch m a rki n g of con ti n u ou s i m provem en t a n d peopl e
d evel opm en t, tog eth er wi th i n d epen d en tl y va l i d a ted pa n -i n d u stry
recog n i ti on of a n org a n i za ti on ’s col l a bora ti ve ca pa bi l i ty i n th e
m a rketpl a ce. At a m ore d eta i l ed l evel som e of th e ben efi ts a l rea d y
recog n i zed by m u l ti n a ti on a l org a n i za ti on s i n cl u d e:

• 2 0 per cen t red u cti on i n opera ti n g costs;

• i m proved ri sk m a n a g em en t;
• 1 5 per cen t sa vi n g s th rou g h su ppl y ch a i n a g g reg a ti on ;
• i m proved d el i very perform a n ce;
• en h a n ced i n vestm en t.

Th e sta n d a rd crea tes a robu st fra m ework for both th e pu bl i c a n d pri va te

sector, provi d i n g a n eu tra l pl a tform for effecti ve m u tu a l l y ben efi ci a l
col l a bora ti ve prog ra m m es. I ts core va l u e i s com m on a l i ty of l a n g u a g e a n d
a ppl i ca ti on between d el i very pa rtn ers. Th i s l ea d s to i m proved i n teg ra ti on
a n d a cts a s a bri d g e between cu l tu res to form pa rtn ersh i ps by red u ci n g
con fu si on , provi d i n g con fi d en ce to pa rti ci pa n ts a n d provi d i n g a
fou n d a ti on for i n n ova ti on . As i t wa s d evel oped th rou g h pa n -i n d u stry
i n pu t i t i s n ot sector-speci fi c; i t provi d es a ba si s for broa d er a d opti on a n d
en g a g em en t, a com m on fou n d a ti on for d evel opi n g repea ta bl e m od el s to
en h a n ce com m u n i ca ti on a n d en g a g em en t.

Th e sta n d a rd i s a ba si s for ben ch m a rki n g th e col l a bora ti ve ca pa bi l i ty of

org a n i za ti on s (both i n tern a l l y a n d extern a l l y) th rou g h B SI i n d epen d en t
a ssessm en t, en h a n ci n g pa rtn er eva l u a ti on a n d sel ecti on tog eth er wi th
esta bl i sh i n g m a rket d i fferen ti a ti on . I t crea tes a focu s to prom ote
cu stom er con fi d en ce a n d m ore effecti ve j oi n t ri sk m a n a g em en t, wh eth er
rel a ted to th e ch a l l en g es of speci fi c prog ra m m es or to th e rel a ti on sh i p
a spects of col l a bora ti ve worki n g . I t red u ces th e l i kel i h ood of
m i su n d ersta n d i n g s or a m i sm a tch of obj ecti ves, con stra i n s h i d d en
a g en d a s a n d red u ces th e proba bi l i ty of con fl i ct.

Th e sta n d a rd ’s stru ctu red a pproa ch fa ci l i ta tes i n teg ra ti on of col l a bora ti ve

worki n g wi th i n opera ti on a l proced u res, processes a n d system s. Th u s i t
esta bl i sh es m ore effecti ve g overn a n ce; i t a l so speed s th e d evel opm en t of

xi v
 In troduction

a b a se l i n e to s u p p o rt re s o u rce d e ve l o p m e n t a n d tra i n i n g , wh i ch i n cre a s e s

an o rg a n i z a ti o n ’s co l l a b o ra ti ve ca p a b i l i ty to e n h a n ce th e s ki l l s a n d a b i l i ty

o f p e rs o n n e l .

In s h o rt , BS 1 1 000 is a fra m e wo rk th a t wi l l p ro m o te b e tte r e n g a g e m e n t

and e ffe cti ve n e s s t h ro u g h s tre n g th e n e d b u s i n e s s p ro ce s s e s , wh i l e

i m p ro vi n g ri s k m a n a g e m e n t , e n h a n ci n g d i s p u te re s o l u ti o n and p ro vi d i n g

a b a s i s fo r s ki l l s d e ve l o p m e n t. M o s t i m p o rta n tl y o f a l l , i t i m p ro ve s th e

p ote n ti a l fo r s u s ta i n a b l e re l a ti o n s h i p s th a t d e l i ve r va l u e .

BS 1 1 000 i s th e wo rl d ’s fi rs t co l l a b o ra ti ve b u s i n e s s re l a ti o n s h i p s

s t a n d a rd , wh i ch h a s been d e ve l o p e d fro m p a n - i n d u s try b e s t

p ra cti ce , re co g n i z i n g th e g ro wi n g u se o f a l te rn a ti ve b u si n e ss

m o d e l s s u ch a s o u ts o u rci n g , a l l i a n ce s , p a rt n e rs h i p s a n d co n s o rti a . It

ca n be d e p l o ye d in a n y b u s i n e s s co n te xt wh e re s u cce s s fu l

p e rfo rm a n ce d epen d s on s tro n g re l a ti o n s h i p s a n d e xp l o i t s th e

ca p a b i l i ti e s o f two o r m o re o rg a n i z a ti o n s wo rki n g in an i n t e g ra t e d

m a n n e r.

Th e s t a n d a rd is unique in th a t i t h a s a n e i g h t- s t a g e l i fe cycl e

a p p ro a ch fo r s tra te g i c d e ve l o p m e n t , en g a g em en t a n d m a n a g em en t

o f b u s i n e s s re l a ti o n s h i p s fro m co n ce p t th ro u g h to d i s e n g a g e m e n t.

I ts s e cto r- n e u tra l p o si ti o n i n g p ro vi d e s a p ra cti ca l m od el . I t i d e n ti fi e s

th e ke y p ri n ci p l e s th a t o rg a n i z a ti o n s s h o u l d a d o p t to e ffe ct i ve l y

bu i l d m o re su sta i n a b l e re l a ti o n s h i p s th a t d e l i ve r p e rfo rm a n ce ,

i n n o va ti o n and cre a t e va l u e fo r th e p a rt i e s i n vo l ve d . I ts co re

b e n e fi t s i n cl u d e :

• e fficiency im p rovement: wh e re o rg a n i z a ti o n s ’ b u si n e ss

o b j e cti ve s re l y o n i n t e rd e p e n d e n t p a rtn e rs wo rki n g to g e th e r to

a ch i e ve re s u l t s , wh i ch in tu rn re s ts o n th e i r a b i l i t y to j o i n tl y

cre a t e a s e a m l e s s d e l i ve ry p ro ce s s ;

• g reate r e ffectivene s s : b y wo rki n g t o g e th e r, o rg a n i z a t i o n s a re

a bl e to s h a re kn o wl e d g e and e xp e ri e n ce to fo cu s t h e i r

re s o u rce s o n re d u c i n g wa s t e and d u p l i ca ti o n o f e ffo rt ;

• im p rove d engagement: wh e re cu s t o m e r re q u i re m e n ts o r

m a rke t va l u e p ro p o s i ti o n s re q u i re th e co m b i n e d ca p a b i l i ti e s of

on e o r m o re p a rtn e rs , th e i r j o i n t s u cce s s re l i e s o n c o m m i tm e n t

to com m o n o b j e cti ve s a n d th u s s p e e d o f i m p l e m e n ta t i o n ;

• co s t re d u ction : wh e re o rg a n i z a ti o n s a re j o i n tl y e n g a g e d in

d e ve l o p i n g and d e l i ve ri n g o b j e cti ve s , th e s t a n d a rd p ro vi d e s a

p ra cti ca l a p p ro a ch to cre a ti n g a s h a re d e n vi ro n m e n t t h a t

a l l o ws co s ts to be o pti m i ze d o r e l i m i n a te d th ro u g h

ra t i o n a l i z a t i o n ;

• im p rove d ri s k management : wh e re i n te rd e p e n d e n t

re l a ti o n s h i p s a re cru ci a l in m e e ti n g b u s i n e s s o b j e cti ve s th e re a re

s i g n i fi ca n t ri s ks . Th e s tru ct u re d a p p ro a ch to i d e n ti fyi n g and

xv
In tro ductio n

managing th e s e re l a ti o n s h i p s re d u ce s th e ri s k o f fa i l u re wh i l e

cre a ti n g a fo cu s fo r j o i n t m a n a g e m e n t o f ri s ks ;

• enh an ce d p e rfo rm an ce : b y e s ta b l i s h i n g an open and

tru s t- b a s e d j o i n t wo rki n g e n vi ro n m e n t b a s e d on a co m m o n

fra m e wo rk, o rg a n i z a ti o n s a re a bl e to s h a re ca p a b i l i ty,

kn o wl e d g e and e xp e ri e n ce to a d o p t i n n o va ti ve a p p ro a ch e s th a t

re m o ve co n s tra i n ts o n p e rfo rm a n ce ;

• f o u n d ation f or s kill s d evelo p m ent : a s o rg a n i z a ti o n s s e e k to

bu i l d a l te rn a ti ve b u s i n e s s m o d e l s s u ch a s o u ts o u rci n g , a l l i a n ce s ,

p a rtn e rs h i p s a n d c o n s o rt i a t h e re is a g re a te r n e e d to d e ve l o p

s ki l l s a n d co m p e t e n ci e s . Th e s ta n d a rd cre a t e s a s ta b l e p l a tfo rm

to fo cu s s ta ff d e ve l o p m e n t p ro g ra m m e s .

• im p rove d s ys tem s an d pr oce s s e s : to e xp l o i t th e b e n e fi t s o f

co l l a b o ra ti ve wo rki n g , th e s ta n d a rd p ro vi d e s a s tru ctu re d b a si s

fo r i n t e g ra ti n g th e ke y e l e m e n ts o f b e s t p ra cti ce i n to

o p e ra t i o n a l p ro ce s s e s a n d s ys t e m s . Th i s p ro vi d e s th e tri g g e rs

and g o ve rn a n ce fo r m o re e ffe cti ve co l l a b o ra ti o n ;

• con s i s ten cy o f a p p roach : d e p l o ym e n t e n s u re s t h a t b e s t p ra ct i ce

i s em bed d ed in th e o rg a n i z a ti o n . Th u s e ffe cti ve o p e ra t i o n is

n o t so l e l y d e p en d e n t o n i n d i vi d u a l s wh o m a y o ve r ti m e be

re p l a ce d b e ca u s e o f th e i r ca re e r d e ve l o p m e n t;

• su s tain able s t rateg ic relation s hi p s : a d o p ti o n o f th e s ta n d a rd

p ro vi d e s a p l a tfo rm fo r t h e b e n e fi ts o f co l l a b o ra t i ve wo rki n g

re l a t i o n s h i p s t o be d e ve l o p e d and s u s ta i n e d o ve r t i m e , wh i ch

m a xi m i z e s th e i r va l u e .

H ow to us e thi s book

Th i s b o o k p ro vi d e s th e re a d e r wi th a ro u te map to s u cce s s fu l

co l l a b o ra ti o n . As o u t l i n e d a t th e s t a rt o f th i s ch a p t e r, i t i s o rg a n i z e d in

t h re e p a rts , e a ch wi th a d i ffe re n t p e rs p e cti ve : wh y, h ow a n d wh e re .

P a rt 1 : Wh y? Th i s p a rt e xp l a i n s wh y re l a ti o n s h i p s a re i m p o rta n t; o u tl i n e s

th e g ro wth o f co l l a b o ra ti o n and i ts m a i n ch a ra cte ri s t i cs ; e xa m i n e s ri s k

and re l a ti o n s h i p s ; d i s cu s s e s th e i m p a ct o f o rg a n i z a ti o n a l cu l t u re ; e xp l a i n s

h o w t ru s t i n co l l a b o ra t i ve re l a ti o n s h i p s i s d e ve l o p e d ; d e s cri b e s t h e

ch a l l e n g e s o f l e a d e rs h i p in a co l l a b o ra ti ve s e tti n g ; and d i s cu s s e s h o w

re l a ti o n s h i p s s h o u l d be p o si ti o n e d fo r m a xi m u m b e n e fi t. Ch e ckl i s t s a t th e

en d o f e a ch c h a p te r i n t h i s p a rt h e l p yo u to i d e n t i fy yo u r o rg a n i z a ti o n ’s

re a d i n e s s to m o ve fo rwa rd ; th e y a re d ra wn fro m BS 1 1 000 ch e ckl i s t s .

P a rt 2 : H ow? Th i s p a rt p ro vi d e s a p ra cti c a l s te p - b y- s te p ro u te map to

i m p l e m e n ta t i o n o f th e s ta n d a rd . I t i n tro d u ce s B S 1 1 000, e xp l a i n s h o w to

ra i s e a wa re n e s s o f th e b u s i n e s s ca s e and b e n e fi t s o f B S 1 1 000; d e s cri b e s

h o w to o bta i n th e re q u i re d o rg a n i z a ti o n a l kn o wl e d g e ; d i s cu s s e s i n te rn a l

xvi
 In tro ductio n

a s s e s s m e n ts o f re a d i n e s s to a d o p t th e s t a n d a rd ; a d vi s e s o n p a rtn e r

s e l e ct i o n ; d i s cu s s e s th e p ra cti ca l i ti e s o f wo rki n g to g e th e r; and h i g h l i g h ts

th e i m p o rta n ce of a n e xi t s tra te g y. Ke y m e s s a g e s a n d ch e ckl i s ts a re

p ro vi d e d a t th e en d o f e a ch ch a p t e r i n th i s p a rt.

P a rt 3 : Whe re? Th i s p a rt e xp l o re s th e va ri o u s wa ys i n wh i ch co l l a b o ra ti ve

a rra n g e m e n ts c a n add va l u e , b o th n ow a n d in th e fu tu re . I t d i s cu s s e s

cu s to m e r e n g a g e m e n t, s u p p l y ch a i n s , o u ts o u rci n g , co l l a b o ra t i ve

co n t ra cti n g , a l l i a n ce m od el l i n g and co l l a b o ra ti ve m a tu ri ty. Su bseq u en t

ch a p t e rs i n th i s p a rt e xp l o re n e w s ce n a ri o s fo r co l l a b o ra t i o n : m e rg e rs a n d

a cq u i s i ti o n s ; SM E co l l a b o ra ti ve cl u s te rs ; co l l a b o ra ti n g fo r s u s t a i n a b i l i ty;

and th e th i rd s e cto r. Th i s p a rt co n cl u d e s wi th a fo rwa rd l o o k to th e

fu tu re o f co l l a b o ra ti o n .

xvi i
PART 1 : Wh y?

Ch a p te r 1 – Th e im p o rtan ce o f relation s h i ps

Th i s ch a pter expl a i n s th e i m porta n ce of rel a ti on sh i ps i n

bu si n ess a s a cru ci a l a spect of su sta i n a bl e su ccess. M ost peopl e
i n th e bu si n ess com m u n i ty (both pu bl i c a n d pri va te sector) wi l l
a ppreci a te th a t rel a ti on sh i ps a re cen tra l to d evel opi n g ,
perform i n g a n d m a i n ta i n i n g effecti ve opera ti on s. I t i s th e
i n tera cti on of rel a ti on sh i ps between org a n i za ti on s th a t crea tes
th e d yn a m i cs of bu si n ess.

B u si n ess rel a ti on sh i ps a re often g i ven l ower pri ori ty th a n processes a n d

system s, on th e a ssu m pti on th a t i n d i vi d u a l s a l rea d y h a ve th e ri g h t
ch a ra cteri sti cs for d evel opi n g a n d su sta i n i n g g ood rel a ti on sh i ps. I n m a n y
ca ses key rel a ti on sh i ps a re l i n ked to peopl e a n d d o n ot ta ke a ccou n t of
th e overa rch i n g cu l tu re of th e com pa n y. B u t ca n org a n i za ti on s a fford to
h a ve su ch a cri ti ca l a spect of su ccess l eft sol el y to i n d i vi d u a l s or sh ou l d
rel a ti on sh i p m a n a g em en t be em bed d ed i n th ei r opera ti on s?

O pera ti on a l perform a n ce i s often sepa ra ted from ei th er cu stom er or

su ppl y en g a g em en t, d u e to pol i ci es a n d processes. Fron t-l i n e su pport wi l l
often be esta bl i sh ed a n d m ea su red a g a i n st servi ce l evel perform a n ce
ra th er th a n ou tcom es. Th i s focu s on con tra ctu a l com pl i a n ce i n
i n tercom pa n y rel a ti on sh i ps crea tes a cu l tu re th a t i s ba sed on ‘con tra cti n g
for fa i l u re’ wh ere th e fou n d a ti on i s to esta bl i sh th e bou n d a ri es for
poten ti a l fa i l u re a n d l i ti g a ti on . An d a focu s on processes wi l l
i n a d verten tl y crea te n eg a ti ve com pl i a n ce, wh ere a d h eren ce to
proced u res overri d es ou tcom es.

E ffecti ve ri sk m a n a g em en t h a s a l wa ys been a m a j or con si d era ti on for

bu si n ess, wh ere th e d evel opm en t of va l u e proposi ti on s i s a ccom pa n i ed by
a ppropri a te ri sk m i ti g a ti on . B u t i t i s ra re for bu si n esses to rea l i ze th a t
rel a ti on sh i ps a re perh a ps on e of th e pri n ci pa l ri sks th a t th ey m u st
m a n a g e. I n th e l a st d eca d e or two th ere h a s been a si g n i fi ca n t sh i ft
towa rd s a l tern a ti ve bu si n ess m od el s su ch a s ou tsou rci n g , a l l i a n ces,
con sorti a , pa rtn ersh i ps a n d j oi n t ven tu res focu sed on d evel opi n g
i n teg ra ted sol u ti on s. Th ese com pl ex bu si n ess m od el s en com pa ss a h i g h

1
PART 1 : Why?

d e g re e o f i n te rd e p e n d e n cy wh e re s u cce s s fu l o u tco m e s d e p e n d on th e

a b i l i ty o f o rg a n i z a ti o n s t o wo rk i n an i n te g ra t e d wa y. Th e vu l n e ra b i l i t y o f

th e s e ve n tu re s i s fre q u e n t l y d u e to th e i r fa i l u re to bu i l d e ffe ct i ve

re l a t i o n s h i p s .

Cu s t o m e rs t o d a y a re s e e ki n g to d i ve s t th e m s e l ve s o f n o n - co re a ct i vi ti e s ,

or o bta i n m o re co m p l e x s o l u ti o n s , th ro u g h o u ts o u rci n g p ro g ra m m e s t h a t

fre q u e n t l y h a ve a d i re ct i n te rfa ce wi th e n d - u s e rs o r co n s u m e rs . Su ppl y

ch a i n p e rfo rm a n ce and d e p e n d a b i l i t y h a ve b e co m e an i n t e g ra l a s p e ct o f

p e rfo rm a n ce ; th i rd p a rt i e s a re n ow a cri t i ca l a s p e ct o f b u i l d i n g va l u e

p ro p o s i ti o n s . M a n y o rg a n i z a ti o n s cl a i m to be to ta l l y fo cu s e d on cu s to m e r

s a ti s fa cti o n wi t h s u p p l y ch a i n m a n a g e m e n t th a t i s d e ve l o p e d a ro u n d

bu i l d i n g ro b u s t re l a ti o n s h i p s . H o we ve r, th e ch a l l e n g e fo r th e s e

o rg a n i z a ti o n s i s t o e va l u a te h o w th e i r a p p ro a ch to p e rfo rm a n ce wo rks i n

p ra cti ce and th e i n ce n ti vi z a ti o n s ch e m e s t h e y d e p l o y to m o ti va te th e i r

p e rs o n n e l , wh i ch m a y be l e ss a b o u t b u i l d i n g re l a ti o n s h i p s a n d m o re

a b o u t s h o rt - te rm g a i n s. Th e p ro b l e m i s co m p o u n d e d wh e n o rg a n i z a ti o n s

wo rk to g e th e r: m a n y o rg a n i z a ti o n s o p e ra te a t l e s s th a n 70 p e r ce n t

e ffi ci e n cy a n d wh e n wo rki n g to g e th e r wi th o th e rs th e i r e ffe cti ve n e s s i s

re d u ce d fu rth e r. D e s p i te th e a d va n ce s o f te ch n o l o g y, i t i s s ti l l peopl e th a t

m a ke an o rg a n i z a ti o n fu n ct i o n ; i t i s re a s o n a b l e to a ssu m e th a t th e

re l a t i o n s h i p s t h e y fo rm a re a cri ti ca l s u cce s s fa cto r th a t i s i m p o rta n t to all

s ta ke h o l d e rs .

Key co rp o rate i ssu e s fo r relation s hi p management

Th e fo l l o wi n g s e cti o n h i g h l i g h ts s o m e o f th e se a s p e cts i n m o re d e ta i l ,

wi th a vi e w to ch a l l e n g i n g th e re a d e r t o co n s i d e r wh e th e r th e i r

o rg a n i z a ti o n h a s th e a p p ro p ri a t e co rp o ra te fo cu s o n i ts re l a t i o n s h i p

m a n a g e m e n t ca p a b i l i t y.

S trategy an d lea d e rs hi p
C o l l a b o ra t i o n wi l l m a ke a b u s i n e s s s tra t e g y vu l n e ra b l e i f th e s tre n g th of

re l a ti o n s h i p s a n d o rg a n i z a ti o n a l o r cu l t u ra l co m p a ti b i l i ty a re n ot

co n s i d e re d a d e q u a te l y, t h u s p u t ti n g b u s i n e s s p ro p o s i ti o n s i n d a n g er of

fa i l u re .

Ri s k management
R i s k i s m o s t o fte n ca te g o ri z e d b y fi n a n ci a l , p e rfo rm a n ce , s a fe ty a n d

e xt e rn a l e ve n ts , wh e th e r n a t u ra l o r s o ci a l /p o l i ti c a l . Ye t th e m o s t l i ke l y ri s k

fo r a n y b u s i n e s s i s th e b re a kd o wn o f re l a ti o n s h i p s wi th cu s to m e rs ,

p a rt n e rs o r s u p p l i e rs .

2
 Ch a p te r 1 – Th e im p o rta n ce o f re la tio n sh ip s

Va l u e c re a ti o n

E ffecti ve rel a ti on sh i ps a re cru ci a l to u n l ocki n g th e poten ti a l wi th i n th e

va l u e ch a i n . B u t org a n i za ti on s freq u en tl y i g n ore th e h i d d en ben efi ts of
sh a ri n g process i m provem en ts, ski l l s d evel opm en t, prod u ct en h a n cem en t
a n d perform a n ce towa rd s overa l l com peti ti ven ess.

Kn o wl e d g e m a n a g e m e n t

At th e h ea rt of m ost rel a ti on sh i p i ssu es i s th e con cept of ‘kn owl ed g e i s

power’ . Th i s i s th e m a i n ba rri er to ben efi ti n g from th e va l u e of
i n tera cti on between org a n i za ti on s; i t i s a fa i l u re to bu i l d u p a l evel of
tru st to en su re th a t kn owl ed g e i s expl oi ted for m u tu a l ben efi t.

P e o p l e , b e h a vi o u rs a n d t ru s t

Th e ch a l l en g e i n a l l bu si n ess rel a ti on sh i ps i s peopl e a n d h ow th ey a re

m a n a g ed , m ea su red , i n cen ti vi zed a n d rewa rd ed . D espi te org a n i za ti on s
i n vesti n g i n ski l l s d evel opm en t prog ra m m es a n d cu l tu ra l i n i ti a ti ves, th e
con fl i ct of pol i ci es a n d process wi l l d ri ve i n d i vi d u a l s to a d a pt th ei r l evel
of com m i tm en t, en th u si a sm a n d en g a g em en t.

I n te r n a l re l a ti o n s h i p s

I n tern a l bou n d a ri es a n d d i vi si on s m a y n ot on l y i m ped e extern a l

rel a ti on sh i ps; th ey a l so h a ve th e ca pa ci ty to u n d erm i n e col l ecti ve
perform a n ce th rou g h i n com pa ti bl e a g en d a s a n d perform a n ce cri teri a .
Th e wa y i n wh i ch i n d i vi d u a l el em en ts of a bu si n ess a re m ea su red wi l l
h a ve a si g n i fi ca n t i m pa ct on h ow th ese el em en ts work tog eth er a s a
wh ol e. An d a s bu si n ess ven tu res becom e m ore com pl ex, so th ei r i n tern a l
ca pa ci ty to h a rm on i ze cross-fu n cti on a l a cti vi ti es fa ces i n crea sed pressu re
a n d stress on overa l l perform a n ce.

Re l a ti o n s h i p m a n a g e m e n t e n g a g e m e n t a re a s

I n h el pi n g org a n i za ti on s to i n teg ra te, th ese key pri n ci pl es a re com m on

a cross m ost types of bu si n ess rel a ti on sh i ps. I t i s eq u a l l y i m porta n t to
con si d er th ese i m pa cts i n a va ri ety of tra d i n g , opera ti on a l a n d bu si n ess
en vi ron m en ts. I n d oi n g so i t i s h oped th a t th e rea d er wi l l sta rt to
con si d er wh ere a m ore i n teg ra ted col l a bora ti ve a pproa ch (a n d perh a ps
th e a ppl i ca ti on of B S 1 1 000) cou l d bri n g a d d i ti on a l va l u e or secu ri ty to
th ei r proj ected ou tcom es. Th ese pri n ci pl es a re a d d ressed i n g rea ter d eta i l
i n Pa rt 3 .

C u s tom e r e n g a g e m e n t

Th e ch a l l en g e i s to be recog n i zed a s a preferred provi d er i n th e rel eva n t

3
PART 1 : Why?

sector or servi ce. As cu stom ers’ n eed s becom e m ore com pl ex, so th e n eed
for both h ori zon ta l a n d verti ca l rel a ti on sh i ps becom es a cru ci a l el em en t
of su ccess.

S u p p l y ch a i n o p ti m i za ti o n

I t i s com m on to fi n d 5 0 per cen t to 80 per cen t of opera ti on a l cost bei n g

ch a n n el l ed th rou g h th e su ppl y ch a i n ; wi th su ch a h i g h cost, su ppl i er
d evel opm en t a n d i n teg ri ty i s a cri ti ca l d i m en si on i n term s of
com peti ti ven ess a n d perform a n ce.

O u t s o u rci n g

O u tsou rci n g a pproa ch es h a ve becom e a n a ccepted a spect of bu si n ess,

wh i ch m ea n s th a t extern a l org a n i za ti on s a re m ovi n g i n si d e opera ti on a l
bou n d a ri es or fi rewa l l s to becom e pa rt of th e overa l l d el i very process.
Th ese provi d ers’ rem ote l oca ti on s m ea n th ey a re n ot ph ysi ca l l y a bsorbi n g
th e cu stom er’s eth os or cu l tu re a n d m a y be opera ti n g wi th d i fferen t a n d
con fl i cti n g va l u es.

I n te r n a ti o n a l re l a ti o n s h i p s

O pera ti n g a cross n a ti on a l bou n d a ri es i n crea ses com pl exi ty; th ose wh o

opera te i n a g l oba l m a rket wi l l be a cu tel y a wa re of th e ch a l l en g es
th rown u p by cu l tu ra l d i fferen ces, wh eth er n a ti on a l , reg i on a l or
corpora te. D i fferen ces i n n a ti on a l tra i ts a re h i g h l i g h ted a n d i t ta kes ti m e
to bu i l d effecti ve rel a ti on sh i ps th a t rea l l y d el i ver.

S M E col l a b o r a ti ve cl u s te rs

For sm a l l to m ed i u m en terpri ses (SM E s) , com peti ti on a n d a n i n crea si n g

focu s on econ om i es of sca l e h a s wi d en ed th e g u l f between th e
m u l ti n a ti on a l s a n d th e sm a l l er l oca l com pa n i es. Col l a bora ti ve cl u sters of
SM E s a re form i n g , to en a bl e th em to com pete wi th th e l a rg er com pa n i es.
Th ey a re ta ki n g a d va n ta g e of th e opportu n i ti es a n d ben efi ts th a t m a y be
expl oi ted th rou g h col l a bora ti ve a pproa ch es to crea te com peti ti ve ed g e.

Co rp o r a te s o ci a l re s p o n s i b i l i ty

Th ere ca n be few boa rd m eeti n g s tod a y th a t d o n ot a d d ress th ei r cu rren t

corpora te soci a l respon si bi l i ty (CSR) profi l e. Th ere i s a d i ffi cu l t ba l a n ce
between th e corpora te d ri vers of com peti ti ven ess, sh a reh ol d er va l u e a n d
su sta i n a bi l i ty. Th e pra cti ca l i m pl i ca ti on s of i g n ori n g su sta i n a bi l i ty i ssu es,
ei th er d i rectl y or i n d i rectl y, tog eth er wi th th e pressu res of ba l a n ci n g th e
d em a n d s of reg u l a tors, cu stom ers, con su m ers a n d pressu re g rou ps, h a s
becom e very com pl ex. Tod a y CSR em bra ces corpora te g overn a n ce, eth i ca l
tra d i n g , h u m a n ri g h ts, en vi ron m en ta l i m pa ct, a n d reg u l a ti on etc.

P a r tn e rs h i p s , a l l i a n ce s , co n s o r ti a a n d j o i n t ve n t u re s

Th e bl en d i n g of d i fferen t bu si n ess processes, cu l tu res, i n cen ti ve sch em es

a n d perform a n ce m ea su rem en t a cross a ch a i n of pa rtn ers (or oth er
a l l i a n ces) ca n crea te poten ti a l con fl i ct a n d l ost effi ci en cy. Rel a ti on sh i ps
becom e a cri ti ca l a spect of th ei r poten ti a l for su ccess.

4
 Chapter 1 – The importance of relationships

Me r ge rs an d ac qu s
i i ti o n s
M erg ers a n d a cq u i si ti on s d epen d on opera ti on a l fi t a n d a l so on th e
a bi l i ty of org a n i za ti on s to h a rn ess a n d opti m i ze th ei r com bi n ed
ca pa bi l i ty. Wh i l e m erg ers a n d a cq u i si ti on s a re a rg u a bl y th e q u i ckest wa y
to g row a com pa n y th ey ca n be ri sky, wh en con si d eri n g th e i n vestm en t
a n d ra ti on a l i za ti on cost. An ecd ota l evi d en ce su g g ests th a t 85 per cen t of
m erg ers a n d a cq u i si ti on s a re fa i l u res; a n i m porta n t a spect th a t i s m i ssi n g
i s a n a l ysi s of th e org a n i za ti on s’ cu l tu ra l com pa ti bi l i ty i n th ei r a pproa ch to
rel a ti on sh i ps to d ri ve su ccess.

Th i rd s e cto r
For m a n y yea rs th e vol u n ta ry (th i rd ) sector h a s been provi d i n g servi ces,
wh eth er for soci a l ou tcom es or em erg en cy rel i ef. M ore recen tl y
g overn m en ts h a ve ta ken a m ore proa cti ve a pproa ch i n seeki n g to h a rn ess
th e ski l l s a n d resou rces of vol u n ta ry org a n i za ti on s. Rel a ti on sh i ps between
l oca l g overn m en t, i n d u stry pa rtn ers a n d th e vol u n ta ry org a n i za ti on s wi l l
n eed to be d evel oped to a voi d poten ti a l cu l tu re cl a sh , beca u se th e
m oti va ti on s a n d pri n ci pl es of ea ch ca n be very d i fferen t.

D e ve l o p ing r e l a ti o n s pshi

Rel a ti on sh i ps of a n y ki n d h a ve a l i fe cycl e; to m a xi m i ze th e ben efi ts i t i s

i m porta n t to con si d er th e l on g er-term i m pl i ca ti on s of ou r a cti on s on th e
va l u e-crea ti n g poten ti a l to d el i ver i m proved perform a n ce. Th i s ca n be
con si d ered a t th ree l evel s: th e stra teg i c i n ten t, th e en g a g em en t process
a n d th e on g oi n g m a n a g em en t. E very rel a ti on sh i p i s d i fferen t, wh eth er
verti ca l or h ori zon ta l ; h owever, th e key i ssu es wi l l be com m on to m ost. I t
i s th ese key fa ctors th a t B S 1 1 000 ca ptu res a n d th u s provi d es a com m on
a n d con si sten t fou n d a ti on for col l a bora ti on . E sta bl i sh i n g th e ri g h t
pl a tform on wh i ch to crea te a rel a ti on sh i p i s cru ci a l ; wh i l e th ere i s cl ea rl y
a n eed for a con tra ct i t i s eq u a l l y i m porta n t to j oi n tl y set ou t a n
a ppropri a te g overn a n ce m od el th a t wi l l su pport col l a bora ti ve worki n g .
Ta bl e 1 . 1 h i g h l i g h ts som e of th e posi ti ve a n d n eg a ti ve i m pa cts on
rel a ti on sh i ps.

Ta b l e 1 . 1 – P s
o i ti ve a n d n e g a ti ve i m p a ct s on r e l a ti o n s ps
hi

P s
o i ti ve co n t r u
ib to rs to co l l a b o r a ti o n N e g a ti ve co n t r u
ib to rs to

co l l a b o r a ti o n

E xecu ti ve spon sorsh i p Poor beh a vi ou r m a n a g em en t

Com m i tted l ea d ersh i p La ck of sta keh ol d er
E a rl y sta keh ol d er en g a g em en t com m i tm en t
I n teg ra ted pl a n n i n g La ck of pa rtn eri n g ski l l s
J oi n t g overn m en t stru ctu re La ck of m a n a g em en t su pport
O pen book (i f a ppropri a te) La ck of stra teg i c d i recti on
Cl a ri ty of obj ecti ves Poor u pfron t pl a n n i n g

5
PART 1 : Why?

R e l a ti o n s h i p m a n a g em en t pl a n P o o r p a rtn e r e va l u a ti o n

G ood co m m u n i ca ti o n at all l e ve l s F a i l u re to a d d re s s cu l tu ra l

J o i n t o wn e rs h i p o f s u cce s s d i ffe re n ce s

B e h a vi o u ra l ch a rt e r La ck o f s h a re d g oa l s

J o i n t ri s k m a n a g e m e n t P o o rl y d e fi n e d m e a s u re m e n t

E ffe ct i ve i n fo rm a ti o n s h a ri n g La ck o f b e n e fi t a n a l ys i s

E a rl y i n te g ra ti o n o f p ro ce s s e s High fo cu s o n ri s k tra n s fe r

J o i n t s ki l l s d e ve l o p m e n t H i d d en a g en d a s

J o i n t ch a n g e m a n a g em en t P o o r co m m u n i ca ti o n

Ap p ro p ri a t e p e rfo rm a n ce I n e ffe cti ve d i s p u te re s o l u ti o n

m e a s u re m e n t La ck o f e xi t s tra te g y

I n te g ra te d co n ti n u o u s i m p ro ve m e n t N e g a ti ve a p p ro a ch to co n tra ct

E ffe ct i ve d i sp u te m a n a g em en t La ck o f i n n o va ti o n

J o i n t e xi t s tra t e g y

M o st re l a ti o n s h i p s a re m u l ti d i m e n s i o n a l . Th e y n e e d to be re co g n i z e d fo r

th e va l u e th e y b ri n g and th e p ote n ti a l ri s k th a t e m e rg e s fro m fa i l i n g

re l a ti o n s h i p s . M o re i m p o rt a n tl y, a s a l te rn a ti ve b u s i n e s s m o d e l s a re

d e ve l o p e d i t i s e sse n ti a l th a t t h e y a re bu i l t on a s tru ctu re t h a t p l a ce s th e

re l a ti o n s h i p s a b o ve th e i n d i vi d u a l and e m b e d s re l a ti o n s h i p m a n a g em en t

in th e o rg a n i z a ti o n a l p o l i ci e s , p ro ce d u re s a n d s ys t e m s . I t i s th e re fo re

i m p o rta n t t o co n s i d e r wh a t wi l l d ri ve th e s u cce s s o f re l a ti o n s h i p s a n d

wh a t m a y u n d e rm i n e th e m .

Eval u ating relation s hi p management initiative s

G i ve n t h i s b a ckg ro u n d , i t i s p e rh a p s s u rp ri s i n g t h a t th e cri ti ca l i ssu e of

re l a ti o n s h i p s i s o fte n l e ft to th e ca p a b i l i ti e s o f i n d i vi d u a l s , ra th e r t h a n

a d o p te d as a co rp o ra t e e th o s th a t e m b e d s th e a p p ro p ri a te ch a ra cte ri s ti cs .

Th e s e o b s e rva t i o n s p ro m p t a ke y q u e s ti o n : i f re l a ti o n s h i p s a re i m p o rta n t,

sh ou l d o rg a n i z a t i o n s b e m a ki n g g re a te r s tri d e s to d e ve l o p th e i r p ro fi l e ,

s tru ctu re t h e i r p o l i ci e s a n d p ro ce s s e s , and d e ve l o p th e s ki l l s o f th e i r

peopl e to d ri ve m o re s u s ta i n a b l e b u si n e ss m o d e l s? E ffe cti ve re l a ti o n s h i p s

wi l l n ot si m pl y h a ppen b e ca u s e we wa n t t h e m to ; th e y n e e d to be

m a n a g ed a p p ro p ri a te l y to e n s u re th e y a re a fa cto r fo r s u cce s s a n d n ot a

ca u s e o f fa i l u re .

Concl us ion
R e l a t i o n s h i p s a re i m p o rt a n t , so i t i s u n re a l i s ti c to a ssu m e th a t s u c h a

cri ti ca l a s p e c t ca n be l e ft t o ch a n ce . I t i s a l so i m p o rta n t to u n d e rs ta n d

t h a t wh i l e o rg a n i z a ti o n s ca n try to p ro j e ct a p a rti cu l a r e th o s , t h e y a re

made up of peopl e and th u s p a rti a l l y d e p e n d e n t o n th e i r p e o p l e . So

re l a ti o n s h i p s ca n n o t b e l e ft to l u ck, n o r ca n o rg a n i z a ti o n s re l y o n i n d i re ct

a ct i vi t y to d e ve l o p th e a p p ro p ri a te b e h a vi o u rs t o s u p p o rt th a t e t h o s . Fa r

6
 Chapter 1 – The importance of relationships

fro m bei n g a si d e i ssu e , re l a ti o n s h i p s a re a fu n d a m e n ta l a s p e ct o f

b u s i n e s s p ro ce s s e s a n d a ke y fa cto r i n d ri vi n g b u s i n e s s s u cce s s .

O rg a n i z a t i o n s s h o u l d u n d e rs ta n d th e i m p o rta n ce o f re l a ti o n s h i p s a n d

s tri ve to em bed b o th s tru ctu re and l e a d e rs h i p to e xp l o i t th e p ote n ti a l

b e n e fi ts .

7
PART 1 : Why?

Checklist
Th e fo l l o wi n g ch e ckl i s t m a y h e l p to ra i s e a wa re n e s s o f re l a t i o n s h i p i ssu e s.

I d e n ti fy th e ke y i s s u e s t h a t a re a p p ro p ri a t e to yo u r b u s i n e s s o p e ra ti o n s t o

cre a t e a fo cu s fro m yo u r p e rs p e c ti ve a s yo u m o ve fo rwa rd to th e n e xt

ch a p te rs . Yo u r re s p o n s e wi l l h el p yo u to co n s i d e r th e n e xt s te p s fo r

d e ve l o p i n g a s tru ctu re d a p p ro a ch fo r yo u r o rg a n i z a ti o n .

Ta b l e 1 . 2 – I n i ti a l r e l a ti o n s p
hi ch e ckl i s t

I n i ti a l r e l a ti o n s p
hi ch e ckl i s t Pr rio i ty

Issu e H igh Me du
i m Lo w

S tra t e g y a n d l e a d e rs h i p

Ri sk m a n a g e m en t

Va l u e cre a t i o n

Kn o wl e d g e m a n a g em en t

Pe o p l e , b e h a vi o u rs a n d tru s t

I n te rn a l re l a ti o n s h i p s

C u s to m e r e n g a g e m e n t

S u p p l y ch a i n o p ti m i z a ti o n

O u ts o u rci n g

I n te rn a t i o n a l re l a ti o n s h i p s

SM E co l l a b o ra ti ve cl u s te rs

CSR a n d s u s ta i n a b i l i t y

P a rtn e rs h i p s , a l l i a n ce s a n d j oi n t

ve n tu re s

M e rg e rs a n d a cq u i s i ti o n s

Th i rd s e cto r

8
Cha p te r 2 – Collabo ration

Col l a bora ti on i s n ot n ew. H owever, bu i l d i n g on th e pri n ci pl e

th a t rel a ti on sh i ps i n bu si n ess a re a cru ci a l a spect of
perform a n ce a n d su ccess, org a n i za ti on s n eed to con si d er th e
ca ta l ysts req u i red to d evel op, prom ote, i m pl em en t a n d
m a i n ta i n effecti ve col l a bora ti ve pra cti ce. At th e sa m e ti m e, th ey
wi l l n eed to expl ore a n d eva l u a te th e i n terd epen d en ce
between opera ti on a l pra cti ces a n d th e beh a vi ou rs th a t
u n d erpi n perform a n ce a n d ou tcom es. I n th i s ch a pter th e a i m i s
to provi d e som e ba ckg rou n d th i n ki n g on th e broa d er su bj ect of
col l a bora ti on .

M a n y peopl e th i n k of col l a bora ti on a n d pa rtn eri n g a s ‘soft a n d fl u ffy’

bu t h a ve perh a ps n ot u n d erstood th e poten ti a l ben efi ts or rea l
ch a l l en g es. Som e bel i eve i t i s si m pl y a q u esti on of ch a n g i n g beh a vi ou rs,
wh i l e oth ers prom ote th e vi ew th a t d ri vi n g opera ti on a l process ch a n g es
wi l l en force th e ri g h t beh a vi ou rs. Th e rea l i ty i s th a t to expl oi t th e fu l l
poten ti a l you m u st h a ve a n en vi ron m en t th a t fosters a n d su pports i ts
effecti ve a d opti on a n d th u s crea tes th e ri g h t beh a vi ou rs.

Term s l i ke ‘corpora te cu l tu re’, ‘eth os’ a n d even th e ‘D N A’ of a n

org a n i za ti on a re h ea rd freq u en tl y. I t m i g h t be rea son a bl e to a ssu m e th a t
th e opera ti n g styl e of a n org a n i za ti on i s som eth i n g th a t i s a resu l t of
n a tu re, n ot n u rtu re. I t sh ou l d be n oted th a t rea l -l i fe bi ol og i ca l D N A
evol ves sl owl y over ti m e a n d i s a rel a ti vel y sta ti c fra m ework. Th e cu l tu re
of a n org a n i za ti on (‘th e wa y we d o th i n g s rou n d h ere’) , on th e oth er
h a n d , i s m ore l i kel y to be a prod u ct of i ts m a n a g em en t stru ctu re a n d
n a ti on a l i d en ti ty, wh i l e th e eth os (th e com pa n y va l u es) i s fa r m ore l i kel y
to be d ri ven by th ose i n a u th ori ty th rou g h g overn a n ce. An org a n i za ti on
ca n va ry ba sed on h ow i t i s m a n a g ed , a l l of wh i ch i n fl u en ces th e peopl e
th a t i t em pl oys to m eet i ts obj ecti ves. So th e d eba te con ti n u es: i s i t
n a tu re a n d a bsorpti on or process a n d g overn a n ce th a t form u l a te th e
col l a bora ti ve profi l e a n d ca pa bi l i ty of a n org a n i za ti on to i n fl u en ce th e
beh a vi ou rs of i ts person n el ?

Th ere a re m a n y books a n d pa pers on th e su bj ect of pa rtn eri n g a n d

col l a bora ti on , wh i ch m a y be u sefu l for th ose wh o seek to broa d en th ei r
u n d ersta n d i n g . E a ch referen ce sou rce h el ps to focu s on on e or m ore
a spects a n d ben efi ts. Th i s wa s a key a spect of th e resea rch pa per Vision

9
PART 1 : Why?

201 0published by PSL1 in 1 999, which focused on future supply or value

chains and supported the view that future competitive edge would be
driven by harnessing the most powerful value network.

The g rowth o f collabo rative wo rking

The concepts of collaboration, partnering and alliances have been around
for a long time. However, depending on who you speak to across various
sectors of industry, you may easily be convinced that collaborative
working and partnering is either well established and delivering results
or, alternatively, a concept of executive management or marketing
department’s imagination. In reality neither is wholly true, though we
should recognize that there have been many examples of good practice
and future practice, which deliver significant value.
Collaborative working is not simply about cutting cost, though clearly
that is a business imperative. It offers enhanced capability to build new
value propositions beyond the capabilities of an individual organization.
It is apparent from many studies that alliances and partnering can be
related to corporate value and performance, but the vast majority are
regarded as having failed – anecdotal evidence suggests more than
80 per cent. Various surveys also suggest that organizations that have
effective alliances demonstrate higher returns on capital investment and
share value. This may be true in part, but perhaps better reflects those
alliances with a unique selling point that drives revenue.
Research work resulting in the publication of Future Connections looking
at business in 20202 identified the trend towards greater reliance on
alliances, partnership and collaborative networks. Subsequent work
focused on the lack of skills development to manage in this arena and
the wide variety of approaches offered to help organizations build these
collaborations. The obvious outcome was the need to create a degree of
uniformity through the development of a standard framework, which
could address the key principles, accelerate engagement and provide a
structure for skills development.

1 PSL (Partnership Sourcing Limited): Now known as the Institute of Collaborative Working:
www.instituteforcollaborativeworking.com
2 www.ucisa.ac.uk/~/media/groups/ssg/PAS1 1 000/future_connections2020%20pdf

10
 Chapter 2 – Collaboration

Netwo rk Rail – ca s e s tud y

Th e ra i l i n d u stry h a s been ch a l l en g ed to d el i ver g rea ter va l u e for
m on ey. Th e Ra i l Va l u e for M on ey revi ew ( Realising the Potential of
GB Rail) l ed by Si r Roy M cN u l ty, pu bl i sh ed i n M a y 2 01 1 , i d en ti fi ed
g rea ter col l a bora ti on between org a n i za ti on s wi th i n th e i n d u stry
(a m on g oth er th i n g s) a s bei n g on e of th e m ea n s of a ch i evi n g th i s. I n
a d d i ti on to em ba rki n g u pon a prog ra m m e to work m ore
col l a bora ti vel y wi th ou r cu stom ers, on e of N etwork Ra i l ’s oth er
stra teg i c obj ecti ves i s to i m pl em en t a pa rtn eri n g a pproa ch wi th ou r
su ppl y ch a i n to i m prove l evel s of perform a n ce, i n trod u ce g rea ter
l evel s of i n n ova ti on a n d d el i ver cost effi ci en ci es. Worki n g m ore
col l a bora ti vel y wi th ou r pa rtn ers wi l l en a bl e u s to a l i g n obj ecti ves i n
pu rsu i t of th ese g oa l s.

D el i veri n g si g n i fi ca n t a n d g rowi n g ca pi ta l works prog ra m m es i n a

sa fer, q u i cker a n d m ore effi ci en t m a n n er i s a key corpora te obj ecti ve
a n d i s a n i m pera ti ve, g i ven th e ch a l l en g e l a i d ou t to th e i n d u stry to
d el i ver better va l u e for m on ey for th e fa re-pa yi n g pa ssen g er a n d th e
ta xpa yer. Th e su ccessfu l d el i very of th ese prog ra m m es d epen d s on
th e cri ti ca l l i n k between ou tcom es a n d th e m ea n s of d el i very.
Kn owl ed g e a n d experi en ce a re essen ti a l , bu t i t i s th rou g h
col l a bora ti ve worki n g th a t sou n d , cost-effi ci en t sol u ti on s wi l l be
fou n d . Worki n g tog eth er wi th ou r su ppl i ers, from th e ea rl y sta g es,
wi l l en a bl e u s to overcom e u n certa i n ti es a n d ri sks.

We i d en ti fi ed th e a d opti on of B S 1 1 000 a s a m ea n s of en a bl i n g
g rea ter col l a bora ti on wi th ou r su ppl y ch a i n . I n a d d i ti on to
su pporti n g th e g oa l s of g rea ter effi ci en cy ou tl i n ed a bove, oth er
i d en ti fi ed obj ecti ves i n cl u d ed en a bl i n g th e cu l tu ra l a n d beh a vi ou ra l
ch a n g e a ssoci a ted wi th m ore col l a bora ti ve worki n g a n d d el i veri n g a
m ore con si sten t m ea n s of en g a g i n g wi th ou r su ppl y ba se.

Perh a ps th e si n g l e bi g g est ben efi t of worki n g to B S 1 1 000 th a t we

h a ve fou n d i s th e req u i rem en t for g rea ter stru ctu re a n d process i n
th e m a n a g em en t of th e rel a ti on sh i p; th i s i s som eth i n g th a t ca n be
d escri bed a s ‘h a vi n g d i fferen t con versa ti on s’ from th ose th a t wou l d
n orm a l l y be th e ca se for tra d i ti on a l con tra ct m a n a g em en t. Th e
req u i rem en t to focu s on con ti n u a l i m provem en t a n d d em on stra ti n g
va l u e th rou g h th e col l a bora ti on , ra th er th a n on l y m eeti n g th e
proj ect ou tpu ts, h a s h el ped to crea te a focu s on th e effecti ven ess of
th e rel a ti on sh i p for ou r proj ect tea m s a n d i ts overa l l con tri bu ti on to
su ccess.

11
PART 1 : Why?

On e o f th e m a j o r b e n e fi ts t o d a te h a s been th e s h a ri n g of

i n fo rm a ti o n and kn o wl e d g e wi th ke y p a rtn e r o rg a n i z a ti o n s wh o

h a ve re s p o n d e d p o s i ti ve l y to o u r p o l i c y to a d opt B S 1 1 000 a s th e y

e m b a rk u p o n th e i r o wn j o u rn e ys to ce rt i fi ca ti o n . Th i s

kn o wl e d g e - s h a ri n g p ro ce s s h a s a l re a d y fa ci l i ta te d th e s h a ri n g of best

p ra ct i ce co l l a b o ra ti ve wo rki n g fro m o th e r i n d u s t ry s e c to rs . S u ch

l e a rn i n g re p re s e n ts a ke y d ri ve r i n o u r o wn co n ti n u a l i m p ro ve m e n t

d ri ve a s we re s p o n d to th e on g oi n g va l u e fo r m o n e y ch a l l e n g e in th e

ra i l i n d u s try.

N ei l l Ca rru t h e rs

H ea d o f C o n t ra cti n g S t ra te g y, I n ve s t m e n t P ro j e c ts

Lea d e rs hi p an d objective s
Th e ro l e o f l e a d e rs h i p i s cru ci a l in managing p a rtn e ri n g , a l l i a n ce or

co l l a b o ra ti ve p ro g ra m m e s wh e re m a rke t i n g , sa l e s, o p e ra ti o n a l

p e rfo rm a n ce and d e l i ve ry p ro ce s s e s cro s s o rg a n i z a t i o n a l b o u n d a ri e s . Th e

p o te n ti a l p o we r o f cro s s - o rg a n i z a ti o n a l co l l a b o ra ti o n i s p a ra m o u n t, bu t

m o re i m p o rt a n tl y t h e re i s th e n eed fo r c l e a r a n d co n ci s e o b j e cti ve s .

D e ve l o p i n g an e ffe cti ve te a m fo cu s i s a ch a l l e n g e in m o st b u si n e ss

e n vi ro n m e n ts ; b u t wh e re th e t ra d i ti o n a l co m m a n d - a n d - co n t ro l s tru ctu re

i s re p l a ce d b y cro s s - fu n c ti o n a l o p e ra ti o n s , th e co o rd i n a ti o n and d i re ct i o n

o f a cti vi ti e s i s e ve n m o re co m p l e x a n d on e wh e re m o t i va ti o n and

i n fl u e n ce a re vi ta l to s u cce s s . I t i s fre q u e n t l y, h o we ve r, th e si n g l e m o st

co m m o n p o i n t o f fa i l u re . Wh e re co m p l e x re l a t i o n s h i p s a re d ri ve n and

s u s ta i n e d b y s e n i o r i n d i vi d u a l s o n e i th e r s i d e o f th e se re l a t i o n s h i p s t h e y

a re p a rti cu l a rl y vu l n e ra b l e wh e n fa ce d wi th a d e p a rtu re on e i th e r s i d e .

M a ki n g th e s h i ft fro m a tra d i ti o n a l ‘ m a s te r a n d s e rva n t’ re l a t i o n s h i p to

co - cre a to rs o ft e n d e m a n d s b o th o rg a n i z a t i o n a l and p e rs o n a l re a l i g n m e n t

o f th i n ki n g and fo s te ri n g i n te rn a l co l l a b o ra ti o n to m a i n ta i n th e fo cu s o n

o b j e ct i ve s a n d o u tco m e s .

The con flicts o f behavio urs an d p olicy

Th e h i s to ri c a l a p p ro a ch to m a n y o f th e s e i n te rfa ce ch a l l e n g e s h a s b e e n to

fo cu s p re d o m i n a n t l y o n th e b e h a vi o u rs o f p e o p l e , to bu i l d and m a i n ta i n

th o se re l a ti o n s h i p s t h a t a re b o th cri ti ca l and fu n d a m e n ta l to b u si n e ss

s u cce s s . Th e ch a l l e n g e m a n y wi l l h a ve e xp e ri e n ce d i s th a t i n ve s tm e n t i n

cu l tu ra l , b e h a vi o u ra l d e ve l o p m e n t a n d tra i n i n g i n i t i a ti ve s i s o fte n d i l u te d

o r wa s te d wh e n b u s i n e s s p ro ce s s e s e ffe cti ve l y m a n d a te ‘ b u si n e ss a s

u su a l ’ . I f th e p o te n ti a l b e n e fi ts o f co l l a b o ra ti o n a p p ro a ch e s a re to be

re a l i z e d i t i s i m p ra ct i ca l to re l y o n i n d i vi d u a l s a n d i n fo rm a l a b s o rp ti o n to

a ch i e ve co l l a b o ra ti ve wo rki n g b e h a vi o u rs . O rg a n i z a ti o n s n e e d th e

p o l i ci e s , p ro ce s s e s a n d s ys t e m s t o s u p p o rt ro b u s t a n d s u s ta i n a b l e

re l a ti o n s h i p s th a t a re l e s s re l i a n t s o l e l y o n ch a ri s m a ti c ch a m p i o n s .

1 2
 Chapter 2 – Collaboration

Fi g ur e 2.1 – O r g a n i z a ti o n a l ve rsus in d i vi du al in fu
l e n ce s

Th e p ote n ti a l co n fl i ct b e twe e n th e d e m a n d s o f th e o rg a n i z a t i o n and th e

p re s s u re s o n i n d i vi d u a l s a s h i g h l i g h te d in F i g u re 2.1 ca n fo s t e r a n

e n vi ro n m e n t t h a t cre a te s u n ce rta i n ty a n d t h u s d ri ve s p o o r b e h a vi o u rs

and fo cu s , l ea d i n g to i n cre a s e d ri s k a n d p o o r p e rfo rm a n ce .

Al l i a n c e s ’ and p a rt n e rs h i p s ’ re l a t i o n s h i p s ca n i n vo l ve b o th ve rt i ca l and

h o ri z o n ta l co l l a b o ra ti o n s . M e e ti n g o r cre a t i n g m a rke t d e m a n d i s th e

e s s e n ce o f b u s i n e s s s u cce s s , and th e ri g h t s o l u ti o n o r va l u e p ro p o s i t i o n at

th e ri g h t ti m e d e fi n e s wi n n e rs a n d l o s e rs . H o we ve r, p ro vi d i n g th e ri g h t

s o l u ti o n a t th e ri g h t ti m e i s n ot en ou g h fo r b u s i n e s s s u cce s s . A co m m o n

p ro b l e m e m e rg e s wh e n th e e u p h o ri a of a b u s i n e s s ‘ wi n ’ d i s s i p a te s a n d

peopl e h a ve to g e t d o wn to d e l i ve ri n g o u t co m e s a n d m e e ti n g i n te rn a l

p o l i ci e s , p ro ce s s e s a n d p e rfo rm a n ce m e a s u re s .

P i cki n g th e r ight p r
a tn e rs
Wh a t a l s o b e co m e s cl e a r i s th a t o rg a n i z a ti o n s , wh e th e r d e ve l o p i n g and

m a rke ti n g a co l l a b o ra t i ve a p p ro a ch o r s e e ki n g to fi n d s u i ta b l e

1 3
PART 1 : Why?

col l a bora ti ve pa rtn ers, wi l l n eed to l ook beyon d tra d i ti on a l eva l u a ti on

cri teri a a n d a ssess th e fol l owi n g :

Att ib te
r u s I n term s of h ow th ei r bu si n ess opera tes a n d i ts pol i ci es

Ability I n term s of th ei r experi en ce a n d /or ca pa bi l i ty to work

col l a bora ti vel y

Attit e ud I n term s of a n em bed d ed cu l tu re a n d eth os of col l a bora ti on

Col l a bora ti on d ra ws i ts stren g th from th e a bi l i ty to work i n a n open a n d

h on est wa y to bu i l d tru st between both th e org a n i za ti on s a n d th e
i n d i vi d u a l s i n vol ved . Tru st i s freq u en tl y seen a s a prereq u i si te for
col l a bora ti on ; h owever, tru st ca n n ot be con tra cted – i t m u st be
d evel oped a n d n u rtu red over ti m e. To pu t th i s i n perspecti ve, con si d er for
exa m pl e th a t wh i l e you m a y bu i l d u p tru st wi th i n d i vi d u a l s worki n g for
a n org a n i za ti on i t i s m ore d i ffi cu l t to a d opt th e sa m e em pa th y wi th th ei r
org a n i za ti on .

An exa m pl e m i g h t be a g overn m en t d epa rtm en t wi th i n fl u en ces th a t a re

d i ffi cu l t to pred i ct or con trol . Th e prem i se i s th a t you ca n rel y on som e
i n d i vi d u a l s a n d ca n bu i l d u p a h i g h d eg ree of con fi d en ce a n d tru st;
h owever, you recog n i ze th a t th ei r i n fl u en ce a n d a u th ori ty h a ve
bou n d a ri es beyon d wh i ch th ey ca n n ot con trol a spects of you r
rel a ti on sh i p. O n th e oth er h a n d , con si d er th ose org a n i za ti on s th a t h a ve
su ch a repu ta ti on for cu stom er servi ce th a t you wou l d be wi l l i n g to tru st
a n y represen ta ti ve of th a t org a n i za ti on . I t i s ea sy to see wh i ch of th ese
opti on s presen ts th e m ost a ttra cti ve prospecti ve col l a bora ti ve pa rtn er a n d
wh i ch i d ea l l y refl ects th e profi l e of you r own org a n i za ti on . I t i s n ot
d i ffi cu l t to a ssess wh i ch offers th e m ost su sta i n a bl e rel a ti on sh i p, wh eth er
you a re sel l i n g you r org a n i za ti on or l ooki n g to fi n d a su i ta bl e pa rtn er.

I nteg ation o c lt e
r f u ur

Th e ta sk of crea ti n g a n i n teg ra ti on cu l tu re (e. g . a cu l tu re th a t a ccepts

i n teg ra ti on ) i s d ri ven by pol i ci es th a t th e org a n i za ti on d epl oys, both i n
term s of opera ti on a l effecti ven ess a n d th rou g h ou t th e sel ecti on ,
d evel opm en t a n d m a n a g em en t of th e peopl e th a t represen t th e pu bl i c
fa ce of th e org a n i za ti on . I f col l a bora ti on i s to be a d opted a s a repea ta bl e
bu si n ess m od el th en i t ca n n ot be sol el y d epen d en t on beh a vi ou ra l
tra i n i n g , tea m bu i l d i n g or i n d i vi d u a l ski l l s focu si n g on th e ‘soft’ i ssu es.
Col l a bora ti on m u st be em bed d ed i n th e g overn a n ce a n d processes of th e
org a n i za ti on , rei n forced i n every a spect of th e bu si n ess th rou g h pol i cy,
process a n d system s. I n th e h i g h l y u n u su a l ca se of th e J oh n Lewi s ch a i n
of reta i l stores, a l l th ei r peopl e a re pa rtn ers i n th e bu si n ess a n d i ts
pri n ci pl es were em bed d ed i n i ts a rti cl es of i n corpora ti on by i ts fou n d er.
Few bu si n esses wi l l h a ve th i s ben efi t, bu t i t i s ea sy to recog n i ze th e
poten ti a l ben efi ts of repl i ca ti n g th ese d ri vi n g pri n ci pl es.

14
 Ch a p te r 2 – Co lla b o ra tio n

H ow peopl e a re m a n a g ed , ta rg eted , m ea su red , i n cen ti vi zed a n d

rewa rd ed h a s a m a j or i n fl u en ce on h ow th ey i n terfa ce wi th oth ers,
wh eth er i n tern a l l y or extern a l l y. I f th ere i s a con fl i ct between th e
col l a bora ti ve pri n ci pl es bei n g prom oted a n d h ow i n d i vi d u a l perform a n ce
i s eva l u a ted , i t i s ea sy to g u ess wh i ch wi l l h a ve th e d om i n a n t i m pa ct.
Si m i l a rl y, i f th e processes by wh i ch th ey h a ve to opera te a re robu stl y
stru ctu red a n d en forced bu t th e bu si n ess obj ecti ves d o n ot cl ea rl y refl ect
a col l a bora ti ve a pproa ch , m ost em pl oyees wi l l q u i ckl y revert to m ore
tra d i ti on a l ‘bu si n ess a s u su a l ’ a pproa ch es a n d ta ke th e l ow ri sk opti on .
So, d espi te org a n i za ti on s i n vesti n g i n ski l l s d evel opm en t prog ra m m es a n d
cu l tu ra l i n i ti a ti ves, th e con fl i ct wi l l force peopl e to a d a pt th ei r l evel of
com m i tm en t, en th u si a sm a n d en g a g em en t i n l i n e wi th M a sl ow’s
H i era rch y 3 or ‘wh a t’s i n i t for m e’.

Concl us ion
Th e ch a l l en g e i s h ow a n org a n i za ti on ca n em bed a n d su sta i n a
col l a bora ti ve a pproa ch , g i ven th e vol a ti l i ty of th e m a rket, th e tra n si en t
n a tu re of i ts peopl e, va ri a bi l i ty of ski l l s a n d experi en ce a n d th e h i stori ca l
focu s of expl oi ti n g tra d i n g rel a ti on sh i ps. I t wa s th i s d i l em m a th a t wa s
i n stru m en ta l i n th e crea ti on of th e worl d ’s fi rst n a ti on a l sta n d a rd ,
B S 1 1 000, wh i ch wou l d provi d e a con si sten t m od el a rou n d wh i ch
org a n i za ti on s cou l d bu i l d m ore su sta i n a bl e rel a ti on sh i ps. Th ere i s pl en ty
of evi d en ce th a t col l a bora ti on (i n wh a tever form ) ca n en h a n ce
perform a n ce. Th e ri sk i s th a t i f col l a bora ti on i s a d opted a s a bol t-on to
exi sti n g bu si n ess processes or th e pri n ci pl es of col l a bora ti on a re a cq u i red
th rou g h i n form a l a bsorpti on , i t i s l i kel y to be d eem ed a fa i l u re – or
worse, be cou n terprod u cti ve i n th e l on g er term . Th e i n trod u cti on of
B S 5 7 5 0 / I SO 9 000 h a s d em on stra ted wh a t ca n be a ch i eved i n term s of
q u a l i ty a n d opera ti on a l perform a n ce, so i t i s l og i ca l th a t i f we a re to be
m ore d epen d en t on col l a bora ti on th en th e a d opti on of a sta n d a rd wi l l
en h a n ce opera ti on a l con si sten cy a n d perform a n ce. B S 1 1 000 offers
org a n i za ti on s th e opportu n i ty to a d opt a recog n i zed m od el for bu i l d i n g
th ei r col l a bora ti ve a pproa ch es. I t a l so en a bl es th em to ben ch m a rk
th em sel ves a g a i n st i n d u stry g ood pra cti ce, provi d i n g th e fou n d a ti on for
d evel opi n g su sta i n a bl e rel a ti on sh i ps to d el i ver va l u e-ba sed perform a n ce.

3
M a sl o w’s h i era rch y o f n eed s: th eo ry i n psych ol og y, propo sed by Abra h a m M a sl o w i n h i s

1 9 43 pa p er A Th e o ry o f Hu m a n Mo tiva tio n .

15
 Checklist
1 6

PART 1 : Why?
Ta b l e 2.1 m a y be h e l p fu l in ch a l l e n g i n g yo u r t h i n ki n g b y s co ri n g yo u r o rg a n i z a ti o n ’s i n cl i n a ti o n to co l l a b o ra t e .

Ta b l e 2 . 1 – S co ri n g yo ur o rg a n i z a ti o n ’s i n cl i n a ti o n to co l l a b o ra te

O rg a n i z a ti o n 1 = s tro n g l y d i s a g re e , 6 = s tro n g l y a g re e

Th e o rg a n i z a ti o n h a s ve ry we l l - d e fi n e d co n tra cti n g p ro ce d u re s 1 2 3 4 5 6

Th e p ri m a ry fo cu s i s o n p ro fi ta b i l i t y n o t p e rfo rm a n ce 1 2 3 4 5 6

Th e re a re cl e a rl y d e fi n e d ro l e s a n d re s p o n s i b i l i ti e s 1 2 3 4 5 6

Th e re a re ve ry tra d i ti o n a l re l a ti o n s h i p s wi t h b o th cu s to m e rs a n d s u p p l i e rs 1 2 3 4 5 6

Th e o rg a n i z a ti o n ’s g o a l s a n d o b j e cti ve s a re c l e a rl y d e fi n e d and m o n i t o re d 1 2 3 4 5 6

Th e re is a fi rm fo cu s o n th e fi n a n ci a l o u tco m e s o f a l l a cti o n s 1 2 3 4 5 6

P e rs o n a l p e rfo rm a n ce i s fi rm l y s t ru ctu re d i n to all i n ce n ti ve s a n d KP I s 1 2 3 4 5 6

E ve ry m e m b e r o f s ta ff i s e m p o we re d to m a ke d e ci s i o n s wi th i n t h e i r a re a o f co m p e te n ce 1 2 3 4 5 6

Th e re is a high l e ve l o f re p o rti n g wi t h i n th e o rg a n i z a ti o n 1 2 3 4 5 6

M a n a g e m e n t i s ve ry g o o d a t co m m u n i ca ti o n s a n d s h a re s wh a t n e e d s to be s h a re d 1 2 3 4 5 6
 Wh en th i n g s g o wron g th e org a n i za ti on l ooks to l ea rn ra th er th a n bl a m e 1 2 3 4 5 6

Th ere a re cl ea rl y d efi n ed obj ecti ves a n d respon si bi l i ti es 1 2 3 4 5 6

M a n a g em en t i s a l wa ys focu sed on wh y peopl e d on ’t m eet th ei r obj ecti ves 1 2 3 4 5 6

Th ere a re cl ea rl y d efi n ed sta n d a rd s of beh a vi ou r 1 2 3 4 5 6

Th ere i s a g ood cu l tu re i n su pporti n g peopl e wh o d on ’t m eet th ei r obj ecti ves 1 2 3 4 5 6

Chapter 2 – Collaboration
17
PART 1 : Why?

18
Cha p te r 3 – Relation s hi p ri s k an d o pp o rtu nity

Re l a ti o n s h i p s a re a fu n d a m e n ta l a s p e ct o f a l l b u s i n e s s a cti vi ti e s ,

ye t th e y a re se l d o m co n s i d e re d wh e n a sse ssi n g or m a n a g i n g

ri s ks . Th e i n h e re n t i m p a ct i n fa i l i n g to manage re l a ti o n s h i p s

e ffe cti ve l y i s l i ke l y t o be s i g n i fi ca n t. In th i s ch a p te r th e fo cu s

s h i fts to b u s i n e s s ri s k a n d o p p o rt u n i ty a n d th e i m p l i ca ti o n s th a t

re l a ti o n s h i p s h a ve on b u s i n e s s o u t co m e s .

R i s k p e rva d e s e ve ry a s p e ct o f b u s i n e s s , wh e th e r i n ve s tm e n t, p ro d u ct

d e ve l o p m e n t, o p e ra ti o n a l p e rfo rm a n ce , re p u t a t i o n o r s u p p l y ch a i n . It is

g e n e ra l l y a cce p te d th a t th e m o re ri s k th a t ca n e ffe cti ve l y b e m a n a g ed ,

th e g re a t e r th e co m p e ti ti ve a d va n t a g e . S i m p l y s e e ki n g to tra n s fe r ri s k

wi l l fre q u e n tl y i n cre a s e th e p o te n ti a l l i ke l i h o o d o f ri s k o ccu rri n g , wh e n

th e i s s u e s a re o u ts i d e th e ca p a b i l i ty o r i n fl u e n ce o f th o s e h ol d i n g th e

re s p o n si b i l i ty.

R i s k i s g e n e ra l l y ca te g o ri z e d b y fi n a n ci a l , p e rfo rm a n ce , s a fe ty a n d

e xte rn a l e ve n ts , wh e th e r n a t u ra l o r s o ci a l /p o l i ti ca l . Th e on e a s p e ct th a t i s

se l d o m m e n ti o n e d in a n y ri s k b ri e f i s th a t a s s o ci a t e d wi t h re l a t i o n s h i p s .

Th i s s h o u l d ra i s e th e co n ce rn o f b u s i n e s s l e a d e rs , s i n ce th e m o s t l i ke l y

fa i l u re o f a n y b u s i n e s s a cti vi ty wi l l co m e fro m th e b re a kd o wn of

re l a ti o n s h i p s s u ch a s wi t h cu s to m e rs , p a rtn e rs o r s u p p l i e rs . Th e fre q u e n t

a ssu m pti o n i s th a t fo cu s i n g on co n t ra ctu a l co n d i t i o n s a n d l i a b i l i ti e s p l a ce s

th i s ri s k i n a m a n a g ea bl e p o s i ti o n , b u t p e rh a p s i g n o re s t h e re a l i ty t h a t

o n ce th e co n tra ct i s i n vo ke d fa i l u re i s l a rg e l y a s s u re d .

Relation s hi p ri s k
In m o s t ca s e s ri s k i d e n ti fi ca ti o n i s d ri ve n b y th e p e rce p ti o n s o f th e p a rt i e s

i n vo l ve d . Th e i ssu e o f re l a ti o n s h i p ri s k i s p ra g m a ti ca l l y i g n o re d on th e

b a s i s th a t we wo rk wi th wh o e ve r we n eed to wo rk wi th and th e y wi l l

manage th e i r ri s ks o r th o s e a ssi g n e d to th e m . E ffe ct i ve l y m a n a g i n g or

m i ti g a ti n g th e i m p a ct s o f re l a ti o n s h i p ri s k wi l l h el p to bu i l d s ta b i l i ty a n d

d ri ve s u cce s s b y cl o s i n g th e gap b e twe e n a s s u m p ti o n and a ct u a l i ty – s e e

F i g u re 3.1 . Ri s k i n fl u e n ce s e ve ry a s p e ct o f th e i n te ra cti o n b e twe e n

o rg a n i z a ti o n s a n d i n d i vi d u a l s , a ffe cti n g b o th en g a g em en t a n d

p e rfo rm a n ce .

1 9
PART 1 : Why?

R i s k i s fre q u e n tl y a d d re s s e d fro m an i n te rn a l p e rs p e cti ve , ba sed on

cu rre n t kn o wl e d g e and o fte n wi th a high d e g re e o f s u b j e cti ve

p e rce p ti o n . U n d e rs ta n d i n g th e o th e r p a rty’s ri s k a s s u m p ti o n s ca n h el p to

sm ooth th e wa y. I t i s th e i r p e rce p ti o n o f ri s k th a t co l o u rs th e wa y th e y

see yo u r o rg a n i z a ti o n , wh i ch t ra d i ti o n a l l y l e a d s u s to wa rd s e ve r m o re

co m p l e x co n t ra cti n g re q u i re m e n ts . I t i s p e rh a p s wo rth co n s i d e ri n g th a t

on e o f th e m a j o r U K co n s tru ct i o n p ro j e cts , Te rm i n a l 5 a t Lo n d o n ’s

H e a th ro w a i rp o rt, a ttri b u te d i t s s u cce s s to th e wa y i n wh i ch ri s k wa s

ce n tra l l y m a n a g e d , wh i ch a vo i d e d i n d i vi d u a l co n t ra cto rs co n t i n u a l l y

bei n g fo cu s e d on t h e i r o wn ri s ks .

Fi g u re 3.1 – Ri sk m a n a g em en t

At a n i n d i vi d u a l l e ve l we e a ch se e ri s k i n a va ri e ty o f wa ys a n d h ow i t

m a y a ffe ct u s ; o u r e n th u s i a s m fo r co l l a b o ra ti o n wi l l be s tro n g l y

i n fl u e n ce d b y th e wa y we p e rce i ve i t. O rg a n i z a ti o n s n e e d to co n s i d e r th e

a d d i ti o n a l ri s ks th a t i n te g ra te d re l a ti o n s h i p s m a y i n t ro d u ce , i n cl u d i n g

a s p e cts o f b u s i n e s s co n ti n u i t y th ro u g h i n te rd e p e n d e n cy a n d th e

co n s e q u e n ce of a fa i l u re in th e re l a ti o n s h i p , t o g e th e r wi t h th e

i m p l i ca ti o n s o f re p u ta ti o n a l ri s k th a t co m e wi th i n cre a s e d i n te g ra ti o n .

R i s k i s b o th an o p p o rt u n i ty a n d p ote n ti a l ca u s e fo r fa i l u re , so e ffe cti ve

ri s k m a n a g e m e n t i s a cri ti ca l co n s i d e ra ti o n . Th i s i s a n a cc e p te d fa ce t o f

b u si n e s s to d a y, b u t th e i m p l i ca ti o n s o f re l a t i o n s h i p s a re a s i g n i fi ca n t

fa c to r i n th e o ve ra l l a s s e s s m e n t o f ri s k a n d th u s s h o u l d n ot be l e ft to

p e rce p ti o n – o r wo rs e , l e ft to p ra g m a ti s m at an i n d i vi d u a l l e ve l to

p ro vi d e a s s u ra n ce o f p e rfo rm a n ce . M a n y o rg a n i z a t i o n s h a ve

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 Chapter 3 – Relationship risk and opportunity

com preh en si ve ri sk m a n a g em en t execu ti ves a n d tea m s wi th h i g h l y

soph i sti ca ted fi n a n ci a l m od el l i n g tool s, sa fety prog ra m m es, i n su ra n ce
portfol i os, a ctu a ri es a n d so on , tryi n g to pred i ct poten ti a l ou tcom es of
ri sk, both m a n -m a d e a n d n a tu ra l , to d evel op a ppropri a te m i ti g a ti on
stra teg i es. Wh a t i s l ess a ppa ren t i s th e con si d era ti on a n d u n d ersta n d i n g
of th e i m pl i ca ti on s of bu si n ess rel a ti on sh i ps a n d th e i n h eren t ri sk th i s ca n
i n trod u ce, or th e opportu n i ty for j oi n t m i ti g a ti on stra teg i es.

B us ine ss envi ronment

As th e bu si n ess l a n d sca pe becom es m ore com pl ex a n d ch a l l en g i n g , th e
rel a ti on sh i ps between org a n i za ti on s ta ke on n ew a n d va ri ed
con fi g u ra ti on s. O ften org a n i za ti on s m i ss opportu n i ti es by m a i n ta i n i n g
ri g i d ri sk bou n d a ri es between th ei r i n tern a l fu n cti on s; bu t a s th e m a rket
profi l e ch a n g es, so th e com pl exi ty of th ese rel a ti on sh i ps i n crea ses, wh i ch
g en era tes a wi d er spectru m of ri sks th a t ca n be a d d ressed th rou g h
proa cti ve i n teg ra ti on of i d ea s a n d ski l l s. Th e g rowi n g tren d s i n
g l oba l i za ti on a n d con verg en ce i n m a n y i n d u stri a l sectors h a ve expa n d ed
th e ra n g e of tra d i n g rel a ti on sh i ps, both verti ca l l y a n d h ori zon ta l l y, wi th i n
th e va l u e crea ti on process. I t i s becom i n g m ore freq u en t to see
com peti tors worki n g cl osel y tog eth er i n speci fi c ven tu res, a s wel l a s th e
com pl exi ti es of m erg ers bri n g i n g tog eth er previ ou s com peti tors i n to a
si n g l e org a n i za ti on . Th e pressu re to i m prove com peti ti ve ed g e h a s
i n trod u ced a g rea ter n eed to en su re th a t org a n i za ti on s ca n work i n a n
i n teg ra ted wa y to m a xi m i ze poten ti a l ben efi ts wi th va ri ou s pa rtn ers (see
Fi g u re 3 . 2 ) . I n teg ra ti on h a s becom e a ch a l l en g e for m a n y bu si n ess
opera ti on s. O ften m u l ti pl e en ti ti es a re l i n ked wi th i n th e va l u e ch a i n ,
wh i ch h a s evol ved i n to a rel a ti on sh i p m a tri x to crea te va l u e a n d m a n a g e
som e a spects of ri sk wh i l e i n trod u ci n g n ew ri sks a s a resu l t of i n teg ra ted
rel a ti on sh i ps.

Th ere ca n be few bu si n ess ven tu res tod a y th a t a re n ot d i rectl y i n fl u en ced

by th e sprea d of g l oba l i za ti on . Th e m u l ti d i m en si on a l n a tu re of th e g l oba l
l a n d sca pe crea tes a n en vi ron m en t th a t g en era tes a n ever-i n crea si n g
profi l e of ri sk th a t m u st be a d d ressed . Th e i m pl i ca ti on s for org a n i za ti on s
a re fa r-rea ch i n g ; th ey n ecessi ta te a n i n crea si n g focu s on ri sk m i ti g a ti on
a n d m a n a g em en t to en su re su ccessfu l ou tcom es from bu si n ess ven tu res.

Ri s k an d integ ration
I t i s d i ffi cu l t to con si d er a n y bu si n ess i n terfa ce wh ere rel a ti on sh i ps d o n ot
pl a y a si g n i fi ca n t pa rt. As a bu si n ess seeks to en h a n ce i ts posi ti on or
respon d s to th e d em a n d s of th e m a rket, i t crea tes a n exten d ed n etwork
of rel a ti on sh i ps, wh i ch i n tera ct to a ffect perform a n ce. I n th ese i n teg ra ted
a pproa ch es th ey crea te a n en vi ron m en t wh ere th e poten ti a l ben efi ts a re
often con stra i n ed by th e ri sk profi l e.

21
PART 1 : Why?

Fi g ure 3.2 – i d e n ti fyi n g p a rtn e rs

C us to m e rs
As th e d e m a n d s o f cu s to m e rs i n cre a s e , so th e p re s s u re to p e rfo rm b oth

d i re ctl y a n d th ro u g h e xte n d e d e n te rp ri s e s b e co m e s m o re ch a l l e n g i n g and

t h u s i n cre a s e s th e ri s k o f ‘ fa i l u re b y a s s o ci a t i o n ’ wh e n o ffe ri n g i n te g ra te d

s o l u ti o n s .

Co n su m e rs
To d a y’s co n s u m e rs a re b e tte r i n fo rm e d th a n e ve r b e fo re and n ow l ook

fo r co m p e ti t i ve p ro d u cts a n d s e rvi ce s , b u t t h e y a re a l so a ttu n e d to th e

b ro a d e r p ro fi l e s o f co rp o ra te re s p o n s i b i l i ty.

Supp l y ch a i n s
G l oba l s o u rci n g h a s p ro vi d e d i n cre a s e d co m p e ti ti ve n e s s a n d ch o i ce ;

h o we ve r, th e se e xte n d e d s u p p l y ro u te s i n tro d u ce vu l n e ra b i l i ty to

co n ti n u o u s s u p p l y.

O u ts o urci n g
O u ts o u rci n g h a s o ffe re d m a n y o rg a n i z a t i o n s co n s i d e ra b l e co m p e ti t i ve

ed g e b u t th i s o p e n s u p th e i m p a cts o f th i rd p a rty p e rfo rm a n ce on

cu s to m e rs a n d co n s u m e rs .

Al l i a n ce p a rtn e rs
D em a n d fo r i n te g ra te d s o l u t i o n s i n cre a s e s t h e p o te n ti a l fo r i n t e g ra ti o n

o f d i s p a ra te o rg a n i z a ti o n s , cre a ti n g ‘g o to m a rke t’ a l l i a n ce s t h a t a re

d epen d en t on t h e i r co h e s i o n .

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 Chapter 3 – Relationship risk and opportunity

Me rge rs /acqu i s ition s

The increasing number of failed mergers and acquisitions prompts
managers/investors/bankers to look beyond technical and financial
modelling to assess effective integration.
Con s o rtia/joint venture s
Developing multifaceted consortia or creating special purpose vehicles
(SPVs) dependent on the strength of relationships in building uniform
robust entities.
Aca d emic re s ea rch
Exploiting the power of academic research and drawing on a broader
industry community. The trend is towards multi-institutional research
programmes where historically independent and successful outputs carry
significant relationship risk.
Re s ea rch an d d evelo p ment (R&D)
The high cost of R&D has over the past decade encouraged many
organizations to seek more shared approaches where sound relationships
and clarity of purpose are crucial ingredients for success.
Pu blic s ecto r d elive ry
As government bodies seek to reduce operating cost through integration
with industry, relationships become critical to maintaining public service
performance.
Vol u nta ry s ecto r
Harnessing the potential of the voluntary (third) sector highlights the
need to consider how these relationships will operate outside traditional
business or public sector environments.
Man ufacture
As manufacture becomes more of a globally sourced activity, the
interrelationships between various design, production and logistics
networks introduce a significant relationship risk profile.
S e rvice s
Extended services such as facilities management and the integration of
these often mission-critical services is a significant risk to overall
operational performance.
Di s trib u tion/retail
In today’s integrated marketplace it is frequently difficult to understand
where one organization stops and another picks up the process; when
performance fails, the underlying relationships present reputational and
business risk.
S takehol d e r management
The perceptions of customers and consumers, the confidence of investors,
the integrity of partners and the commitment of personnel all create a

23
PART 1 : Why?

b u si n e s s e n vi ro n m e n t wh e re re l a ti o n s h i p s a re no l o n g e r o n e - to - o n e bu t

h i g h l y co m p l e x i n te ra cti o n s wh e re re l a ti o n s h i p s a re a ke y fa ct o r o f

s ta ke h o l d e r m a n a g e m e n t.

Asp e cts o f ri s k

R i s k ca n be cl a s s i fi e d in m a n y wa ys . Al l ri s k h a s a n i m p a ct i n te rm s o f

co s t , ti m e and p ro fi ta b i l i t y. To e s ta b l i s h an e ffe cti ve a p p ro a ch it is

i m p o rta n t t o a n a l ys e wh a t th e p o te n ti a l ri s ks a re and th e p o te n ti a l

e ffe cts . Ri sk m a y n o t si m p l y b e an i ssu e o f c o s t a g a i n s t to d a y’s b u s i n e s s ; it

ca n a l so be an i n fl u e n ce on to m o rro w’s p o te n ti a l b u si n e ss a n d th e

b i g g e s t ri s k to a n y b u si n e ss i s th e l o s s o f cu s to m e rs th ro u g h poor

p e rfo rm a n ce or g l oba l ch a n g e s . Ta b l e 3.1 m a y p ro vi d e a s ta rti n g poi n t

fo r s u ch co n s i d e ra ti o n . F o r m a n y o f th e t ra d i ti o n a l ri s k i s s u e s th e

i n tro d u ct i o n o f p a rtn e ri n g , co l l a b o ra ti o n s o r a l l i a n ce s m a y o ffe r

o p p o rtu n i ti e s to aid th e m a n a g e m e n t o f ri s k. At th e sa m e ti m e m a n y of

th e ri s ks m a y we l l be re m o ve d o r re d u c e d b y g re a te r vi s i b i l i ty a n d

o p e n n e ss.

Ta b l e 3 . 1 – Ri s k i m p a ct typ e s

Ri s k typ e I m p a ct

O p e ra ti o n a l G re a te r i n te rd e p e n d e n cy i n cre a s e s vu l n e ra b i l i ty to

th e re l a ti o n s h i p s i t e n co m p a s s e s

P e rfo rm a n ce In a co l l a b o ra ti ve o p e ra ti o n a l a p p ro a ch o ve ra l l

p e rfo rm a n ce co m e s fro m a co m m i tm e n t d e l i ve re d by

th o s e fa ci n g th e en d -u ser

Kn o wl e d g e Th e m o re i n te g ra te d th e b u si n e ss m o d e l , th e h a rd e r

fu s i o n i t i s to re g u l a t e wh a t i s tra n s m i tte d b e twe e n

p a rtn e rs , cre a ti n g a ri s k i n te rm s o f p ro te ct i n g

p ro p ri e ta ry i n fo rm a t i o n

B u si n e ss As o rg a n i z a ti o n s fo cu s o n th e i r co re o p e ra ti o n s , th e y

co n t i n u i ty re d u c e i n te rn a l ca p a b i l i ty wh e re a b re a kd o wn in th e

re l a t i o n s h i p l e a ve s o n e o f th e p a rti e s u n a b l e to

m e e t i ts l o n g - te rm o b l i g a ti o n s

R e p u ta t i o n a l Th e bl en d i n g o f o rg a n i z a ti o n s ’ ca p a b i l i t y m a y h a ve

te ch n i ca l , fi n a n ci a l and re s o u rce b e n e fi t s ; h o we ve r,

th e re l a ti o n s h i p b ri n g s wi th i t ‘ ri s k b y a s s o ci a ti o n ’

Pe o p l e Th e a tti tu d e and b e h a vi o u rs o f e m p l o ye e s , b o th

i n te rn a l l y a n d e xte rn a l l y, wi l l re fl e ct b a ck o n th e

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 Chapter 3 – Relationship risk and opportunity

o rg a n i z a ti o n and th e i m p a ct o f p o o r b e h a vi o u r b y

s ta ff i s a p o te n t i a l ri s k

C u l t u re Th e d i ffe re n t cu l tu re s o f o rg a n i z a ti o n s a re o ft e n

i g n o re d wh e n co n s i d e ri n g h o w two o r m o re

o rg a n i z a ti o n s wi l l wo rk to g e t h e r, wh i ch ca n o ft e n

b e co m e a si n g l e p o i n t o f fa i l u re

E n vi ro n m e n t a l As re g u l a to ry co n tro l s g ro w, so th e re l i a b i l i ty o f

o th e rs d e p e n d s o n a s h a re d p e rs p e cti ve th a t i s

e n h a n ced th ro u g h a sou n d re l a ti o n s h i p o f m u tu a l

re s p e ct a n d o wn e rs h i p

Te ch n o l o g y Te ch n o l o g y d e ve l o p m e n ts m a y n e g a te e xi s ti n g

re l a ti o n s h i p s a n d e ve n th o s e wi th i n a s tru ctu re d

p a rtn e rs h i p o r a l l i a n ce m a y be h i d d en i f th e

re l a ti o n s h i p i s n o t so u n d

B u si n e ss I f th e re l a t i o n s h i p i s l o o se , th e n th e p o te n ti a l fo r

p ro ce s s e s o p e ra ti o n a l b re a kd o wn s to o ccu r i s h i g h and th u s a

ri s k to b e n e fi ts re a l i z a ti o n i f p ro ce s s e s a re i n h e re n tl y

s e p a ra t e d i n to ‘ si l o s’

E ffi ci e n cy E ffi ci e n cy g a p s ca n o ccu r wh e n i n te g ra ti n g on e or

m o re o rg a n i z a ti o n s ; th i s i n e ffi ci e n cy ca n be

m u l ti p l i e d b y i n fl u e n ce s fro m th e i r p a rtn e rs

E ffe cti ve n e s s Th e e ffe cti ve n e s s o f a n o p e ra ti o n on pa per m a y

a p p e a r to be a l i g n ed and fu n cti o n a l , bu t i s h i g h l y

d epen d en t on th e re l a t i o n s h i p s t h a t p ro vi d e th e

co h e s i o n

I n n o va ti o n M a i n ta i n i n g a co m p e t i ti ve l ea d – wh e th e r s co p e ,

t e c h n o l o g y o r d e l i ve ry p ro ce s s – re l i e s o n

o rg a n i z a ti o n s b e i n g i n n o va ti ve wi th th e i r

a p p ro a ch e s , re q u i ri n g re l a ti o n s h i p s to be open and

t ra n s p a re n t

F u tu re A fa i l u re to s h a re fu t u re p l a n s p l a ce s co n s tra i n ts o n

p ro o fi n g th e o ve ra l l ca p a b i l i ty o f th e re l a ti o n s h i p , wh e re e a ch

o rg a n i z a ti o n d e ve l o p i n g th e i r p l a n s i n d i vi d u a l l y

i m p a cts o n j o i n t p e rfo rm a n ce and fu tu re i n ve s tm e n t

Ch a n g e O ve r t i m e i n te rn a l o r e xte rn a l i n fl u e n ce s wi l l a ffe ct

th e va l u e p ro p o s i ti o n and m a rke t ch a n g e s wi l l a ffe ct

25
PART 1 : Why?

th e d yn a m i cs of th e bu si n ess; to m a i n ta i n a g i l i ty
th ey n eed a robu st rel a ti on sh i p

Tra n si ti on Al l a rra n g em en ts wi l l com e to th e en d of th ei r

poten ti a l to a d d va l u e ei th er for pa rtn ers or
cu stom ers; wi th ou t a stron g rel a ti on sh i p, both m a y
be d a m a g ed by a fa i l u re to con stru ct a vi a bl e exi t
stra teg y

Ri s k analys i s an d management
Th e m a n a g em en t of ri sk d epen d s on th e n a tu re of th e si tu a ti on ; i n m a n y
ca ses th e a n swer i s si m pl y a ca se of i n su ri n g th e ri sk. I n a col l a bora ti ve
rel a ti on sh i p i t m a y prove th a t j oi n tl y focu si n g th i s a rea of i n su ra n ce cover
ca n provi d e econ om i c a d va n ta g e, even before a d d ressi n g con seq u en ti a l
i m pa cts or m i ti g a ti on a pproa ch es i n a rea s of i n terru pti on a n d l i a bi l i ti es.
M a n a g i n g th e ri sks ca n often be m i ti g a ted th rou g h g rea ter i n teg ra ti on ,
en su ri n g th a t th e a i m s of both pa rtn ers a re sh a red a n d protected
th rou g h th ei r bu si n ess d ea l i n g s.

An a l ysi s of ri sk m a y be focu sed i n to th ree m a i n a rea s of a tten ti on . Th e

fi rst a rea g rou ps th ose i ssu es th a t ca n be i d en ti fi ed by sou rce, i n term s of
wh ere th e ri sk com es from . I n m a n y ca ses th i s m a y provi d e th e a bi l i ty to
red u ce som e ri sks by ch a n g i n g (sa y) su ppl y opti on s. O th ers m a y be
n a tu ra l (en vi ron m en ta l ) ri sks, wh i ch g en era l l y a re su bj ect to i n su ra n ce
cover – or, i n certa i n ca ses, th e n eed for d esi g n a d j u stm en ts.

Th e secon d a rea i s th e ri sks th a t em a n a te from th e a ctu a l opera ti on s,

wh eth er th i s i s a n i n tern a l or extern a l fu n cti on , by cu stom ers or su ppl i ers.
Th ey m a y resu l t from prod u cti on processes a n d i n m a n y ca ses ca n be
n eu tra l i zed th rou g h re-en g i n eeri n g . I n th i s ca se th e a bi l i ty of
col l a bora ti n g org a n i za ti on s to sh a re worki n g kn owl ed g e ca n often
provi d e a wi d er ra n g e of opti on s a n d sol u ti on s.

Th e th i rd a rea i s th a t of i m pa ct, i n term s of bei n g cl ea r wh a t th e

repercu ssi on s m a y be, wh i ch ca n g en era l l y be su bd i vi d ed i n to i m pa ct on
peopl e, property or ea rn i n g s. I n ea ch ca se th e ri sk m a n a g er i s seeki n g to
fi n d th e m ost cost-effecti ve m i ti g a ti on , a n d th en ba l a n ci n g th e fu tu re
a cti on s to red u ce th e ri sk profi l e to a ccepta bl e l evel s, con si d eri n g th e
l i a bi l i ti es i n a d d i ti on to i m pa cts on cu stom ers a n d com peti ti on . A
col l a bora ti ve a pproa ch h a s th e poten ti a l to provi d e a n open pl a tform
th a t ca n focu s on rea l (ra th er th a n percei ved ) ri sk, wh ere i n m a n y ca ses
com peti ti ve ed g e i s l ost th rou g h th e a ccu m u l a ti ve i m pa ct of ri sk
con ti n g en ci es. Th u s percepti on of ri sk m a y i n i tsel f be a si g n i fi ca n t ri sk
fa ctor. Th e ea rl i er a ri sk i s i d en ti fi ed , th e m ore opportu n i ty th ere wi l l be
to m a n a g e th e si tu a ti on a n d certa i n l y th e l ess costl y i t wi l l be to m i ti g a te

26
 Chapter 3 – Relationship risk and opportunity

o r e l i m i n a te th e ri s k. Wh a t ca n n o t b e se e n i s u n l i ke l y to be m a n a g ed

e ffe ct i ve l y; th e m o re i n t e g ra te d th a t o rg a n i z a t i o n s b e co m e , th e g re a te r

i m p o rt a n ce to e n s u re th a t a l l th o s e i n vo l ve d u n d e rs t a n d th e ri s ks b e i n g

fa ce d and – m o re i m p o rta n tl y – a l l o ca t e re s p o n s i b i l i t y fo r a cti o n .

Concl us ion
I f we a re to e xp l o i t th e p o te n ti a l o f a l t e rn a t i ve b u s i n e s s m o d e l s we

ca n n o t i g n o re th e p o te n ti a l i m p a cts o n ri s k m a n a g e m e n t. M o re

i m p o rt a n tl y, in th e b ro a d e r s e n s e of m a n a g i n g b u s i n e s s ri s k th e

i m p l i ca ti o n s o f re l a ti o n s h i p s a re n o t s o m e th i n g th a t ca n be l e ft to

ch a n ce . R e l a t i o n s h i p s l i n k e ve ry a s p e ct o f b u s i n e s s a n d ye t fo r m a n y th e y

h a ve a l i m i te d fo cu s fo r th o s e wh o a re ta s ke d wi th managing ri s k a n d

d e l i ve ri n g p e rfo rm a n ce . I f we do n o t re co g n i z e th e i m p l i ca ti o n s o f

re l a t i o n s h i p s t h e n m u ch o f wh a t i s p u t i n p l a ce to d ri ve b u si n e ss

o u t co m e s a n d cre a te m o re e ffe cti ve o p p o rtu n i t i e s fo r s t a ke h o l d e rs i s

i n h e re n tl y fl a we d .

R e l a ti o n s h i p s a re an i n te g ra l p a rt o f b u s i n e s s , wh i ch in tu rn sh ou l d m a ke

th e m a ke y a s p e ct o f ri s k m a n a g e m e n t. E ffe cti ve j o i n t ri s k m a n a g e m e n t

o ffe rs co n s i d e ra b l e a d va n ta g e in a m a rke tp l a ce t h a t i s b e co m i n g m o re

vo l a ti l e in m a n y a s p e ct s o f i ts b u s i n e s s cu l tu re . Ri sk i n m o s t o rg a n i z a ti o n s

re p re s e n ts a s i g n i fi c a n t co s t co n s i d e ra ti o n ; b y d e ve l o p i n g an a p p ro p ri a te

a p p ro a ch , o rg a n i z a ti o n s ca n gain co m p e ti t i ve ed g e.

27
 Checklist
28

PART 1 : Why?
Con si d er th e fol l owi n g ch eckl i st by ra ti n g ea ch el em en t i n term s of th e bu si n ess i m pa ct on you r org a n i za ti on to d evel op a n
i n i ti a l col l a bora ti ve rel a ti on sh i p ri sk profi l e (Ta bl e 3 . 2 ) .

Ta b l e 3 . 2 – I n i ti a l co l l a b o r a ti ve r e l a ti o n s p r s pr f
hi i k o ile

I n i ti a l co l l a b o r a ti ve r e l a ti o n s p r s pr f
hi i k o ile H igh/

Me du
i m /Lo w

Fo c us p oi n t Ra ti o n a l e

1 O p r
e a ti o n a l Peopl e opera ti n g i n a col l a bora ti ve en vi ron m en t ca n h a ve a si g n i fi ca n t i m pa ct
on effecti ven ess a n d effi ci en cy. A key fa cet of B S 1 1 000 i s a l l oca ti on of rol es
a n d respon si bi l i ti es th rou g h tra n spa ren t j oi n t m a n a g em en t to d ri ve th e
a ppropri a te beh a vi ou rs

2 P rf r
e o m a n ce A brea kd own i n rel a ti on sh i ps between col l a bora ti ve pa rtn ers wi l l h a ve a m a j or
i m pa ct on perform a n ce a n d th u s crea te a ri sk i n m eeti n g obj ecti ves. E ffecti ve
col l a bora ti ve m a n a g em en t th rou g h th e pri n ci pl es of B S 1 1 000 provi d es a ba si s
to en su re th a t th e rel a ti on sh i ps rem a i n posi ti ve a n d su sta i n a bl e

3 Kn o wl e d ge I n form a ti on a n d kn owl ed g e ca n be effecti vel y expl oi ted th rou g h col l a bora ti on ;

bu t th ey m a y a l so be d i ssi pa ted th rou g h u n con trol l ed tra n sfer of kn owl ed g e. A
fa i l u re to sh a re i n form a ti on m a y i n fl u en ce beh a vi ou rs a n d th u s a ffect
perform a n ce. B S 1 1 000 h i g h l i g h ts th e n eed to en su re req u i red i n form a ti on i s
effecti vel y u sed wh i l e protecti n g d efi n ed propri eta ry i n tel l ectu a l property
ri g h ts (I PR)
 4 Re pu tational In an i n te g ra t e d co l l a b o ra ti ve ve n tu re th e p a rti e s a re i n e xtri c a b l y l i n ke d , b o th

o p e ra ti o n a l l y a n d t h ro u g h th e i r i n d i vi d u a l re p u ta ti o n s . Th e a ct i o n of on e p a rty

re fl e cts o n th e o th e r, wh i ch m a y h a rm re p u ta ti o n a l p ro fi l e s – p a rti cu l a rl y i n

a re a s l i ke co rp o ra te soci a l re s p o n s i b i l i t y a n d e n vi ro n m e n t i m p a ct, a s we l l as

e xp o s i n g e a ch o th e r to th i rd p a rty o r re g u l a to ry l i a b i l i ti e s . P a rt n e r s e l e cti o n is

t h e re fo re a cru ci a l a cti vi ty i n co rp o ra t e d i n to th e s ta n d a rd

5 P eo lep C o l l a b o ra t i o n i s n ot a n e a s y co n ce p t to a d o p t fo r m a n y fro m a co n ve n ti o n a l

b u s i n e s s b a ckg ro u n d . Pe o p l e s e l e cti o n , co a ch i n g and d e ve l o p m e n t a re cri ti ca l

a s p e ct s o f a n y c o l l a b o ra ti ve ve n tu re and th e re fo re a p ote n ti a l ri s k to

Chapter 3 – Relationship risk and opportunity

p e rfo rm a n c e and s u cce s s fu l o u t co m e s

6 C lt e
u ur Th e n a tu re o f o rg a n i z a ti o n s i s a co m b i n a ti o n o f m a n a g e m e n t e th o s a n d th e i r

peopl e. Wh i l e p a rtn e rs m a y o ffe r th e a p p ro p ri a te re s o u rce s , s ki l l s , kn o wl e d g e ,

t e ch n o l o g y a n d fi n a n ci a l p ro fi l e th e re re m a i n s a ke y ri s k o f wh e th e r th e

p a rt n e rs ca n e ffe cti ve l y wo rk i n ta n d e m

7 B ine
us ss La ck o f co m p a ti b i l i ty o f s ys te m s , p ro ce d u re s a n d p ro ce s s e s p re s e n ts a

oce e
pr ss s s i g n i fi ca n t ri s k wh e n o ve ra l l d e l i ve ry p e rfo rm a n ce h a s to be i n t e g ra t e d . J oi n t

p ro ce s s a s s e s s m e n t i s a p ri n ci p l e of B S 1 1 000

8 Change Ch a n g e is a co m m o n a re a o f fa i l u re in a n y b u s i n e s s ve n t u re . M anaging ch a n g e

e ffe cti ve l y i s a ke y ri s k a l o n g s i d e fu tu re - p ro o fi n g o u tco m e s ; tra n s p a re n cy a n d

open n ess i n co l l a b o ra ti o n a re e sse n ti a l i n g re d i e n ts

9 I nnovation S h a ri n g kn o wl e d g e and ca p a b i l i t y a l l o ws o rg a n i z a t i o n s to h a rn e s s va l u e a c ro s s

th e re l a t i o n s h i p and p o t e n t i a l l y e xt e n d t h e i r co n tri b u t i o n to o ve ra l l s u cce s s .

29
30

PART 1 : Why?
H owever, th i s h a s to be ba l a n ced th rou g h j oi n t m a n a g em en t a g a i n st th e ri sks
of u n d erm i n i n g cu rren t processes

10 B us ine ss Th e cu stom er i s th e u l ti m a te ben efi ci a ry of th e com bi n ed servi ce or prod u ct

contin u ity from th e col l a bora ti on or m a y th em sel ves be pa rt of th e bu si n ess ven tu re.
E i th er wa y, th e fa i l u re of a n y pa rtn er a ffects a l l a ssoci a ted pa rti es, a n d i s th u s a
ri sk th a t h a s to be a ssessed , m a n a g ed a n d (wh ere a ppropri a te) m i ti g a ted
Cha p te r 4 – C u lture

Th e s u b j e ct o f cu l tu re and cu l tu ra l ch a n g e h a s been p e rh a p s

on e o f th e m o s t d e b a te d and d o cu m e n te d i ssu e s o f a l l ti m e . In

th e co n t e xt o f o rg a n i z a t i o n a l d e ve l o p m e n t i t h a s b e co m e a

ca tch p h ra s e fo r e ve ry b u s i n e s s i m p ro ve m e n t i n i t i a ti ve in

m o d e rn ti m e s . Th i s ca n be s i m p l y va l i d a te d b y typ i n g th e wo rd

‘ cu l t u re ’ i n to an i n te rn e t s e a rch en g i n e, wh e re t wo m i l l i on pl u s

h i ts i s th e n o rm . Th e fo cu s fo r th i s ch a p te r i s th e i n fl u e n ce of

o rg a n i z a t i o n a l cu l tu re on e ffe cti ve co l l a b o ra ti o n .

Wh a t i s cu l tu re ? H o w d o e s i t d e ve l o p ? P e rh a p s m o re i m p o rta n tl y, h ow

ca n o rg a n i z a ti o n s h a rn e s s c u l tu ra l ch a n g e to cre a te th e e n vi ro n m e n t fo r

co l l a b o ra ti ve wo rki n g and p ro j e ct th i s to p o te n ti a l p a rtn e rs ? We l i ve in a

g l oba l tra d i n g co m m u n i ty, wh e re a l m o s t e ve ry co m m e rci a l a cti vi ty

e n co u n te rs b y i ts ve ry n a tu re som e fo rm o f cu l t u ra l e xch a n g e . N a ti o n a l

tra i ts o r cu l tu re s a re s o m e th i n g t h a t e ve ry b u s i n e s s tra ve l l e r e n co u n te rs ;

bei n g a wa re o f th e n u a n ce s i s a cru ci a l a s p e ct o f s u cce s s , b a se d on h ow

we a ct o r i n te ra ct b y g i vi n g due d e fe re n ce to th e l o ca l p ro to co l s a n d

cu s to m s to wa rd s b u i l d i n g th e ri g h t re l a ti o n s h i p .

Th e m o re d i ffe re n t we l o o k to e a ch o th e r, th e m o re a wa re we b e co m e of

th e p o te n ti a l d i ffe re n ce s o f a p p ro a ch , language and s i g n s th a t i n fl u e n ce

th e wa y we do b u si n e ss. On e o n l y h a s to tra ve l a cro s s E u ro p e to

a p p re ci a t e th e co m p l e xi ty o f b u s i n e s s s tyl e s a n d n a ti o n a l tra i ts . Wh i l e

E n g l i sh m a y tod a y be a cce p t e d a s th e b u si n e ss l a n g u a g e i t re m a i n s th e

s e co n d language fo r m o s t o f t h e g l obe. I f yo u tra ve l to th e U S A, wh e re

S h a w fa m o u s l y re m a rke d th a t th e UK and U S A we re two co u n t ri e s

s e p a ra te d by a co m m o n l a n g u a g e, i t b e co m e s a p p a re n t th a t i t i s n o t

si m p l y a n i ssu e of l a n g u a g e bu t a s p e ctru m o f i n fl u e n ce s t h a t s h a p e th e

wa y we a s s e s s th o s e we a re d ea l i n g wi th . C o m m u n i ca ti o n i s cru ci a l , bu t

th e a rt o f co m m u n i ca ti o n i s n o t s i m p l y a b o u t th e wo rd s we u se ; i t i s a l so

a b o u t th e co n te xt th a t h e l p s to fo rm th e m e ssa g e.

What i s cu lture?
So wh a t i s cu l tu re and h o w d o e s t h i s t ra n s l a te o r sh a p e th e n a tu re of a n

o rg a n i z a ti o n ? In th e co n te xt o f co l l a b o ra t i ve wo rki n g , h o w d o e s i t d ri ve

th e b e h a vi o u rs , b oth co rp o ra t e l y a n d at a p e rs o n a l l e ve l , b e twe e n

o rg a n i z a ti o n s ? Cu l tu re is a t e rm t h a t h a s m a n y m e a n i n g s b u t i s d e ri ve d

31
PART 1 : Why?

from th e La ti n cultura (l i tera l l y ‘cu l ti va ti on ’) , wh i ch i n fers th a t i t ca n be

d evel oped . I t i s, h owever, m ore com m on l y u sed i n th ree ba si c sen ses:

• th e a rts a n d oth er m a n i festa ti on s of h u m a n i n tel l ectu a l a ch i evem en t

reg a rd ed col l ecti vel y;
• th e cu stom s, ci vi l i za ti on a n d a ch i evem en ts of a pa rti cu l a r ti m e or
peopl e;
• sh a red a tti tu d es, va l u es, g oa l s a n d pra cti ces exh i bi ted by a n
org a n i za ti on or g rou p.

Cu l tu re i s freq u en tl y a ttri bu ted to n a ti on a l a spi ra ti on s or i d ea l s; i t i s

g en era l l y a ccepted th a t a fter 1 9 45 th e term sta rted to a ttra ct m ore focu s
i n rel a ti on to org a n i za ti on a l psych ol og y a n d bu si n ess m a n a g em en t. Si n ce
org a n i za ti on s a re popu l a ted wi th peopl e, i t i s often d i ffi cu l t to see h ow
org a n i za ti on a l cu l tu re i s n ot a n a m a l g a m of a l l th ree d efi n i ti on s, si n ce
ea ch i n d i vi d u a l ’s perspecti ve a n d beh a vi ou r wi l l be col ou red to som e
d eg ree by a l l th ree.

G i ven th e i n tera cti on of i n d i vi d u a l a n d corpora te va l u es, i t i s rea son a bl e

to focu s org a n i za ti on a l cu l tu re a s bei n g a prod u ct of both ;
org a n i za ti on a l ch a n g e wi l l on l y prog ress i f we ta ke a m ore h ol i sti c
perspecti ve. Th i s l ea d s u s to con si d er th e d yn a m i cs of rel a ti on sh i ps a n d
th e ch a l l en g e of bl en d i n g stru ctu re a n d peopl e to d eterm i n e beh a vi ou rs
(both i n tern a l l y a n d extern a l l y) to crea te a n en vi ron m en t for
col l a bora ti ve worki n g .

Fi g ur e 4. 1 – Th e r e l a ti o n s p
hi i ce b e r g

32
 Chapter 4 – Culture

Th i s ca n perh a ps be a ppreci a ted m ore rea d i l y wh en con si d eri n g th e

rel a ti on sh i p i ceberg (see Fi g u re 4. 1 ) , wh ere th e u n d erl yi n g i n fl u en ce i s
n ot i n th e g overn a n ce stru ctu re a n d process bu t i n th e peopl e i ssu es
bel ow th e wa ter l i n e. Th i s i s a m pl i fi ed i n term s of org a n i za ti on a l cu l tu re:
con si d er th e i m pl i ca ti on s of obj ecti ves a n d va l u es refl ected by a n
org a n i za ti on a n d evi d en ced by beh a vi ou rs, wh ere th ese i ssu es ta ke on
d i fferi n g d eg rees of i m porta n ce wh en vi ewed from th ree sepa ra te
perspecti ves: corpora te, soci a l a n d person a l .

Co n s ti tu e n ts o f cu l tu re

To a d d ress org a n i za ti on a l cu l tu re, we n eed to brea k d own th e

con sti tu en ts, to eva l u a te th ese a spects a n d (wh ere n ecessa ry) to m od i fy
th em to d ri ve th e d esi red beh a vi ou rs. For col l a bora ti ve worki n g , th e
org a n i za ti on s i n vol ved n eed to posi ti on th ei r pa rtn er sel ecti on a n d
g overn a n ce to su pport a set of cu l tu ra l pri n ci pl es th a t wi l l u n d erpi n th e
rel a ti on sh i p. D efi n i n g th e key el em en ts of cu l tu re prom pts a wi d e
spectru m of i n fl u en ces (see Ta bl e 4. 1 ) . Th e fol l owi n g cu l tu ra l pri n ci pl es
m ost rea d i l y provi d e a fra m ework to focu s org a n i za ti on a l ch a n g e. Th ey
speci fi ca l l y excl u d e th e a rts, l i tera tu re, food a n d recrea ti on , wh i ch a re
freq u en tl y a ssoci a ted wi th cu l tu re; wh i l e th ese a re cl ea rl y i m porta n t, th ey
ten d to be a by-prod u ct of l oca l h eri ta g e.

Ta b l e 4. 1 – I n te rn a l and e xte rn a l i n fl u e n ce s

E xte r n a l i n fl u e n ce s I n te r n a l i n fl u e n ce s

G overn m en t/pol i ti ca l Lea d ersh i p/obj ecti ves

N a ti on a l /reg i on a l M a rket rea ch

E th n i c/rel i g i ou s/h eri ta g e D i versi ty/q u a l i ty

Soci a l /cu stom s Vi si on s/va l u es

La n g u a g e/ed u ca ti on Ca pa bi l i ty/com peten ci es

E con om y/en vi ron m en t B u si n ess sector/CSR

Leg a l /reg u l a tory G overn a n ce/eth i cs

Tech n ol og y m a tu ri ty I n n ova ti on /ch a n g e

Th e extern a l el em en ts ca n be seen to h a ve a si g n i fi ca n t d eg ree of

i n fl u en ce on a n y bu si n ess a cti vi ty a n d i m pa ct on percei ved beh a vi ou rs. I n

33
PART 1 : Why?

a co l l a b o ra ti ve wo rki n g e n t e rp ri s e th e s e e xte rn a l i n fl u e n ce s m u s t b e

u n d e rs to o d , wh e re a s i n t e rn a l i n fl u e n ce s ca n be m a n a g ed to d e ve l o p th e

a p p ro p ri a te b e h a vi o u rs th a t wi l l u n d e rp i n p e rfo rm a n ce and m u tu a l

o b j e ct i ve s .

Wh e n co n s i d e ri n g th e o rg a n i z a ti o n a l cu l tu re th e re a re m a n y d e fi n i ti o n s ;

in a co l l a b o ra ti ve re l a ti o n s h i p , wh e re two o r m o re o rg a n i z a t i o n s a re

fo rm i n g a s u b s e t o f th e i r o rg a n i z a ti o n s , t h e y cre a te a th i rd l e ve l of

cu l tu re . S tro n g cu l tu re s e xi s t wh e re i n d i vi d u a l s re s p o n d to sti m u l u s

b e ca u s e of a l i g n ed va l u e s ; co n ve rs e l y a we a k cu l tu re i s on e wh e re th e re

i s l i m i te d a l i g n m e n t. A so u n d o rg a n i z a ti o n a l cu l t u re sh o u l d i m p ro ve

p e rfo rm a n ce and s u p p re s s p o o r b e h a vi o u rs . A va ri e ty o f ch a ra cte ri s t i cs

m i g h t i n cl u d e :

• m i ssi o n – s t ra te g i c d i re cti o n , vi s i o n , g oa l s a n d o b j e cti ve s ;

• a d a p ta b i l i ty – cre a ti n g ch a n g e , cu s to m e r fo cu s a n d l e a rn i n g ;

• i n vo l ve m e n t – e m p o we rm e n t, te a m s a n d ca p a b i l i ty d e ve l o p m e n t;

• co n s i s te n cy – co re va l u e s , a g re e m e n t co o rd i n a ti o n and i n te g ra ti o n .

Al l o f th e se wo u l d be i n h e re n t a s p e cts o f d e ve l o p i n g a so u n d

co l l a b o ra ti ve re l a t i o n s h i p . Th e s u cce s s o f a s t ro n g c o l l a b o ra ti ve a p p ro a ch

i s s tro n g l y d e p e n d e n t o n th e a l i g n m e n t o f th e p a rtn e r o rg a n i z a ti o n s ’

cu l tu re s .

Cu ltural cru nch

Th e cu l tu ra l d i vi d e i s n o t o n l y b e twe e n o rg a n i z a ti o n s , b u t a l so wi th i n

th e m . M a n y e s ta b l i s h e d o rg a n i z a t i o n s h a ve co n s i d e ra b l e d i ffi cu l ty i n

i n te g ra ti n g co l l a b o ra ti ve co n ce p ts a g a i n s t a b a ckg ro u n d o f t ra d i ti o n a l

i n te rn a l p ra ct i ce s . At t h e i n d i vi d u a l l e ve l th e re is a n eed fo r e d u ca ti o n

and d e ve l o p m e n t o f n e w th i n ki n g at all l e ve l s o f o p e ra ti o n . M o st

o rg a n i z a ti o n s te n d to do wh a t th e y kn o w a n d h a ve d on e fo r m a n y ye a rs .

C o l l a b o ra t i o n o p e n s th e wa y to ra d i c a l t h i n ki n g b y ‘ b re a ki n g th e m ou l d ’;

th e p o te n ti a l fo r d e ve l o p i n g and ca p i ta l i z i n g on th e s e co n ce p t s i s

l i m i tl e s s , p ro vi d i n g t h a t cu l tu ra l ‘ tu n n e l vi s i o n ’ ca n be o ve rco m e .

Knowle d ge management
Kn o wl e d g e m a n a g e m e n t h a s b e co m e p a rt o f t h e b u s i n e s s vo ca b u l a ry a n d

i s re g a rd e d a s th e n e xt g e n e ra ti o n o f ke y i s s u e s t o be a d d re s s e d b y th e

b u s i n e s s co m m u n i t y. E xp l o i ti n g th e i n te l l e ct u a l ca p i t a l o f o rg a n i z a ti o n s i s

seen as a m a j o r o p p o rtu n i ty; b u t th e co n ve rs e si tu a ti o n e xi s ts , as

o rg a n i z a ti o n s s e e k t o p ro te ct wh a t re s t s n o t i n th e i r I T s ys te m s b u t i n s i d e

th e m i n d s o f th e i r p e o p l e . D e s p i te th e a d ve n t o f t h e te ch n o l o g i ca l age

th e re a l va l u e th a t i s cre a te d wi th i n o rg a n i z a t i o n s i s n o t g e n e ra l l y

co n ta i n e d wi th i n i ts I T- b a s e d i n te l l e ct u a l p ro p e rty b u t h e l d in th e minds

o f ke y s ta ff. As o rg a n i z a ti o n s m o ve to wa rd s th e i n te g ra t i o n of g l oba l

34
 Chapter 4 – Culture

n e two rks a n d s tri ve to h a rn e s s l o w co s t o p p o rt u n i ti e s wo rl d wi d e , th e ri s k

o f l o s t i n t e l l e ctu a l ca p i ta l b e co m e s a p o te n ti a l l y i n cre a s i n g th re a t t o

l o n g - te rm s ta b i l i ty. F ocu si n g on wh a t n e e d s t o be s h a re d , in o rd e r t o

p ro vi d e n e w va l u e p ro p o s i ti o n s a n d a ch i e ve l a s ti n g cu l tu ra l ch a n g e ,

m e a n s a d d re s s i n g th e b u s i n e s s e n vi ro n m e n t, o rg a n i z a ti o n a l s tru ct u re ,

b u s i n e s s p ro ce s s e s a n d – m o s t i m p o rta n tl y – p e o p l e . Kn o wl e d g e i s p o we r;

bu t h i d i n g kn o wl e d g e a wa y i s i n h e re n t i n m a n y co rp o ra te c u l tu re s .

I n stea d , s h a ri n g i t wi l l be fu n d a m e n ta l in cre a ti n g a cu l tu re to s u p p o rt

a l te rn a t i ve b u si n e ss m o d e l s.

Technology
Th e e m e rg e n ce o f ‘ s m a rt’ s ys te m s g i ve s ri s e to i m p l i ca ti o n s fo r m a n y

o p e ra t i o n s . Th e re is a d ri ve to wa rd s th e i n t e g ra ti o n o f d i s p a ra te

o rg a n i z a ti o n s . Th e s e wi l l fo rm i n t e rl i n ke d vi rtu a l e n ti t i e s , wi th va ri a b l e

l i fe s p a n s , bei n g cre a te d and d i s p e rs e d in line wi th m a rke t d ri ve rs . Th i s

o ffe rs g re a t p o te n ti a l fo r o rg a n i z a ti o n s o f va ryi n g s i z e s to m a t ch th e i r

s p e ci a l i s t ta l e n t s a n d s ki l l s a n d fo rg e n e w tra d i n g a l l i a n ce s . In d e ve l o p i n g

th e s e n e two rks th e re is a co m m o n n eed to l i n k s ys te m s a n d s h a re

kn o wl e d g e to an e xte n t th a t h a s n o t ye t b e e n fu l l y e xp l o i te d . Th e

co u n te r p o s i ti o n i s th a t wi th th e te ch n o l o g y th a t i s n o w b e i n g h a rn e s s e d

th e re i s a l so th e a b i l i ty, a s n e ve r b e fo re , to so a k u p i n fo rm a t i o n ;

th e re fo re th e g re a te r t h e i n te g ra ti o n , th e h i g h e r th e p o s s i b i l i ti e s o f

kn o wl e d g e s p re a d i n g i n fo rm a l l y, wi t h o u t a d e q u a te co n tro l s . Th i s fu s i o n

o f kn o wl e d g e and i n te l l e ct u a l p ro p e rty m a y i n a d ve rte n tl y p a s s b e t we e n

o rg a n i z a ti o n s wh o a re wo rki n g to g e t h e r; s u b s e q u e n tl y th e y m a y

d i s p e rs e , wi th th e e ve n t u a l o u tco m e bei n g th e l o s s o f i n te l l e ct u a l ca p i t a l .

Challenging tra d itional thinking

In th e p a s t, re d e fi n i n g a p ro ce s s wa s a ch a l l e n g e to tra d i ti o n a l th i n ki n g

wi th i n th e o rg a n i z a t i o n . I f th e p ro ce s s i s n o w t a ke n o u ts i d e th e

o rg a n i z a ti o n , wi th o wn e rs h i p ve s te d in s e ve ra l d i s p a ra te o rg a n i z a ti o n s ,

th e ch a l l e n g e m a y be e ve n g re a te r. N o w i t i s th e j o i n t p e rs p e cti ve th a t

h a s to be d e ve l o p e d and s a n cti o n e d , wh i ch m e a n s th a t t h o s e o u tsi d e

m a y l ook u pon wh a t h a s p re vi o u s l y b e e n se e n a s p ro te ct e d te rri to ry a n d

ch a l l e n g e i ts va l i d i ty. P ro ce s s e s ca n b e co m e e n s h ri n e d in tra d i ti o n and

m a i n ta i n e d in line wi th p e o p l e ’s e s ta b l i s h e d ‘ co m fo rt z o n e s ’ . D e ve l o p i n g

i n n o va ti ve va l u e p ro p o s i ti o n s re q u i re s fre e d o m fro m p a s t re s tri cti o n s to

open up th e p o s s i b i l i ti e s . C re a ti n g t h i s e n vi ro n m e n t re q u i re s a

m u l t i fa ce te d a p p ro a ch , s ta rti n g wi th a cl e a r fo cu s o n e d u ca ti o n and

tra i n i n g . F o r m a n y e m p l o ye e s co m i n g fro m a tra d i ti o n a l

co m m a n d - a n d - co n tro l cu l tu re , m e n t o ri n g and co a ch i n g wi l l be cru ci a l to

bu i l d up co m p e te n ci e s .

35
PART 1 : Why?

Exte r nal in fl u ence s

The relevance of Michael Porter’s Five Forces model 4 and the implications
of market entrants, competition and the power balance between buyers
and sellers are clearly applicable to all aspects of organizational culture.
Each industrial sector has its own ‘biorhythms’, which reflect the
economic investment and development in that sector. The shift between
customer power and supplier power will vary, depending on the
traditional impacts of supply and demand. Clearly these variables will
significantly influence the nature of any discussions or negotiations.
Addressing internal drivers in this environment means deploying
adaptable approaches. The competitor landscape is equally crucial, since
clearly the greater the options available to the customer the higher their
confidence level to negotiate a more robust deal for themselves.
Many organizations are affected not only by local pressures but also by
the impact of wider changes in the market. There can be few
organizations in the industrialized world today that are not affected by
the financial markets and shareholders. In recent years there has been a
significant change in the valuation process to reflect greater
consideration for corporate structures, as opposed to assets. The move
away from the traditional assessment of a company’s balance sheet of
assets, revenue, expenses and liabilities now includes a focus on brand,
market channels, employees, suppliers and partners, with greater
attention to the structure and nature of organizations.
At the same time the growing trend in recognizing CSR has created new
dynamics in the interdependence of buyer and seller. In recent years one
only has to look at the implications for companies like Nike, B&Q, Marks
& Spencer and other high street names when they come under
unfavourable scrutiny from the regulators and the media. The impacts of
these commentaries on corporate culture are clearly identifiable. It may
seem obvious to suggest that different national cultures require different
approaches; but sadly very often organizations fail not because of the
issues but a failure to recognize the cultural aspects of the business
environment that are different from their own corporate culture.
Effective relationship management is now a crucial factor in the global
marketplace; when developing alternative business models to operate in
this environment, partners may be drawn from a range of cultural
backgrounds.

Co rp o rate cu ltu re
It is perhaps best to consider separating corporate culture and
organizational culture, particularly in the context of collaborative
4 Porter’s five forces analysis: a framework for industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1 979.

36
 Chapter 4 – Culture

worki n g , wh i ch m a y on l y a ppl y to certa i n l y a spects of th e bu si n ess

opera ti on s. Corpora te cu l tu re i s freq u en tl y typi fi ed by bra n d recog n i ti on
– for exa m pl e, we ca n a l l recog n i ze th e g ol d en M of M cD on a l d ’s or oth er
h i g h -profi l e bra n d s. Th ese we a ssoci a te wi th con si sten cy, q u a l i ty, va l u e
etc. a n d th ey a re g en era l l y su pported by a stron g ou twa rd -focu si n g
cu l tu re th a t d efi n es a n d rei n forces th ese i n tern a l sta n d a rd s. We m a y n ot
n ecessa ri l y a ssoci a te th ese org a n i za ti on s wi th con cepts su ch a s
col l a bora ti on , si n ce th ei r bra n d profi l e i s l a rg el y ba sed on en forcem en t
d ri ven by robu st tra i n i n g a n d con d i ti on i n g of person n el . I t sh ou l d be
recog n i zed th a t i n m a n y ca ses th ere m a y be a corpora te i m a g e th a t h a s
to refl ect l oca l con d i ti on s; th i s i s a ch a l l en g e i n m a n y pa rts of th e worl d .
Loca l con tra d i cti on s ca n prove d i ffi cu l t to m od era te a n d perh a ps i n som e
ca ses rei n force th e n eed for even g rea ter com m a n d -a n d -con trol or
power-d ri ven cu l tu res. Th e opposi te ca n a l so be tru e: wh en vi si ti n g som e
pa rts of th e worl d we m a ke a ssu m pti on s a bou t th e l oca l cu l tu re, on l y to
fi n d th a t corpora te tra i n i n g a n d ed u ca ti on crea te a profi l e th a t i s m ore
g l oba l l y recog n i zed .

N everth el ess, i f i t i s seeki n g to h a rn ess col l a bora ti on i t i s i m porta n t for

a n org a n i za ti on to u n d ersta n d th a t i ts ou twa rd styl e a n d a pproa ch wi l l
be a cru ci a l el em en t of a ttra cti n g a n d d evel opi n g th e ri g h t pa rtn ers. Th i s
poi n t i s often l ost on org a n i za ti on s th a t a re tra d i ti on a l l y focu sed on
com m a n d -a n d -con trol m od el s. E ven wh en a pproa ch i n g th e m a rket wi th
th e expecta ti on of d evel opi n g a col l a bora ti ve m od el su ch a s i n n ova ti on ,
pa st perform a n ce ca n be a d eterren t for th ose con si d eri n g respon d i n g .
M a n y org a n i za ti on s tod a y l ook for th e ‘i n tel l i g en t cu stom er’ a n d
u n d erta ke beh a vi ou r a n a l ysi s before com m i tti n g to th e fi rst sta g es of
col l a bora ti on . I t i s i m porta n t to u n d ersta n d on e’s own ca pa bi l i ty a n d
i m a g e a n d to eva l u a te poten ti a l pa rtn ers. I f we con si d er org a n i za ti on a l
cu l tu re to be i m porta n t, th en we n eed to refl ect on th ose i n fl u en ces we
ca n m a n a g e a s opposed to th ose wh i ch a re extern a l l y i m posed . Th e
recu rri n g th em e th rou g h m ost l i tera tu re rel a ted to org a n i za ti on a l cu l tu re
stem s ba ck to a focu s on l ea d ersh i p. Rog er H a rri son 5 d escri bed
org a n i za ti on a l cu l tu re i n fou r types:

• p owe r cu lture wh i ch con cen tra tes power on a few;

• role cu lture wh ere a u th ori ty i s d el eg a ted wi th i n a h i g h l y stru ctu red
org a n i za ti on ;
• ta sk cu lture focu sed th rou g h speci a l i zed tea m s a n d com peten ci es;
• p e rs on cu lture wh ere i n d i vi d u a l percei ved su peri ori ty ca n be h i g h l y
u n sta bl e.

5
H a rri son , Ro g er (1 9 7 2 ) Understanding your organization’s character, H a rva rd B u si n ess

Revi ew

37
PART 1 : Why?

Managing inte r nal in fl u ence s

A cri ti ca l fa cto r fo r co l l a b o ra ti o n i s h o w b e h a vi o u ra l t ra i t s a re m a n a g ed

to o p ti m i z e p e rfo rm a n ce and s a t i s fa cti o n th ro u g h e ffe ct i ve

s e l f- m a n a g e m e n t, wi th i n an o rg a n i z a t i o n a l e th o s b a se d on bu i l d i n g tru s t.

E ve ry o rg a n i z a ti o n is made up of peopl e and h o w i t i s p e rce i ve d o u ts i d e

i s ve ry m u ch a re fl e cti o n o f th e b e h a vi o u r t h e y d i s p l a y. Th e i m p o rta n ce of

u n d e rs ta n d i n g th e ke y b e h a vi o u rs i s cru ci a l in e ve ry a s p e ct o f b u s i n e s s

o p e ra ti o n s . Th e re a re m a n y a s p e cts o f b e h a vi o u r b u t p e rh a p s t h e s e ca n

b e st b e ca p tu re d in th e fo l l o wi n g re s p e ct m o d e l .

R e s p e ct m o d e l :

R E S P O N S I VE

E TH I C S AN D I N TE G RI TY

S E RVI C E TO C U S TO M E R S

P R O F E S S I O N ALI S M

E N TH U S I AS M

C R E ATI VI TY

T E AM WO R K

Ma rket reach
In m o s t ca s e s t h e fa i l u re o f e xt e rn a l re l a ti o n s h i p s i s d i re ctl y ro o t e d in a

fa i l u re to u n d e rs ta n d th e i n t e rn a l p ro fi l e ; a l a ck o f c l a ri ty l e a d s to

co n fu s i o n and m i s d i re cti o n , re s u l t i n g in th e fa i l u re o f th o s e o u tsi d e th e

o rg a n i z a ti o n to a p p re ci a t e th e i m p l i ca ti o n s o f th e i r a cti o n s . F o rm i n g a

s u cce s s fu l co l l a b o ra ti ve s t ra te g y d e p e n d s o n th e n a t u re and cu l tu re of

th e o rg a n i z a t i o n s i t wi l l s e rve ; i t m u s t e n co m p a s s th e main d ri ve rs o f t h e

co rp o ra te vi s i o n s a n d va l u e s , and th e vi s i b l e s u p p o rt o f th e l e a d e rs h i p at

th e h i g h e s t l e ve l . C o l l a b o ra ti ve wo rki n g wi l l l ea d to ch a n g e , wh i ch wi l l

a ffe ct a l l th e o rg a n i z a ti o n s i n vo l ve d . D e ve l o p m e n t o f a co l l a b o ra ti ve

a p p ro a ch m u st b e i n te g ra te d i n to th e wi d e r o b j e ct i ve s a n d e th o s, e ve n

th o u g h i t m a y be vi e we d a s o n l y i n i ti a l l y a ffe cti n g on e p a rt o f t h e

o p e ra ti o n .

Th e re a re m a n y fa c to rs t h a t th e b u s i n e s s co m m u n i ty h a s to co n ti n u a l l y

a d j u st a n d a d a p t to . In th e g l oba l b u s i n e s s e n vi ro n m e n t t h e s e i s s u e s ca n

cre a t e b o th o p p o rtu n i t i e s a n d ri s ks . Wh e n th e re l a ti o n s h i p i s so u n d , th e n

t h i s a p p re ci a t i o n o f s i g n i fi ca n t ch a n g e ca n be h a n d l ed e ffe cti ve l y. Th i s

i n cl u d e s th e a cco m m o d a ti o n o f ch a n g e s i n re g u l a to ry d e m a n d s o r

p o l i ti c a l s tru ctu re s , wh i ch ca n cre a te co n s t ra i n ts th a t cro s s o rg a n i z a ti o n a l

b o u n d a ri e s . E co n o m i c va ri a ti o n s a l te r th e cu s to m e r p e rs p e cti ve and ca n

p ro vi d e a d va n ta g e s to co m p e ti t o rs . Th e m o re g l oba l th e o p e ra ti o n s , th e

g re a te r th e ri s k th a t ch a n g e s i n th e b u s i n e s s l a n d s ca p e ca n d ra m a ti ca l l y

cl a s h wi th i n t e rn a l cu l tu re s .

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 Chapter 4 – Culture

Dive rs ity an d e qu ality

I t i s i m porta n t to recog n i ze th a t org a n i za ti on s a re g en era l l y m a d e u p of
d i fferi n g g rou ps of peopl e. M a n y wi l l wa n t to sta y i n th ei r ‘com fort zon e’
a n d ch oose n ot to see wh y ch a n g e i s n ecessa ry, wh i l e oth ers wi l l be
pa ssi ve a n d seek m ore d i recti on . Th e m ore prog ressi ve i n d i vi d u a l s wi l l
wa n t g u i d a n ce a n d a few wi l l be m ore vi si on a ry. E a ch of th ese
ch a ra cteri sti cs wi l l crea te d i fferi n g d yn a m i cs i n term s of h ow th ey rea ct to
oth ers, a n d th i s con si d era ti on m u st be h i g h on th e col l a bora ti ve l ea d er’s
ch oi ce of pl a yers. Th e org a n i za ti on a l cu l tu re m a y be con stra i n ed by a
n u m ber of fa ctors th a t crea te obsta cl es to i m pl em en ta ti on . Th i s si tu a ti on
ca n be observed i n both th e pu bl i c a n d pri va te sectors; i t a ri ses th rou g h a
n u m ber of com m on pa ra m eters, su ch a s tra d i ti on a l th i n ki n g a n d
processes, l evel s of u n d ersta n d i n g a n d experi en ce, l eg a l fra m eworks,
a ccou n ti n g a n d a u d i ti n g con cern s a n d reg u l a ti on .

Concl us ion
Th e fu tu re h ol d s i n crea si n g ch a l l en g es; org a n i za ti on s m u st con si d er i n
th ei r l on g -term stra teg i es h ow to a d d ress th e ch a n g es a n d m a i n ta i n th ei r
bu si n ess profi l es a n d profi ta bi l i ty. I n a ch a n g i n g a n d vol a ti l e m a rketpl a ce,
wh ere com peti ti on i s g rowi n g , th ere i s con ti n u ou s pressu re on
org a n i za ti on s to fi n d a l tern a ti ve opti on s to com peti ti ven ess, wh i ch i s
i n crea si n g . Corpora te a n d org a n i za ti on a l cu l tu res ca n be th e bed rock for
su sta i n a bl e bu si n ess or a m i l l ston e i n a d yn a m i c m a rket. Th e prospect of
d evel opi n g a l tern a ti ve bu si n ess m od el s, wh i ch a re focu sed n ot on
tra d i ti on a l con tra cti n g rel a ti on sh i ps bu t form u l a ted a rou n d col l a bora ti ve
con cepts, offers opportu n i ty a n d fu rth er ch a l l en g es to th e bu si n ess
com m u n i ty. Th e proposi ti on th a t a n u m ber of i n d epen d en t org a n i za ti on s
form th em sel ves i n to a vi rtu a l opera ti on h a s m a n y ben efi ts bu t i s l i kel y
to m eet th e ba rri er of tra d i ti on a l i n sti tu ti on a l th i n ki n g . Th ese i n teg ra ted
rel a ti on sh i ps m a y be g rea tl y con stra i n ed by th ei r i n h eren t cu l tu res.

Cu l tu re i s both a con seq u en ce of th e en vi ron m en t wi th i n wh i ch a n

org a n i za ti on opera tes a n d a con stru ct of th e wa y i t i s org a n i zed a n d
opera ted . Th e form er a spect i s pa rti a l l y beyon d th e con trol of bu si n ess
l ea d ers; oth er th a n i n u n d ersta n d i n g th e org a n i za ti on ’s vi si on s a n d
va l u es, i ts stra teg i c obj ecti ves a n d d i recti on ca n be sel ecti ve. I n
u n d ersta n d i n g th e d esi red d i recti on a n d d ri vers, sen i or m a n a g ers ca n
ta ke steps to refocu s th ei r tra d i ti on a l cu l tu re a n d i m prove th ei r a bi l i ty to
fu n cti on m ore effecti vel y i n a rea s wh ere opportu n i ti es d o or m a y exi st.
B S 1 1 000 provi d es a fou n d a ti on on wh i ch to con si d er th ose a spects of
cu l tu re th a t ca n be a d d ressed i n ord er to fa ci l i ta te cl a ri ty of focu s a n d a
pl a tform for cu l tu ra l u n d ersta n d i n g a n d i n teg ra ti on . U n d ersta n d i n g th e
cu l tu ra l pi ctu re (wh eth er n a ti on a l , reg i on a l , corpora te or org a n i za ti on a l )
h el ps bu i l d con fi d en ce to expa n d th e d eg ree of i n tera cti on , wi th th e a i m
of crea ti n g l on g er-term rel a ti on sh i ps th a t a re m u tu a l l y ben efi ci a l .

39
PART 1 : Why?

Checklist
C u l t u re is a ke y fa cto r fo r s u cce s s . Ta b l e 4. 2 h e l p s yo u to co n s i d e r h o w

yo u m a y i n te rp re t th e cu l t u re o f yo u r o rg a n i z a t i o n and, m o re

i m p o rta n tl y, h ow i t m a y be vi e we d fro m o u tsi d e b y cu s t o m e rs , p ote n ti a l

p a rtn e rs a n d ke y s u p p l i e rs . Som e e xa m p l e s a re p ro vi d e d in i ta l i cs .

Ta b l e 4. 2 – Cu l tu ra l p e rce p ti o n s – e xa m p l e s

I n te rn a l Cu s to m e r Pa rtn e r S u ppl i er

p e rce p ti o n p e rce p ti o n p e rce p ti o n p e rce p ti o n

Success Challenging Demanding Aggressive

focused

Financially Rigid Risk averse Intrusive

astute

Customer Patronizing Demanding Aggressive

focused

Well Constrained Controlling Dictatorial

organized

Reliable Limited Inflexible Bureaucratic

innovation

Quality Expensive Unimaginative Compliance

focused driven

40
 Chapter 4 – Culture

N ow i n sert you r percepti on s of you r org a n i za ti on , th en a pra g m a ti c vi ew

of h ow oth ers m a y see i t (Ta bl e 4. 3 ) .

Ta b l e 4. 3 – Cu l tu ra l p e rce p ti o n s – yo u r o wn vi e wp o i n ts

I n te rn a l Cu s to m e r Pa rtn e r Su ppl i er

p e rce p ti o n p e rce p ti o n p e rce p ti o n p e rce p ti o n

41
Cha p te r 5 – C reating trus t

As org a n i za ti on s fu rth er i n vesti g a te th e a ppl i ca ti on of a

col l a bora ti ve a pproa ch th e i ssu e of tru st wi l l soon be ra i sed , so
th i s ch a pter wi l l exa m i n e th e con cept of tru st. Tru st h a s l on g
been recog n i zed a s a key a spect of bu si n ess su ccess, yet i t i s a
very person a l a ttri bu te th a t i s n ot g i ven ea si l y. I f tru st i s
i m porta n t bu t i s a person a l percepti on , th en h ow d oes i t
becom e a n i n teg ra l pa rt of a n org a n i za ti on ’s profi l e? An d
wh ere tru st i s crea ted between i n d i vi d u a l s, h ow su sta i n a bl e i s
tru st for th e org a n i za ti on ? I f tru st exi sts, ca n org a n i za ti on s
va l i d a te, m ea su re a n d m a n a g e th e bu i l d i n g of tru st?

Th ere a re m a n y a spects to tru st; th i s ch a pter wi l l l ook a t th e i m pl i ca ti on s

between i n d i vi d u a l s a n d org a n i za ti on s worki n g tog eth er. To set th e
th em e, th e fol l owi n g a re d efi n i ti on s of tru st:

• th e fi rm rel i a n ce on th e i n teg ri ty, a bi l i ty a n d /or ch a ra cter of a person

or org a n i za ti on ;
• th e con d i ti on a n d resu l ti n g obl i g a ti on of h a vi n g con fi d en ce pl a ced i n
on e;
• th e rel i a n ce on som eth i n g i n th e fu tu re: h ope;
• th e rel i a n ce on th e i n ten ti on a n d a bi l i ty of a pu rch a ser to pa y i n th e
fu tu re: cred i t.

Th e fou rth d efi n i ti on i s of pa rti cu l a r i n terest i n a com m erci a l

en vi ron m en t beca u se i t a ffects th e very fou n d a ti on of bu si n ess. Tru st i s a
key el em en t of a l l bu si n ess rel a ti on sh i ps, bu t i t i s sel d om (i f ever) vi si bl e
a s pa rt of a con tra ct, a t l ea st n ot d i rectl y. I n on e form , h owever, tru st i s
d efi n ed a s com m erci a l cred i t. ‘Cred i t’ com es from th e La ti n creditum
(l oa n ) , wh i ch com es from credere (bel i ef) a n d i s th u s a l i n k to con tra cts.
I n m a n y wa ys tru st i s on l y recog n i zed wh en i t i s g i ven a s th e rea son for a
d i spu te beca u se th ere i s a brea kd own between th e pa rti es.

Tru st i s th e corn erston e of bu si n ess; from th e ea rl i est of ti m es th e

rel a ti on sh i p between bu yer a n d sel l er wa s d ri ven by th e a bi l i ty of both
pa rti es to be a bl e to d evel op con fi d en ce i n th e oth er. A sh a ke of th e
h a n d s wa s en ou g h to pu t a con tra ct i n pl a ce a n d th i s freed om from
com pl exi ty often provi d ed a sol i d pl a tform on wh i ch to crea te va l u e a n d
bu i l d tra d e. I t i s th erefore a key fa ctor wh en bu i l d i n g col l a bora ti ve
rel a ti on sh i ps. As com m erce h a s m oved on , th e sca l e of tra d e h a s

43
PART 1 : Why?

si g n i fi ca n tl y i n crea sed a n d so h a ve th e stori es (g ood a n d ba d ) a rou n d th e

fa i l u res between org a n i za ti on s a n d i n d i vi d u a l s. Certa i n l y on ce th ere h a s
been a fa i l u re of perform a n ce i t becom es l ess vi a bl e to tra d e, ba sed
pu rel y on tru st. Th i s q u i ckl y ta kes u s to a poi n t wh ere a l a ck of tru st i s
proba bl y th e sta rti n g poi n t for m a n y rel a ti on sh i ps, ra th er th a n th e oth er
wa y a rou n d .

Th e com pl exi ty of th e bu si n ess com m u n i ty tod a y a n d th e very pu bl i c

d em on stra ti on s of wh a t ca n h a ppen wh en tru st i s a ssu m ed or expl oi ted
by u n scru pu l ou s bu si n esses (su ch a s E n ron , Worl d Com a n d oth ers) h a s
i n crea sed con trol s to th e poi n t wh ere i t h a s becom e i n m a n y ca ses
vi rtu a l l y i m possi bl e to work on tru st a l on e. La ck of con fi d en ce h a s a d d ed
a h u g e bu rd en to bu si n ess opera ti on s – for exa m pl e, i n th e ca se of
Sa rba n es-Oxl ey, 6 wh i ch crea ted a n en vi ron m en t wh ere g overn a n ce a n d
reg u l a ti on cou l d be seen to be sti fl i n g g rowth .

As bu si n ess seeks to fi n d opportu n i ti es for tra d e, a ven u es to expl oi t

com peti ti ve ed g e, or si m pl y to con stra i n costs, th e n eed for tru st h a s
g rown . I t h a s becom e m ore th a n si m pl y con fi d en ce i n th e prod u ct or th e
a ssu ra n ce th a t pa ym en t wi l l be m a d e; i t becom es fu n d a m en ta l to th e
bu si n ess proposi ti on a n d th e m ost va l u a bl e of com m od i ti es. Wi th ou t
tru st, org a n i za ti on s a re forced to d epen d on l a wyers a n d a ccou n ta n ts,
ba cked by th e cou rts, to n a vi g a te a com pl ex en vi ron m en t th a t a d d s l i ttl e
ta n g i bl e ben efi t bu t con tri bu tes si g n i fi ca n t costs a n d a m i n efi el d of ri sks
to bu si n ess effecti ven ess.

I n tern a l l y, org a n i za ti on s ca n n o l on g er si m pl y d epen d on em pl oyees to

d o wh a t i s ri g h t; n or, for th a t m a tter, ca n m a n y em pl oyees rel y on
org a n i za ti on s to d o wh a t i s proper a n d fa i r. Th e Tra d e U n i on m ovem en t
th
i n th e ea rl y pa rt of th e 2 0 cen tu ry took on th e ta sk of d efen d i n g
workers a n d i m provi n g worki n g con d i ti on s. M u ch of th i s beca m e l a w a n d
perh a ps h a s becom e so stron g i n pa rts of th e worl d th a t com pa n i es ca n
n o l on g er d o wh a t i s pra cti ca l bu t stru g g l e to sa ti sfy reg u l a ti on . Th i s i s
n ot i n ten d ed to be su pporti ve of u n scru pu l ou s em pl oyers n or a cri ti ci sm
of th e rol e for col l ecti ve l a bou r rel a ti on s, bu t a d em on stra ti on th a t even
a t a n i n d i vi d u a l l evel tru st i s often h a n d l ed by l a w ra th er th a n com m on
sen se.

S ocial inte raction

Forwa rd -th i n ki n g org a n i za ti on s u n d ersta n d th a t g ood em pl oyee rel a ti on s
a re a cru ci a l pa rt of a n effecti ve bu si n ess. Th ey stretch beyon d
g eog ra ph i c bou n d a ri es i n th i s g l oba l m a rketpl a ce, a n d freq u en tl y beyon d
corpora te bou n d a ri es to th ose extern a l provi d ers i n th e d el i very process.
Th e m ore rem ote th e i n terfa ce, th e h a rd er i t i s to d evel op tru st i n th ose
wh o con tri bu te to i n d i vi d u a l or corpora te su ccess. Th e ra pi d sprea d of

6
Th e Sa rba n es-O xl ey Act 2 002 : www. soxl a w. co m

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 Chapter 5 – Creating trust

co m m u n i ca ti o n s te ch n o l o g y h a s p ro vi d e d a wi d e ra n g e o f o p p o rtu n i ti e s

to o p e ra te o u ts i d e l o ca l i z e d s t ru ctu re s . H o we ve r, th e s e vi rtu a l

co m m u n i ti e s a re o fte n co n s tra i n e d b y th e i n a b i l i ty o f th e p a rti ci p a n t s to

bu i l d t ru s t i n e a ch o th e r o r th e o rg a n i z a ti o n s th e y re p re s e n t. Th e

i m p o rt a n ce o f s o ci a l i n t e ra cti o n i s fre q u e n tl y i g n o re d in fa vo u r o f wi re d

co n n e cti o n s , wh i ch a l l o w i n s ta n t co m m u n i ca ti o n b u t fre q u e n tl y h a m p e r

th e d e ve l o p m e n t o f a n y p e rs o n a l co n n e c ti o n . We all a p p re ci a t e m e e ti n g

a ro u n d th e co ffe e m a ch i n e and th e fu rth e r we m o ve wa y fro m e a ch

o th e r th e we a ke r th e l e ve l s o f tru s t.

Th e i n te rn e t h a s cre a t e d a s i g n i fi ca n t ch a n g e in th e tra d i n g co m m u n i ty,

b u t wh e n yo u a sk p e o p l e i f t h e y wo u l d b u y m i s s i o n - cri ti ca l i te m s fo r th e i r

b u s i n e s s o r i t e m s fo r th e i r fa m i l y th ro u g h an u n kn o wn we b s i t e th e y

i m m e d i a te l y re co i l . So tru s t re m a i n s th e ca t a l ys t fo r t ra d e , e ve n in th i s

h i g h - te ch a g e. E ve n M i cro s o ft h a s s ta rte d to a d ve rti s e a ro u n d th e th e m e

of peopl e and re l a ti o n s h i p s ra th e r t h a n t e ch n o l o g y s o l u ti o n s , s u g g e s ti n g

th a t t h e pen d u l u m i s s wi n g i n g b a ck i n fa vo u r o f tra d i t i o n a l va l u e s a n d

th i n ki n g . Th e i n ve s t m e n t ch a l l e n g e and d i ve rs i ty o f t h e m a rke tp l a ce is

cre a ti n g an e n vi ro n m e n t wh e re b u s i n e s s p ro p o s i t i o n s a re m o re l i ke l y to

be b a se d on th e d e ve l o p m e n t o f a l l i a n ce s a n d n e two rks o f co m p a n i e s

l i n ke d to g e th e r to fo rm vi rtu a l o rg a n i z a t i o n s , to e xp l o i t a p a rti cu l a r

p ro d u ct/s e rvi ce p ro p o s i ti o n or m eet a cu s to m e r d e m a n d . Th i s i s p e rh a p s

ca u s i n g a re s u rg e n ce o f th i n ki n g to re va l u e th e i m p o rt a n ce o f tru s t e d

re l a t i o n s h i p s a s a ke y i n g re d i e n t o f s u cce s s a n d a cru ci a l fa cto r.

The im p o rtance o f tru s t

Th e re is no d o u b t th a t tru s t i s e s s e n t i a l in a n y re l a ti o n s h i p ; in b u si n e ss i t

is a ke y fa cto r i n bei n g a bl e to e xp l o i t th e o p p o rtu n i t i e s a n d manage th e

ri s ks a t th e i n t e rfa ce s b e t we e n i n d i vi d u a l s , g ro u p s , fu n cti o n s a n d

o rg a n i z a ti o n s . B y bu i l d i n g tru s t we ca n re m o ve m a n y o f th e

ti m e - co n s u m i n g and co s tl y co n tro l s th a t b u s i n e s s e s p l a ce b e twe e n

th e m s e l ve s . M a n a g e m e n t o f o th e rs i s m a i n l y d ri ve n by a co n ce rn th a t

th e y wi l l n ot d o wh a t i s e xp e ct e d o f th e m , so we fo rm co n t ra cts th a t a re

b a se d on a p re s u m p ti o n o f fa i l u re .

Th e p ro b l e m i s th a t i n m o s t ca s e s co n tra cts a re n o t cl e a r, n o r ca n th e y

fu l l y d e fi n e e ve ry s i tu a ti o n . Th u s wh e n i s s u e s a ri s e t h e y fa i l to d e l i ve r

th e i r o b j e cti ve o f cl a ri t y. I t i s p e rh a p s wo rth co n s i d e ri n g th e adage th a t

co m p a n i e s m a ke co n t ra cts a n d peopl e m a ke b u si n e ss. Th e m o re e ffo rt we

i n ve s t i n and re l y o n d e ve l o p i n g wa t e rti g h t co n tra cts , th e l e ss ti m e we

sp e n d fo cu s i n g on h o w to be s u cce s s fu l . Th i s i s n o t to s u g g e s t th a t we

d on ’t n e e d co n tra cts , b u t p e rh a p s t h e y s h o u l d be co n s i d e re d as a s a fe t y

n et a n d n o t th e e xcl u s i ve d ri ve r.

Th e re a re ce rta i n peopl e we i n h e re n tl y tru s t, l i ke l y d o cto rs a n d t e a ch e rs ,

bu t peopl e a re u s u a l l y e i th e r t ru s ti n g u n ti l p ro ve d wro n g or

fu n d a m e n ta l l y m i s tru s ti n g o f o th e rs u n ti l th e y re co g n i z e th a t th ro u g h

45
PART 1 : Why?

p e rfo rm a n ce o f o b l i g a t i o n s th e y ca n be tru s te d . Th e m o re o ft e n yo u g et

yo u r fi n g e rs b u rn e d , th e l e s s i n cl i n e d yo u a re to tru s t wh a t o th e rs s a y. In

b u si n e s s we g e n e ra l l y b u i l d tru s t th ro u g h i n cre m e n ta l sta g e s, wh i ch is

p e rh a p s o n e o f th e s i m p l e s t fo rm s o f ri s k m a n a g e m e n t. We a l l ow on l y a

sm a l l d e g re e o f fre e d o m , b a se d on a l i m i te d bel i ef i n o th e rs ; we

p ro g re s s i ve l y i n cre a s e th e b o u n d a ri e s , b a se d on h o w we se e th e i r

p e rfo rm a n ce .

O rg a n i z a ti o n s i n p ri n ci p l e a re re fl e cti o n s o f th e peopl e t h a t e xe cu te th e i r

a i m s; tru s t i s d ri ve n n o t b y o rg a n i z a ti o n s , bu t by peopl e e a ch h a vi n g

d i ffe re n t th re s h o l d s o f tru s t. P e rfo rm a n ce i s th e o n l y re a l m e a s u re of

o th e rs a n d th u s th e b e n ch m a rk fo r tru s t . Th e cu l tu re of a n o rg a n i z a t i o n

i s re fl e cte d th ro u g h i ts p e o p l e ; so i f t h e y a re n o t tru s te d , th e n h ow d o

we e xp e ct th e m to tru s t o th e rs o r cre a te an e n vi ro n m e n t wh e re o t h e rs

wo u l d tru s t th e m o r th e i r o rg a n i z a t i o n ? I t i s th i s d i l e m m a th a t fa ce s

m a n y o rg a n i z a t i o n s . As we see a g ro wi n g tre n d to wa rd s co l l a b o ra ti ve

a p p ro a ch e s a n d a b re a kd o wn o f th e tra d i ti o n a l b u si n e ss m o d e l s i t i s

p e rh a p s t i m e to co n s i d e r re l a ti o n s h i p m a n a g em en t n ot a s a ‘ n i ce - to - h a ve ’

o r so m e th i n g th a t we do as a m a tt e r o f co u rs e bu t a s a fu n d a m e n ta l

n e ce s s i ty fo r th e fu t u re . Th e wri t e r’s re s e a rch i n to th e ch a l l e n g e s o f

co l l a b o ra ti o n h i g h l i g h ts t h re e ke y fa ct o rs fo r s u cce s s , e a ch h a vi n g i ts

fo u n d a ti o n in d e ve l o p i n g tru s t:

• wh e n t wo o rg a n i z a ti o n s e n t e r a n y ki n d o f co l l a b o ra t i ve re l a ti o n s h i p

t h e re a re a l wa ys th re e s e ts o f o b j e ct i ve s : ‘ Yo u rs , mine and o u rs ’ .

Fa i l i n g to re co g n i z e th e s e p o te n ti a l l y ve ry d i ffe re n t p o s i ti o n s

fre q u e n tl y l e a d s to co n fu s i o n and co n fl i ct;

• secon d i s th e i ssu e o f d i s p u te s . I t i s n o t th e fa ct t h a t we h a ve th e m

b u t h o w we handle th e m th a t d e fi n e s th e s t re n g t h o f tru s t a n d th e

re l a ti o n s h i p ;

• t h i rd i s th e q u e s ti o n of a n e xi t s t ra te g y. Th i s i s p e rh a p s th e m o st

damaging, s i n ce n o t u n d e rs t a n d i n g th e ru l e s o f d i s e n g a g e m e n t t e n d s

to co l o u r th e wa y we i n te ra ct.

Th e q u e s ti o n o f tru s t i s a s m u ch a bou t g ood open co m m u n i ca ti o n as

a n yth i n g e l se ; a s o rg a n i z a ti o n s m o ve m o re and m o re to wa rd s a l t e rn a ti ve

b u si n e s s m o d e l s , t ru s t b e co m e s a m a j o r co n s i d e ra ti o n . Tru s t s e e m s to be

som eth i n g th a t i s i n h e re n t l y u n d e rs to o d at a p e rs o n a l l e ve l bu t n ot

som eth i n g th a t o rg a n i z a t i o n s cu rre n tl y fo s t e r a s a n o p e ra t i o n a l p l a tfo rm .

Contracts an d p eo p le
Tra d i ti o n a l co m m e rci a l ‘ tri a l b y co m b a t’ h a s been co n s i d e re d th e on l y

wa y to d ea l wi t h cu s to m e rs a n d s u p p l i e rs . Th e fo u n d a ti o n i s fi rm l y

e n tre n ch e d in th a t th e b u ye r wa n t s t o p a y th e l e a s t fo r th e m o st a n d th e

s e l l e r wa n ts to p ro vi d e th e l e a s t fo r t h e m o s t; ‘ Le t b a ttl e co m m e n ce ’

fro m th a t p o s i ti o n . Ye t b e n e a th th e b ra va d o o f s a b re - ra tt l i n g t h e re is a

ke y co n ce p t t h a t a ffe c ts e ve ry d e ci s i o n we m a ke , and th a t i s ‘TRU S T’ . Th e

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 Chapter 5 – Creating trust

l e s s we tru s t e a ch o t h e r th e h a rd e r th e fi g h t a n d th e l o n g e r i t ta ke s to

g et a re s o l u ti o n . Th i s u n d e rl yi n g co n ce p t i s cru ci a l to s u cce s s fu l b u si n e ss;

and in an e n vi ro n m e n t to d a y, wh e re te ch n o l o g y a n d co m m u n i ca ti o n s

h a ve ch a n g e d th e fa ce o f t ra d i n g re l a t i o n s h i p s , i t i s p e rh a p s e ve n m o re

tru e .

C o l l a b o ra ti ve wo rki n g is a g ro wi n g ph en om en on , re fl e ct i n g th e re a ch

a cro s s tra d i t i o n a l i n d u s t ry s e ct o rs o r co m p e t i ti ve b o u n d a ri e s to cre a te

a l te rn a t i ve m o d e l s o f i n te g ra te d p ro d u cts a n d s e rvi ce s . Ye t s o m a n y of

th e s e p ro g ra m m e s a re co n s i d e re d fa i l u re s , b e ca u s e fre q u e n tl y th e

re l a t i o n s h i p s a re n o t s t ro n g en ou g h . U n d e rl yi n g th i s i s th e fu n d a m e n ta l

tru th t h a t tru s t i s a cru ci a l i n g re d i e n t t h a t we re l y o n b u t ca n n o t

m e a s u re . We m a y re co g n i z e t h a t i t e xi s ts , b u t g e n e ra l l y o n l y re co g n i z e it

wh e n i t i s n o t th e re .

I m p act o f behavio u rs
Th e d e ve l o p m e n t o f co l l a b o ra ti ve p ro g ra m m e s i s fre q u e n t l y fo cu s e d on

th e bl en d i n g o f c o m p a n y cu l tu re s . D e l i ve ri n g cu s to m e r s a ti s fa cti o n is

fo u n d e d u pon o rg a n i z a t i o n s g o i n g th a t ‘ e xtra m i l e’ in t e rm s o f

p e rfo rm a n ce . E ve ry b u s i n e s s re l a ti o n s h i p is a j o u rn e y; u n d e rs t a n d i n g

wh e re yo u a re in th e d e ve l o p m e n t p ro ce s s i s cru ci a l in bei n g a bl e to

m a xi m i z e th e b e n e fi ts . Th e e th o s o f a n o rg a n i z a ti o n is a re fl e cti o n o f i ts

l e a d e rs h i p and i ts p e o p l e , wh o i n fl u e n ce th e o ve ra l l cu l tu re and re fl e ct

th a t s tyl e e xte rn a l l y.

In a n y ci rcu m s t a n ce wh e re peopl e n eed to wo rk to g e th e r to d e l i ve r a

p ro d u ct o r s e rvi ce , s u cce s s l a rg e l y d e p e n d s o n th e b e h a vi o u rs o f th e

peopl e i n vo l ve d . E xp l o i ti n g co l l a b o ra t i ve re l a ti o n s h i p s d e ri ve s s u cce s s

fro m i n te g ra ti n g b u s i n e s s p ro ce s s e s a n d s h a ri n g kn o wl e d g e to cre a te

a d d i ti o n a l va l u e and i n n o va ti o n . Th e wa y i n wh i c h peopl e i n te ra ct wi th

e a ch o th e r i s a ke y fa cto r i n d e l i ve ri n g p e rfo rm a n c e and cu s to m e r va l u e .

I t sh o u l d be cl e a r th a t h o w e a ch i n d i vi d u a l b e h a ve s a n d p e rfo rm s th e i r

ro l e s i n th e o p e ra t i o n s tro n g l y i n fl u e n ce s th e wa y i n wh i ch o th e rs re a ct

in re tu rn .

R e l a ti o n s h i p s a re a fu n d a m e n ta l p a rt o f a n y o p e ra ti o n . In an

e n vi ro n m e n t wh e re cu s to m e r s a ti s fa cti o n i s th e fo cu s o f th e a cti vi ty, th e n

s u cce s s i s ve ry d e p e n d e n t o n i m p ro vi n g th e b e h a vi o u rs th a t s u p p o rt

th o s e re l a ti o n s h i p s . Th e re l a ti o n a l i s s u e s ca n be fu n d a m e n ta l b a rri e rs to

i n te g ra ti o n . Th i s i s p a rti cu l a rl y th e ca s e wh e n co n s i d e ri n g co l l a b o ra ti ve

re l a t i o n s h i p s t h a t s p a n re g i o n a l cu l tu ra l b o u n d a ri e s . Th e e m o ti o n a l i ssu e s

in g e n e ra l te rm s wi l l be th e a re a s th a t m a ke o r b re a k a re l a ti o n s h i p . It is

th e s e a re a s th a t wi l l d e fi n e th e s u cce s s o f a n y co l l a b o ra ti ve ve n tu re .

B e h a vi o u rs wi l l s t ro n g l y i n fl u e n ce th e wa y i n wh i ch o th e rs re a ct ; th u s to

s ti m u l a te s u cce s s a n o rg a n i z a ti o n m u s t s ta rt b y u n d e rs ta n d i n g i n d i vi d u a l

ch a ra cte ri s ti cs , g ro u p d yn a m i cs a n d o rg a n i z a ti o n a l cu l tu re , and bu i l d i n g

47
PART 1 : Why?

tru st. Th e org a n i za ti on wi l l n eed to a d j u st beh a vi ou ra l pa ttern s a n d

con ti n u ou sl y focu s on excel l en ce to i m prove perform a n ce a n d en h a n ce
cu stom er sa ti sfa cti on .

Th e key to m a n a g i n g beh a vi ou ra l tra i ts to opti m i ze perform a n ce a n d

sa ti sfa cti on i s th rou g h effecti ve sel f-m a n a g em en t, tog eth er wi th a n
org a n i za ti on a l eth os th a t i s recog n i zed a s a cri ti ca l fa ctor for su ccess. I t i s
i m porta n t th a t org a n i za ti on s h a ve cl ea rl y d efi n ed obj ecti ves a n d va l u es
th a t a re refl ected th rou g h ou t th e opera ti on a n d a ccepted by a l l i n vol ved .
Th i s i s n ot to su g g est th a t org a n i za ti on s ca n a l wa ys sa ti sfy th e
percepti on s of every i n d i vi d u a l , bu t cl ea r ru l es of en g a g em en t wi l l h el p
to m a i n ta i n d i recti on a n d n ot d i l u te i ts focu s.

Comm u nication
E ffecti ve com m u n i ca ti on i s a bou t u n d ersta n d i n g h ow beh a vi ou ra l tra i ts
a ffect th e wa y a m essa g e i s g i ven a n d recei ved . Th e a tti tu d es a n d
a pproa ch es th a t i n d i vi d u a l s presen t to oth ers a re key fa ctors i n crea ti n g
em pa th y a n d th u s tru st between th e i n d i vi d u a l s or th ei r org a n i za ti on s.
Th e m ost com m on fa i l i n g i n th e cu stom er rel a ti on sh i p i s th e m a n n er i n
wh i ch com pl a i n ts a re h a n d l ed ; th e wa y i n wh i ch d i spu tes a re m a n a g ed
ca n be a va l u a bl e ben ch m a rk for th e stren g th of th e rel a ti on sh i p. M a n y
org a n i za ti on s see com pl a i n t m a n a g em en t a s a n eg a ti ve fa ctor wh i l e
th ose th a t seek con ti n u ou s i m provem en t see i t a s a key perform a n ce
i n d i ca tor.

I t i s i m porta n t to recog n i ze th e fl ow of a n y com m u n i ca ti on a n d

i n fl u en ces th a t wi l l d efi n e i ts effecti ven ess (see Fi g u re 5 . 1 ) . I t i s freq u en tl y
n ot th e word s th a t a re u sed bu t th e peri ph era l i n fl u en ces th a t d eterm i n e
su ccess. Recog n i zi n g th e m essa g e i s a fa ctor of th e a cti on s a n d th e
con text wi th i n wh i ch i t i s bei n g d el i vered . I t wi l l be i n terpreted ba sed on
th e person a l i ty a n d expecta ti on s of th e recei ver, wh ere th e percei ved
m essa g e wi l l resu l t from i n fl u en ces a n d m a n i pu l a ti on wi th i n th ese
fa ctors. B a l a n ci n g a n d m a n a g i n g th ese tra i ts i s a n essen ti a l pa rt of
bu i l d i n g a n effecti ve a n d tru sti n g rel a ti on sh i p.

Th e beh a vi ou rs of org a n i za ti on s a re freq u en tl y d ri ven by th ei r opera ti n g

stru ctu res or corpora te ‘si l os’, wh i ch ca n often d i cta te th e wa y i n wh i ch
i n d i vi d u a l s a re a l l owed to perform . Th i s i s pa rti cu l a rl y a ppa ren t wh en
con si d eri n g opera ti on s th a t bri d g e n a ti on a l or cu l tu ra l bou n d a ri es. Th e
key i n fl u en ces a re often pa rt of opera ti n g processes su ch a s fi n a n ci a l
reporti n g a n d i n cen ti ve sch em es, wh eth er g rou p or i n d i vi d u a l .
Perform a n ce req u i rem en ts th a t d i cta te th e m ea su res of su ccess wi l l a l so
set ben ch m a rks for kn owl ed g e sh a ri n g a n d col l a bora ti on . Th e m ore ri g i d
a n d l oca l i zed th e perform a n ce m ea su res, th e m ore l i kel y i t wi l l be th a t
th ese wi l l prom ote a tti tu d es th a t crea te a bl a m e cu l tu re, so i t i s

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 Chapter 5 – Creating trust

Fi g u re 5.1 – Co m m u n i ca ti o n s fl o w

i m p ra c ti ca l to co n s i d e r th e b e h a vi o u ra l tra i ts o f i n d i vi d u a l s wi th o u t

ta ki n g i n to co n s i d e ra ti o n th e b u s i n e s s e n vi ro n m e n t wi th i n wh i ch th e y a re

re q u i re d to o p e ra t e .

Th e re ca n n e ve r b e a si n g l e co m p l e te s o l u ti o n to th e b e h a vi o u r d i l e m m a

wi th i n o rg a n i z a ti o n s , wh e t h e r co n s i d e ri n g e xt e rn a l re l a ti o n s h i p s o r

i n te rn a l i n te rfa ce s . Th e re is a n eed to a sse ss a n d b a l a n ce th e ‘ h a rd ’ i ssu e s

o f p ro ce d u re s , p ro ce s s e s , s ys t e m s a n d p o l i cy a g a i n s t th e s o ft e r i s s u e s t h a t

re fl e ct t h e p e rs o n a l tra i ts a n d s tyl e s o f t h o s e wh o a re ch a rg e d wi th

d e l i ve ri n g wi th i n th e se p ro ce s s e s . Th e b a l a n ce is t ru s t th ro u g h wh i ch

i n d i vi d u a l s a n d o rg a n i z a ti o n s a re a bl e to re l y m o re on co m m o n

p e rfo rm a n ce th a n on ri g i d l y e n fo rce d p ro ce s s e s .

In high p e rfo rm i n g o rg a n i z a ti o n s th e ke y tra i t s a re fa ce ts o f m a n a g i n g

b e h a vi o u rs a n d th u s l e a d to s u cce s s . Le a d e rs d e m o n s tra te co m m i t m e n t to

g oa l s a n d va l u e s , m e e ti n g th e n e e d s o f s ta ke h o l d e rs wi t h e th i ca l and

tra n s p a re n t d e ci s i o n s , wh i l e e n co u ra g i n g i n n o va ti o n and h a rn e s s i n g

d i ve rs i ty. E ffe cti ve m a n a g e rs wi l l in tu rn p ro vi d e p e rfo rm a n ce fe e d b a ck

a g a i n s t cl e a r g o a l - s e tti n g , s u p p o rte d b y ri s k a n d re wa rd . Th e y s h o u l d a l so

re fl e ct co n s i d e ra ti o n fo r d e ve l o p i n g s ki l l s a n d p ro m o t e a wo rk–l i fe

b a l a n ce . S ta ff wi l l ta ke re s p o n s i b i l i ty a n d co n tri b u te fu l l y wi th

co m m i tm e n t, i n i ti a ti ve and s u p p o rt fo r co rp o ra t e g oa l s a n d va l u e s .

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PART 1 : Why?

B ri d ging the relation s hi p d ivi d e

M o st p e o p l e wh o wo rk i n l a rg e o rg a n i z a ti o n s h a ve s u ffe re d a t so m e

p o i n t wi t h th e i n te rn a l co n fl i cts th a t d e tra ct fro m th e o u twa rd - fa ci n g

re l a ti o n s h i p s , wh e t h e r th e y a re wi th cu s to m e rs , s u p p l i e rs o r p a rtn e rs .

Tryi n g to i m p ro ve p e rfo rm a n ce b y wo rki n g wi th s tra te g i c re l a t i o n s h i p s

cre a t e s p re s s u re b e ca u s e o th e r i n te rn a l fu n ct i o n s fa i l to s u p p o rt th e

re l a ti o n s h i p e ffe ct i ve l y. Th e a d o p ti o n o f co l l a b o ra ti ve m o d e l s ca n be

co n s tra i n e d by a n u m b e r o f fa cto rs th a t cre a t e o b s ta cl e s to

i m p l e m e n ta t i o n . Th i s s i tu a ti o n i s o b s e rve d b o th in th e pu bl i c a n d p ri va te

s e c to rs a n d a ri s e s th ro u g h a n u m b e r o f co m m o n p a ra m e te rs , s u ch as

t ra d i ti o n a l th i n ki n g and p ro ce s s e s , l e ve l s o f u n d e rs ta n d i n g and

e xp e ri e n ce , l eg a l fra m e wo rks , a cco u n t i n g and a u d i ti n g co n ce rn s a n d

re g u l a t i o n . In a co l l a b o ra ti ve re l a t i o n s h i p th e b e n e fi ts a ri s e fro m

e xp l o i ti n g th e i n te rfa c e s b e twe e n o rg a n i z a ti o n s a n d th e a b i l i ty o f

d i s p a ra te g ro u p s to fo cu s o n co m m o n o b j e cti ve s a n d i m pl em en t a j oi n t

p ro g ra m m e . I t i s t h e re fo re i m p e ra ti ve th a t o rg a n i z a ti o n s i n ve s t th e ti m e

to em bed th e co l l a b o ra t i ve a p p ro a ch in th e i r b u s i n e s s p ro ce s s e s a n d i n to

th e e th o s o f th e o rg a n i z a t i o n to bu i l d tru s t .

Di spu te re s ol u tion
In a n y b u s i n e s s ve n t u re wh e re peopl e a re i n vo l ve d t h e re i s a l wa ys t h e

p o s s i b i l i ty o f d i ffe re n ce s ; th i s i n cl u d e s a co l l a b o ra t i ve cu l tu re . Managing

co n fl i ct to wa rd s a co n s tru cti ve and m u tu a l l y b e n e fi ci a l o u tco m e is a

cru ci a l e l e m e n t o f e ffe ct i ve co l l a b o ra ti o n . Al th o u g h o rg a n i z a ti o n s a n d

i n d i vi d u a l s m a y ch o o s e to o p e ra te in a m o re open m a n n e r, a t ti m e s th e re

wi l l be ci rcu m s t a n ce s th a t g e n e ra te so m e d e g re e o f d i ffe re n ce s i n

e ve ryd a y o p e ra ti o n s . I t i s i n e vi ta b l e th a t d i ffe ri n g vi e ws wi l l a ri s e in th e

fo cu s o f g ro u p s , e i th e r wi th i n th e te a m s o r i n th e wi d e r o rg a n i z a ti o n s

t h a t co n s ti t u t e th e re l a ti o n s h i p . In th e co n ve n ti o n a l tra d i n g re l a t i o n s h i p

th e se i s s u e s a re o fte n s u p p re s s e d u n ti l i t i s to o l a te to d e fu s e th e co n fl i ct.

In a co l l a b o ra ti ve a rra n g e m e n t i t i s i m p o rta n t to e n s u re th a t th e re is a

d i sp u te re s o l u ti o n p ro ce s s t h a t p ro vi d e s a m e ch a n i s m and e s ca l a ti o n

ro u te wh e re a p p ro p ri a te . C e rta i n l y th e s tre n g th of a re l a t i o n s h i p ca n

o ft e n be j u d g ed on th e wa y i t i s a b l e to fa ce and s o l ve d i s p u te s ; t ru s t

d e ve l o p s th ro u g h e ffe cti ve m a n a g e m e n t o f d i s p u te s . E s ta b l i s h i n g th i s

si m pl e guiding p ro ce s s ca n h el p to fo cu s o n th e i ssu e s a n d n ot on th e

p e rs o n a l i ti e s , s ta rt i n g b y va l i d a ti n g wh a t i s h a p p e n i n g and wh a t n e e d s

a tt e n t i o n . I n si d e a vi a b l e co l l a b o ra ti o n th e re sh ou l d be no p o we r b a s e s i f

i t i s to re a l l y o p e ra te wi th a fo cu s o n a d d ed va l u e . In l o o ki n g at any

p o te n ti a l co n fl i ct th e re i s a l wa ys a ch a n ce th a t i t wi l l be se e n a s ‘ th e m

and u s’ . In si m p l e t e rm s th i s i s a b o u t th e ‘ wi n –wi n ’ a p p ro a ch ve rs u s th e

‘ wi n –l o s e ’ . Th e s e two co n fl i cti n g p o s i t i o n s ca n be e xp l a i n e d a s s h o wn

b e l o w.

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 Chapter 5 – Creating trust

Ta b l e 5 . 1 – Wi n –wi n ve rsus wi n –l o s e

Wi n –Wi n Wi n –Lo s e

Con fl i ct a s a m u tu a l probl em Con fl i ct wh ere on e pa rty wi n s a n d

th e oth er l oses

Tea m l ooki n g for j oi n t B oth si d es l ooki n g for i n d i vi d u a l

sol u ti on s sol u ti on s

Sa ti sfyi n g both si d es Power own er forces sol u ti on

M u tu a l i n terd epen d en ce Power th rou g h i n d epen d en ce

O pen a n d h on est d i a l og u e M i sl ea d i n g i n form a ti on

Th rea ts a voi d ed Th rea t i s power

Fl exi bl e Ri g i d

I f n ot m a n a g ed th ese si tu a ti on s ca n com pl etel y d estroy tru st, th erefore

on ce you h a ve th e i ssu es ou t i n th e open (i n th e m i d d l e g rou n d ) th en
th ey n eed to be d i ssected by th e tea m . You ca n n ot sol ve a probl em i f you
ca n ’t see th e rea l ca u se, a n d so often we a d d ress th e sym ptom – n ot th e
root ca u se.

M o vi n g f r
o wa rd to t rus t

I f we a ckn owl ed g e th a t rel a ti on sh i ps a re i m porta n t, th en th e obvi ou s

con n ecti on i s th a t tru st (wh i ch i s wh a t fu el s g ood rel a ti on sh i ps) m u st be
h i g h on th e a g en d a , si n ce to m a ke rel a ti on sh i ps fu n cti on effecti vel y th ere
m u st be tru st between th e pa rti es or th ey wi l l be con stra i n ed by ri g i d
a n d i n fl exi bl e system s a n d con tra cts. Th e l a tter i s a si tu a ti on wh i ch wi l l
be fa m i l i a r to m a n y i n th e bu si n ess worl d , bu t wh i ch (a s h a s a l rea d y been
sa i d ) i s perh a ps n ot th e m od el for th e fu tu re. Th e ch a l l en g e, h owever, i s
h ow to bu i l d rel a ti on sh i ps th a t foster tru st. I n th ese ti m es of bu si n ess
reporti n g , i t i s perh a ps even m ore i m porta n t to a sk h ow we ca n m ea su re
tru st. Th e i ssu e of tru st com es u p ti m e a n d a g a i n i n cu l tu ra l prog ra m m es,
a n d even m ore freq u en tl y wh en org a n i za ti on s try to m ea su re th e
resi l i en ce of th ei r bu si n ess rel a ti on sh i ps. Yet tru st i s perh a ps th e m ost
i n ta n g i bl e of con cepts a n d i s m ore often th a n n ot som eth i n g th a t ea ch
i n d i vi d u a l d efi n es a n d d evel ops from a very si n g u l a r perspecti ve. I t i s
d i ffi cu l t to m ea su re, yet freq u en tl y i t i s i n cl u d ed i n cu l tu ra l m on i tors,
wh en i n fa ct i t i s m a y be m ore of a n ou tcom e th a n a d ri ver.

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PART 1 : Why?

H o w ca n o r g a n i z a ti o n sd f e i n e ‘t rus t’?

To d e ve l o p an a p p ro a ch fo r l o o ki n g b e yo n d th e l o o se a d o pti o n o f t e rm s

l i ke ‘ tru s t ’ , yo u h a ve to try to g et a n a p p re ci a ti o n o f h o w o th e rs s e e th e

s u b j e c t. I f tru s t i s a n i n ta n g i b l e p e rce p t i o n , th e n h o w ca n yo u m e a s u re i t?

Wh a t yo u co u l d p e rh a p s m e a s u re i s th e output o f tru s t a n d h o w th i s

re fl e cts th e p e rce p ti o n s o f th o s e i n vo l ve d . C l e a rl y s o m e o rg a n i z a ti o n s – o r

a t l e a s t th e i r b ra n d s – ca rry a high d e g re e o f tru s t a n d e ve ry o rg a n i z a ti o n

wo u l d wi s h to be re co g n i z e d as a tru s t e d b ra n d .

R e s e a rch ca rri e d o u t a m o n g s t I C W e xe cu ti ve s c l e a rl y i d e n ti fi e d t ru s t a s

cru ci a l ; b u t th e re s e a rch a l so re co g n i z e d th a t th i s wa s a n o u tp u t o f

b e h a vi o u rs , wh i ch had to be d e ve l o p e d and n o t a ssu m e d a t th e o u t s e t.

Tru s t wa s p e rs o n a l ; so in g e n e ra l th e o rg a n i z a ti o n ’s p e rs p e cti ve on tru s t

wa s b a s e d on i ts p e o pl e , n o t i t s p ro ce s s e s . Tru s t wa s d e ve l o p e d

i n cre m e n ta l l y, s ta rti n g fro m a ra n g e o f kn o wl e d g e fa cto rs th a t m i g h t

i n cl u d e p e rs o n a l e xp e ri e n c e , re c o m m e n d a ti o n s o r p u b l i c re p u ta ti o n . Tru s t

wa s g i ve n in d e g re e s b a s e d on a co m b i n a t i o n o f kn o wl e d g e and ri s k

a s s e s s m e n t. Th u s , i f tru s t wa s a n o u tp u t o f p e rfo rm a n ce and b e h a vi o u rs ,

th e n th e n e xt q u e s ti o n wa s : ‘ Wh a t a re th e fa ct o rs th a t g o ve rn yo u r l e ve l

o f tru s t? ’ Th e m a n y a n e cd o ta l re s p o n s e s we re a n a l ys e d to i d e n ti fy th e s e

o u tp u ts , wh i ch l a rg e l y fe l l i n to th re e ca t e g o ri e s :

• co m p l i a n ce – wh i ch te n d e d to co m e fro m ve ry p ro ce s s - o ri e n te d and

s tru ctu re d o rg a n i z a ti o n s , re fl e cti n g p e rh a p s th e n a tu re o f th e i r

m a n a g e m e n t;

• c u ur
lt e – wh i ch in g e n e ra l ca m e fro m o rg a n i z a t i o n s wi th a b ro a d e r

g l oba l o p e ra ti o n ;

• co m m i tm e n t – wh i ch had a wi d e fo cu s fo r i n d i vi d u a l s wh o we re

m o re fu l l y a p p re ci a t i ve o f p a rtn e ri n g and a l l i a n ce co n ce p ts .

Ta b l e 5 . 2 – I d
n i ca to rs f rus
o t t

Co m p l i a n ce C u ur
lt e Co m m i tm e n t

O n -ti m e d e l i ve ry Open to E a rl y wa rn i n g s o f

High q u a l i ty n e g o ti a ti o n p ro b l e m s

C o n tra ct co m p l i a n ce C u s to m e r fo cu s Re s p o n s i ve

M e e ti n g s ch e d u l e G oi n g th e e xt a r F a i rn e s s

C o n ci s e re p o rti n g mile F l e xi b l e

F a ctu a l A d pa ta b l e to Depen d a bl e

P u n ct u a l ch a n g e E m p a th y

R i s k a ve rs e G oo d Cl e a r co m m i tm e n t

Re l i a b l e co m m u n i ca ti o n Acce s s i b l e

S tru ctu re d a cce s s Op ss en n e P ro b l e m s o l vi n g

Sou n d pl a n n i n g H s r pu
on e t e ta ti o n Co n ti n u o u s

M eet s p rf r e o m a n ce S r f r
ha e in o m a ti o n i m p ro ve m e n t

ta r s
g et F ri e n d l y S u s ta i n a b i l i t y fo cu s

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 Chapter 5 – Creating trust

R o b u s t p o l i ci e s S t ro n g peopl e Do wh a t t h e y s a y

H e a l th and s a fe ty fo cu s th e y wi l l do

R e g u l a to ry a d h e re n ce S t a ff re te n ti o n C o n s ci e n ti o u s

P ro ce s s d ri ve n I n n o va ti ve

P ro ve n p e rfo rm a n ce C re a t i ve

S t ro n g a d m i n i s t ra ti o n S e rvi ce d ri ve n

Lo w l e ve l o f co m p l a i n ts Wi n –wi n

C o l l a b o ra ti ve

Th o s e a s p e cts m o s t o ft e n o cc u rri n g d u ri n g th i s s t u d y h a ve been

h i g h l i g h te d in Ta b l e 5. 2. I t i s n o t s u rp ri s i n g th a t th e re wa s a s tro n g fo cu s

on p e rfo rm a n ce fo r co m p l i a n ce in m o s t ca s e s , and m a n y d i ffe re n t wa ys

o f i n t e rp re ti n g th i s. Th e o th e r re s p o n s e s , re l a ti n g to th e a s p e cts o f

cu l tu re and co m m i tm e n t , we re m o re fo cu s e d .

Mea su ring ‘tru s t’

C ri t i ca l b e h a vi o u rs a re a ke y e l e m e n t o f b u i l d i n g a tru s t- b a s e d o p e ra ti o n .

Th e h i g h e r th e d e g re e o f tru s t, th e m o re e ffi ci e n t l y t h e o p e ra t i o n ca n

m o ve fo rwa rd , re l e a s i n g m a n a g e m e n t ti m e and e ffo rt to fo cu s o n

va l u e - a d d i n g a cti vi ti e s . So, fi n d i n g a si m pl e m od el to m e a s u re t ru s t a c ro s s

a re l a ti o n s h i p wo u l d se e m a va l u a b l e i d ea . D i s ti l l i n g th e va ri e ty o f

co m m e n ts co l l e ct e d wa s re l a ti ve l y e a s y, s i n ce in g e n e ra l th e ke y i s s u e s

d ro p p e d o u t fro m th e n u m b e r o f ti m e s a s u b j e ct wa s ra i s e d . Th e re is

p ro b a b l y n o a b s o l u te a n s we r, b u t i f th e s e ke y a s p e cts re fl e ct e d wh a t

re a s s u re d peopl e, th e n th e s e wo u l d tra n s l a te i n to so m e m e a s u re m e n t o r

‘ t ru s t’ i n d e x.

I t i s e a sy to p l a ce a high va l u e on tru s t , b u t a t th e sa m e ti m e i t i s d i ffi cu l t

to i d e n ti fy t ru s t a s th e p ri n c i p a l ca ta l ys t fo r p e rfo rm a n ce . I f peopl e a re

open , h o n e st a n d re s p o n s i ve , d e m o n s tra ti n g fa i rn e s s a n d co m m i tm e n t,

th e n o th e rs wi l l be l i ke l y to tru s t th e m . Building a ro b u s t a p p ro a ch ,

wh i ch h a rn e s s e s th e cu l tu re o f co l l a b o ra ti o n , wi l l fa ci l i ta te tru s ti n g

re l a t i o n s h i p s wi th i n a fra m e wo rk t h a t b ri n g s o u t th e b e s t p e rfo rm a n ce .

In th e en d i t wi l l be p e rfo rm a n ce and tru s t th a t a re th e b e n ch m a rks o f

co l l a b o ra ti o n ; a s tru s t i n cre a s e s , a cco rd i n g l y i t wi l l add g re a te r va l u e to

th e p a rti ci p a n ts .

Concl u s ion
R e l a ti o n s h i p s a n d th e b e h a vi o u rs t h a t d ri ve th e m a re d yn a m i c a n d wi l l

va ry i n d e pth and ch a n g e o ve r t i m e . Th e u l ti m a te o b j e cti ve i s to s t ri ve fo r

e xce l l e n ce in all ca s e s , b u t th i s p ro ce s s h a s to be p ro g re s s i ve . E xce l l e n ce is

u n l i ke l y e ve r to be a ch i e ve d ; th e b a r sh o u l d be co n s ta n tl y ra i s e d to

a ch i e ve g re a te r l e ve l s o f tru s t i n o rd e r to d ri ve e ffi ci e n cy a n d

e ffe ct i ve n e s s .

53
PART 1 : Why?

We m a y u n d e rs ta n d th e va l u e o f tru s t- b a s e d re l a ti o n s h i p s , bu t

m a i n ta i n i n g th e se in g ood ti m e s a n d ba d i s fre q u e n tl y a co n te s t b e t we e n

s h o rt a n d l o n g - te rm p re s s u re s . Th e n e xt d e ca d e and b e yo n d o ffe rs a

co m p l e x a n d s h i ft i n g vi s ta o f re l a ti o n s h i p ch a l l e n g e s a s we s tru g g l e wi t h

th e co n fl i ct s o f e c o n o m i cs a n d s e rvi ce d e l i ve ry. R e l a ti o n s h i p s a re th e

co rn e rs to n e o f b u si n e ss; p ro j e ct i n g th e s e ch a l l e n g e s i n to th e fu tu re , ou r

co n cl u s i o n i s th a t s tra te g i c th i n ki n g m u st bu i l d on a fo u n d a ti o n of

re l a ti o n s h i p m a n a g e m e n t, wh i ch wi l l be cru ci a l to s u cce s s .

Th e q u e s ti o n we h a ve to a s k i s wh e th e r o rg a n i z a t i o n s h a ve th e a b i l i ty

and s ki l l s t o bu i l d and e xp l o i t tru s t to d e l i ve r th e s e s o l u t i o n s e ffe cti ve l y.

A g ood s ta rti n g poi n t m a y be to l o o k to th e n ew B SI co l l a b o ra ti ve

b u si n e s s re l a ti o n s h i p s ta n d a rd BS 1 1 000. Th i s m a y h e l p to e s ta b l i s h a

fo u n d a ti o n , p u t so m e co n s i s te n cy a n d ri g o u r i n to tra d i n g a p p ro a ch e s a n d

h el p to u n d e rp i n th e va l u e o f ‘ t ru s t’ .

54
 Chapter 5 – Creating trust

Checklist
B a sed on a cu rren t cri ti ca l bu si n ess rel a ti on sh i p, try to a ssess h ow you r
cu stom er or pa rtn er m a y cu rren tl y vi ew you r org a n i za ti on (Ta bl e 5 . 3 ) .

Ta bl e 5 . 3 – A ss e ss cus tom e r/p a rtn e r vi ews

Su bj ect Ra ti on a l e High/
M ed i u m /

Low

Pe rfo rm a n ce Th ere wi l l a l wa ys be a stron g i n fl u en ce i n

a n y bu si n ess en vi ron m en t i n rel a ti on to
m eeti n g th e d em a n d s of th e m a rket. Tru st
wi l l n ever be a ppa ren t i f org a n i za ti on s or
i n d i vi d u a l s con ti n u a l l y fa i l to m eet th ei r
obl i g a ti on s. Th i s i t i s n ot si m pl y a bou t
con tra ct com pl i a n ce; i t i s a bou t d oi n g wh a t
you sa y you wi l l d o a t every l evel

O p en n e ss I f th ere i s a n y con cern th a t pa rtn ers a re n ot

bei n g open th en tru st i s pu t i n d ou bt; i t
sti m u l a tes a protecti ve rea cti on , wh i ch i n
tu rn wi l l crea te a reci proca l rea cti on

H on e s ty A bel i ef i n h on esty i s fu n d a m en ta l to a n y
tru st-ba sed rel a ti on sh i p, bu t i n a bu si n ess
con text th i s i s often d i sreg a rd ed i n fa vou r
of g a m e-pl a yi n g – pa rti cu l a rl y i n
n eg oti a ti on s

Re sp on s i ve- Th ere i s a g en era l a ccepta n ce th a t q u esti on s

ne ss m a y n ot be a n swered i m m ed i a tel y. B u t i f
req u ests a re i g n ored th i s freq u en tl y l ea d s to
fru stra ti on a n d con cern th a t th e a n swers
a re bei n g m a n i pu l a ted or i n terpreted a s
sh i el d i n g som e a spect, a n d th u s th e l evel of
tru st becom es q u esti on ed

Com m i tm en t Th e q u esti on of com m i tm en t i s often a

refl ecti on of th e preva i l i n g a tti tu d e ra th er
th a n a fa i l u re to a ct. A l a ck of a cti on m a y
be refl ecti ve of oth er i ssu es bu t th e wa y th i s
i s con veyed wi l l i n fl u en ce th e percepti on of
wi l l i n g n ess to a ct

55
PART 1 : Why?

Fa i r n e s s Th e b u s i n e s s wo rl d ca n be a to u g h

e n vi ro n m e n t b u t i n g e n e ra l th i s i s

u n d e rs t o o d b y th o se en g a g ed in i t. Th e

o u tco m e o f a n y e n g a g e m e n t wi l l be j u d g ed

b y th e p a rti e s i n re l a t i o n to h o w i t a ffe cts

th e i r o b j e cti ve s a n d h o w fa i r i t i s p e rce i ve d

to be, g i ve n th e ci rcu m s ta n ce s

I n f o r m a ti on Th e b e n e fi ts o f i n te g ra t e d wo rki n g a re th e

s h a ri n g va l u e cre a t e d b y s h a ri n g i n fo rm a ti o n . Th e

i m p l i ca ti o n o f i n fo rm a ti o n n ot bei n g s h a re d

i s th a t s o m e o th e r d ri ve r i s i n fl u e n ci n g th e

d e ci s i o n to s h a re and th u s o p e n s t h e wa y to

co n ce rn s a b o u t th e m o ti ve s , wh i ch in tu rn

wi l l a ffe ct th e l e ve l o f tru s t

Com m u n i ca - M o s t d i s p u t e s b e twe e n i n d i vi d u a l s o r

ti on o rg a n i z a ti o n s s te m fro m poor

co m m u n i ca ti o n , wh i ch i n tro d u ce s co n ce rn s

th a t th e o t h e r p a rty i s n o t i n te re s t e d or i s

s e e ki n g d e l i b e ra te l y n o t to co m m u n i c a t e fo r

so m e h i d d en re a s o n . E i th e r wa y t h e i m p a ct

on tru s t i s o b vi o u s

E a rl y Tru s t b re e d s co n fi d e n ce and wh e n th a t

wa r n i n g s co n fi d e n c e is high e a ch p a rty wi l l fe e l a bl e

to s h a re ba d n e ws a s we l l a s g ood n e ws .

P ro b l e m s s h a re d a fte r a fa i l u re wi l l be

i n te rp re t e d a s p o o r p e rfo rm a n ce , wh e re a s

wh e n co n ve ye d e a rl y t h e y o ffe r th e

o p p o rtu n i ty to fi n d j o i n t s o l u ti o n s , wh i ch

i n cre a s e s th e p e rce p ti o n o f tru s t

E xt r a m i l e Th e p e rce p t i o n th a t i n d i vi d u a l s o r

o rg a n i z a ti o n s a re p re p a re d to ‘g o th e e xtra

m i l e’ i s on e o f th e s t ro n g e s t o b s e rva ti o n s o n

tru s t. I t co n ve ys a g en u i n e d e s i re to e xce l

and s a ti s fy, wh i ch e n h a n ce s t h e co n ce p t o f a

tru s ti n g re l a t i o n s h i p

56
Cha p te r 6 – Collabo rative lea d e rs hi p

To su pport ch a n g e we n eed to a d d ress l ea d ersh i p, th e th em e of

th i s ch a pter. As we i n crea si n g l y a d opt a l tern a ti ve bu si n ess
a pproa ch es (wh eth er a l l i a n ces, con sorti a or pa rtn ersh i ps) to
st
m eet th e ch a l l en g es of th e 2 1 cen tu ry, h i era rch i ca l stru ctu res
fa i l to provi d e th e a g i l i ty a n d fl exi bi l i ty to opti m i ze th e
effecti ven ess of i n terd epen d en t opera ti on s. Th e fa i l u re of m a n y
of th ese rel a ti on sh i ps stem s from a l a ck of d yn a m i c l ea d ersh i p
to bu i l d th e en vi ron m en ts wh ere th e ben efi ts of col l a bora ti on
ca n be h a rn essed a n d expl oi ted .

Wi th a g rowi n g tren d towa rd s a l tern a ti ve bu si n ess m od el s versu s

tra d i ti on a l opera ti n g con cepts, ba sed on com m a n d a n d con trol ,
l ea d ersh i p i s a pri n ci pa l ca ta l yst for su ccess. Lea d ersh i p i s a topi c th a t i s
d eba ted , d i scu ssed a n d a n a l ysed i n every a ca d em i c, pol i ti ca l a n d bu si n ess
foru m . From th e ti m e of Ad a m Sm i th th e su ccess of bu si n ess h a s been
focu sed on th e i m pl em en ta ti on of stra teg y by i n n ova ti ve a n d ch a ri sm a ti c
l ea d ers. To g a u g e th e i n terest i n th e su bj ect, si m pl y l og i n to a n on l i n e
bookstore a n d type i n ‘l ea d ersh i p’; th ere i s a n en orm ou s n u m ber of
excel l en t ti tl es. Yet i f you d o th e sa m e u si n g th e term ‘col l a bora ti ve
l ea d ersh i p’ you wi l l fi n d a very l i m i ted n u m ber a n d fewer sti l l wi th a
focu s on bu si n ess.

D yn a m i c l ea d ersh i p i s a key fa cet of every su ccessfu l bu si n ess ven tu re.

Wh en m a n a g i n g a n y pa rtn eri n g a l l i a n ce or col l a bora ti ve prog ra m m es,
wh ere th e d el i very process crosses org a n i za ti on a l bou n d a ri es, th e rol e of
th e l ea d er i s even m ore cru ci a l . D evel opi n g a n effecti ve focu s i s a
ch a l l en g e i n m ost bu si n ess en vi ron m en ts bu t wh ere th e tra d i ti on a l
com m a n d -a n d -con trol stru ctu re i s repl a ced by cross-fu n cti on a l opera ti on s,
th e coord i n a ti on a n d d i recti on of th e tea m i s even m ore com pl ex.
M oti va ti on a n d i n fl u en ce becom e vi ta l to su ccess.

Collabo rative lea d e rs hi p

‘Lea d ersh i p’ i s often con fu sed wi th power a n d con trol , yet i n th e
en vi ron m en t of i n teg ra ti n g rel a ti on sh i ps a cross org a n i za ti on a l
bou n d a ri es th e m ost effecti ve ou tcom es em erg e from a pool i n g of
resou rces, kn owl ed g e, ski l l s a n d ca pa bi l i ti es. Wh ere th e l ea d ers seek to
u se th ei r rel a ti ve power th ey wi l l i n evi ta bl y crea te fri cti on a n d a l a ck of

57
PART 1 : Why?

tru st th a t wi l l u n d erm i n e th e poten ti a l ben efi ts a n d d evel opm en t of

opportu n i ti es. Th e i m pl em en ta ti on of a l tern a ti ve bu si n ess m od el s for
opera ti on s req u i res cross-org a n i za ti on a l m a n a g em en t a n d effecti ve
rel a ti on sh i p m a n a g em en t to u n d erpi n processes a n d d ri ve su ccess.
Lea d ers n eed to be a bl e to d ra w on su pport, n ot on l y from th ei r own
org a n i za ti on s bu t a l so from th ose of th ei r pa rtn ers. Th e opera ti on a l rol e
i s a l so l i kel y to be stretch ed over d i sta n ce a n d g eog ra ph i c bou n d a ri es,
wh i ch req u i res th a t m a n a g em en t rel y m ore on tru st a n d l oca l i n i ti a ti ve.
Th e coord i n a ti on a n d m oti va ti on of rem ote tea m s towa rd s com m on
g oa l s i s fa r m ore com pl ex th a n co-l oca ted opera ti on s.

Fi g u re 6 . 1 – E l e m e n ts o f l e a d e rs h i p

E xecu ti ves a n d col l a bora ti ve l ea d ers n eed to recog n i ze th a t th ei r rol e i s

to be th e a d voca te of th e col l a bora ti on wi th i n th ei r own org a n i za ti on s
(see Fi g u re 6. 1 ) , wh i ch m a y often be i n con fl i ct wi th i n tern a l stru ctu res.
M a ki n g th e sh i ft from a tra d i ti on a l ‘m a ster-a n d -serva n t’ rel a ti on sh i p to
co-crea tors often d em a n d s both org a n i za ti on a l a n d person a l rea l i g n m en t
of th i n ki n g a n d a pproa ch es.

I d e n ti fyi n g co l l a b o ra ti ve m a n a g e rs

Th e ch a l l en g e wh en l ooki n g for effecti ve col l a bora ti ve m a n a g ers i s th a t

th e ra n g e of a bi l i ti es a n d a ttri bu tes n ecessa ry prod u ce a profi l e th a t i s

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 Chapter 6 – Collaborative leadership

h a rd to fi l l . H owever, th i s rol e i s cru ci a l i n th e process of bu i l d i n g

effecti ve col l a bora ti ve rel a ti on sh i p prog ra m m es a n d d ri vi n g th em to
d el i ver stra teg i c a n d com m erci a l a d va n ta g e to th e m a xi m u m ben efi t of
th e pa rtn ers. H i stori ca l l y, m a n a g em en t h a s d ra wn i ts power from
posi ti on , resou rce con trol or professi on a l sta n d i n g bu t i n a col l a bora ti ve
en vi ron m en t th e em ph a si s m u st be on i n spi ra ti on a n d m oti va ti on (see
Fi g u re 6. 2 ) .

Fi g u re 6 . 2 – M a n a g e m e n t e th o s

Th e effecti ve l ea d er wi l l opera te n ot from a posi ti on of power bu t from

th e a bi l i ty to i n fl u en ce a n d i n spi re, wi th a g ood u n d ersta n d i n g of h i s or
h er rel a ti ve power. Th e m ost su ccessfu l l ea d ersh i p ta kes i ts stren g th from
bei n g a bl e to d ra w pa rti es tog eth er a n d crea te sol u ti on s th a t u se th e fu l l
poten ti a l to opti m i ze perform a n ce ou tcom es, wh i ch cou l d n ot be
a ch i eved i n i sol a ti on . E ffecti ve l ea d ersh i p m u st focu s a cross th e i n terfa ces
to expl oi t th e poten ti a l of col l a bora ti ve tea m s i rrespecti ve of th ei r
i n d i vi d u a l org a n i za ti on s, wh i l e a ckn owl ed g i n g th a t ea ch pa rtn er a l so h a s
to sa ti sfy m a n a g em en t a n d d evel opm en t d ri vers wi th i n th ei r respecti ve
org a n i za ti on s. Th e ch a l l en g e i n th e a ren a of col l a bora ti ve rel a ti on sh i ps i s
to bri n g tog eth er th e i n d i vi d u a l m em bers to con tri bu te to th e overa l l
ben efi t of th e tea m , focu sed on j oi n t obj ecti ves. Th e recog n i ti on of
i n d i vi d u a l con tri bu ti on s i s a m a j or fa ctor i n i n spi ri n g i n n ova ti ve
a pproa ch es a n d fosteri n g col l ecti ve own ersh i p.

59
PART 1 : Why?

Th e ch a n g i n g nat ur e o f l ea d rs p
e hi

Th e n a tu re of l ea d ersh i p h a s ch a n g ed over ti m e (see Fi g u re 6. 3 ) , from a

posi ti on th a t wa s pri n ci pa l l y ba sed on stren g th . As th e bu si n ess l a n d sca pe
h a s ch a n g ed , so h a s th e i n fl u en ce a n d ski l l set req u i red for bri n g i n g ou t
th e m ost effecti ve perform a n ce. Th e d evel opm en t of bu si n ess m od el s
from h i era rch a l wh ol l y own ed stru ctu res to th e m ore fl exi bl e a n d fl u i d
n etwork of ca pa bi l i ti es h a s l ed to th e n eed to d evel op m ore a d a pta bl e
m a n a g em en t styl es, focu sed on em poweri n g i n n ova ti on a cross a ra n g e of
bu si n ess rel a ti on sh i ps.

Fi g ur e 6 . 3 – Ch a n g i n g s tyl e o f l ea d rs p
e hi

Col l a bora ti ve worki n g req u i res l ea d ersh i p th a t ca n ta ke m a n a g em en t

beyon d l oca l i zed i n tern a l g oa l s a n d d i rect th e ou tcom es towa rd s m u tu a l
retu rn on i n vestm en t wi th i n a cu l tu re of tru st a n d coopera ti on .
O rg a n i za ti on s freq u en tl y focu s th ei r a tten ti on on th e q u a l i fi ca ti on s of
th ei r peopl e to provi d e a n i n d i ca tor of poten ti a l perform a n ce a n d va l u e.
I n term s of beh a vi ou ra l perform a n ce th i s m a y n ot be th e best m ea su re of
su i ta bi l i ty or refl ect a com m u n i ca ti ve a n d col l a bora ti ve styl e th a t
m oti va tes i n teg ra ti on . As col l a bora ti ve worki n g becom es a n esta bl i sh ed
pa rt of bu si n ess opera ti on s, th ere i s a n i n crea sed em ph a si s on m a n a g i n g
effecti ve rel a ti on sh i ps – both i n tern a l l y a n d extern a l l y. I t req u i res a
fou n d a ti on on wh i ch col l a bora ti ve l ea d ersh i p ca n be d evel oped , for
th ose l ea d ers to g o on to crea te th e ri g h t en vi ron m en t for col l a bora ti on
a n d for th e d evel opm en t of col l a bora ti ve l ea d ersh i p ski l l s to m eet th e
stra teg i c ch a l l en g es of tom orrow.

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 Chapter 6 – Collaborative leadership

The challenge s o f lea d e rs hi p

Wi th i n m a n y org a n i za ti on s th e rol e of l ea d ers i s g en era l l y d efi n ed by
wh a t i s expected of th em , ra th er th a n th e ski l l s a n d ca pa bi l i ti es th ey m a y
n eed to a ch i eve th ose resu l ts. Th ere i s often con fu si on between
management a n d leadership . As a resu l t th e rol e of m a n a g ers i s
freq u en tl y fi l l ed ba sed on tech n i ca l ski l l s a n d experi en ce. Th i s si tu a ti on i n
a tra d i ti on a l com m a n d -a n d -con trol org a n i za ti on a l stru ctu re i s l ess
probl em a ti c th a n i n a col l a bora ti ve-ba sed en vi ron m en t, wh ere th e
va ri ou s pa rti es i n vol ved d o n ot h a ve d i rect own ersh i p or respon si bi l i ty for
ea ch oth er.

Th e proba bi l i ty i s th a t i n a n y org a n i za ti on th ere wi l l be a n eed to a ssess

a n d d evel op th e ski l l s a n d kn owl ed g e th a t a re a va i l a bl e, th en m en tor
a n d coa ch tea m s to bu i l d on th e ca pa bi l i ti es th a t exi st. Th e rol e sh ou l d
n ot be trea ted l i g h tl y, si n ce th e i n terfa ces between org a n i za ti on s ca n
prod u ce si g n i fi ca n t opportu n i ti es a n d ri sks, bu t m a n y of th ese wi l l
proba bl y on l y su rfa ce u n d er effecti ve l ea d ersh i p. Th e l ea d ersh i p rol e i n a
col l a bora ti ve en vi ron m en t i s fa r m ore com pl ex th a n for tra d i ti on a l
org a n i za ti on s. N ot on l y d o th ey h a ve to m eet th e n orm a l d em a n d s of
tea m bu i l d i n g a n d m oti va ti on ; i n a vi rtu a l con text th i s h a s to be a ch i eved
a g a i n st th e va ri a bl e ba ckg rou n d of ti m e, power, d i sta n ce a n d cu l tu ra l
d i versi ty. Th i s d em a n d s crea ti ve l ea d ersh i p wi th th e a bi l i ty to esta bl i sh
th e vi si on s a n d va l u es th a t wi l l su pport a col l a bora ti ve m od el , wh i ch
broa d en s th e essen ti a l el em en ts of l ea d ersh i p.

Th e i d ea of col l a bora ti ve i n teg ra ti on m a y be on e th a t offers m a n y

org a n i za ti on s th e opportu n i ti es to d evel op a l tern a ti ve bu si n ess m od el s. I t
i s n ot, h owever, a si m pl e sol u ti on ; i t ch a l l en g es m a n y org a n i za ti on s a n d
th ei r l ea d ers to ch a n g e th ei r opera ti n g m eth od s, tra i n i n g , stra teg i es a n d
overa l l org a n i za ti on a l a pproa ch . U n d erpi n n i n g col l a bora ti ve prog ra m m es
m u st be a focu s on beh a vi ou rs. From th e execu ti ves ‘wa l ki n g th e ta l k’ to
th e fron t-l i n e opera tors u n d ersta n d i n g th ei r person a l i m pa ct wh en
worki n g tog eth er to m eeti n g j oi n t obj ecti ves, th i s req u i res i n d i vi d u a l s,
g rou ps a n d org a n i za ti on s to u n d ersta n d a n d m a n a g e th ei r beh a vi ou rs.

To con si d er th e expl oi ta ti on of th e poten ti a l ben efi ts of col l a bora ti ve

opera ti on s a n d strea m l i n i n g of processes, th e si g n i fi ca n ce of tru st wi l l be
obvi ou s. Th i s i ssu e i s n ot si m pl y on e of g rea ter open n ess i n th e extern a l
rel a ti on sh i ps; i t i s a m a j or fa ctor wh en con si d eri n g th e h a rn essi n g of
i n tern a l n etworks by bu i l d i n g a stru ctu re for col l a bora ti ve a l i g n m en t,
m on i tori n g a n d m ea su ri n g perform a n ce a n d m a n a g i n g d i spu tes. Th e
con cept of ‘tota l cost of own ersh i p’ (TCO ) h a s been a rou n d for severa l
d eca d es a n d h a s prom pted m a n y org a n i za ti on s to l ook beyon d th e
tra d i ti on a l sel ecti on cri teri on of pri ce. At th e sa m e ti m e, a s cu stom ers
h a ve sou g h t to expl oi t ‘sol u ti on s’ ra th er th a n prod u cts, i n crea si n g th ei r
u se of ou tsou rci n g a n d offsh ori n g to red u ce cost, so th e i n teg ra ted
n a tu re of m a n a g i n g TCO th rou g h a spectru m of extern a l rel a ti on sh i ps
h i g h l i g h ts th e n eed to focu s on esta bl i sh i n g g rea ter coh esi on th rou g h ou t

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PART 1 : Why?

th e va l u e ch a i n . Th e i n tro d u cti o n o f co l l a b o ra t i ve re l a ti o n s h i p

m a n a g em en t sh ou l d be se e n as a ke y e l e m e n t o f th e TC O e q u a ti o n . For

l e a d e rs h i p th i s m e a n s re co g n i z i n g i n t e rd e p e n d e n c y, d e ve l o p i n g co n ce p ts

o f j o i n t o wn e rs h i p and h a rn e s s i n g co l l e ct i ve ca p a b i l i ty. U n d e rs ta n d i n g

s tre n g t h s a n d we a kn e s s e s wi l l p ro vi d e b a ckg ro u n d on th e a re a s o f ri s k

a ssu m e d b y co l l a b o ra t i ve l e a d e rs , wh i ch th e y m a y n e e d d e ve l o p m e n t

p l a n s to a d d re s s .

Managing behaviours an d d i spu tes th rou gh in fl u ence

Th e e th o s o f a n o rg a n i z a ti o n is a re fl e cti o n o f i ts l e a d e rs h i p . In any

ci rcu m s t a n ce wh e re peopl e n eed to wo rk to g e th e r to d e l i ve r a p ro d u ct

o r s e rvi ce , s u cce s s l a rg e l y d e p e n d s o n th e b e h a vi o u rs o f th e peopl e

i n vo l ve d . Th e wa y i n wh i ch peopl e i n t e ra ct wi th e a ch o th e r i s a ke y

fa c to r i n d e l i ve ri n g p e rfo rm a n ce and cu s to m e r va l u e , and h o w e a ch

i n d i vi d u a l b e h a ve s a n d p e rfo rm s t h e i r ro l e s i n th e o p e ra ti o n s tro n g l y

i n fl u e n ce s t h e wa y i n wh i ch o th e rs re a ct i n re t u rn .

I n te rn a l l y th e re a re m a n y i n t e rfa ce s th a t a ffe ct t h e p e rfo rm a n ce of a n

o rg a n i z a ti o n . I t i s i m p o rta n t t o re co g n i z e th a t wh i l e m a n y o f th e se may

n ot be d i re ctl y i n th e p ro ce s s o f d e l i ve ry th e y wi l l s i g n i fi ca n t l y a ffe ct th e

wa y i n d i vi d u a l s re a ct a n d p e rfo rm . C u s to m e rs a n d e xte rn a l o rg a n i z a ti o n s

ten d to vi e w th e wh o l e o p e ra ti o n , and e ffe cti ve p e rfo rm a n ce co m e s fro m

an i n te g ra te d a p p ro a c h . Th i s i s p a rti cu l a rl y i m p o rt a n t wh e n co n s i d e ri n g

co l l a b o ra ti ve ve n t u re s th a t m a y a ffe ct n u m e ro u s i n te rn a l b o u n d a ri e s .

Th e s e b a ckg ro u n d p re s s u re s wi l l s i g n i fi ca n tl y i n fl u e n ce th e wa y th e y

re s p o n d to o th e rs . U n d e rs ta n d i n g th e s e i ssu e s a n d bei n g a wa re of h ow

cri ti ca l b e h a vi o u rs a re re fl e cte d in th e o p e ra ti o n i s th e cru ci a l s te p

t o wa rd s fu l l y o p ti m i z i n g p e rfo rm a n ce .

I n d i vi d u a l and co l l e cti ve p e rfo rm a n ce n eed to be co n s i d e re d , to g e t h e r

wi th a re co g n i ti o n th a t th ro u g h t h e i r b e h a vi o u r e a ch i n d i vi d u a l ca n

u n d e rm i n e th e tru s t th a t i s b u i l d i n g b e twe e n g ro u p s o r o rg a n i z a t i o n s . It

i s u n l i ke l y th a t p e o p l e ca n e ffe cti ve l y re fl e ct a s tyl e t h a t i s d i ffe re n t fro m

t h e i r n a tu ra l tra i ts , and be co n vi n ci n g . Th e i m p o rta n ce , th e re fo re , of

u n d e rs ta n d i n g th e ke y b e h a vi o u rs i s cru ci a l in e ve ry a s p e ct o f b u s i n e s s

o p e ra ti o n s . Th e re a re m a n y a s p e cts o f b e h a vi o u r, bu t i n fu n cti o n a l te rm s

th e ke y p ri n ci p l e is respect. Au th o ri ty ca n be b e s to we d b u t re s p e ct ca n

on l y be e a rn e d . So wh i l e i t m a y n ot be p o ssi b l e to ch a n g e th e b a si c

n a tu re of a n i n d i vi d u a l , i t i s p o ssi b l e to manage h o w th a t n a t u re is

re fl e cte d to o th e rs .

Th e e sse n ti a l s o f m a n a g i n g b e h a vi o u ra l tra i ts to o p ti m i z e p e rfo rm a n c e

and s a t i s fa ct i o n a re e ffe cti ve s e l f- m a n a g e m e n t to g e th e r wi th l e a d e rs h i p ,

t h ro u g h an o rg a n i z a ti o n a l e th o s th a t e n s u re s i t i s re c o g n i z e d as a cri ti ca l

fa c to r fo r s u cce s s . P e rs o n a l and c o rp o ra t e e xp e c ta ti o n s a re cru ci a l fa ce ts

o f th e co l l a b o ra t i ve re l a ti o n s h i p . I t i s re l a ti ve l y e a s y to d e fi n e h o w we

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 Chapter 6 – Collaborative leadership

e xp e c t o th e rs to b e h a ve , b u t i t i s fre q u e n tl y l e s s co m m o n to fi n d th o se

sa m e e xp e cta t i o n s b e i n g re fl e cte d in th e wa y i n wh i ch l e a d e rs h i p and

o rg a n i z a ti o n s p re s e n t th e m s e l ve s .

Th e ch a l l e n g e fo r l e a d e rs h i p i s to e n s u re t h a t co l l a b o ra t i ve p ro g ra m m e s

re m a i n re l e va n t, a s o ve r ti m e n e w wa ys b e co m e a wa y o f l i fe and n eed

to be re g u l a rl y re a s s e s s e d . At th e sa m e ti m e , i t i s i m p o rt a n t to re co g n i z e

th a t co l l a b o ra ti ve re l a t i o n s h i p s s h o u l d n ot on l y be d e l i ve ri n g on th e

i n i ti a l o b j e cti ve s ; to re m a i n e n e rg i z e d th e y sh o u l d a l so be fo c u s e d on

adding a d d i ti o n a l va l u e .

Wo rki n g in a co l l a b o ra ti ve e n vi ro n m e n t m a y n o t co m e e a s i l y to e ve ryo n e ;

d e ve l o p i n g th e s ki l l s ca n m a ke a s i g n i fi ca n t co n t ri b u ti o n to o ve ra l l

i n te g ra ti o n . In m o s t o p e ra t i n g e n vi ro n m e n ts th e ro u te to e ffe cti ve

l e a rn i n g i s d ri ve n b y e xp o s u re and s h a ri n g . I t i s, h o we ve r, i m p o rta n t to

re co g n i z e th a t p e o p l e l e a rn a t d i ffe ri n g ra t e s a n d th ro u g h a m u l t i p l i ci t y

o f s t yl e s . Le a rn i n g i s a l so a c o n s t a n t p ro ce s s a n d i s e sse n ti a l to th e

d e ve l o p m e n t o f e ffe cti ve re l a ti o n s h i p s . It is a t wo - wa y p ro ce s s th a t o n l y

a d d s re a l va l u e wh e n it is a s h a re d j o u rn e y. Th e co l l a b o ra t i ve l ea d er

sh o u l d be a ca ta l ys t fo r b e h a vi o u r d e ve l o p m e n t p ro g ra m m e s ; i n te l l i g e n t

l e a rn i n g is a fu n d a m e n t a l p a rt o f th e m a n a g e m e n t p ro ce s s to s u p p o rt

i n d i vi d u a l d e ve l o p m e n t a n d co n fi d e n ce .

In a ch a n g i n g wo rl d , th e i n te rn a l and e xte rn a l p re s s u re s o n any

co l l a b o ra ti ve re l a ti o n s h i p wi l l i n e vi t a b l y l e a d to i m p a c ts o n e ffe cti ve n e s s .

As re l a ti o n s h i p s e vo l ve th e y wi l l u n d e rg o ch a n g e . No t wo re l a ti o n s h i p s

a re th e sa m e ; th e d yn a m i cs o f o rg a n i z a ti o n a l and peopl e ch a n g e s ca n

i n fl u e n ce p e rfo rm a n ce . I t i s i m p o rta n t to re co g n i z e t h a t a s re l a ti o n s h i p s

p ro g re s s t h e y n e e d to be m o n i to re d to e n s u re th a t a p p ro p ri a t e fo cu s i s

m a i n ta i n e d on a re a s wh e re p e rh a p s co n ve rg e n ce i s n ot h a ppen i n g to

m a xi m u m b e n e fi t. Ap p ro p ri a te p e rfo rm a n ce m e a s u re s wi l l n eed to be

e s ta b l i s h e d , to e n s u re th a t b e h a vi o u rs a n d th e i r i m p a ct a re re co g n i z e d

and a d d re s s e d . Th e l o n g e r th e re l a ti o n s h i p is in p l a ce th e g re a te r th e ri s k

th a t co m p l a ce n cy wi l l bu i l d b e twe e n th e va ri o u s p a rti e s .

In a n y b u s i n e s s ve n tu re wh e re peopl e a re i n vo l ve d th e re i s a l wa ys th e

p o s s i b i l i t y o f d i ffe re n ce s ; th e sa m e i s t ru e o f co l l a b o ra ti ve p ro g ra m m e s .

Managing co n fl i ct to wa rd s co n s tru cti ve and m u tu a l l y b e n e fi ci a l o u tco m e s

is a cri ti ca l l y i m p o rt a n t e l e m e n t o f e ffe cti ve co l l a b o ra ti ve l e a d e rs h i p . In a

co l l a b o ra ti ve a rra n g e m e n t i t i s e s s e n ti a l to e n s u re th a t th e re is a co n fl i ct

re s o l u ti o n p ro ce s s wh i ch p ro vi d e s a m e ch a n i s m and e s ca l a t i o n p ro ce d u re

wh e re a p p ro p ri a t e . In a co m m e rci a l e n vi ro n m e n t s o m e i ssu e s m a y

e ve n t u a l l y l e a d to a co n t ra ctu a l i m p a sse b e twe e n th e p a rt i e s . Th i s wi l l be

l i ke l y t o h a ve a d i re ct i m p a ct o n o p e ra ti o n a l p e rfo rm a n ce and, i f n ot

a d d re s s e d e ffe cti ve l y, m a y l ea d to th e b re a kd o wn o f th e re l a t i o n s h i p .

Wh i l e m a n y i ssu e s m a y b e re s o l ve d wi t h i n th e co l l a b o ra ti ve te a m s , so m e

wi l l i n e vi ta b l y n e e d p a rti cu l a r s u p p o rt. Th e va l u e o f th e re l a ti o n s h i p and

th e i n ve s tm e n t m a d e sh o u l d s ti m u l a te a j o i n t d e s i re to fi n d an e ffe ct i ve

o u t co m e .

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PART 1 : Why?

r
Col l a bo a ti ve l ea d e rs h i p s el f-a ss e ss m en t
Lea d ers m u st a d opt a n a pproa ch th a t i s focu sed on h el pi n g th e tea m s to
m a ster col l a bora ti ve worki n g a n d m eeti n g th ei r obj ecti ves. Th i s sta rts by
col l a bora ti ve l ea d ers su pporti n g i n d i vi d u a l d evel opm en t a n d m a n a g i n g
n on -a l i g n ed beh a vi ou rs. Su ccess rel i es on a cl u ster of com peten ci es a n d
beh a vi ou rs th a t bu i l d on th ose of tra d i ti on a l l ea d ersh i p, bu t a re
speci fi ca l l y a i m ed a t col l a bora ti ve worki n g . Th e a ssessm en t of
col l a bora ti ve l ea d ersh i p ca n be focu sed on two key a spects: ability and
attitude (see Fi g u re 6. 4) . ‘Abi l i ty’ i s a bou t bu si n ess-rel a ted experi en ce i n
a rea s th a t wou l d be su pporti ve to fu n cti on i n g ou tsi d e th e tra d i ti on a l
com m a n d -a n d -con trol stru ctu re. ‘Atti tu d e’ i s th e i n d i vi d u a l ’s styl e of
opera ti n g wi th oth ers i n a col l a bora ti ve en vi ron m en t. Th ese two d i sti n ct
bu t i n terrel a ted a spects, wh en com bi n ed , tog eth er crea te a col l a bora ti ve
l ea d ersh i p profi l e.

Fi g ure 6. 4 – Abi l i ty ve rsus a tti t ud e

Ta bl e 6. 1 con ta i n s som e a ttri bu tes th a t org a n i za ti on s a n d prospecti ve

col l a bora ti ve l ea d ers sh ou l d con si d er a s a ba si s for sel f-a ssessm en t,
com bi n i n g both bu si n ess ski l l s a n d th ei r i n d i vi d u a l tra i ts.

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 Chapter 6 – Collaborative leadership

Ta bl e 6. 1 – Abi l i ti e s an d a tti t ud e s

s
Abi l i ty ( ki l l s an d p r
ex e i en ce) Atti t ud e (p e rs on a l a pproa ch )

B u si n ess l ea d ersh i p Co m m u n i ca ti o n s

Co n tra ct m a n a g em en t I n terp erson a l ski l l s

Ri sk m a n a g em en t M a n a g em en t styl e

Ch a n g e m a n a g em en t Sel f-a wa ren ess

Pl a n n i n g B u si n ess a p p ro a ch

Stra teg i c th i n ki n g E xpecta ti o n s o f o th ers

Rel a ti o n sh i p m a n a g em en t I m p o rta n ce of rel a ti o n sh i p s

Perfo rm a n ce Tea m worki n g

Tea m b u i l d i n g Lea d ersh i p tra i ts

B en ch m a rki n g Su sta i n a b i l i ty

Pa rtn eri n g exp eri en ce Tra i n i n g a n d

sel f-d evel o p m en t

Prod u ct d evel op m en t D eci si o n m a ki n g

Servi ce d el i very Perso n a l focu s to o th ers

I n tern a ti on a l tra d e Perfo rm a n ce fa i l u re

Q u a l i fi ca ti o n s M a n a g em en t of d i sp u tes

Cu sto m er m a n a g em en t M o ti va ti o n

M a rket kn o wl ed g e Posi ti o n i n g

Proj ect m a n a g em en t Wo rki n g a p p ro a ch

Va l u e ch a i n Lea rn i n g styl e

Fi n a n ci a l m a n a g em en t Key su ccess fa cto rs

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PART 1 : Why?

Concl us ion
Th e ch a l l e n g e s o f wo rki n g in a co l l a b o ra ti ve e n vi ro n m e n t s h o u l d n ot be

u n d e re s ti m a te d and p ro m p t u s to l o o k cl o s e l y a t p e rs o n a l a tti tu d e s . In a

co m m a n d - a n d - co n tro l s tru ctu re th e l e a d e rs h i p p o s i ti o n p ro vi d e s a d e g re e

o f s e cu ri t y a n d co n fi d e n c e , b u t s e l f- a wa re n e s s i s cru ci a l i f co l l a b o ra t i ve

l e a d e rs a re to be s u cce s s fu l . Th e y n e e d to be a bl e to re co g n i z e th e i r o wn

s tre n g t h s a n d we a kn e s s e s a n d u n d e rs t a n d h o w th e se a s p e cts a ffe ct

o th e rs . D i re c ti n g th ro u g h i n fl u e n ce ra th e r th a n p o we r o r p o s i ti o n

re q u i re s i n c re a s e d s e l f- m a n a g e m e n t t o m a i n ta i n co n t ro l wh i l e a t th e

sa m e ti m e cre a t i n g tru s t, bei n g a d a p ti ve and i n n o va ti ve . Th e y wi l l n eed

to manage d i s ru p ti ve i n fl u e n ce s a n d m a i n ta i n h o n e s t y. Co l l a b o ra ti ve

l e a d e rs n e e d to be s e l f- m o ti va te d and d ri ve i n n o va ti o n to fo cu s o n th e

i m p ro ve m e n ts t h a t wi l l a ch i e ve o rg a n i z a t i o n a l g oa l s.

Th e re is a n eed to m a i n ta i n e m p a th y b y b e i n g a cti ve l y i n t e re s te d in

o th e rs , re a d y to s h a re kn o wl e d g e and m e n to r th o s e i n d i vi d u a l s wh o a re

l e s s co n fi d e n t i n a co l l a b o ra ti ve s t ru ctu re . M a n y b u s i n e s s e s a re o rg a n i z e d

a l on g t ra d i ti o n a l l i n e s wh e re co m m a n d and co n t ro l i s th e d e fa u l t

s i tu a ti o n . In a co l l a b o ra t i ve ve n tu re th e l e a d e r m u s t s a ti s fy th e m u tu a l

o b j e ct i ve s o f th e p a rti e s a n d cre a t e a d d i ti o n a l va l u e t h ro u g h i n n o va ti o n .

Th e l e a d e r’s s ki l l s a re fo cu s e d on i n fl u e n ci n g th e re l a t i o n s h i p to a ch i e ve

th e se o u t co m e s , bei n g u n a bl e to re l y o n h i e ra rc h i ca l p o we r a n d

u n i l a te ra l a u th o ri ty.

Le a d e rs h i p is a co m p l e x a n d cru c i a l ro l e ; in a g ro wi n g e n vi ro n m e n t o f

a l te rn a ti ve b u si n e ss m o d e l s i t i s o n e t h a t wi l l l a rg e l y d e fi n e s u cce s s o r

fa i l u re . M a n y ca n l ea d , b u t th o se wh o h a ve th e ca p a ci t y to i n fl u e n ce

o u tco m e s wh e n th e y d o n o t h a ve co n tro l a re l e s s o b vi o u s . To o fre q u e n tl y

th e ro l e i s on e th a t i s a s s i g n e d b y d e fa u l t o r b a s e d on t e c h n i ca l s ki l l s a n d

e xp e ri e n ce , an a p p ro a ch th a t h a s p o te n ti a l fl a ws wh e n d ri vi n g a

co l l a b o ra ti ve p ro g ra m m e . I t i s e s s e n ti a l t h a t o rg a n i z a ti o n s co n s i d e ri n g

a l te rn a ti ve b u s i n e s s m o d e l s e xp a n d th e i r s e l e cti o n and d e ve l o p m e n t

p ro ce s s e s to e n co m p a s s a n a l te rn a t i ve l e a d e rs h i p p ro fi l e wh i ch re co g n i z e s

th e ch a l l e n g e s o f l e a d e rs h i p o u ts i d e th e t ra d i ti o n a l s t ru ctu re s .

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Checklist
To cre a te an i n i ti a l p ro fi l e of a co l l a b o ra t i ve l e a d e r i t ca n be u s e fu l to a sk

a fe w s i m p l e q u e s ti o n s a n d a n a l ys e t h e i r i n p u ts , s u ch a s s h o wn in

Ta b l e 6. 2 .

Ta b l e 6 . 2 – I n i ti a l co l l a b o ra ti ve l e a d e rs h i p p ro fi l e

S co re

5 high

1 l ow

I d o n ’t n e e d to ch a n g e th e wa y I wo rk

I d o n ’ t fi n d so m e peopl e h a rd to to l e ra te

M y th i n ki n g i s i n tu i ti ve

I fi n d i t e a s y to se e o th e rs ’ p o i n t o f vi e w

I d o n ’ t g e t a n xi o u s a n d kn o w h o w to d ea l wi th ch a n g e

I h a ve m o re co n tro l o ve r m y a cti vi t i e s th a n o t h e rs

I a d a p t m y b e h a vi o u r to a ch i e ve m y o b j e cti ve s

I am n o t ri g i d o n ce I h a ve made a d e ci s i o n

F ri e n d s h i p a t wo rk i s a b o n u s, n ot a n e ce s s i ty

I m a i n ta i n m y p o s i ti o n e ve n i f i t u p s e ts o th e rs

I am o p ti m i s ti c b u t ke e p m y e ye on th i n g s

I o n l y s h o w m y fe e l i n g s wh e n I n eed to

G e n e ra l l y p e o p l e l i ve up to t h e i r p ro m i s e s

I th i n k co n s t ru cti ve cri ti ci s m i s u s e fu l

Building re l a ti o n s h i p s i s e a s y fo r m e

I kn o w m y s tre n g th s

I u n d e rs ta n d wh e re I am we a k a n d n eed to be vi g i l a n t

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PART 1 : Why?

I e n j o y wo rki n g a s p a rt o f a te a m

I e xp e ct o th e rs t o fo l l o w wi th o u t q u e s ti o n

I b e l i e ve yo u n eed to l i s te n to o th e rs

S co re s

0 –2 5 Th e i n d i vi d u a l h a s d i ffi cu l ty m a n a g i n g p e rs o n a l b e h a vi o u r;

tra n s l a ti n g th i s to e ffe cti ve re l a ti o n s h i p m a n a g e m e n t, th e i n d i vi d u a l

fi n d s i t h a rd to tru s t o th e rs .

2 5 –5 0 Th e i n d i vi d u a l i s co m fo rta b l e wi th t h e i r o wn a tti t u d e bu t

re co g n i z e s t h a t th e re a re a re a s wh i ch re q u i re d e ve l o p m e n t. Th e

i n d i vi d u a l ca n d ea l wi t h m o s t p ro b l e m s b u t e xp e cts o th e rs to fo l l o w.

5 0 –7 5 Th e i n d i vi d u a l i s g ood at managing peopl e and b e l i e ve s i n

d e ve l o p i n g tru s t a n d s u p p o rt fro m o t h e rs . Th e i n d i vi d u a l te n d s to

manage b y co n s u l ta ti o n and o p e n n ess, re co g n i z i n g o th e rs ’ n e e d s.

7 5 –1 0 0 Th e i n d i vi d u a l has a g ood a p p ro a ch to l e a d e rs h i p and

m a n a g e m e n t th a t i s b a s e d on d e ve l o p i n g e ffe cti ve re l a ti o n s h i p s . Th e

i n d i vi d u a l wi l l handle co n fl i ct we l l and re a ct we l l to ch a n g e .

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Cha p te r 7 – Po s itioning relation s hi ps

H a vi n g con si d ered som e of th e m a j or i n fl u en ces i n th e

d evel opm en t of col l a bora ti ve rel a ti on sh i ps, th e focu s of th i s
ch a pter tu rn s to eva l u a ti n g a ppropri a te rel a ti on sh i ps to
con cen tra te resou rces for m a xi m u m bu si n ess ben efi t. M a n y
org a n i za ti on s u n d eresti m a te (or i g n ore) th e i n vestm en t
req u i red to a ch i eve th e fu l l poten ti a l of col l a bora ti ve worki n g ,
beca u se th ey d o n ot ta ke a focu sed a pproa ch to eva l u a ti n g a n d
ta rg eti n g th e ri g h t rel a ti on sh i ps.

H i stori ca l l y term s su ch a s pa rtn eri n g , a l l i a n ces a n d col l a bora ti ve worki n g

h a ve been u sed i n a va ri ety of ci rcu m sta n ces, coveri n g a broa d ra n g e of
rel a ti on sh i ps. Freq u en tl y th e u se of su ch l a bel s h a s been i n a ppropri a tel y
a ssi g n ed to con ven ti on a l tra d i n g a rra n g em en ts, wi th th e resu l t th a t th ey
set u n rea l i sti c expecta ti on s. Th i s crea tes th e percepti on th a t th ese m od el s
a re si m pl y cosy rel a ti on sh i ps – or th e l a test tren d – a n d a re d eem ed to
h a ve fa i l ed . Col l a bora ti on ca n m a ke a va l u a bl e con tri bu ti on to bu si n ess
opera ti on s, bu t i t h a s to be recog n i zed th a t th ese a pproa ch es ca n req u i re
a si g n i fi ca n t i n vestm en t of ti m e a n d resou rces, so i t i s i m porta n t to
esta bl i sh th e poten ti a l retu rn on i n vestm en t.

I t i s eq u a l l y i m porta n t to u n d ersta n d th a t every org a n i za ti on i s d i fferen t.

Wh i l e th ere a re m a n y com m on th em es, a n y col l a bora ti ve prog ra m m e
n eed s to be a l i g n ed wi th speci fi c bu si n ess obj ecti ves a n d ch a l l en g es. B y
seg reg a ti n g th e profi l e of extern a l rel a ti on sh i ps, th ese ca n be g rou ped to
en su re th a t resou rces a re m ost effecti vel y d epl oyed . Con si d era ti on sh ou l d
be g i ven n ot on l y to th e cu rren t rel a ti on sh i ps, bu t a l so to th e poten ti a l
d evel opm en ts wi th i n th e m a rketpl a ce or a n ti ci pa ted ch a n g es i n th e
overa l l bu si n ess stra teg y. Th i s wi l l en a bl e a n y i m pl em en ta ti on prog ra m m e
a n d i n vestm en t i n col l a bora ti ve rel a ti on sh i ps to ca ptu re poten ti a l
ben efi ts i n th e fu tu re.

Appl yi n g col l a bora ti ve con cepts a n d a pproa ch es a cross th e va l u e ch a i n

ca n h el p to i n teg ra te h ori zon ta l a n d verti ca l rel a ti on sh i ps to crea te va l u e.
For m ost bu si n esses th ei r extern a l spen d m a y be a si g n i fi ca n t proporti on
of tota l opera ti n g cost; pl a n n i n g th ei r su ppl y n eed s ea rl y wi l l d i rect
efforts to th e opti m i zed ou tcom e. U n d ersta n d i n g th e ca pa bi l i ty of
provi d ers a n d th ei r d ri vers i s cru ci a l to d evel opi n g a n effecti ve
pa rtn ersh i p. I n tod a y’s m a rket th e a d opti on of a l l i a n ces i s eq u a l l y
i m porta n t i n term s of bu si n ess d evel opm en t wh en con si d eri n g th e

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PART 1 : Why?

crea ti on of com pl ex m u l ti fa ceted sol u ti on s. Assu m pti on s d u ri n g th e ea rl y

sta g es m a y prove both costl y a n d ti m e-con su m i n g . E sta bl i sh i n g th e ri g h t
pa rtn er i s cru ci a l to th e su ccess of th e ven tu re, so org a n i za ti on s sh ou l d
n ot ta ke a n y rel a ti on sh i p for g ra n ted ; th i s i s pa rti cu l a rl y rel eva n t wh en
m ovi n g i n to a n ew styl e of tra d i n g th a t cou l d h a ve l on g -term
i m pl i ca ti on s. Th e process n eed s to be ca refu l l y con si d ered a n d d evel oped
i n a m a n a g ed wa y to su pport a g ood com m erci a l a n d com peti ti ve
posi ti on . I n a ssessi n g a stra teg i c pa rtn er th ere i s a n eed to l ook m u ch
d eeper th a n q u a l i ty com pl i a n ce to a con tra ct. Th ere i s a n eed to eva l u a te
m ore i n ten si vel y, si n ce on ce th e rel a ti on sh i p i s i n pl a ce org a n i za ti on s wi l l
opera te i n a m ore open m a n n er. Th ey m u st be a bl e to su pport th e
i n ten d ed m a rkets a n d h a ve a ppropri a te experi en ce, eth os a n d styl e a s
l ea rn i n g org a n i za ti on s (see Fi g u re 7 . 1 ) .

Fi g u re 7.1 – Le a rn i n g o rg a n i z a ti o n

Ta rg e ti n g co l l a b o r a ti ve ben e fi ts

O rg a n i za ti on s sh ou l d h a ve a cl ea r u n d ersta n d i n g of wh a t col l a bora ti on

m ea n s to th em . Th e term h a s been m i su sed i n becom i n g th e wa tch word
for m a rketi n g peopl e a cross th e g l obe. I t i s n ot pa rtn eri n g i f a l l you d o i s
to spea k pol i tel y to ea ch oth er. N or sh ou l d i t be u sed to d i sg u i se wh a t i n
m a n y ca ses a re cost-d own con tra cts. Th ere a re m a n y con tra cti n g
a pproa ch es th a t ca n be d epl oyed th a t cl ea rl y work better u n d er a
col l a bora ti ve u m brel l a . We m a y be l ooki n g a t opti on s su ch a s ta rg et

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con tra cts, bl a n ket con tra cts, preferred su ppl i ers, cost-pl u s con tra cts,
ca l l -off a g reem en ts or j oi n t ven tu res; i f th ese wi l l provi d e th e req u i red
ou tcom es, th ey sh ou l d n ot be con fu sed by ca l l i n g th em a pa rtn ersh i p. I n
d evel opi n g B S 1 1 000 th e a i m wa s to crea te a col l a bora ti ve fra m ework
th a t cou l d be u sed a cross th e con tra cti n g spectru m , wh ere pa rtn ersh i p
m a y be a n even tu a l g oa l bu t th a t cou l d a l so su pport m ore tra d i ti on a l
rel a ti on sh i ps. Th e obj ecti ve h a s to be focu sed on en h a n ci n g overa l l
bu si n ess perform a n ce. Th i s en h a n cem en t i s d ri ven by a l l of th e key
d ri vers th a t m a ke u p th i s bu si n ess cycl e, sta rti n g wi th focu si n g th e
org a n i za ti on on th e ‘tota l cost’ of d oi n g bu si n ess, a s opposed to th e pri ce
you wou l d n orm a l l y pa y a t (sa y) poi n t of sa l e. I t m u st en com pa ss th e
sh a ri n g of ri sk, to g et org a n i za ti on s l ooki n g beyon d previ ou s n orm s to
u n d ersta n d wh y th ey sh ou l d even con si d er pa rtn eri n g a s a n opti on .

Th e con cept of col l a bora ti on h a s a very wi d e rem i t i n term s of th e j oi n t

poten ti a l th a t ca n be d evel oped . B ei n g cl ea r on h ow fa r you wa n t to g o
i s extrem el y i m porta n t to th e d evel opm en t process. Setti n g th e scen e ca n
often be j u st a si m pl e process of a ssessi n g th e a d va n ta g es a n d
d i sa d va n ta g es a ssoci a ted wi th a n y a l l i a n ce. Con si d er th e exa m pl e bel ow.

S ELEX S ys tem s I nteg ration Ltd – ca s e s tu d y

SE LE X System s I n teg ra ti on Ltd expected th e sta n d a rd wou l d

stren g th en ou r bu si n ess ben efi ts by bu i l d i n g a n d m a i n ta i n i n g
rel a ti on sh i ps th rou g h ou t ou r su ppl y ch a i n , a n d we were n ot
d i sa ppoi n ted . Th e econ om i c ch a l l en g es of th e cu rren t m a rket, pl a ce
even g rea ter em ph a si s on th e va l u e of col l a bora ti ve rel a ti on sh i ps. For
u s, th erefore, a tta i n i n g B S 1 1 000 wa s n ever a ‘q u i ck fi x’ or ‘si m pl y
a n oth er a pproa ch to su ppl y ch a i n m a n a g em en t’. Th i s sta n d a rd
offered a n i n n ova ti ve, stru ctu red a pproa ch to rel a ti on sh i p
m a n a g em en t, wh i ch , i n a d d i ti on to d ed i ca ted boa rd com m i tm en t,
h a d th e poten ti a l to yi el d tra n sform a ti on a l l on g -term ben efi ts. SE LE X
System s I n teg ra ti on Ltd i s ri g h tfu l l y prou d th a t i t wa s on e of th e fi rst
com pa n i es to be a ccred i ted to B S 1 1 000, wh i ch i s testa m en t to ou r
corpora te eth os of bu i l d i n g l on g -term rel a ti on sh i ps ba sed on tru st
a n d tra n spa ren cy.

An i ta B roa d h ea d
Com m erci a l M a n a g er
Sel ex E S Ltd

To m a ke a col l a bora ti ve rel a ti on sh i p work, th ere h a s to be cl a ri ty on a l l

si d es a s to wh a t ea ch expects to g a i n a n d i s prepa red to su pport – j oi n t
obj ecti ves, n ot th e i n d i vi d u a l scores. So org a n i za ti on s m u st be cl ea r a bou t
th ei r rea l g oa l s i n a n en vi ron m en t of open n ess a n d th i s i s often wh ere

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PART 1 : Why?

th e co n ce p ts s ta rt to b re a k d o wn . D e ve l o p i n g co l l a b o ra ti ve p ro g ra m m e s

re q u i re s re a l co m m i tm e n t a n d a s tru ct u re d a p p ro a ch fo r fi n d i n g th e

a p p ro p ri a te p a rtn e r to wo rk wi th .

Pe rfo rmance ba s e d collabo ration

Wh e n sh o u l d an o rg a n i z a ti o n co n s i d e r t h e b e n e fi ts o f e ffe ct i ve

co l l a b o ra ti ve re l a t i o n s h i p m a n a g e m e n t? In th e fi rs t p l a ce i t sh o u l d be

fo cu s e d on bei n g co s t - e ffe ct i ve and h a s to be e va l u a te d a s th e m o st

a p p ro p ri a te to o l . Th e re sh o u l d be co n s i d e ra t i o n a s to wh e th e r t h e

re l a ti o n s h i p l e n d s i ts e l f to re p e a t b u s i n e s s a n d wh e th e r i t ca n b e n e fi t

fro m l e s s o n s l e a rn e d wi t h i n th e ti m e fra m e t h a t th e re l a ti o n s h i p n eed s

fo r i t to d e ve l o p .

Lo o ki n g a t co l l a b o ra ti ve a rra n g e m e n ts re q u i re s a d e g re e o f fi l te ri n g . It is

u n l i ke l y t h a t a d i re ct co p y o f o n e co m p a n y’s p ro g ra m m e wo u l d fi t

a n o th e r o rg a n i z a ti o n e xa ctl y i n a n y e ve n t. Th e re a re , h o we ve r, som e

co m m o n t ra i t s th a t fa l l o u t fro m i n ve s ti g a ti o n . Th e s e a re th e tra i ts th a t

o rg a n i z a ti o n s s h o u l d be l o o ki n g to m i rro r, re co g n i z i n g t h a t th e

t ra d i ti o n a l a d ve rs a ri a l a p p ro a ch d i ve rts re s o u rce s a wa y fro m fo cu s i n g on

th e m u tu a l b e n e fi ts o f o p ti m i z i n g co s t a n d ti m e . C o l l a b o ra t i ve

a p p ro a ch e s d o to so m e e xte n t fo rc e o rg a n i z a ti o n s to l o o k a t h o w th e y

s h a re ri s k, m o n i to r p e rfo rm a n c e and s h a re co s t re d u ct i o n s , a s opposed to

t ra d i ti o n a l l y s u b co n tra cte d wo rk b a s e d on a fi xe d p ri ce co n t ra ct, wh i c h

fre q u e n tl y re s u l ts i n co n fl i ct a n d cl a i m s . In a co l l a b o ra ti ve re l a t i o n s h i p

th e d ri ve r h a s to be ta rg e t e d to wa rd s m e a s u ra b l e p e rfo rm a n ce and va l u e

fo r m o n e y, wh e re th e i n ce n t i ve i s to p e rfo rm we l l and s h a re th e b e n e fi ts .

S kan s ka Civil Enginee ring – ca s e s tud y

At S ka n s ka we a h a ve a l on g h i s t o ry o f co l l a b o ra ti ve wo rki n g wi th

o u r cu s t o m e rs , o u r j o i n t ve n tu re p a rt n e rs a n d o u r s u p p l y ch a i n .

C o l l a b o ra t i o n in b u si n e ss i s n o t a n e a s y o p ti o n a s i t a l wa ys i n vo l ve s

a d d i ti o n a l e ffo rt t o e n s u re th a t th e te rm s a n d th e d i re cti o n re m a i n

cl e a r t o e ve ryo n e , and to e n s u re th a t tru s t re m a i n s a t a l l ti m e s –

e ve n wh e n ti m e and m o n e y a re ti g h t . H o we ve r, we a re co n vi n ce d it

i s a b so l u te l y th e ri g h t wa y to d e l i ve r b e s t va l u e to o u r cu s to m e rs a n d

to o u r s ta ke h o l d e rs – th e b e n e fi t s fa r o u twe i g h th e d i s a d va n ta g e s .

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M a n y of ou r fl a g sh i p proj ects, su ch a s th e M 2 5 wi d en i n g , h a ve been

d el i vered th rou g h j oi n t ven tu re rel a ti on sh i ps th a t exten d ba ck
d eca d es. O u r su ppl y ch a i n d el i vers m ost of ou r proj ect ou tpu t; i t i s
essen ti a l th a t we work wi th th em to con ti n u ou sl y i m prove ou r
com bi n ed effi ci en cy a n d prod u cti vi ty. Si n ce E g a n a n d La th a m 7 ou r
pu bl i c sector cu stom ers h a ve recog n i zed th a t col l a bora ti on i s th e best
wa y to d el i ver th e con ti n u a l i m provem en ts d em a n d ed by th ose
h ol d i n g th e pu bl i c pu rse, a n d we h a ve worked on m a n y pi on eeri n g
col l a bora ti ve con tra cts i n cl u d i n g th e Ch a n n el Tu n n el Ra i l Li n k, E a rl y
Con tra ctor I n vol vem en t sch em es for th e H i g h wa ys Ag en cy a n d
N etwork Ra i l , a n d th e @ O n e Al l i a n ce for An g l i a n Wa ter.

B S 1 1 000 provi d es a fra m ework a n d a l a n g u a g e to i m prove th e wa y

we crea te a n d su sta i n ou r col l a bora ti ve bu si n ess rel a ti on sh i ps. I t
refl ects ou r exi sti n g best pra cti ce, bu t som e of th i s i s n ot form a l l y
ca ptu red a n d i n oth er a rea s we kn ow we ca n yet col l a bora te m ore
effecti vel y. We vi ew B S 1 1 000 i m pl em en ta ti on a s a n opportu n i ty to
record , ra ti on a l i ze a n d i m prove ou r a pproa ch to col l a bora ti on so
th a t everyon e i n Ska n ska u n d ersta n d s h ow we sh ou l d m a n a g e ou r
col l a bora ti ve rel a ti on sh i ps.

J on a th a n M orri s
B u si n ess I m provem en t D i rector
Ska n ska Ci vi l E n g i n eeri n g

De fining yo u r exp ectation s

Th e rea son to l ook a t expecta ti on s before d eci d i n g on th e focu s of
col l a bora ti on i s twofol d . Fi rstl y, i t i s on th e a ssu m pti on th a t th e
org a n i za ti on a l rea d y h a s som e i n terest i n col l a bora ti on a n d h a s i d ea s of
wh ere i t cou l d h el p; a n d secon d l y, wi th ou t cl ea rl y esta bl i sh i n g ben efi ts
th e focu s ca n be d i l u ted . Th rou g h ou t th e com m erci a l m a rketpl a ce, you
a re u n l i kel y to su cceed u n l ess you kn ow wh ere you a re g oi n g – a n d i t
m u st m a ke com m erci a l sen se. I f you ca n n ot d efi n e wh a t su ccess l ooks
l i ke, h ow ca n you stri ve for i t or kn ow wh en i t h a s been a ch i eved ?

E xa m i n i n g th e poten ti a l wi d er a spects of a bu si n ess rel a ti on sh i p wi l l

provi d e u sefu l ba ckg rou n d th i n ki n g wh en i t com es to d eci d i n g th e
su i ta bi l i ty of th e a pproa ch a n d th e com m erci a l ben efi ts of col l a bora ti on .
Wi th th e ever-i n crea si n g m oves towa rd s sol u ti on s (ra th er th a n prod u cts
or servi ces) th e tra d i ti on a l vi ew of a n org a n i za ti on i s ch a n g i n g . I t m a y
n ow d epen d a s m u ch on i n teg ra ted ca pa bi l i ty a s i t d oes on tra d i ti on a l
prod u cts or servi ces. Cost red u cti on provi d es tru e opportu n i ti es th a t
tra d i ti on a l rel a ti on sh i ps a re u n l i kel y to a ch i eve. Th i s i s l og i ca l , for wh y
sh ou l d a provi d er pa ss ba ck cost red u cti on s wh en th ey h a ve com peti ti vel y

7
M a j or repo rts i n th e 1 9 9 0s l ea d i n g to si g n i fi ca n t reco m m en d a ti o n s fo r b etter p ra cti ce i n

p u bl i c sector con stru cti o n proj ects.

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PART 1 : Why?

won a con tra ct? I n a tra d i ti on a l rel a ti on sh i p th e bu yer sel d om (i f ever)

provi d es th e fl exi bi l i ty to g en era te th ese sa vi n g s, perh a ps beca u se th ey
d o n ot bel i eve th a t th ey wou l d g et a fa i r sh a re of th e sa vi n g for th e
effort i n vol ved .

I n a m ore open rel a ti on sh i p th e ru l es ca n ch a n g e, a n d a cross i n d u stry

th ey a re bei n g ch a n g ed th rou g h pa rtn eri n g d ea l s. To rem a i n a t th e
l ea d i n g ed g e, org a n i za ti on s h a ve to ch a n g e th e ru l es a n d col l a bora ti on
offers on e of th e a pproa ch es. Wh en both si d es ca n see rea l retu rn for
th ei r effort th en th e en th u si a sm for tryi n g i n crea ses, pa rti cu l a rl y i f th i s
ca n be d on e wi th ou t erod i n g m a rg i n s a n d profi ta bi l i ty. Th i s offers better
ben efi ts com pa red wi th th e tra d i ti on a l n eg oti a ti n g of con tra ct ch a n g es
or va ri a ti on s, wh ere both si d es l ose i n terest a s ea ch tri es for th e m a j or
sl i ce. I f you h a ve th e ri g h t pa rtn er you ca n l ook to see wh ere th ere i s
d u pl i ca ti on of effort a n d wh a t rea l l y d oes a d d va l u e. O n ce org a n i za ti on s
‘cross th e Ru bi con ’ i n m a ki n g a col l a bora ti on d eci si on i t i s su rpri si n g wh a t
opportu n i ti es com e to l i g h t.

I n m a n y fi el d s of en g i n eeri n g con tra cti n g m u ch of th e ti m e i s spen t i n

revi ewi n g a n d q u esti on i n g th e ou tpu t of provi d ers a n d su ppl i ers. So on e
m i g h t a sk: i s i t n ot better to a ppl y th e effort u pfron t to va l i d a ti n g th e
pa rtn er th a n si tti n g l ooki n g over th ei r sh ou l d er? Th e effort sh ou l d g o
i n to l ooki n g for opportu n i ti es, n ot fa i l i n g s. Th i s g i ves a m u ch g rea ter
retu rn on i n vestm en t bu t i n vol ves a m u ch g rea ter d eg ree of respon si bi l i ty
on both si d es to m a ke i t a su ccess. Th e d evel opm en t of j oi n t
respon si bi l i ty open s u p th e possi bi l i ty for j oi n t m a n a g em en t a n d a s a
resu l t l ower costs. H owever, a voi d i n g d u pl i ca ti on of effort d oes of cou rse
ra i se th e i ssu e of ri sk m a n a g em en t – bu t th e poten ti a l to i m prove
com peti ti ven ess th rou g h col l a bora ti on ri sk sh a ri n g i s a m a j or
con si d era ti on .

H a vi n g l ooked pri n ci pa l l y a t th e opera ti on a l ben efi ts, th e n ext ben efi t

com es from ta ki n g a l on g er-term perspecti ve. Th ese opportu n i ti es m a y
n ot be i m m ed i a tel y a ppropri a te bu t cou l d i n ti m e be th e ba si s of a tru e
wi n n i n g com bi n a ti on th rou g h opti m i za ti on i n i ts m a n y form s. Th e
l on g -term sta bi l i ty of a tru e col l a bora ti ve pa rtn ersh i p provi d es a pl a tform
on wh i ch ea ch pa rty ca n g row, worki n g wi th i n a tea m en vi ron m en t th a t
en cou ra g es th e focu s to be on tota l cost (n ot i n d i vi d u a l ord er vol u m e)
wh i l e m a i n ta i n i n g profi ta bi l i ty for a l l a n d i n crea si n g ord ers. Th ese a re
som e of th e con cepts th a t a re bei n g u sed to i m prove th e com peti ti ven ess
of previ ou sl y esta bl i sh ed a d versa ri es i n th e va l u e ch a i n .

S eg regating relation s hi ps
Th e spectru m of rel a ti on sh i ps, speci fi c n eed s a n d stra teg i c req u i rem en ts
wi l l be m a n y a n d va ri ed . Wi th i n th i s con text th e fol l owi n g g en eri c m od el

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(see Fi g u re 7 . 2 ) ba sed on th e Kra l j i c m od el 8 provi d es a ba si s for i n i ti a l

posi ti on i n g of rel a ti on sh i ps. I n som e ca ses th ere wi l l be a prog ressi on
from on e sector to th e n ext, ba sed on ch a n g es i n d em a n d or th e
d evel opm en t of a n opportu n i ty. At th e en d of th i s ch a pter th ere i s a
bri ef ch eckl i st, wh i ch m a y h el p to focu s d evel opm en t.

Fi g u re 7 . 2 – Re l a ti o n s h i p fo c u s

Su ppl y con tra cts wou l d be th ose th a t wi l l g en era l l y cover prod u cts,
com m od i ti es or si m pl e servi ces th a t a re rel a ti vel y l ow va l u e, l i m i ted
com pl exi ty a n d l ow ri sk bu t, m ore i m porta n tl y, n ot of stra teg i c i m pa ct to
th e bu si n ess. O pportu n i ty con tra cts wou l d be th ose th a t wh i l e of
si g n i fi ca n t i m pa ct a re g en era l l y on e-off type req u i rem en ts, wh ere th e
m ost l i kel y best ou tcom e wou l d com e from a tra d i ti on a l l y d evel oped
a rm ’s-l en g th con tra ct a rra n g em en t. Col l a bora ti ve fra m eworks wou l d be
th ose th a t wh i l e n ot i n i ti a l l y stra teg i c i n n a tu re a re of si g n i fi ca n t
cu m u l a ti ve va l u e, wh ere overa l l cost a n d perform a n ce ca n be en h a n ced
th rou g h th e d evel opm en t of a fra m ework a g reem en t th a t fosters a m ore
i n teg ra ted a pproa ch . Pa rtn eri n g a n d a l l i a n ces wou l d be stra teg i c
req u i rem en ts wh ere th e l on g -term poten ti a l for a n i n teg ra ted a pproa ch
cou l d provi d e si g n i fi ca n t a d va n ta g e a n d ben efi t th rou g h th e exch a n g e of
kn owl ed g e a n d resou rces.

Th e ch a l l en g e for m ost org a n i za ti on s i s to esta bl i sh a n d com m u n i ca te a

cl ea rl y d efi n ed set of cri teri a to h el p th ose i n vol ved i n th e sel ecti on

8
Purchasing must become supply management, Kra l j i c P, H a rva rd B u si n ess Revi ew, 1 9 83 .

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PART 1 : Why?

p ro ce s s t o u n d e rs t a n d th e d i ffe re n t m o d e l s a n d a p p l i ca ti o n s . H o we ve r,

th e s e a l on e sh ou l d n e ve r b e th e o n l y cri t e ri a wh e n co n s i d e ri n g any

co n t ra cti n g a rra n g e m e n t. Th e re n e e d s to be a b a l a n ce a g a i n s t a s p e cts o f

p e rfo rm a n ce and o ve ra l l ri s k to th e b u si n e ss. E ve ry o rg a n i z a ti o n is

d i ffe re n t a n d th u s th e s p re a d o f a cti vi t i e s m a y va ry s i g n i fi ca n tl y; h o we ve r,

in m o s t ca s e s th e co s t a n d ri s k p ro fi l e te n d s t o fo l l o w a p a tt e rn .

Fi g ur r
e 7 . 3 – Co n t a cti n g ty p s e

Th e m a tri x s h o wn in F i g u re 7.3 p ro vi d e s a n i n i ti a l b a s i s fo r e s ta b l i s h i n g a

re l a t i o n s h i p ro u te to e n s u re th a t co l l a b o ra ti ve p ro g ra m m e s a re fo cu s e d

a p p ro p ri a te l y, d e fi n i n g h o w th e y wi l l fu n cti o n and d e l i ve r a d d i ti o n a l

va l u e . S tru ctu re d co rre ctl y, i t wi l l p ro vi d e a p l a tfo rm fo r m e a s u ri n g

s u cce s s a n d p ro vi d e cl a ri ty o n re s o u rce s , ri s k a n d co n tri b u ti o n . B e fo re

l o o ki n g a t s e tti n g up a co l l a b o ra ti ve a p p ro a ch , th e re sh o u l d be a h a rd

d e b a te a ro u n d th e l i fe e xp e cta n cy o f t h e a g re e m e n t. Co n tra ct d u ra ti o n

wi l l h a ve a m a j o r i m p a ct o n th e t h i n ki n g p ro ce s s a n d th e s tru ctu re of

a rra n g e m e n ts . O ve r a p e ri o d o f ti m e th e m a rke t p o s i ti o n ch a n g e s ; if

a g re e m e n ts a re n o t fl e xi b l e th e re wi l l be p ro b l e m s d o wn s tre a m .

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Wh a t s ho ud
l yo ur p r a tn e r l o o k l i ke ?

Crea ti n g a n effecti ve stra teg y m u st be ba sed n ot on d esi res bu t on a fi rm

fou n d a ti on of ca pa bi l i ti es a n d sou n d a ssessm en t of th e a ren a th a t wi l l be
en cou n tered . Th ere n eed s to be a fra m ework wi th i n wh i ch org a n i za ti on s
ca n u n d erta ke a system a ti c a pproa ch to con sol i d a ti n g th ei r i n tern a l
expecta ti on s a n d vi ews of poten ti a l pa rtn ers, th en d epl oy th ese fi n d i n g s
to crea te th e a ppropri a te stra teg y (see Fi g u re 7 . 4) . Th rou g h a process of
ca teg ori zi n g th e key i ssu es, org a n i za ti on s ca n focu s on th e fu n d a m en ta l
i ssu es th a t wi l l d ri ve th e rel a ti on sh i p towa rd s a su ccessfu l
i m pl em en ta ti on . Certa i n l y th ere wi l l be som e opi n i on s a bou t th e i ssu es
th a t h a ve g rea ter wei g h t, si m pl y d u e to th e person n el i n vol ved , or a t a n
a d m i n i stra ti ve l evel th i s m a y be a fa ctor of th e org a n i za ti on a l styl e of th e
poten ti a l pa rtn er. I n th e l a ter sta g es of a ssessm en t th ere h a s to be a
focu s on setti n g a cti on pl a n s for i m provem en ts a n d a n y correcti ve
a cti on s; n o on e speci fi c i ssu e i s l i kel y to be a ‘sh ow-stopper’. Th i s i s
beca u se i n m ost ca ses th e poten ti a l pa rtn er i s a l rea d y pa rt of th e exi sti n g
tra d i n g n etwork, wh ere com m on perform a n ce i ssu es wi l l h a ve a l rea d y
been a ssessed .

Fi g ur e 7 . 4 – D e ve l o p m en t a r ea s

Th e process i s to d evel op th e cri teri a th a t wi l l be u sed to m a ke th e

a ssessm en t, a i m ed a t com pi l i n g a sou n d overa l l pi ctu re of th e poten ti a l
pa rtn er a n d th en focu si n g on th e a rea s for expl oi ta ti on a n d
i m provem en t. I t i s com m on th a t certa i n fu n cti on s wi th i n a n org a n i za ti on
wi l l h a ve g rea ter em ph a si s th a n oth ers, bu t i f th e rel a ti on sh i p i s to be
effecti ve th en ea ch pri m a ry fu n cti on a l g rou p m u st be represen ted i n th e
eva l u a ti on . Sa m pl e cri teri a for a ssessi n g poten ti a l pa rtn ers i s sh own
bel ow.

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PART 1 : Why?

Typ i ca l p a rt n e r p ro fi l e q u e s ti o n s :

Le ve l o f co m m i tm e n t

Le ve l o f ca p a b i l i ty

D yn a m i c cu l tu re

Ap p ro p ri a te o rg a n i z a ti o n

Le ve l o f co m m u n i ca ti o n

To ta l co s t a p p ro a ch

Q u a l i t y p ro g ra m m e

C o m m i tm e n t to o u r vi s i o n and va l u e s

C u sto m e r fo cu s

Atti tu d e to p a rtn e ri n g

Th i s wi l l re s u l t i n i d e n ti fyi n g th o s e p o te n ti a l p a rt n e rs wh e re th e re is an

o b vi o u s fi t. Th e re m a i n d e r a re th o s e o rg a n i z a ti o n s th a t m a y n e e d ti m e to

d e ve l o p in o rd e r to b e co m e p a rt n e rs a n d th o s e wh e re i t wo u l d cl e a rl y b e

in th e b e s t i n te re s ts o f th e p a rti e s to re m a i n in a co n ve n ti o n a l

co n tra ct i n g re l a ti o n s h i p .

In g e n e ra l , th e cu s to m and p ra ct i ce o f o rg a n i z a ti o n s a n d t h e i r t ra d i ti o n a l

re l a ti o n s h i p s wi l l s u p p o rt th e vi e ws i d e n ti fi e d in p a rtn e r a s s e s s m e n ts . Th e

i n te n d e d o u tco m e o f th i s p ro ce s s i s t o i n i t i a te a m o re i n te g ra te d

re l a ti o n s h i p ; th e vi e ws u s e d to th i s p o i n t h a ve been th o se fro m wi th i n

th e o rg a n i z a t i o n , so i t i s o fte n u s e fu l to co n s i d e r te s t i n g th e va l i d i t y o f

th e fi l te ri n g p ro ce s s o n th e p ro s p e cti ve p a rtn e r. C l e a rl y, m a n y o f th e

vi e ws e xp re s s e d fro m i n si d e th e o rg a n i z a ti o n a re l i ke l y to be cri ti ca l ,

s i n ce th a t i s th e o b j e cti ve o f th e p ro ce s s . E ve n th o u g h th e aim i s to

h i g h l i g h t s t re n g t h s , i t i s co m m o n to fo cu s o n th e n e g a ti ve s .

Concl us ion
I f s e g re g a ti o n i s a p p ro a ch e d in a s tru c tu re d m a n n e r, th e n th e o u tco m e s

wi l l be fo cu s e d on cre a ti n g a p l a tfo rm fo r e xp l o i ti n g th e re l a ti o n s h i p and

d e fi n i n g a re a s wh e re j o i n t a tt e n ti o n co u l d p ro d u ce b e n e fi ts to b oth

p a rti e s . In m o s t ca s e s th e t e n s i o n s b e twe e n o rg a n i z a t i o n s a re se l d o m

o n e -si d ed ; th e s tru ctu re o f th e a s s e s s m e n t ca n be ve ry u s e fu l in open i n g

up p o s s i b i l i ti e s fo r i m p ro ve m e n t. Th e fe e d b a ck fro m s u ch d i s cu s s i o n s ca n

o ft e n s tre n g th e n th e a n a l ys i s a n d i m p ro ve th e o ve ra l l p ro ce s s , as

re c o g n i t i o n o f i n t e rn a l co n s tra i n ts i s n o t s o m e th i n g th a t m o st

o rg a n i z a ti o n s ca n e a s i l y i d e n ti fy.

C o l l a b o ra t i o n i s a b o u t e xp l o i t i n g th e j o i n t p o te n ti a l o f p a rtn e ri n g

o rg a n i z a ti o n s i n an open and p o s i t i ve m a n n e r, so fe e d b a ck wi l l a l so te st

th e va l i d i ty o f th e p ote n ti a l p a rtn e rs ’ re s o l ve to p a rt i ci p a t e p ro a cti ve l y.

Th i s s h o u l d be d e ve l o p e d i n to s u i ta b l e a cti o n p l a n s to a d d re s s th e s h o rt- ,

m ed i u m - a n d l o n g - te rm i s s u e s t h a t re s u l t fro m th e o ve ra l l a n a l ys i s . Th i s

p ro ce s s i s cru ci a l to g et i n p l a ce th e ke y i s s u e s th a t n e e d to be a d d re s s e d

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 Chapter 7 – Positioning relationships

wi th p ote n ti a l p a rtn e rs . Th e s e co n s o l i d a te d p e rs p e cti ve s g e n e ra te a

re a l i s ti c a n d re co g n i z a b l e p ro fi l e th a t s h o u l d o n l y e n c o u ra g e

i m p ro ve m e n t.

Th e a p p l i ca ti o n o f co l l a b o ra ti ve a p p ro a ch e s t a ke s ti m e and va l u a b l e

re s o u rce s , so i t i s i m p o rta n t to fo cu s o n d e p l o yi n g o rg a n i z a ti o n s ’ a s s e ts to

m a xi m u m e ffe ct. A s tru ctu re d a p p ro a ch h e l p s to e n s u re th a t th e s e

ca p a b i l i ti e s ca n be fo cu s e d on wh e re th e y wi l l d e l i ve r m a xi m u m va l u e . It

i s a l so i m p o rta n t to e n s u re th a t a p p ro a ch e s s u ch a s p a rtn e ri n g or

co l l a b o ra ti o n a re n ot a ppl i ed to s i tu a ti o n s wh e re m o re tra d i t i o n a l

a p p ro a ch e s a re a d e q u a te to m e e t th e o p e ra ti o n a l n eed , s i n ce i f th e y a re

n ot m a n a g ed p ro p e rl y th e l i ke l y o u tco m e wo u l d be co u n te rp ro d u cti ve .

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PART 1 : Why?

Checklist
Th e g e n e ra l p ro fi l i n g a p p ro a c h s h o wn in Ta b l e 7.1 h e l p s to d e ve l o p a

s p e ci fi c s tra te g i c a p p ro a ch th a t a d d re s s e s i n t e rn a l co n ce rn s a n d e xt e rn a l

i n fl u e n ce s . Th e m a tri x i s b a s e d on a si m pl e s co ri n g m od el to gauge th e

i m p o rta n ce o f s p e ci fi c i d e n ti fi e d i ssu e s. B y a sse ssi n g th e se 20 p a ra m e t e rs

th e o rg a n i z a t i o n sh o u l d be a bl e to s t a rt t h e p ro ce s s o f s e g re g a t i n g i ts

e xi s ti n g o r p ro j e cte d fu t u re re l a ti o n s h i p re q u i re m e n ts .

Ta b l e 7 . 1 – I d e n ti fyi n g ke y p a ra m e te rs fo r p o te n ti a l p a rtn e rs

80
PART 2 : H ow?

Cha p te r 8 – Backg ro u n d an d intro du ction to

B S 1 1 000

I n Pa rt 2 of th i s book th e a i m i s to a ssess h ow to u se B S 1 1 000:

wh ere th e B S 1 1 000 fra m ework ca n a d d som e stru ctu re a n d
ben ch m a rki n g for a n org a n i za ti on ’s ca pa bi l i ty to expl oi t
col l a bora ti ve a pproa ch es. Pa rt 1 con si d ered th e ba ckg rou n d
a n d posi ti on i n g of col l a bora ti ve rel a ti on sh i ps; poten ti a l
ben efi ts were a l so i d en ti fi ed . Th i s ch a pter i n trod u ces th e rea d er
to B S 1 1 000; su bseq u en t ch a pters i n th i s pa rt focu s on th e
va ri ou s ‘h ow’ a spects.

Th e a i m of B S 1 1 000 (th e worl d ’s fi rst rel a ti on sh i p fra m ework, d evel oped

i n a ssoci a ti on wi th a pa n -i n d u stry g rou p) wa s to esta bl i sh a n a ti on a l a n d
sector-n eu tra l fra m ework th a t ca ptu res best pra cti ce i n col l a bora ti ve a n d
pa rtn eri n g prog ra m m es to su pport th e i m pl em en ta ti on a n d m a n a g em en t
of col l a bora ti ve rel a ti on sh i ps. Th e d ri ve to d evel op a rou te m a p for
col l a bora ti on ca m e from th e experi en ce of worki n g on a l l i a n ce a n d
pa rtn eri n g prog ra m m es, som e of wh i ch d el i vered si g n i fi ca n t ben efi t a n d
oth ers th a t fa i l ed . E xperi en ce h i g h l i g h ted th a t wh en rel a ti on sh i ps d i d n ot
d el i ver or h i t u pon rou g h ti m es i t wa s cl ea r th a t th e fou n d a ti on s were
wea k. Th ere a re m a n y sou n d m eth od ol og i es a va i l a bl e to su pport
col l a bora ti ve or pa rtn eri n g prog ra m m es, bu t m ost of th ese focu s on th e
poi n t of en g a g em en t a n d beyon d , wh erea s th e sta n d a rd i s ba sed on a
l i fe cycl e m od el from con cept to cl osu re.

Th e m a j or ch a l l en g e h i g h l i g h ted wa s th a t th e pri n ci pa l con stra i n t wou l d

be th e l a ck of ski l l s wi th i n th e bu si n ess sector to d evel op a n d m a n a g e
th ese n etworks. Th e tra d i ti on a l com m a n d -a n d -con trol m a n a g em en t
tra i n i n g wa s i n a d eq u a te to a d d ress th e com pl exi ty of expl oi ti n g th i s
rel a ti on sh i p-ba sed com m u n i ty. D evel opi n g th e m ore fl u i d stru ctu res a n d
tra i n i n g of fu tu re m a n a g ers h a s a l so brou g h t ou t a si g n i fi ca n t n u m ber of
a ssoci a ti on s a n d org a n i za ti on s focu sed on tryi n g to ra i se th e professi on a l
sta n d a rd a n d ben ch m a rki n g for th ese n ew ski l l s. I t wa s th i s tren d th a t
i n sti g a ted th e d evel opm en t of B S 1 1 000 th rou g h th e a d opti on of th e

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PART 2: How?

CRAFT m eth od ol og y, 9 wh i ch wa s th e fou n d a ti on of th e sta n d a rd . Th e

d ri ver wa s to i d en ti fy th e key req u i rem en ts th a t wou l d provi d e a sou n d
pl a tform to col l a bora te, th en d evel op th e pri n ci pl es th a t cou l d be
em bed d ed i n opera ti n g processes to g i ve org a n i za ti on s a m ore effecti ve
fou n d a ti on . Th e resu l t of th i s resea rch wa s th e ei g h t-step m od el th a t
n ow form s th e ba ckbon e of th e sta n d a rd (see Fi g u re 8. 1 ) .

Fi g u re 8. 1 – E i g h t- s te p l i fe cycl e m o d el

Awa ren e s s : ch a n g i n g th e wa y we rel a te to extern a l org a n i za ti on s ca n be

ch a l l en g i n g to overcom e. Th ere m a y be i n tern a l con stra i n ts wh ere

col l a bora ti on i s vi ewed a s ‘soft a n d fl u ffy’. I t i s eq u a l l y cru ci a l to en su re
th a t efforts a re focu sed on th ose rel a ti on sh i ps wh ere col l a bora ti on wi l l

9
CRAFT: Col l a b ora ti ve Rel a ti on sh i p, Assessm en t, Fu l fi l m en t, a n d Tra n sform a ti o n –

m eth o d ol og y d evel oped b y th e a u th or wi th PSL (n ow kn o wn a s th e I n sti tu te for

Col l a bo ra ti ve Wo rki n g ) .

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 Chapter 8 – Background and introduction to BS 1 1 000

d e l i ve r re a l va l u e and a vo i d u si n g ti tl e s s u ch as ‘ partnering ’ th a t ca n

co m p l i c a t e tra d i ti o n a l co n t ra cti n g re l a ti o n s h i p s .

Knowle ge d : cre a ti n g e ffe cti ve co l l a b o ra ti o n n e e d s s t ra te g i e s fo cu s e d on

th e b u s i n e s s o b j e cti ve s . Th e s tra te g y m u s t re co g n i z e th e ri s ks a s s o ci a te d

wi t h g re a te r i n te g ra ti o n , to g e th e r wi th a s p e ct s o f kn o wl e d g e

m a n a g em en t a n d b u s i n e s s c o n ti n u i ty. I t i s p a rti cu l a rl y u s e fu l to co n s i d e r

yo u r e xi t s tra te g y a t t h i s s ta g e , a s th i s wi l l h el p to i d e n ti fy ke y co n ce rn s .

I nte nal a e ment

r ss ss : u n d e rs ta n d i n g th e s tre n g th s a n d we a kn e s s e s o f o u r

o wn o rg a n i z a ti o n s i s cri t i ca l i f co l l a b o ra t i o n i s to be s u cc e s s fu l . We

fre q u e n t l y fo cu s o n wh a t we wa n t fro m o th e rs , ra t h e r th a n e n s u ri n g we

ca n m e e t o u r si d e o f th e a rra n g e m e n t.

P a tne election
r r s : fi n d i n g th e ri g h t p a rtn e r i s cri ti ca l and fre q u e n tl y we

a ssu m e th a t l o n g -sta n d i n g t ra d i ti o n a l s u p p l i e r re l a ti o n s h i p s ca n si m p l y

m i g ra t e . O fte n t h i s i s n o t th e ca s e , so i t i s i m p o rta n t t o u n d e rs t a n d th e

p a rtn e r p ro fi l e yo u a re l o o ki n g fo r a n d h o w yo u wi l l e va l u a te th e i r

ca p a b i l i ty to co l l a b o ra te .

Wo king togethe
r r: e s ta b l i s h i n g j o i n t g o ve rn a n ce fo r co l l a b o ra ti ve

p ro g ra m m e s a n d i n te g ra ti n g th e se i n to e ffe cti ve co n t ra cti n g

a rra n g e m e n ts re q u i re s ca re fu l a t te n ti o n . Th e re m u st b e co n s i d e ra ti o n fo r

b oth th e j o i n t o b j e cti ve s a n d th o s e o f th e i n d i vi d u a l p a rtn e rs , t o g e th e r

wi th e n s u ri n g th a t th e p e rfo rm a n ce i n ce n t i ve s a n d m e a s u re m e n t wi l l

s u p p o rt co l l a b o ra t i ve b e h a vi o u rs .

Val e c eation
u r : th e ke y to m a i n ta i n i n g a so u n d re l a ti o n s h i p i s to e n s u re

th a t i t re m a i n s cu rre n t a n d d ri ve s i n n o va ti o n to b ri n g a d d i ti o n a l va l u e to

th e re l a ti o n s h i p th ro u g h j o i n t co n ti n u a l i m p ro ve m e n t p ro g ra m m e s .

S taying togethe r: re l a ti o n s h i p s n e e d n u rtu ri n g . Ch a n g es i n peopl e and

th e b u s i n e s s e n vi ro n m e n t m u s t b e m o n i t o re d , a l on g wi th p e rfo rm a n ce

and b e h a vi o u rs . I ssu e s a n d d i s p u t e s wi l l be i n e vi ta b l e b u t ca n s tre n g th e n

re l a t i o n s h i p s i f h a n d l e d e ffe cti ve l y.

Exit t ategy s r : n oth i n g l a s t s fo r e ve r a n d b u s i n e s s re l a ti o n s h i p s wi l l

e ve n t u a l l y re a ch an en d . M a i n ta i n i n g a j o i n t e xi t s tra t e g y i s i m p o rta n t, to

ke e p th e p a rtn e rs fo cu s e d . At t h e sa m e ti m e , cl e a r ru l e s fo r

d i s e n g a g e m e n t wi l l fre q u e n tl y i m p ro ve a cti ve e n g a g e m e n t th ro u g h o u t

th e l i fe o f th e re l a ti o n s h i p .

A o n ation o collabo ation an

f u d f r r d p a tne ing
r r

Th e co n ce p t o f a vi rtu a l o rg a n i z a ti o n i s n o t n e w; e a rl y re fe re n ce s g o b a ck

to th e 1 9 5 0s, wh e n th e co m p u t e r wa s a n e w b u s i n e s s to o l . Ta ki n g a

b ro a d d e fi n i t i o n , p e rh a p s t h e g ro u p i n g o f d i ffe re n t s p e ci a l i s t tra d e s to

cre a te a cu s to m e r- fo cu s e d p ro d u ct h a s b e e n co m m o n , ra th e r th a n

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PART 2: How?

excepti on a l , th rou g h ou t h i story. I n tod a y’s wi red worl d we focu s on

com pu ters a n d i n tern et tech n ol og y, l i n ki n g com pa n i es a cross th e g l obe
a n d offeri n g opportu n i ti es for va l u e proposi ti on s th a t i n d epen d en tl y
wou l d n ot be pra cti ca l . An oth er si g n i fi ca n t m ovem en t towa rd s
i n teg ra ti on of bu si n ess rel a ti on sh i ps beg a n i n th e 1 9 80s. Th i s wa s
pa rtn eri n g or th e u se of a l l i a n ces, wh i ch sh owed h ow i n d epen d en t
org a n i za ti on s cou l d opera te wi th i n th e ‘u m brel l a ’ of a si n g l e obj ecti ve.
Crossi n g tra d i ti on a l con tra ctu a l bou n d a ri es, th e m od el d evel ops a m ore
i n teg ra ted a pproa ch th a n th a t of ol d -styl e con sorti a .

As bu si n ess m oves from a n i n d u stri a l econ om y towa rd s a n etwork

econ om y, exch a n g i n g a portfol i o of prod u cts for ca pa bi l i ti es a n d n ew
rel a ti on sh i ps, we see a n evol u ti on em bra ci n g vi rtu a l i n teg ra ti on . Th i s i s
g i ven fu rth er i m petu s by g l oba l i za ti on ; org a n i za ti on a l stru ctu res a n d ski l l
sets m u st be re-eva l u a ted to rel a te better to th e rel a ti on sh i p-ba sed va l u e
ch a i n s of th e fu tu re.

So wh y d i d th i s ‘n ew’ en th u si a sm sta rt to d ri ve i n d i fferen t d i recti on s?

Th e tru th i s th a t, d espi te th e ‘soft a n d fl u ffy’ percepti on s, th e fou n d a ti on
of col l a bora ti ve th i n ki n g wa s ba sed on h a rd com m erci a l n eed s a n d
ch a l l en g es – red u ci n g costs to m a i n ta i n posi ti on i n a n ever i n crea si n g l y
com peti ti ve m a rketpl a ce. U n fortu n a tel y i t a l so m ea n t th a t pressu re to
red u ce costs a t th e top of th e su ppl y ch a i n pl a ced pressu re on th ose
fu rth er d own to ta ke on h i g h er l evel s of ri sk. I n m a n y ca ses th e resu l t
wa s l ess rewa rd , d espi te th e sa l es pi tch th a t sh a red ri sk wou l d be
ba l a n ced a g a i n st i n crea sed poten ti a l profi t. Th e i d ea of ‘n o pa i n , n o g a i n ’
ta kes on a wh ol e n ew m ea n i n g .

I n fa ct th e rea l expon en ts of col l a bora ti on i n recen t yea rs were th ose a t

th e su ppl y en d of th e prod u cti on m a n u fa ctu ri n g m a rkets. Con cepts su ch
a s j u st i n ti m e (J I T) su ppl y prog ra m m es req u i red th e forg i n g of n ew
rel a ti on sh i ps between su ppl i ers a n d m a n u fa ctu rers. I n m a n y ca ses th e
m a j or reta i l sa l es ou tl ets d evel oped a pproa ch es wh i ch ri n g -fen ced su ch a
l a rg e pa rt of th ei r su ppl i er’s prod u cti on th a t i n pra cti ce th ey h a d a l m ost
tota l m a n a g em en t con trol wi th ou t ta ki n g a n y eq u i ty. Th ese m a y h a ve
been ca l l ed pa rtn eri n g a rra n g em en ts bu t i n rea l i ty th ey were tra d i ti on a l
m a ster-a n d -serva n t rel a ti on sh i ps. Th e m ove towa rd s ou tsou rci n g brou g h t
wi th i t n ew probl em s, for wh i l e i t d i d red u ce i n -h ou se costs i t a l so m ea n t
a g rea ter d epen d en ce on th i rd pa rti es, wh o th em sel ves n eed ed to
provi d e retu rn s to th ei r sh a reh ol d ers.

Th e evol u ti on of th e su ppl y ch a i n beca m e a stra teg i c i m pera ti ve a n d th e

i d ea of J I T rel a ti on sh i ps m oved towa rd s fi n d i n g n ew wa ys of rem a i n i n g
com peti ti ve; th e prospect of cost red u cti on a cross th e su ppl y ch a i n
beca m e th e m a j or d ri ver. Th ese a rra n g em en ts tri g g ered th e sta rt of
l ooki n g a t m u ch ti g h ter rel a ti on sh i ps, wh ere i n terd epen d en cy open ed
d oors to el i m i n a ti n g d u pl i ca ti on of effort a n d i n vestm en t. Th e essen ti a l
com pon en t of th ese rel a ti on sh i ps wa s a n eed to i n trod u ce i n cen ti ves for

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i m p ro ve d p e rfo rm a n ce on b o th s i d e s o f th e tra d i n g b o u n d a ry. Ri s k a n d

re wa rd had to be a ckn o wl e d g e d and t ra d i n g te rm s h a d to be l on g

en ou g h to a l l o w i n ve s tm e n t re tu rn .

U n fo rt u n a te l y fo r m a n y, a t l e a st i n th e s h o rt te rm , th e y l a u n ch e d i n to th e

co n ce p t wi t h a s o m e wh a t u n i n fo rm e d a p p ro a ch . Th e i r n e w wa y wa s

o u t wa rd l y b a s e d on te a m i n g , bon d i n g and a s e a rch fo r t h o s e wh o

cl a i m e d th e sa m e d e s i re s . Th e vi e w th a t yo u r a t ti t u d e and th a t o f

p a rtn e rs wa s i n fa ct m o re i m p o rta n t t h a n h a vi n g a so u n d wo rki n g

re l a t i o n s h i p open ed up a wh o l e vi s ta o f p ro b l e m s . Th e co l l a b o ra ti ve

a l l i a n ce s b e ca m e s tre t ch e d a s co n fl i cts o f i n te re s t a n d i n d i vi d u a l co m p a n y

p ro fi t a b i l i ty ca m e u n d e r p re s s u re . As wi th a n y re l a ti o n s h i p , th e re wi l l

a l wa ys b e ti m e s wh e n d i ffe ri n g vi e ws a n d d ri ve rs cre a te th e p re s s u re fo r

s e l f- p re s e rva t i o n . B u t so m e ca s e s , wh i ch a re n o w o fte n h el d up a s th e

b e n ch m a rks fo r p ro m o t i n g th e co n ce p ts o f p a rtn e ri n g , n ot on l y

e s ta b l i s h e d wo rki n g a l l i a n ce s to en a bl e a so u n d b u si n e ss ca se to be made

fo r p re vi o u s l y u n e co n o m i c d e ve l o p m e n ts . Th e y h a ve s h o wn th a t b y

wo rki n g o p e n l y t o g e th e r wi t h th e i r s u p p l y ch a i n , d e ve l o p m e n t co s ts ca n

be re d u ce d by 3 0 p e r ce n t a s wa s th e ca s e fo r B P An d re w. Th e re a l i ty i s

th e re and so i s th e p o t e n ti a l ri s k: i f a n y co m p a n y h e a d s i n to th e wo rl d of

co l l a b o ra ti o n th i n ki n g i t i s e a s y, th e y wi l l ve ry q u i c kl y fa i l . Th o s e wh o

h a ve been s u cce s s fu l sh o u t a l o t, th o s e wh o h a ve fa i l e d ke e p ve ry q u i e t.

Ch a n g i n g th e ru l e s o f th e game re q u i re s a l te rn a ti ve th i n ki n g th a t m a y be

s u p p re s s e d wi th i n th e co n fi n e s o f cu rre n t co n tra cti n g p ra cti ce . Th i s

tra n s i ti o n ca n sel d om be a ch i e ve d p u re l y b a s e d on i n te rn a l a cti o n s . Th e

d e ve l o p m e n t o f a n i n te g ra te d re l a ti o n s h i p m u st b e b a se d on e xp l o i ti n g

th e co m p l e m e n t a ry s ki l l s a n d re s o u rce s th a t p o te n ti a l p a rt n e rs ca n b ri n g

to th e a rra n g e m e n t .

Th e o b j e cti ve o f i n cre a s i n g va l u e to th e p a rtn e rs a n d to th e u l ti m a te

cu s to m e r m u s t b e b a se d on th e ke y i n g re d i e n ts th a t t h a t a re co n s i d e re d

to re p re s e n t a n d s u p p o rt th e en d g o a l s. Th e o b j e cti ve wh e n u n d e rt a ki n g

an o rg a n i z a ti o n a l a n a l ys i s i s n o t s i m p l y to ra n k o rg a n i z a t i o n s , b u t to

re m o ve th e o u te r l a ye r; and e sta b l i sh i f th e p ote n ti a l p a rtn e r s h a re s th e

l o n g - te rm o b j e cti ve s a n d ta rg e ts th a t wi l l d e l i ve r b e n e fi ts to th e

a rra n g e m e n t o ve r ti m e .

Th e tra d i t i o n a l b e n ch m a rks th a t a cco m p a n y s u p p l i e r s e l e cti o n s u ch as

fi n a n ci a l s tre n g t h and h i s to ri ca l p e rfo rm a n ce sh o u l d n ot be i g n o re d , bu t

sh o u l d be b a l a n ce d a g a i n s t th e u n d e rl yi n g e th o s th a t wi l l e n s u re th a t a s

th e re l a ti o n s h i p p ro g re s s e s t h e p a rti e s ca n b e co m e fo cu s e d on j oi n t a i m s

to th e i r m u tu a l b e n e fi t.

S u cce s s fu l co l l a b o ra t i o n re s t s o n a co m m o n d ri ve to e xp l o i t th e j oi n t

p ote n ti a l o f two o r m o re i n d i vi d u a l o rg a n i z a ti o n s . BS 1 1 000 s ta n d a rd

p ro vi d e s a s tru ctu re d p l a tfo rm fo r o rg a n i z a ti o n s to re a l i z e th e i r

ca p a b i l i ti e s a n d th o s e o f i ts p a rtn e rs t o p ro vi d e an i n t e g ra te d s o l u ti o n

th a t cre a te s va l u e and o p ti m i z e s e xi s ti n g re l a ti o n s h i p s . O rg a n i z a ti o n s a re

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PART 2: How?

beg i n n i n g to a p p re ci a te th a t i n te g ra ti o n ca n d e l i ve r va l u a b l e

co n tri b u t i o n s ; h o we ve r, th i s m e a n s th a t tra d i t i o n a l co n tra ct i n g

b o u n d a ri e s a n d p e rce i ve d s a fe g u a rd s n e e d to be co m p l e m e n t e d wi t h a

m o re fo cu s e d vi e w o n th e typ e o f o rg a n i z a ti o n bei n g co l l a b o ra te d wi th .

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 Chapter 8 – Background and introduction to BS 1 1 000

Co s tain – ca s e s tud y
For Costa i n th e m a i n d ri vers for col l a bora ti ve worki n g were a l rea d y
th ere – i t i s fu n d a m en ta l l y th e wa y we work, a n d i s key to ou r
‘Ch oosi n g Costa i n stra teg y’. So a d opti n g B S 1 1 000 wa s a ‘n o-bra i n er’.
D oi n g so wi l l d em on stra te to ou r cu stom ers th a t we d o wh a t we sa y,
a n d ou r col l a bora ti ve ca pa bi l i ty h a s been i n d epen d en tl y veri fi ed by
B SI .

An oth er key d ri ver i s th a t B S 1 1 000 provi d es a sta n d a rd a pproa ch

wi th a com m on l a n g u a g e th a t (a s m ore org a n i za ti on s a d opt th e
sta n d a rd ) ca n be a d opted a n d rea d i l y u n d erstood by a l l pa rti es. I t
h a s h el ped bri n g stru ctu re a n d process to a su bj ect th a t h a d i n th e
pa st been a l i ttl e i n ta n g i bl e a n d i s pa rti cu l a rl y i m porta n t a s we form
m a n y j oi n t ven tu res, a l l i a n ces a n d rel a ti on sh i ps.

O n e of th e fi rst ch a l l en g es wa s to m a p ou r exi sti n g col l a bora ti ve

processes to th e sta n d a rd , a n d n ot to rei n ven t th e wh eel or ca u se
d u pl i ca ti on , a n d th en l ooki n g to see wh ere a n y g a ps were. For
exa m pl e, pl a n n i n g for ‘d i sen g a g em en t’ before sel ecti n g a pa rtn er
wa s som eth i n g th a t wa s n ot form a l l y d on e a t th i s ea rl y sta g e of a
rel a ti on sh i p.

Ton y B l a n ch , B u si n ess I m provem en t D i rector

Costa i n G rou p

E ffecti ve perform a n ce i s crea ted th rou g h i n teg ra ti on of th e

org a n i za ti on ’s i n tern a l en vi ron m en t a n d i ts extern a l cu stom ers a n d
su ppl i ers. H ol i sti c m a n a g em en t h a s to exten d beyon d th e tra d i ti on a l
fu n cti on a l bou n d a ri es wi th i n org a n i za ti on s to en su re th a t opportu n i ti es
a re fu l l y expl oi ted . B u i l d i n g on th e stren g th s of th e org a n i za ti on , i t i s
cri ti ca l to esta bl i sh th e cu rren t l evel of kn owl ed g e a n d ski l l s to en su re
th a t su i ta bl e tra i n i n g i s d evel oped th a t wi l l provi d e a n effecti ve pl a tform
to m ove i n to col l a bora ti on wi th con fi d en ce.

Creating the fu ture o f collabo ration

I n col l a bora ti ve bu si n ess rel a ti on sh i ps, th e a d va n ta g e of d evel opi n g m ore
effecti ve rel a ti on sh i ps i s i n expl oi ti n g th e j oi n t kn owl ed g e a n d
ca pa bi l i ti es of org a n i za ti on s to crea te a d d ed va l u e for th e pa rtn ers, a n d
for th e en d -cu stom er or con su m er, wh i ch cou l d n ot be crea ted
i n d i vi d u a l l y. Th i s sh a ri n g of kn owl ed g e i s a t th e core of effecti ve
col l a bora ti on a n d i s th e ca ta l yst for crea ti n g va l u e.

Va l u e crea ti on i s a bou t sti m u l a ti n g i n n ova ti on a n d ca pi ta l i zi n g on th e

rea l i za ti on of wh a t m a y h a ve been kn own by a l l bu t n ot recog n i zed
beca u se of org a n i za ti on a l ba rri ers. I t i s proba bl e th a t m u ch of a n

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PART 2: How?

Fi g u re 8 . 2 – Va l ue ch a i n

org a n i za ti on ’s bu si n ess processes a n d i n tera cti on h a s been esta bl i sh ed

beca u se of org a n i za ti on a l bou n d a ri es a n d l a ck of tru st. Th e process of
seeki n g ou t com peti ti ve a d va n ta g e th rou g h col l a bora ti ve i n tera cti on i s a
m a j or opportu n i ty th rou g h ou t th e va l u e ch a i n (see Fi g u re 8. 2 ) . Th e
expl oi ta ti on of col l a bora ti ve a pproa ch es m u st h a ve a fou n d a ti on th a t i s
ba sed on d el i veri n g a d d ed va l u e to th e pa rti es, th rou g h ca pi ta l i zi n g on
th e syn erg i es. Th i s wi l l en a bl e org a n i za ti on s to sh a re resou rces or rem ove
n on -va l u e a d d ed a cti vi ti es. Lon g er-term ben efi t i s i n m ovi n g th e
a rra n g em en ts forwa rd to provi d e m ore com peti ti ve opti on s for th e
en d -cu stom ers a n d crea ti n g even g rea ter va l u e. I n d i fferen t org a n i za ti on s
va l u e m a y be d eri ved from sa ti sfyi n g a va ri ety of d i fferi n g ch a l l en g es a n d
n eed s. Th ese a re often com m on a cross org a n i za ti on s, bu t th ey m a y va ry
a n d en su ri n g syn erg y i s cru ci a l to m a i n ta i n i n g j oi n t focu s on ou tcom es.

E very rel a ti on sh i p i s d i fferen t, wh eth er verti ca l or h ori zon ta l ; h owever,

th e key i ssu es wi l l be com m on to m ost. B S 1 1 000 crea tes a pl a tform for
d evel opi n g a n d m a n a g i n g col l a bora ti on from con cept to com pl eti on . Th e
ch a l l en g e for m a n y org a n i za ti on s i s fi rstl y to en su re th e effecti ve i n i ti a l
en g a g em en t of th e sta keh ol d ers a n d th en to m a i n ta i n th i s en g a g em en t

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over th e l i fe of th e prog ra m m e, pa rti cu l a rl y wh ere i t i s l i kel y th a t th ere

wi l l be ch a n g es of person n el d u ri n g th e opera ti on a l ph a se. Th e
i n trod u cti on of th e rel a ti on sh i p m a n a g em en t pl a n (RM P) provi d es a
fra m ework to d ocu m en t th e d evel opm en t process a n d crea te a d yn a m i c
record a s th e prog ra m m e evol ves. I n th i s wa y i t i s i n ten d ed to provi d e a
focu s a n d ba ckg rou n d for opera ti on a l person n el ; wh ere a ppropri a te, i t
a l so provi d es a cen tra l i zed record for a n y process a u d i t or a ssessm en t for
org a n i za ti on s seeki n g a ccred i ta ti on to B S 1 1 000 .

Raytheon S ys tem s – ca s e s tud y

Ra yth eon System s recog n i zes th e i m porta n ce a n d si g n i fi ca n ce of
a ch i evi n g su ccess both for cu stom ers, su ppl i ers a n d th e com pa n y. Th i s
u n d ersta n d i n g i s refl ected i n th e com pa n y’s core va l u es, em bed d ed i n
Ra yth eon ’s Vi si on , Stra teg y, G oa l s a n d Va l u es. Th ey serve a s th e roa d
m a p for ou r a ch i evem en ts a n d th e ben ch m a rk by wh i ch we m ea su re
ou r perform a n ce ea ch yea r.

B S 1 1 000 com pl em en ts th ese core va l u es; i t u n d erpi n s a n d su sta i n s

Ra yth eon ’s a pproa ch to rel a ti on sh i p m a n a g em en t, both i n tern a l l y
a n d extern a l l y. B S 1 1 000 provi d es a n i n d epen d en t a n d rel i a bl e
ben ch m a rk a g a i n st wh i ch ea ch pa rti ci pa ti n g en ti ty ca n rel y on a
com m on set of m ea su ra bl e rel a ti on sh i p pri n ci pl es, ou tl i n ed a g a i n st a
ba l a n ced a n d eq u i ta bl e process of rel a ti on sh i p m a n a g em en t. Wh i l e
Ra yth eon h a s a l wa ys h a d a stron g col l a bora ti ve worki n g cu l tu re,
a d opti on of th i s sta n d a rd h a s provi d ed ’stru ctu re to ou r cu l tu re’.

Certi fi ca ti on a n d fu l l a d opti on of B S 1 1 000 su pports Ra yth eon ’s

stra teg i c a i m s. M ore cu stom ers seek to red u ce cost a n d ri sk th rou g h
va ri ou s effi ci en cy m ea su res. Th i s i n cl u d es posi ti on i n g m ore com pl ex
a n d l en g th i er con tra cts, n ecessi ta ti n g col l a bora ti ve i n d u stry sol u ti on s.
Th rou g h certi fi ca ti on to B S 1 1 000, Ra yth eon bel i eves i t i s stron g l y
pl a ced to m eet cu stom er d em a n d s i n th i s en vi ron m en t. Ad opti on of
th e sta n d a rd h a s su pported th e n ecessi ty for si g n i fi ca n t
sel f-rea l i za ti on i n th e form of m a n d a ti n g i n tern a l d u e d i l i g en ce a s
wel l a s th e obvi ou s extern a l d u e d i l i g en ce before en teri n g a
col l a bora ti ve a rra n g em en t. From experi en ce, we kn ow th a t
a ppl i ca ti on of th e sta n d a rd h a s a d d ed si g n i fi ca n t va l u e to exi sti n g
a n d n ew rel a ti on sh i ps.

M i ke Wood stock, Com m erci a l E xecu ti ve

Ra yth eon System s Li m i ted

89
PART 2: How?

Concl us ion
C l e a rl y e a ch o rg a n i z a t i o n h a s d i ffe re n t d ri ve rs a n d s tra t e g i c n e e d s ; fo r

m a n y o rg a n i z a t i o n s co l l a b o ra ti o n and p a rtn e ri n g i s n o t th e a n s we r. But it

sh ou l d be p a rt o f t h e s tra te g i c th i n ki n g to i d e n ti fy wh e re th e re co u l d be

i n ve s tm e n t o p p o rtu n i ti e s , wh i ch e xp a n d th e e n te rp ri s e wi th o u t cre a t i n g

co m p l e x a n d ri g i d l eg a l re l a t i o n s h i p s o r j o i n t ve n t u re s .

Th e re is no si n g l e s o l u ti o n to th e co m p l e xi ti e s o f co l l a b o ra ti ve ve n t u re s

b u t th e ch a ra cte ri s ti cs a re co m m o n . I t i s th e se co m m o n fe a tu re s th a t t h e

d e ve l o p m e n t o f B S 1 1 000 h a s ca p tu re d to p ro vi d e th e ro u te map to

cre a t i n g i n d i vi d u a l s o l u ti o n s , wh i ch a re b a se d on m u tu a l u n d e rs t a n d i n g

and b e n e fi t. Th e n e u tra l i ty o f th e s ta n d a rd p ro vi d e s a b ri d g e to h el p

fo rg e ro b u s t a n d su sta i n a b l e re l a ti o n s h i p s .

90
 Checklist
Table 8.1 provides some initial ideas to help identify where collaboration and BS 1 1 000 may add value initially and beyond.
It is important to define the expectations, not assume them.
Ta b l e 8 . 1 – I d e n ti fyi n g re l a ti o n s h i p d ri ve rs

Wi d e r a s p e cts o f Co m p e ti ti ve Pre fe rre d Al l i a n ce Pa rtn e rs h i p / J oi n t

re l a ti o n s h i p s te n d e r su ppl i er co n s o rti u m ve n tu re

Chapter 8 – Background and introduction to BS 1 1 000

Long-term stability X X
Joint research and development X X
(R&D)
Reduced total cost O X X X
Focused team X X X
Risk sharing O X X
Innovation X X
Optimization O X X
Reduced quality cost O O X X
91
92

PART 2: How?
Red u ced su pport cost O X X

Red u ced en g i n eeri n g cost O O X X

B a ck-to-ba ck term s O X X

Rea l i sti c l i q u i d a ted d a m a g es (LD s) O X X

Rea l g u a ra n tees O X X

Cost red u cti on O X X X

I n fl a ti on h ed g i n g O O X

Lower ten d eri n g costs O X X

Red u ced cycl e ti m e O X X X

Wi n n i n g pri ces O X X

I m proved ca sh fl ow O X X

Fi n a n ce/fu n d i n g su pport O X

G l oba l su ppl y O O O X O
 Customer support O O X X

Currency risk m anagement O X X

Reliable del ivery O O X X X

M arket pricing O O X X X

Chapter 8 – Background and introduction to BS 1 1 000

Enhanced service support O O X X

Extended skill s base O X X

Enhanced supply options O X X

Integrated propositions O O X X

Customer focused solutions O O X X

X = likel y
O = possible
93
Cha p te r 9 – Awa rene ss

Co l l a b o ra ti ve a p p ro a ch e s wi l l cu t a cro s s e ve ry fu n cti o n in an

o rg a n i z a t i o n ; in o rd e r t o a ch i e ve s u cce s s th e re m u st b e

a wa re n e s s o f th e n e w a p p ro a ch – th e s u b j e ct o f th i s ch a p t e r.

Th e i n i ti a l ke y i s to e n s u re th a t a n o rg a n i z a ti o n has a cl e a r

m a n d a te and s tra te g y to u n d e rt a ke a co l l a b o ra ti ve

e n g a g e m e n t. Th i s h a s to be d e m o n s tra b l y a l i g n e d wi th th e

vi s i o n s , va l u e s a n d o b j e cti ve s o f t h e b u si n e ss.

I t i s e sse n ti a l th a t t h e a d o p ti o n of a co l l a b o ra ti ve a p p ro a ch i s cl e a rl y

a l i g n ed wi t h th e b u si n e ss g o a l s a n d o b j e cti ve s . In t h i s wa y th e co n ce p ts ,

a i m s, and th e p o te n t i a l fo r a va l u e ch a i n o r va l u e n e two rk a p p ro a c h ca n

be a p p re ci a t e d a cro s s t h e o rg a n i z a ti o n . P ro m o ti n g co l l a b o ra ti o n m a y be

a t o d d s wi t h cu rre n t th i n ki n g , so i ts b e n e fi ts o fte n n eed to be e xp l a i n e d .

Th e s e b e n e fi ts m u s t b e a rt i cu l a t e d and u n d e rs to o d , i n cl u d i n g th e

l o n g - te rm a d va n ta g e s ; th i s m a y b e p a rti cu l a rl y d i ffi cu l t wh e re i n te g ra t i o n

wi th e xte rn a l o rg a n i z a ti o n s co u l d a ffe ct i n t e rn a l re s o u rce s . Ad o p t i n g a

va l u e ch a i n a p p ro a ch m u s t cl e a rl y o ffe r g re a te r t a n g i b l e b e n e fi t s th a n a

m o re tra d i t i o n a l o wn e rs h i p m od el . I t sh o u l d be fo cu s e d on a ro b u s t

a n a l ys i s o f a co s t - e ffe ct i ve s o l u ti o n .

Exec u tive sp on s o rs hi p an d p olicy

F o r m a n y o rg a n i z a t i o n s th e vi e w o f tra d i ti o n a l tra d i n g re l a ti o n s h i p s i s

se e n a s on e o f e xp l o i ti n g p o we r. I m p l e m e n ti n g co l l a b o ra ti ve a p p ro a ch e s

n e e d s s tro n g s u p p o rt fro m th e top to o ve rco m e i n t e rn a l co n ce rn s a n d

co n s tra i n t s a n d to s u p p o rt a p p ro p ri a te p ro vi s i o n o f re s o u rce s . S u cce s s fu l

co l l a b o ra ti o n m u st b e ba sed on e s ta b l i s h i n g re a l i s t i c a n d a ch i e va b l e aims

th a t a re cl e a rl y d e fi n e d and m e e t th e o b j e ct i ve s o f th e wh o l e

o rg a n i z a ti o n . As th e i m p l e m e n ta ti o n p ro g re s s e s th e re m a y be o p p o si ti o n

to th e ch a n g e ; th e ch a l l e n g e and p o te n ti a l o b j e cti ve s wi l l n eed to be

u n d e rs to o d . Th e a p po i n tm e n t o f a s e n i o r e xe cu ti ve s p o n s o r re s p o n s i b l e

fo r s u p p o rti n g th e se co l l a b o ra t i ve i n i ti a ti ve s i s s e e n as a cru ci a l s ta rti n g

p o i n t to re i n fo rce i m p l e m e n t a ti o n , s u p p o rt th e a l l o ca ti o n o f n e ce s s a ry

re s o u rce s a n d e n s u re th a t cl e a r p o l i ci e s a n d p ro ce s s e s a re in p l a ce to

u n d e rp i n th e vi s i o n s a n d va l u e s o f th e o rg a n i z a t i o n .

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PART 2: How?

B us ine ss objective s
Al i g n i n g co l l a b o ra ti ve a p p ro a ch e s wi th th e b u si n e ss g o a l s a n d o b j e ct i ve s

e n s u re s th a t t h e re a re cl e a r l i n ka g e s b e twe e n a d o p ti o n of a co l l a b o ra t i ve

a p p ro a ch and th e o rg a n i z a ti o n a l ch a n g e th a t m a y be re q u i re d . Wh e n

sh ou l d an o rg a n i z a t i o n co n s i d e r c o l l a b o ra ti o n and th e b e n e fi ts o f

e ffe cti ve re l a t i o n s h i p m a n a g e m e n t? In th e fi rs t p l a ce i t sh o u l d be fo cu s e d

on bei n g d ri ve n b y m e a s u ra b l e o u tc o m e s . Co l l a b o ra ti o n m a y be a g ood

wa y to wo rk b u t i t s h o u l d be d e p l o ye d wh e re i t a d d s va l u e . Th e re sh o u l d

be co n s i d e ra ti o n a s to wh e th e r t h e ta rg e te d re l a ti o n s h i p s l e n d

t h e m s e l ve s to su sta i n a b l e b u si n e ss, th e n wh e th e r th e a rra n g e m e n ts wi l l

fa c i l i ta te th e s h a ri n g o f re s o u rce s , ca n be b a se d on s h a re d ri s k a n d

re wa rd , and ca n b e n e fi t fro m l e s s o n s l e a rn e d . To s e t th e o ve ra l l b u si n e ss

s tra te g y, yo u wi l l n eed to a d d re s s n o t j u s t th e l o ca l o b j e cti ve s , b u t a l so

u n d e rs ta n d th e wi d e r p e rs p e ct i ve . Wh e th e r co l l a b o ra ti o n i s a t co m p a n y,

g ro u p o r i n t e rn a ti o n a l l e ve l , e a ch has an i n fl u e n ce on h o w th e p l a ye rs

m a y re a ct o r wh a t o p ti o n s a n d s a fe g u a rd s m a y h a ve to be i n te g ra t e d .

U n d e rs ta n d i n g wh a t d ri ve s yo u r o rg a n i z a t i o n and th a t o f th e cu s to m e r

o r s u p p l i e r a re i m p o rta n t fe a t u re s o f t h e d e ve l o p m e n t p ro ce s s . Th e

wh o l e s p e ctru m o f th e m a rke tp l a ce wi l l i n fl u e n ce e ve n ts ; i f th e se a re n ot

u n d e rs to o d , th e n o p p o rtu n i ti e s m a y b e m i sse d and th e ri s k p ro fi l e

i n cre a s e d .

Bene fits an d b us ine ss ca s e

Ad o p ti n g a va l u e ch a i n a p p ro a ch m u s t cl e a rl y o ffe r g re a t e r ta n g i b l e

b e n e fi t s th a n a m o re tra d i ti o n a l o wn e rs h i p m od el . I t sh ou l d be fo cu s e d

on a ro b u s t a n a l ys i s o f a co s t- e ffe cti ve s o l u ti o n . Th e re n e e d s to be a

sou n d b u s i n e s s ca s e e sta b l i sh e d ; d e s p i te wh a t m a n y p e o p l e su g g e st i s j u st

a ch a n g e o f a t ti t u d e , e ffe ct i ve c o l l a b o ra ti ve wo rki n g re q u i re s i n ve s tm e n t

o f re s o u rce s t o d e ve l o p th e p ro ce s s e s a n d s ki l l s to d e l i ve r s u cce s s . I ts

s u cce s s wi l l ve ry m u ch d epen d on th e a tt i tu d e and co m m i tm e n t o f th o s e

i n vo l ve d to d ri ve th e ri g h t b e h a vi o u rs . C o l l a b o ra ti ve wo rki n g i s n ot a

‘ s o ft o p ti o n ’ bu t on e th a t ca n d e l i ve r re a l ta n g i b l e b e n e fi ts .

I m p l e m e n ti n g a n y o rg a n i z a ti o n a l ch a n g e p ro g ra m m e m u st b e b a l a n ce d

a g a i n s t th e co s t s a n d i m p a ct s o n th e cu rre n t b u s i n e s s m o d e l ; th e sa m e is

t ru e wh e n i m p l e m e n ti n g co l l a b o ra ti o n – in fa c t, p o te n ti a l l y i t ca n h a ve a

g re a te r fu n d a m e n t a l i m p a ct a cro s s t h e o rg a n i z a ti o n . U n d e rs ta n d i n g ,

e xp l a i n i n g and ra i s i n g a wa re n e s s a b o u t th e co s ts a n d b e n e fi ts a re cru ci a l

to cre a ti n g th e ri g h t e n vi ro n m e n t .

S eg regate relation s hi ps
H i s to ri ca l l y te rm s s u ch a s p a rt n e ri n g o r co l l a b o ra ti o n h a ve o ft e n been

u se d too l i b e ra l l y a n d fre q u e n tl y wh e n n o t n e ce s s a ry o r a p p ro p ri a t e . Th i s

ca n l ea d to co n fu s i o n , m i sa l i g n m e n t o f g o a l s, fa i l u re ba sed on

96
 Chapter 9 – Awareness

expecta ti on s a n d l a ck of robu st m a n a g em en t. I t i s i m porta n t to focu s

on l y on wh ere col l a bora ti on ca n a d d rea l va l u e. So i f exi sti n g a pproa ch es
wi l l provi d e a com peti ti ve ou tcom e, th en a voi d th e com pl i ca ti on s a n d
efforts of a col l a bora ti ve m od el . Col l a bora ti on sh ou l d be cl ea rl y focu sed
on th ose rel a ti on sh i ps wh ere i t wi l l cl ea rl y d el i ver rea l va l u e; u si n g th e
term wh ere i t rea l l y h a s n o tru e va l u e ca n com pl i ca te a tra d i ti on a l
en g a g em en t. Perh a ps th e m ost cru ci a l d eci si on i s h ow org a n i za ti on s
d i fferen ti a te th ei r rel a ti on sh i ps a n d focu s th ei r resou rces effecti vel y. Th e
spectru m of rel a ti on sh i ps a n d speci fi c n eed s a n d stra teg i c req u i rem en ts
wi l l be m a n y a n d va ri ed . Con si d era ti on sh ou l d be g i ven n ot on l y to th e
cu rren t rel a ti on sh i p profi l es bu t a l so to poten ti a l d evel opm en ts wi th i n
th e m a rketpl a ce or expected ch a n g es i n th e overa l l bu si n ess stra teg y. Th i s
wi l l en a bl e a n y d evel opm en t prog ra m m e a n d i n vestm en t i n pa rtn eri n g or
col l a bora ti ve rel a ti on sh i ps to ca ptu re poten ti a l ben efi ts i n th e fu tu re.
U n d ersta n d i n g th e pa ra m eters of exi sti n g rel a ti on sh i ps provi d es th e
pl a tform for bu i l d i n g effecti ve en g a g em en t.

Eval u ate key in d ivi d u al s

Worki n g i n a col l a bora ti ve en vi ron m en t m a y n ot su i t everyon e; wh i l e
th ey m a y be excel l en t i n on e d om a i n , th e ca pa bi l i ty a n d ski l l s for
opera ti n g i n a m u tu a l l y ben efi ci a l rel a ti on sh i p m a y ch a l l en g e som e
i n d i vi d u a l s – h owever, i t ca n represen t a d evel opm en t opportu n i ty for
m a n y professi on a l s. Wh en poten ti a l a rea s for th e a ppl i ca ti on of
col l a bora ti ve a pproa ch es h a ve been esta bl i sh ed , th e n ext key sta g e i s to
con si d er th e i n tern a l ca pa bi l i ti es to d el i ver su ch a prog ra m m e.
Col l a bora ti ve worki n g a n d m a n a g em en t a re n ot ea sy ta sks a n d
freq u en tl y th ey a re ou tsi d e th e experi en ce of m a n y peopl e. I f
col l a bora ti on i s to d el i ver va l u e i t h a s to h a ve th e ri g h t l ea d ersh i p a n d
ski l l s. Th i s m a y be a si g n i fi ca n t con stra i n i n g fa ctor even a t th i s i n i ti a l
sta g e; th e a ssu m pti on th a t everyon e ca n h a n d l e th e n u a n ces of
col l a bora ti on ca n l ea d to i n h eren t fa i l u res. As pa rt of th e overa l l bu si n ess
stra teg y th a t i s en com pa ssi n g a poten ti a l col l a bora ti ve a pproa ch , i t i s
essen ti a l to u n d ersta n d wh a t ski l l s a re a va i l a bl e a n d wh a t d evel opm en t
m a y be n ecessa ry.

I nitial ri s k a s s e s s ment
E very bu si n ess ven tu re ca rri es som e ri sk a n d m a n a g i n g ri sk i s a key a spect
of sou n d bu si n ess. Col l a bora ti ve a pproa ch es ca n i n trod u ce a l tern a ti ve
wa ys of m a n a g i n g ri sk, i n cl u d i n g a j oi n t a pproa ch wi th pa rtn er(s) , bu t
ca n a l so i n trod u ce n ew ri sk el em en ts th a t n eed to be i d en ti fi ed a n d
ca rri ed forwa rd .

B u i l d i n g n ew bu si n ess m od el s or refi n i n g th e cu rren t va l u e ch a i n m u st be

d ri ven by cl ea rl y i d en ti fi ed opportu n i ti es a n d rea l i sti c i d en ti fi ca ti on of

97
PART 2: How?

th e p o te n ti a l ri s ks i n vo l ve d . A co l l a b o ra t i ve re l a ti o n s h i p o ffe rs b ro a d

o p p o rtu n i ti e s to e xp a n d th e b u s i n e s s p ro fi l e , bu t a t th e sa m e ti m e b ri n g s

a l e ve l o f i n t e g ra ti o n ri s k. A co l l a b o ra ti ve a p p ro a ch e n co u ra g e s

o rg a n i z a ti o n s to l o o k a t h o w t h e y s h a re ri s k, m o n i to r p e rfo rm a n ce and

s h a re re wa rd s . Tra d i ti o n a l l y, i f yo u s u b co n tra cte d wo rk, yo u i ssu e d a

fi xe d - p ri c e co n t ra ct, th e n fo u g h t wi th th e p ro vi d e r to g e t th e m to m eet

th e i r o b l i g a ti o n s. In a co l l a b o ra ti ve m od el th e d ri ve r h a s to be ta rg e te d

t o wa rd s m e a s u ra b l e p e rfo rm a n ce , va l u e fo r m o n e y a n d s h a re d o b j e cti ve s .

R e s e a rch i n to co l l a b o ra ti ve p ro g ra m m e s h i g h l i g h ts t h e p ro b l e m wi th

p e rfo rm a n ce s ta n d a rd s : in m a n y o rg a n i z a ti o n s t h e p e rfo rm a n ce of

i n te rn a l s e rvi ce s g ro u p s i s a l wa ys cri ti ci z e d , b u t th e re a re fe w m a j o r

cri ti cs , a s m o s t i s s u e s g e t s o l ve d l o ca l l y o r a t a p e rs o n a l l e ve l . O n ce yo u

b ri n g in a ‘ p a rtn e r’ to p ro vi d e th e s e rvi ce th e l e ve l o f p e rfo rm a n ce is

e xp e cte d to be s u b s ta n ti a l l y h i g h e r.

Relation s hi p management p lan

Th e i n tro d u ct i o n o f th e RM P p ro vi d e s a s tru ctu re d a p p ro a ch fo r

d o cu m e n ti n g th e d e ve l o p m e n t p ro ce s s a n d cre a ti n g a d yn a m i c re co rd as

th e i m p l e m e n t a ti o n e vo l ve s . In th i s wa y i t i s i n te n d e d to p ro vi d e a fo cu s

and b a ckg ro u n d fo r o p e ra t i o n a l p e rs o n n e l ; wh e re a p p ro p ri a te , i t a l so

p ro vi d e s a ce n tra l i z e d re co rd fo r a n y p ro ce s s a u d i t o r a s s e s s m e n t fo r

o rg a n i z a ti o n s s e e ki n g a cc re d i ta ti o n to th e s ta n d a rd . Th i s m a y b e a

s e p a ra t e p ro ce s s o r th e re q u i re m e n t s ca n be i n te g ra te d i n to e xi s t i n g

s ta n d a rd a p p ro a ch e s s u ch a s cu s to m e r m a n a g e m e n t p ro g ra m m e s , ke y

a cco u n t m a n a g e m e n t, p ro g ra m m e m a n a g e m e n t, p ro cu re m e n t p l a n s o r

co n tra ct m a n a g e m e n t p l a n s . I m p l e m e n ti n g BS 1 1 000 sh o u l d n ot be a bou t

wri t i n g m a n y n e w p ro ce d u re s , si n ce th i s te n d s to l e a ve i t o u ts i d e th e

m a i n s tre a m o p e ra ti o n a l p ro ce s s e s .

Th e R M P ca n be u sed as a co rp o ra te m od el to e s ta b l i s h p ro ce s s e s to be

a d o p te d , in th e ca s e o f p a rtn e ri n g o r co l l a b o ra t i ve p ro g ra m m e s , and as a

m od el fo r i n d i vi d u a l re l a t i o n s h i p s o r s p e ci fi c co l l a b o ra ti ve re l a t i o n s h i p s .

Th i s e s ta b l i s h e s a co n s i s te n t m o d e l fro m wh i ch d e l i ve ry t e a m s , wi t h th e i r

p a rtn e rs , ca n e s ta b l i s h a t a i l o re d RM P to s u i t th e s p e ci fi c n e e d s a n d

re q u i re m e n ts o f i n d i vi d u a l p ro g ra m m e s . E a ch R M P i s e xp e cte d to e vo l ve

o ve r th e l i fe ti m e of a p ro g ra m m e , p ro vi d i n g a c o re re co rd o f th e

p re - co n tra ct d e ve l o p m e n t a s b a ckg ro u n d i n fo rm a ti o n to p ro g ra m m e

tea m m e m b e rs . S u b s e q u e n t l y i t e s ta b l i s h e s a wo rki n g p l a tfo rm fo r

re l a ti o n s h i p m a n a g e m e n t th ro u g h th e l i fe o f th e p ro g ra m m e , e n s u ri n g

t h a t re l a t i o n s h i p m a n a g e m e n t i s e ffe cti ve l y co m m u n i ca te d at all l e ve l s

and i n t e g ra t e d i n to co n tra ct e xe cu ti o n and d e l i ve ry fo r a l l s t a ke h o l d e rs .

For a co l l a b o ra t i ve a rra n g e m e n t to be s u cce s s fu l t h e re h a s to be a cl e a r

fo cu s a n d u n d e rs ta n d i n g fo r th o s e i n vo l ve d o f th e b ro a d e r a s p e cts o f t h e

p ro g ra m m e , o ve r a n d a b o ve th e i r i n d i vi d u a l ro l e s a n d re s p o n s i b i l i ti e s .

Th u s , wh i l e i t m a y n ot be p ra cti ca l fo r e ve ry m e m b e r o f t h e te a m to fu l l y

98
 Ch a p te r 9 – A wa re n e ss

u n d e rs ta n d all th e d e ta i l o f th e co n tra cti n g a rra n g e m e n t s , an e xe cu t i ve

s u m m a ry wi l l h el p to p o s i ti o n t h e i r a ct i vi ti e s a n d h o w th e y i n te ra ct wi th

o th e r s t a ke h o l d e rs o r p a rt n e rs . Th i s o ve rvi e w s h o u l d co n ta i n a b ri e f

d e s cri p t i o n o f th e i n i ti a ti ve , i ts ra ti o n a l e , aims and o b j e ct i ve s to e n s u re

th a t i n d i vi d u a l s a re fo cu s e d on th e o ve ra l l d e s i re d o u tco m e .

E ffe ct i ve re l a ti o n s h i p m a n a g em en t i s a l l a bou t em bed d i n g th e ri g h t

b e h a vi o u rs wi th i n an i n te g ra te d te a m . I t i s d o u b t fu l th a t th e ri g h t

b e h a vi o u rs ca n be d ri ve n s o l e l y b y co n tra ct co n d i t i o n s , th o u g h on e

p o s s i b i l i t y co u l d be to i n co rp o ra te th e R M P i n to a n y co n tra ct to e sta b l i sh

an a g re e d p l a tfo rm to e n co u ra g e th e a p p ro p ri a te b e h a vi o u rs . Th i s wo u l d

e n s u re th a t th e s tra te g i c m i s s i o n , vi s i o n and va l u e s , g o ve rn a n ce ,

co l l a b o ra ti ve ch a rt e r, b e h a vi o u ra l e xp e cta ti o n s o f t h e p a rtn e rs a n d th e i r

te a m s , to g e th e r wi t h an a g re e d p ro ce s s o f m o n i to ri n g and p e rfo rm a n ce

m e a s u re m e n t, a re in p l a ce to s u p p o rt a s u s ta i n a b l e re l a t i o n s h i p .

Wh e n th e o rg a n i z a ti o n a l s tru ct u re and s tra t e g y a re se t i n p l a ce , th e n e xt

ph a se i s to a d d re s s i n d i vi d u a l re l a ti o n s h i p s o r i n i ti a t i ve t h ro u g h th e

kn o wl e d g e ph a se of B S 1 1 000.

Concl us ion
C o l l a b o ra ti ve wo rki n g in a n y fo rm i s n ot a n e a s y o p ti o n . I t re q u i re s

i n ve s tm e n t a n d re s o u rce and i t fre q u e n tl y ch a n g e s wi th i n an

o rg a n i z a ti o n , so i t n e e d s su sta i n e d b a cki n g and fo cu s e d d i re ct i o n . For

m a n y o rg a n i z a ti o n s th e vi e w o f tra d i ti o n a l tra d i n g re l a t i o n s h i p s i s s e e n

a s on e o f e xp l o i ti n g p o we r. I m p l e m e n ti n g co l l a b o ra ti ve a p p ro a ch e s n e e d s

s tro n g s u p p o rt fro m th e top to o ve rco m e i n t e rn a l co n s tra i n ts a n d to

s u p p o rt a p p ro p ri a te re s o u rci n g . Wi th o u t th i s h i g h - l e ve l s u p p o rt, e ffo rt s

to h a rn e s s co l l a b o ra ti ve wo rki n g wi l l m o s t l i ke l y fa i l to d e l i ve r.

99
 Checklist
1 00

PART 2: How?
To s ta rt th e p ro ce s s o f co n s i d e ri n g wh e re BS 1 1 000 m a y fi t yo u r b u s i n e s s o p e ra ti o n s a n d , p e rh a p s m o re i m p o rta n tl y, at

wh a t s ta g e th e o rg a n i z a ti o n i s cu rre n t l y s e t u p to e xp l o i t co l l a b o ra ti ve wo rki n g , co n s i d e r t h e ch e c kl i s t g i ve n in Ta b l e 9. 1 .

Ta b l e 9 . 1 – Awa r en e ss i n i ti a l p r
a a m e te rs

Awa r en e ss Ye s /N o

1 Are th e o b j e ct i ve s o f th e o rg a n i z a ti o n cl e a rl y d e fi n e d and vi s i b l e ?

2 I s th e re a d e fi n e d re s p o n s i b i l i ty a t th e e xe cu ti ve l e ve l to s u p p o rt a co l l a b o ra ti ve

a p p ro a ch ?

3 D o e s th e cu rre n t b u s i n e s s s tra te g y s u p p o rt t h e o ve ra l l o b j e cti ve s a n d i n cl u d e th e

o p p o rtu n i t y to e xp l o i t co l l a b o ra ti ve wo rki n g ?

4 I s th e re a u n i fi e d fo cu s a cro s s th e o rg a n i z a ti o n fo r a d o p t i n g co l l a b o ra t i ve a p p ro a ch e s ?

5 Is a co l l a b o ra ti ve a p p ro a ch e s s e n ti a l to th e a ch i e ve m e n t o f th e b u s i n e s s o b j e cti ve s ?

6 H a ve th e b e n e fi ts o f co l l a b o ra ti ve wo rki n g been e va l u a te d and cl e a rl y d e fi n e d wi th i n

th e o rg a n i z a ti o n ?

7 H a s th e re been an a s s e s s m e n t to co n s i d e r i f th e re wo u l d be i n te rn a l co n s tra i n t s to

a d o p ti n g a co l l a b o ra ti ve a p p ro a ch ?
 8 H a s t h e re been an a s s e s s m e n t o f th e m a rke t to i d e n ti fy t h e m a rke t re a cti o n to a

co l l a b o ra ti ve a p p ro a ch ?

9 I s th e fo cu s o f t h e o rg a n i z a ti o n b a se d on d e ve l o p i n g l o n g - te rm re l a ti o n s h i p s , e i th e r

ve rti ca l l y o r h o ri z o n ta l l y?

1 0 H a s th e o rg a n i z a ti o n d e fi n e d i ts fo cu s o f va l u e and wh a t wo u l d be th e m e a s u re of

s u cc e s s ?

I f th e a n s we r to e a ch o f th e a b o ve q u e s ti o n s i s ‘Ye s ’, th e o r g a n i za ti on i s we l l p o s i ti o n e d to d e l i ve r s u cce s s th ro u g h

col l a b o r a ti ve a p p roa ch e s .

Chapter 9 – Awareness
1 01
Cha p te r 1 0 – Knowle d ge

Wh e n yo u h a ve i d e n ti fi e d th e p ote n ti a l fo r c o l l a b o ra ti o n th e

n e xt s ta g e i s to d e ve l o p s p e ci fi c s tra te g i e s a n d ri s k

m a n a g e m e n t th a t wi l l d e l i ve r t h e re q u i re d o u tco m e s ; th i s i s th e

fo cu s o f th i s ch a p te r. Wh a t d o yo u wa n t to a ch i e ve and do yo u

h a ve th e s ki l l s to s u p p o rt t h e co m p l e xi t i e s o f th e s e i n te g ra te d

a p p ro a ch e s ? H o w wi l l yo u manage kn o wl e d g e and i n fo rm a ti o n

fl o ws ? Wh a t wi l l yo u r cu s t o m e rs a n d m a rke ts m a ke of a

co l l a b o ra ti ve a p p ro a ch ? Wh o co u l d yo u p a rt n e r wi th ? Wh a t

wo u l d be th e i m p a ct o f wi t h d ra wi n g fro m co l l a b o ra ti o n ? Th e

e xi t s tra te g y i s o fte n se e n a s n e g a ti ve bu t i n fa ct u n d e rs t a n d i n g

th e ru l e s fo r d i s e n g a g e m e n t fo cu s e s th e a t te n ti o n on th e ke y

i s s u e s to m a ke a re l a t i o n s h i p wo rk. M o s t i m p o rt a n t l y, wh a t d o

th e s p e ci fi c ri s ks l o o k l i ke ?

E ve ry re l a t i o n s h i p i s d i ffe re n t, wh e th e r ve rti ca l o r h o ri z o n t a l ; h o we ve r,

m a n y o f th e i s s u e s wi l l be co m m o n to m o s t o rg a n i z a ti o n s . Th e s e a re th e

ke y fa cto rs t h a t B S 1 1 000 ca p tu re s a n d th u s p ro vi d e s a co m m o n and

co n s i s te n t fo u n d a t i o n fo r co l l a b o ra ti o n . Wh i l e th e re m a y be many

co m m o n fa cto rs , e a ch re l a ti o n s h i p wi l l be l i ke l y to h a ve va ryi n g d ri ve rs ,

wh i ch wi l l sh a p e th e re l a ti o n s h i p . I t i s i m p o rta n t to u n d e rs t a n d th e se and

e n s u re t h e y a re tra n s p a re n t to th e o rg a n i z a t i o n and s ta ke h o l d e rs . As t h e

re l a ti o n s h i p p ro g re s s e s t h e s e m u s t re m a i n a t th e fo re , a s th e y wi l l

i n fl u e n ce e ve ry a s p e ct o f t h e d e ve l o p m e n t.

Id enti fy objective s an d dr ive rs

U n d e rs t a n d i n g th e o b j e cti ve s a n d d ri ve rs fo r co l l a b o ra ti o n i s e s s e n ti a l ,

s i n ce i f th e s e a re n o t we l l d e fi n e d i t b e co m e s d i ffi cu l t to co m m u n i ca te

th e ra t i o n a l e fo r s e e ki n g e xte rn a l p a rtn e rs – p a rti cu l a rl y wh e re th e s e

re l a t i o n s h i p s m a y a ffe ct i n t e rn a l fu n cti o n s . Building n e w p ro p o s i t i o n s o r

re fi n i n g th e cu rre n t va l u e ch a i n m u st b e d ri ve n b y cl e a rl y i d e n t i fi e d

o p p o rtu n i t i e s a n d re a l i s ti c i d e n ti fi ca ti o n o f th e p o te n ti a l o b j e ct i ve s a n d

ri s ks i n vo l ve d . As t h e d e ve l o p m e n t p ro ce s s p ro ce e d s th e re m a y be

i n te rn a l o p p o s i ti o n , wh i ch n e e d s to be m a n a g ed . Th e e ffe cti ve n e s s o f a

co l l a b o ra ti ve a p p ro a ch d epen d s on i n t e g ra ti n g wi th th e b u si n e ss

1 03
PART 2: How?

en vi ron m en t wi th i n wh i ch i t wi l l opera te, a n d va l i d a ti n g th e ca pa bi l i ti es

a n d ski l l s of a n org a n i za ti on to bu i l d a n d opera te a n a ppropri a te
sol u ti on .

S kill s an d com p etencie s

I t i s i m porta n t to con si d er th e a va i l a bl e resou rces to su pport a
col l a bora ti ve a pproa ch a n d , wh ere a ppropri a te, en su re d evel opm en t
prog ra m m es a n d su pport a re i n pl a ce. As previ ou sl y m en ti on ed ,
col l a bora ti ve worki n g m a y n ot su i t everyon e a n d th e ri g h t peopl e m a y
n ot be th e tra d i ti on a l l y obvi ou s on es. I t i s i m porta n t to con si d er th e
d evel opm en t n eed s a t both a n org a n i za ti on a l a n d i n d i vi d u a l l evel ,
pu tti n g th e em ph a si s on sel ecti n g a n d d evel opi n g th ose i n d i vi d u a l s wh o
ca n su pport th e en vi ron m en t a n d respon d wi th a ppropri a te beh a vi ou rs.
Th i s m a y be si m pl y a wa ren ess of th e a pproa ch , m ore d eta i l ed u se of
tool s a n d tech n i q u es or col l a bora ti ve l ea d ersh i p.

Knowle d ge management
O n e of th e si g n i fi ca n t ben efi ts of col l a bora ti on i s th e a bi l i ty to sh a re
kn owl ed g e wi th pa rtn ers. Th i s freq u en tl y crea tes a ch a l l en g e for m a n y
org a n i za ti on s to i d en ti fy wh a t ca n a n d ca n n ot be sh a red i n ord er to
a voi d cl a sh es l a ter. Th e effecti ve expl oi ta ti on of kn owl ed g e i s th e key to
su ccess; crea ti n g th e en vi ron m en t n ecessa ry to en su re th e sh a ri n g of
kn owl ed g e sh ou l d h a ve a cl ea r focu s. Col l a bora ti on provi d es th e ca ta l yst
a n d pl a tform for org a n i za ti on s, both i n tern a l l y a n d extern a l l y, to crea te
a n eth os th a t en cou ra g es th e sh a ri n g of kn owl ed g e a n d th e crea ti on of
n ew th i n ki n g for m u tu a l ben efi t. Col l a bora ti ve pri n ci pl es a re focu sed on
sh a red resou rces a n d ski l l s bei n g opti m i zed a n d d i rected towa rd s
com m on obj ecti ves. Th rou g h effecti ve col l a bora ti ve rel a ti on sh i ps,
org a n i za ti on s ca n ca pi ta l i ze on th e kn owl ed g e pool wh i ch m a y h a ve
been con stra i n ed by tra d i ti on a l con tra cti n g bou n d a ri es.

H ow wi l l kn owl ed g e a n d i n form a ti on be m a n a g ed i n a rel a ti on sh i p th a t

i s m ore i n teg ra ted ? Sh a ri n g i d ea s a n d i n form a ti on sou n d s g ood bu t th i s
i s a l so a n a rea wh ere ‘kn owl ed g e creep’ ca n l ea d to u n pl a n n ed
d i scl osu re. M ost com pa n i es h a ve i n tel l ectu a l property ri g h ts (I PR) th a t
th ey wa n t to reta i n , bu t th i s i s on l y a sm a l l pa rt of th e kn owl ed g e ba se.
I f we wa n t peopl e to work cl osel y tog eth er th en th ey n eed to
u n d ersta n d wh a t ca n a n d ca n n ot be sh a red . I n pa rti cu l a r, we n eed to
en g a g e th e rest of th e org a n i za ti on to su pport th e fl ow of i n form a ti on
ou twa rd s to col l a bora ti ve pa rtn ers a n d i n wa rd s to en su re th a t i n tern a l
g rou ps h a ve th e i n form a ti on th ey n eed from extern a l pa rtn ers.
Kn owl ed g e m a ppi n g i s on e wa y to a ssess h ow fa r col l a bora ti on ca n m a ke
u se of th e kn owl ed g e a n d i n form a ti on th a t org a n i za ti on s h a ve. B y

1 04
 Chapter 1 0 – Knowledge

i d en ti fyi n g wh a t we a re prepa red to sh a re, we ca n stru ctu re ou r

a pproa ch a ccord i n g l y wh en en g a g i n g wi th pa rtn ers.

Perh a ps th e m ost i m porta n t fa ctor i n th e beh a vi ou ra l pa ttern s of

org a n i za ti on s a n d i n d i vi d u a l s i s th e d esi re to con trol th rou g h kn owl ed g e.
Th e i m porta n ce a n d va l u e of kn owl ed g e a re u n d erstood by m ost peopl e,
bu t to h a rn ess th e en erg y a n d force of th a t kn owl ed g e req u i res
org a n i za ti on s to fi rst u n d ersta n d th e d i versi ty of kn owl ed g e th a t exi sts.
U n d ersta n d i n g th e d i fferen ce between kn ow-h ow (experi en ce) a n d
expl i ci t (record ed ) kn owl ed g e i s on l y th e fi rst step. B u i l d i n g a n
en vi ron m en t wh ere i n d i vi d u a l s, g rou ps or extern a l org a n i za ti on s a re
en cou ra g ed a n d em powered to sh a re kn owl ed g e m u st sta rt from a
perspecti ve of i d en ti fyi n g cl ea r obj ecti ves a n d d ri vi n g th e d evel opm en t of
kn owl ed g e sh a ri n g from th e execu ti ve l evel . We n eed to d evel op
org a n i za ti on -wi d e cu l tu res a n d processes th a t en su re a ppropri a te a ccess
to expl i ci t kn owl ed g e; h owever, record i n g a n d fa ci l i ta ti n g th e
d i stri bu ti on of person a l kn owl ed g e kn ow-h ow rests wi th i n d i vi d u a l
m em bers of th e org a n i za ti on .

t ategy d evelop ment

S r
Th e su ccess of a n y bu si n ess ven tu re d epen d s on th e stra teg y th a t i s
beh i n d th e a pproa ch a n d th e d epth of ri sk eva l u a ti on th a t preced es
a cti on . D evel opi n g col l a bora ti ve stra teg i es sh ou l d sta rt by esta bl i sh i n g
th e i n fl u en ces th a t wi l l sti m u l a te su ccess. To expl oi t th e poten ti a l i t i s
essen ti a l to fu l l y a ppreci a te th e d ri vers, ri sks a n d pressu res of th e
m a rketpl a ce bei n g a d d ressed ; a d opti n g col l a bora ti ve a pproa ch es req u i res
i n vestm en t from a l l pa rti es a n d th u s sh ou l d be focu sed wh ere i t offers
m ost ben efi t. Th e ch a l l en g e i s to d evel op a n effecti ve stra teg y th a t
i n teg ra tes th e i d ea s i n to a pra cti ca l a pproa ch to m eet th e bu si n ess
obj ecti ves a n d expecta ti on s of th e poten ti a l pa rtn ers. Th e fou r key a rea s
for stra teg y d evel opm en t a re en vi ron m en t, org a n i za ti on , peopl e a n d
processes; th ese d efi n e th e pa ra m eters for d evel opi n g a n effecti ve
stra teg y a n d focu s th e process of col l ecti n g a n d va l i d a ti n g th e a pproa ch ,
tog eth er wi th th e m a j or ch a l l en g es to be con si d ered . Th ese i ssu es a re
i n tercon n ected a n d ea ch i s a m a j or fa ctor i n stra teg i c th i n ki n g .

Ma rket analysi s
U n d ersta n d i n g th e d yn a m i cs of th e m a rket i s i m porta n t – h ow
com peti tors a n d su ppl i ers wi l l see col l a bora ti on a n d a l so h ow th i s m a y be
vi ewed from a cu stom er perspecti ve. Stra teg y d evel opm en t i n m a n y
org a n i za ti on s ca n be a soph i sti ca ted a pproa ch , bu t for oth ers i t i s often
a n a d h oc a cti vi ty. For a n org a n i za ti on to be su ccessfu l i t m u st fi rst
u n d ersta n d i ts own req u i rem en ts before tryi n g to d evel op th ose of a n
extern a l org a n i za ti on . I n m ost ca ses th e fa i l u re of extern a l rel a ti on sh i ps

1 05
PART 2: How?

ca n be d i rectl y rooted i n a fa i l u re to u n d ersta n d or d efi n e th e i n tern a l

rou te m a p. Th i s l a ck of cl a ri ty l ea d s to con fu si on a n d m i sd i recti on , wh i ch
i n tu rn wi l l resu l t i n th e fa i l u re of th ose ou tsi d e th e org a n i za ti on to
u n d ersta n d th e i m pl i ca ti on s of th ei r a cti on s. Th e scope of wh ere a
rel a ti on sh i p i s expected to opera te tod a y a n d wh ere i t wi l l opera te i n
fu tu re i s i m porta n t i n d efi n i n g th e pa ra m eters for poten ti a l pa rtn er
sel ecti on ; setti n g th e scen e for col l a bora ti on h a s to be sca l a bl e a n d
tra n sporta bl e.

Collabo ative a tne

r p r rs

Ad opti n g th e col l a bora ti on con cept i s th e fi rst step, bu t th en you h a ve to

con si d er wh o m i g h t be col l a bora ti ve pa rtn ers. Th e sta rti n g poi n t i s often
exi sti n g tra d i ti on a l rel a ti on sh i ps, ta ki n g a ccou n t of th ei r tra d i ti on a l
sta n ce a n d th ei r poten ti a l to ch a n g e th e ru l es of en g a g em en t. Wh en
th ey h a ve d evel oped th e ou tl i n e of a proposed col l a bora ti ve proposi ti on ,
org a n i za ti on s n eed to con si d er wh o i s ou t th ere i n th e m a rketpl a ce to fi l l
th e g a ps a s poten ti a l pa rtn ers. I n som e ca ses th ese pa rtn ers m a y com e
from exi sti n g rel a ti on sh i ps, or pa rtn ersh i p poten ti a l m a y evol ve from a
m u tu a l a g reem en t to work tog eth er. Wh a tever th e ca ta l yst for
col l a bora ti on i t i s i m porta n t to u n d ersta n d th e pri n ci pa l el em en ts th a t
d ri ve th e a ssoci a ti on . H ow wi l l col l a bora ti on en h a n ce ou r posi ti on ? Wh a t
sort of pa rtn er d o we n eed a n d wh ere d o we n eed th em ? Wh o h a s th e
resou rces we n eed a n d ca n we work wi th th em ?

I nitial exit t ategy

s r

Pa rt of th e overa l l stra teg y sh ou l d i n cl u d e th e i m pl i ca ti on s of exi ti n g th e

rel a ti on sh i p a t som e poi n t. Th i s i s n ot si m pl y a bou t h a vi n g a process for
con tra ct term i n a ti on bu t sh ou l d i n corpora te tra n si ti on (to a n ew pa rtn er
or even a n ew servi ce) a n d a cq u i ri n g key a ssets or kn owl ed g e. Th i s m a y
h i g h l i g h t key a spects th a t m u st be pa rt of th e overa l l pl a n for
i m pl em en ta ti on (e. g . own ersh i p of i n tel l ectu a l property) . A key a spect of
d evel opi n g a stra teg i c a pproa ch i s to con si d er th e exi t stra teg y a s a n
essen ti a l com pon en t u pfron t. U n d ersta n d i n g th e i ssu es th a t wi l l a ri se
from d i sen g a g em en t wi l l h i g h l i g h t a spects to be a d d ressed i n
d evel opm en t. H owever, experi en ce su g g ests th a t a d efi n ed a pproa ch wi l l
en h a n ce en g a g em en t i n th e fu tu re, by i d en ti fyi n g th e i ssu es th a t a re
l i kel y to u n d erm i n e th e process of open i n g u p th e org a n i za ti on to a th i rd
pa rty.

Ri k management
s

I n d evel opi n g a n effecti ve stra teg y i t i s essen ti a l to i n teg ra te ri sk

m a n a g em en t i n to th e overa l l prog ra m m e. I t i s th e ski l l i n m a n a g i n g th i s

1 06
 Chapter 1 0 – Knowledge

ri s k th a t g e n e ra l l y d i s ti n g u i s h e s b e twe e n th o se o rg a n i z a t i o n s t h a t a re

s u cce s s fu l and th o s e th a t a re n o t. To be s u cce s s fu l , th e m a n a g em en t of

ri s k s h o u l d be high on th e a g en d a of a l l p a rt i e s – b o th in t e rm s o f

m i ti g a ti o n and s h a ri n g o f ri s k. F a i l u re to i d e n t i fy th e ri s k e l e m e n t o f a

re l a t i o n s h i p m a y u l ti m a te l y u n d e rm i n e th e p ro g ra m m e and th u s b u i l d up

g re a te r ri s k. D e ve l o p m e n t o f a s tra te g y m u s t b e l i n ke d to th e cre a ti o n of

a ri s k m a n a g e m e n t s tra te g y t h a t a d d re s s e s th e co n ce rn s o f a l l p a rti e s ,

to g e th e r wi th i d e n ti fyi n g a p ro fi l e o f th e l e ve l s o f a cce p ta b l e ri s k.

B us ine ss contin u ity an d CS R

Two a s p e cts th a t a re o fte n o ve rl o o ke d a re co n ce rn e d wi th g re a t e r

i n te g ra ti o n . F i rs t, h o w ca n b u s i n e s s co n ti n u i ty b e a s s u re d i f th e

re l a t i o n s h i p b re a ks d o wn ? S e co n d , a s p a rtn e rs m a y n o w b e s yn o n ym o u s

wi th yo u r o rg a n i z a ti o n , h o w co u l d th a t a ffe ct i n te rn a l C S R p o l i ci e s a n d

va l u e s ? Th e s e a re two ke y ri s ks a s s o ci a t e d wi t h a co l l a b o ra t i ve a p p ro a ch

th a t n e e d to be c o n s i d e re d . Th e n a tu re of a co l l a b o ra ti ve a p p ro a ch is

th a t t h e p a rtn e rs wi l l e s ta b l i s h an i n te g ra t e d o p e ra t i o n . Th i s wi l l

n a tu ra l l y cre a te a l i n ka g e wh e re co rp o ra te p o l i cy n e e d s t o be u n d e rs to o d

and s h a re d to a vo i d c o n fl i ct o r a b re a kd o wn . Cl e a rl y b u s i n e s s co n t i n u i ty

wi l l i n e vi ta b l y b e p a rt o f a n y e xi t s tra te g y.

Relation s hi p management p lan

Wh e n a s tra te g y h a s b e e n e s ta b l i s h e d , th e cre a ti o n of a s p e ci fi c R M P wi l l

h el p to ca p tu re th e ke y p ri n c i p l e s . Th i s wi l l p ro vi d e th e co m m u n i ca ti o n s

and i n fo rm a t i o n p l a tfo rm th a t wi l l h el p to ra i s e a wa re n e s s a cro s s t h e

o rg a n i z a ti o n .

Concl us ion
O rg a n i z a t i o n s m a y h a ve m a n a g e m e n t s u p p o rt fo r co l l a b o ra ti ve

a p p ro a ch e s , b u t th e re i s o fte n a t e n d e n cy fo r p e o p l e to s a y:

‘ C o l l a b o ra t i o n i s th e a n s we r; wh a t wa s th e q u e s ti o n ? ’ so a s to be seen to

be fo l l o wi n g th e p a rt y l i n e . Th e s e a l te rn a t i ve b u s i n e s s m o d e l s ta ke ti m e

and re s o u rce s t o d e ve l o p , so sh o u l d a l wa ys b e a d o p te d a g a i n st a ro b u s t

b u s i n e s s ca s e th a t ca n be ta n g i b l y m e a s u re d . I f o rg a n i z a t i o n s ca n n o t

va l i d a t e th e ra t i o n a l e th e n a s th e e n g a g e m e n t p ro g re s s e s i t b e co m e s

d i ffi cu l t to h a rn e s s a p p ro p ri a te s u p p o rt to d ri ve s u cce s s .

1 07
PART 2: How?

Checklist
F o cu s i n g on m o vi n g to th e n e xt s ta g e o f d e ve l o p i n g s p e ci fi c co l l a b o ra t i ve

re l a ti o n s h i p s o r p ro g ra m m e s , co n s i d e r th e kn o wl e d g e - re l a te d i s s u e s g i ve n

in Ta b l e 1 0. 1 .

Ta b l e 1 0 . 1 – Kn o wl e d g e i n i ti a l p a r a m e te rs

Kn o wl e d g e Ye s /

No

1 D o e s th e o rg a n i z a t i o n h a ve s p e ci fi c s tra t e g i e s i n

p l a ce to e xp l o i t co l l a b o ra ti ve wo rki n g ?

2 I s t h e re an e s ta b l i s h e d p o l i cy a n d a p p ro p ri a te

p ro ce s s e s fo r co l l a b o ra ti o n ?

3 I s t h e re cro s s - fu n cti o n a l s u p p o rt fo r co l l a b o ra ti ve

wo rki n g ?

4 Wi l l s p e ci fi c co l l a b o ra ti ve a p p ro a ch e s fi t wi th th e

cu rre n t m a rke t ?

5 H a s t h e re been an i n te rn a l a s s e s s m e n t o f th e

i m p a cts o n s ta ff a n d th e i r d e ve l o p m e n t n e e d s ?

6 Are t h e re tri g g e rs i n th e b u s i n e s s s ys t e m s t o

i d e n t i fy p o te n ti a l ri s k a s s o ci a te d wi th co l l a b o ra t i ve

wo rki n g ?

7 I s t h e re a fo cu s wi t h i n cu rre n t ri s k m a n a g e m e n t

p ro g ra m m e s th a t a d d re s s e s re l a ti o n s h i p ri s k?

8 I s t h e re a cl e a rl y d e fi n e d l i n ka g e b e t we e n

co l l a b o ra ti ve p ro g ra m m e s a n d b u s i n e s s o b j e cti ve s ?

9 I s t h e re a p ro ce s s i n p l a ce to e n s u re a co s t–b e n e fi t

a n a l ys i s i s u n d e rt a ke n wh e n e ve r co n s i d e ri n g

co l l a b o ra ti ve b u si n e ss m o d e l s?

1 0 D o e s th e cu rre n t b u s i n e s s p ro ce s s i d e n t i fy th e n eed

fo r a n e xi t s t ra te g y to be d e ve l o p e d th a t

re co g n i z e s th e i m p a cts o f i n te rd e p e n d e n ce ?

I f th e a n s we r to e a ch q u e s ti o n i s ‘Ye s ’, th e n th e re i s a s o u n d

f o u n d a ti o n to co n s i d e r a d o p ti o n o f col l a b o r a ti ve b u s i n e s s m o d e l s .

1 08
Ch a p te r 1 1 – I n te r n al a s s e s s m en t

O rg a n i za ti on s th a t wa n t to bu i l d robu st col l a bora ti ve

prog ra m m es n eed to en su re th a t a ppropri a te ru l es of
en g a g em en t a re cl ea rl y em bed d ed i n th ei r opera ti on a l
a pproa ch es, a s expl a i n ed i n th i s ch a pter. Th i s en su res th a t over
ti m e beh a vi ou rs rem a i n a l i g n ed to th e a g reed obj ecti ves a n d
g oa l s. I t i s u sefu l to ta ke a step ba ck a n d con si d er wh eth er
cu rren t opera ti n g pra cti ce m a y con stra i n effecti ve col l a bora ti on
a n d g et th ese i ssu es a d d ressed . Th ese ca n va ry wi d el y bu t m a y
rel a te to prog ra m m e own ersh i p, cross-fu n cti on a l ba rri ers,
i n cen ti ve a n d perform a n ce m ea su rem en t pol i ci es, tog eth er wi th
system s a n d proced u res.

M ost org a n i za ti on s a re very g ood a t d efi n i n g wh a t th ey wa n t from

oth ers bu t perh a ps l ess wi l l i n g to recog n i ze th ei r own ca pa bi l i ty to m eet
th e d em a n d s of col l a bora ti on . A col l a bora ti ve rel a ti on sh i p i s a two-wa y
process a n d to a ch i eve th e d esi red g oa l s i t req u i res com m i tm en t on a l l
si d es. Th i s i s n ot j u st a bou t processes, proced u res, system s a n d con tra cts
(th e ‘h a rd ’ process i ssu es) . I t i s a l so a q u esti on of th e ‘peopl e d ri vers’ (th e
‘soft i ssu es’) su ch a s l ea d ersh i p, ski l l s a n d m oti va ti on , wh i ch wi l l g overn
th e beh a vi ou rs a n d a pproa ch es a t th e worki n g l evel . I t i s i m porta n t to
u n d ersta n d th e i n tern a l en a bl ers th a t bu i l d tru st between th e pa rti es
ba sed on m u tu a l ben efi t a n d eq u i ta bl e rewa rd .

I n d evel opi n g a col l a bora ti ve prog ra m m e th ere m u st be a cl ea r l i n ka g e

between h ow to d evel op th e bu si n ess stra teg y for th e m a rket a n d h ow
th i s m a y a ffect th e vi si on a n d va l u es of th e org a n i za ti on . An y su ch
prog ra m m e sh ou l d i n teg ra te wi th th e pol i ci es a n d processes i n ord er to
en su re cl a ri ty for th ose i n vol ved . Th i s becom es even m ore cru ci a l wh en
you sta rt to con si d er th e l on g -term n a tu re of col l a bora ti ve a pproa ch es,
wh ere d evel opm en t wi l l be ba sed on expl oi ti n g th e com pl em en ta ry ski l l s
a n d resou rces th a t poten ti a l pa rtn ers ca n bri n g to th e a rra n g em en t.

Col l a bora ti ve worki n g opera tes ou tsi d e tra d i ti on a l bou n d a ri es a n d i s fa r

m ore sen si ti ve to th e l evel of com m i tm en t th a t i s brou g h t to th e ta bl e.
As a resu l t i t i s i m porta n t th a t th e wh ol e org a n i za ti on i s beh i n d th e
prog ra m m e. Th i s m a y sou n d ea sy bu t experi en ce su g g ests th e rea l i ty i s
often very fa r from bei n g si m pl e. Worki n g i n col l a bora ti on wi th th i rd
pa rti es open s u p m a n y possi bi l i ti es a n d opportu n i ti es, bu t i s tota l l y
d epen d en t on en su ri n g th a t i n tern a l tea m s a re fu l l y su pporti n g th e

1 09
PART 2: How?

i n i t i a ti ve . M a n y se e th e a p p ro a ch a s j u s t a n o th e r n e w tre n d , wh i l e o th e rs

cl o s e th e i r m i n d s to th e p o s s i b i l i ti e s o f wo rki n g in co l l a b o ra ti o n o r vi e w i t

as a t h re a t.

Th e co l l a b o ra ti o n m od el o p e n s th e wa y to ra d i ca l t h i n ki n g a t e ve ry l e ve l

b y b re a ki n g d o wn p re - s e t co n ve n ti o n s a n d re m o vi n g p re vi o u s l i m i ta ti o n s .

At th e sa m e ti m e th e re is a n eed fo r th e i n s ti tu ti o n a l si d e o f co m m e rci a l

o p e ra t i o n s to u n d e rs ta n d th e s e n e w vi rtu a l m od el s a n d cro s s th e b a rri e rs

in th i n ki n g . A s u cce s s fu l co l l a b o ra ti o n wi l l be d ri ve n b y th e a t ti t u d e and

e xp e ct a ti o n s o f th e p l a ye rs ; i f re a l va l u e i s to be cre a te d , th e n th e fi rs t

s te p m u st b e to a s s e s s h o w we l l eq u i pped an o rg a n i z a ti o n is in re l a ti o n

to th e ch a l l e n g e s . Th i s a s s e s s m e n t h a s to t a ke a h a rd l ook a t m a n y

d i ffe re n t a s p e cts o f th e o rg a n i z a t i o n to i d e n ti fy wh e t h e r th e re i s re a l l y a

fi t a n d – m o re i m p o rta n tl y – a n o p p o rtu n i ty to be d e ve l o p e d th ro u g h

p a rtn e ri n g .

S e l f- a s s e s s m e n t s t a rts wi t h th e e xe cu ti ve b o a rd s i n ce t h e y wi l l se t th e

to n e and su p p o rt. I f th e y a re tra d i ti o n a l in th e i r th i n ki n g th i s wi l l

i n fl u e n ce th e m a n a g e m e n t to be s tro n g l y fo cu s e d on fu n cti o n a l

b o u n d a ri e s a n d ve rti ca l m a n a g e m e n t s tru ctu re s . Th e p ro b l e m wi t h

o rg a n i z a ti o n s t h a t a re s tru ctu re d a ro u n d tra d i t i o n a l fu n ct i o n a l

o p e ra t i o n s, ra th e r t h a n wi th b u s i n e s s p ro ce s s e s th a t a re we l l d e fi n e d and

d e ve l o p e d h o l i s ti ca l l y a cro s s a l l o p e ra ti o n s , i s th a t i t wi l l be d i ffi cu l t to

i n tro d u ce co l l a b o ra t i o n e ffe cti ve l y. H o we ve r, o rg a n i z a t i o n s t h a t h a ve a

co n ti n u o u s i m p ro ve m e n t p ro g ra m m e in p l a ce , fo cu s e d on p e rfo rm a n ce

i m p ro ve m e n t, wi l l be m o re open to a l te rn a ti ve th i n ki n g a t e ve ry l e ve l of

o p e ra t i o n s.

Policie s an d proce ss e s
O rg a n i z a ti o n s th a t wa n t to bu i l d ro b u s t co l l a b o ra ti ve p ro g ra m m e s n e e d

to e n s u re th a t a p p ro p ri a t e ru l e s o f e n g a g e m e n t a re cl e a rl y e m b e d d e d in

t h e i r o p e ra ti o n a l a p p ro a ch e s . Th i s e n s u re s th a t o ve r t i m e b e h a vi o u rs

re m a i n a l i g n ed to th e a g re e d o b j e ct i ve s a n d g oa l s. E s ta b l i s h i n g th e

a p p ro p ri a te p o l i ci e s a n d p ro ce d u re s i s e s s e n t i a l to l a yi n g d o wn th e ri g h t

fo u n d a ti o n . P o l i ci e s a n d p ro ce d u re s a re n o t s i m p l y a b o u t d e fi n i n g ru l e s

a ro u n d co m p l i a n ce to s ys t e m s a n d p ro ce s s e s , b u t a l so a b o u t re co g n i ti o n

o f th e b a l a n ce b e twe e n th e ‘ s o ft e r’ a s p e cts o f a d o p ti n g a p p ro p ri a te

a p p ro a ch e s to s u p p o rt e n g a g e m e n t. In u n d e rta ki n g th i s a s s e s s m e n t i t i s

e sse n ti a l to l o o k a t th e e n a b l e rs a n d e n s u re th a t th e s e a re in line wi th

th e o ve ra l l a s p i ra t i o n s . Co n s i d e r, fo r e xa m p l e , h o w i n d i vi d u a l i n ce n ti ve s

m a y i n fl u e n ce b e h a vi o u rs . Th e h o l i s ti c n a tu re o f co l l a b o ra ti o n m ea n s

co n s i d e ri n g th e a tt ri b u te s o f th e o rg a n i z a ti o n , i ts a b i l i ty a n d e xp e ri e n ce

to wo rk co l l a b o ra ti ve l y a n d th e a tt i tu d e s t h a t p re va i l fro m th e e xe cu ti ve

m a n a g e m e n t to th e fro n t l i n e .

1 1 0
 Chapter 1 1 – Internal assessment

I nte nal con t aint

r s r s

I t i s u sefu l to ta ke a step ba ck a n d con si d er th e exten t to wh i ch cu rren t

opera ti n g pra cti ce m a y con stra i n effecti ve col l a bora ti on , th en a d d ress
th ese i ssu es. Th ese ca n va ry wi d el y bu t m a y rel a te to prog ra m m e
own ersh i p, cross-fu n cti on a l ba rri ers, i n cen ti ve a n d perform a n ce
m ea su rem en t pol i ci es, tog eth er wi th system s a n d proced u res. M ost
peopl e wh o work i n l a rg e org a n i za ti on s h a ve su ffered a t som e poi n t
wi th th e i n tern a l con fl i cts th a t d etra ct from th e ou twa rd -fa ci n g
rel a ti on sh i ps, wh eth er th ey a re wi th cu stom ers, su ppl i ers or pa rtn ers. As
pa rt of d evel opi n g a col l a bora ti ve a pproa ch th ere i s a n eed to i d en ti fy
tra i ts a n d i n d i ca tors th a t refl ect a n org a n i za ti on ’s a bi l i ty to col l a bora te.
O n e a spect of th e a ssessm en t i s th e req u i rem en t n ot on l y to l ook a t th e
opera ti on bu t a l so to eva l u a te th e cu stom er a n d su ppl i er rel a ti on sh i ps, to
esta bl i sh i f th e d esi re a n d eth os of col l a bora ti on a ctu a l l y spa n s th e
i n tern a l fu n cti on s of a n org a n i za ti on . E ven a si m pl e SWO T a n a l ysi s to
a ssess th e stren g th s, wea kn esses, th rea ts a n d opportu n i ti es of th e
org a n i za ti on wi l l be u sefu l – i n pa rti cu l a r, i d en ti fyi n g th e wea kn esses a n d
th rea ts, a s th ese wi l l n eed to be a ssessed d u ri n g th e process of
d evel opi n g a pa rtn er.

Collabo ativer pr o ile

f

U n d erta ki n g a revi ew of th e org a n i za ti on ’s col l a bora ti ve profi l e – a n d

th ere i s a va ri ety of m od el s th a t you ca n u se – wi l l provi d e a pl a tform on
wh i ch to con si d er i f you r org a n i za ti on wou l d m a ke a su i ta bl e
col l a bora ti ve pa rtn er wh en vi ewed extern a l l y. For col l a bora ti on to work
effecti vel y, poten ti a l pa rtn ers m u st see you a s a n i n tel l i g en t pa rtn er th ey
ca n work open l y wi th . B S 1 1 000 i s a ben ch m a rk for col l a bora ti ve
ca pa bi l i ty a n d a u sefu l m od el on wh i ch to test th e cu rren t posi ti on . Th e
m a tu ri ty m a tri x h a s been d evel oped for th i s pu rpose, si n ce i t ca n provi d e
eva l u a ti on cri teri a for pa rtn er sel ecti on a n d a l so works to a ssess i n tern a l
ca pa bi l i ty. From th ese a ssessm en ts, org a n i za ti on s n eed to be a bl e to
i d en ti fy wh a t a re l i kel y to be th e i n tern a l con stra i n ts to col l a bora ti ve
perform a n ce a n d , wh ere a ppropri a te, i m pl em en t th e n ecessa ry ch a n g e
m a n a g em en t prog ra m m es i n corpora ti n g pol i cy revi ews, process
d evel opm en t, system s ch a n g es a n d (m ost i m porta n tl y) th e d evel opm en t
of resou rces a n d ski l l s to m eet th e ch a l l en g es.

Collabo ative lea e hi

r d rs p

Th e key to su ccessfu l col l a bora ti on com es from h a vi n g th e ri g h t

l ea d ersh i p, wh i ch i s a d i ffi cu l t rol e si n ce on occa si on s th e prog ra m m e
m a n a g ers m a y be req u i red to fi g h t th e pa rtn er’s corn er i n tern a l l y. I n
a d d i ti on th ey n eed to be a bl e to en g en d er a n d m a i n ta i n th e eth os of
col l a bora ti on by su pporti n g a n d m en tori n g th ose i n vol ved . I n a n y

111
PART 2: How?

co l l a b o ra ti ve p ro g ra m m e , e ffe ct i ve l e a d e rs h i p s e t s th e to n e , l ea d i n g by

e xa m p l e . D e ve l o p i n g e ffe cti ve te a m fo cu s i s a ch a l l e n g e in m ost

e n vi ro n m e n ts , b u t wh e re th e t ra d i ti o n a l co m m a n d - a n d - co n t ro l s tru ctu re

i s re p l a ce d b y cro s s - fu n c ti o n a l o p e ra ti o n s th e co o rd i n a ti o n and d i re cti o n

o f th e te a m i s e ve n m o re co m p l e x. Tra d i ti o n a l m a n a g e m e n t te n d s t o

fo cu s o n c o n tro l th ro u g h p o s i ti o n , re s o u rce p o we r o r te ch n i c a l s ta n d i n g ;

in a co l l a b o ra ti ve s tru ctu re i t i s th e a b i l i ty to i n fl u e n ce th a t co u n ts , wh e re

i n d i vi d u a l s a re a bl e to d ra w o n s u p p o rt n o t o n l y fro m th e i r o wn

o rg a n i z a ti o n s b u t a l s o fro m th o s e o f t h e i r p a rt n e rs .

Pa rtne r pro file

As p a rt o f th e i n te rn a l a s s e s s m e n t i t i s u s e fu l to e s ta b l i s h in e a ch ca s e

wh a t yo u r p a rtn e r s h o u l d l o o k l i ke . Th i s e n a b l e s th e o rg a n i z a ti o n to se t

i ts a g e n d a and a l so p ro vi d e s a b a s i s fo r e va l u a ti o n l a te r i n th e p ro ce s s .

Th e re a re m a n y a s p e cts th a t o rg a n i z a ti o n s m a y co n s i d e r fo r th e i r

a s s e s s m e n t o f s u i ta b l e p a rtn e rs , d ra wi n g th e s e o u t to co n s o l i d a te i n to a

re p re s e n t a ti ve b e n ch m a rki n g p ro fi l e . I n te rn a l l y i t i s l i ke l y th a t t h e re wi l l

be m a n y d i ffe re n t vi e wp o i n t s , b u t i t i s i m p o rt a n t to h a ve a cl e a r a n d

a g re e d p ro fi l e b e fo re l a u n ch i n g i n to th e m a rke t. E ve n i f yo u a re fa ce d

wi th a ch o i ce of on l y on e p a rt n e r i t i s b e tte r to e sta b l i sh a b a se l i n e to

u n d e rs ta n d wh a t m a y h a ve to be d i s cu s s e d o r ch a n g e d in fu tu re .

Knowle d ge an d s kill s
I t i s u n l i ke l y th a t e ve ry o rg a n i z a ti o n wi l l h a ve an a b u n d a n ce o f s ki l l e d

p ro fe s s i o n a l s re a d y to t a ke on a co l l a b o ra t i ve ro l e . E ve n th o s e highly

s ki l l e d peopl e in a tra d i ti o n a l e n vi ro n m e n t m a y s tru g g l e wh e n o p e ra ti n g

o u ts i d e th e co m m a n d - a n d - co n t ro l s tru ctu re . Th i s d o e s n o t m a ke th e m

p o o r p e rfo rm e rs b u t m a y ch a l l e n g e th e m to wo rk i n a co l l a b o ra ti ve

m od el . So, in s e l e cti n g o r d e ve l o p i n g a te a m i t i s i m p o rta n t to fo cu s o n

th o se i n d i vi d u a l s wh o wi l l b e s t re s p o n d to th e ch a l l e n g e s o f

co l l a b o ra ti o n .

In m o s t o p e ra t i n g e n vi ro n m e n ts th e ro u te to e ffe cti ve l e a rn i n g i s d ri ve n

b y e xp o s u re and s h a ri n g . U n d e rs ta n d i n g th e s e s t yl e s o f l e a rn i n g and

a ssi m i l a ti o n is a ke y p a rt o f t h e co m m u n i ca ti o n p ro ce s s . I t i s va l u a b l e to

co n s i d e r th e s e l e a rn i n g s t yl e s i n te rm s o f e s ta b l i s h i n g th e e xp e cta t i o n s

and b e h a vi o u ra l a p p ro a ch th a t m a y b e m o s t a p p ro p ri a te . Co n si d e r th e

i m p l i ca ti o n s o f a n i n d i vi d u a l wh o s tri ve s fo r p re ci s i o n , wh o i s n o t p ro n e

to i m p u l s i ve n e s s b u t fo cu s e d on l i s te n i n g , co m p a re d wi t h a p e rs o n wh o is

a ri s k- ta ke r a n d i n n o va ti ve . Th e re fl e ct i ve t yp e wi l l s e e k a ccu ra cy wh i l e

th e cre a ti ve i n d i vi d u a l wi l l s t ri ve fo r i n g e n u i ty. R e co g n i ti o n i s o n l y th e

fi rs t s t e p in th e p ro ce s s o f m a n a g i n g b e h a vi o u rs a n d i t i s i m p o rta n t to

i m pl em en t a d e ve l o p m e n t ro u te , p a rti cu l a rl y wh e re th e re a re cl e a rl y

1 1 2
 Chapter 1 1 – Internal assessment

ch a l l e n g e s a h e a d . Th e e i g h t s te p s g i ve n in F i g u re 1 1 .1 p ro vi d e a

fra m e wo rk a g a i n s t wh i ch to s tru ctu re th e d e ve l o p m e n t p ro ce s s .

O rg a n i z a ti o n a l n eed s a n d g oa l s

I n d i vi d u a l n eed s

P e rs o n a l a sse ssm e n t

Ta i l o re d l e a rn i n g

Pe o p l e i n cl u s i o n

Li n ks to g oa l s

Ad j u s t e xp e ct a ti o n s

M o n i t o r p ro g re s s

Fi g u re 1 1 . 1 – S u p p o rti n g i n d i vi d u a l s

Th e re i s a l wa ys a d a n g e r t h a t ce rta i n i n d i vi d u a l s m a y b e fo u n d to be in

th e wro n g o u twa rd - fa ci n g ro l e s a n d th i s n e e d s to be a d d re s s e d .

B e h a vi o u r i s i n h e re n t i n m o s t i n d i vi d u a l s a n d wh i l e i t m a y be a m en d ed it

i s se l d o m p o ssi b l e to ch a n g e o ve rn i g h t . B e h a vi o u r i s cl e a rl y l i n ke d to

g oa l s a n d ta rg e t s ; th e s e m u st b e va l i d a te d to e n s u re t h a t l o ca l i z a ti o n of

i n ce n ti ve s i s n o t a l l o we d to cre a te a n e g a ti ve i m p a c t. At th e sa m e ti m e

th e o ve ra l l p ro ce s s m u s t b e fo cu s e d on a d j u s ti n g e xp e cta t i o n s a t e a ch

i n te rfa ce , re co g n i z i n g th a t re l a ti o n s h i p s a n d th e b e h a vi o u rs t h a t d ri ve

th e m a re d yn a m i c – th e y wi l l va ry i n d e p th and ch a n g e o ve r ti m e .

I m pl em en t a n d re vi e w

Th e b e n e fi t o f a n i n te rn a l a s s e s s m e n t i s to i d e n ti fy th e ca p a b i l i ty o f th e

o rg a n i z a ti o n to m e e t i ts o b l i g a ti o n s ; i t a l so s e ts th e p l a t fo rm th a t

e n co u ra g e s p a rtn e r p a rti ci p a ti o n and co m m i tm e n t . O n ce th e a sse ssm e n t

h a s been d on e i t i s i m p o rta n t to p u t th e n e ce s s a ry s te p s i n p l a ce to

a d d re s s a n y a re a s fo r d e ve l o p m e n t. At t h e sa m e ti m e th e s e i ssu e s sh o u l d

be b o rn e in mind wh e n m o vi n g to p a rtn e r s e l e cti o n ; i d e a l l y th e y ca n be

m a tch e d to e xt e rn a l s tre n g th s to p ro vi d e a s t ro n g j o i n t re s o u rce and

ca p a b i l i ty. Wi t h th e s e bu i l d i n g b l o cks i n p l a ce , o rg a n i z a ti o n s ca n n ow

m o ve fo rwa rd wi th a d e g re e o f co n fi d e n ce to a d d re s s th e m a rke t.

1 1 3
PART 2: How?

Concl us ion
C o l l a b o ra t i ve p ro p o s i t i o n s ca n p l a ce s tre s s e s o n o rg a n i z a t i o n a l p ro ce s s e s

and, m o re s p e ci fi ca l l y, on i n d i vi d u a l ca p a b i l i t i e s . I f th e b u s i n e s s ca s e is

s tro n g th e n th e re s o u rce s n e e d to be a p p ro p ri a te l y a l l o ca te d and th e

b e s t s ki l l s d e p l o ye d to m e e t th e d e m a n d s. Ad o p t i n g th e s e a l te rn a ti ve

b u s i n e s s m o d e l s wi th o u t re co g n i z i n g i n te rn a l we a kn e s s e s wi l l l e a ve th e

o rg a n i z a ti o n open to fa i l u re .

O f co u rs e , th e re i s o fte n no ch o i ce in te rm s o f o b ta i n i n g a d e q u a te

ca p a b i l i ty, b u t re co g n i z i n g th e p o te n ti a l we a kn e s s e s p ro vi d e s a b a s i s to

s e e k fu rth e r d e ve l o p m e n t o r tra i n i n g to m i ti g a t e p o te n ti a l ri s ks .

1 1 4
 Checklist
O rg a n i z a ti o n s a re made up of peopl e. I t i s e s s e n ti a l th a t e a c h o rg a n i z a ti o n u n d e rs ta n d s i ts e l f b e fo re co l l e cti ve l y s e e ki n g to

i n fl u e n ce o th e rs , e i th e r i n t e rn a l l y o r e xte rn a l l y; th e i s s u e s s h o wn in Ta b l e 1 1 .1 sh o u l d be co n s i d e re d

Ta b l e 1 1 . 1 – I n te rn a l a s s e s s m e n t i n i ti a l p a ra m e te rs

I n te rn a l a ssessm en t Ye s /N o

1 H a s th e re been an a s s e s s m e n t o f th e i n te rn a l i m p a ct o f co l l a b o ra ti ve wo rki n g on o ve ra l l

p e rfo rm a n ce ?

2 H a s th e o rg a n i z a t i o n re vi e we d i t s s t re n g t h s a n d we a kn e s s e s ?

3 H a s th e re been a n y b e n ch m a rki n g to va l i d a t e th e co l l a b o ra ti ve p ro fi l e o f th e

o rg a n i z a ti o n ?

Chapter 1 1 – Internal assessment

4 H a s th e re been an e va l u a ti o n o f th e s ta ff’s e xp e ri e n ce and s ki l l s i n re l a ti o n to wo rki n g

in a co l l a b o ra t i ve e n vi ro n m e n t ?

5 H a s th e re been a n y s tru ctu re d a p p ro a ch to p ro fi l i n g th e o rg a n i z a ti o n ’s cu l t u re and

b e h a vi o u rs ?

6 Are th e re tra i n i n g p ro g ra m m e s i n p l a ce to s u p p o rt th e d e ve l o p i n g o f i n te rn a l ca p a b i l i ty

fo r co l l a b o ra ti ve wo rki n g ?

7 I s th e re a p ro ce s s to i d e n ti fy th o s e l e a d e rs wi th i n th e o rg a n i z a ti o n t h a t h a ve th e
1 1 5

ca p a b i l i ty to manage co l l a b o ra t i ve ve n tu re s ?
116

PART 2: How?
8 Does the current market review process include considerations for collaboration?

9 Does the organization have a range of business and contracting models that support
collaborative working?

10 Is there an established basis to develop partner evaluation and selection criteria?

I f th e a n s we r to a l l o f th e s e q u e s ti o n s i s ‘ Ye s ’ th e n th e o rg a n i z a ti o n i s l i ke l y to b e i n g ood s h a p e to ta ke co l l a b o ra ti ve

p ro p o s a l s to th e m a rke t.
Ch a p te r 1 2 – P a rtn e r s election

Col l a bora ti ve rel a ti on sh i ps ca n be u sed i n m a n y d i fferen t

ci rcu m sta n ces a n d fi n d i n g th e ri g h t pa rtn er sh ou l d n ot be l eft
to ch a n ce. Th e sel ecti on process i s d i scu ssed i n th i s ch a pter; too
often th e sel ecti on process i s by d efa u l t or ba sed on l on g -term
experi en ce i n a tra d i ti on a l rel a ti on sh i p. Th i s m a y n ot a l wa ys be
th e best cri teri on . M ost col l a bora ti ve prog ra m m es resu l t from
a n evol u ti on from m ore tra d i ti on a l tra d i n g i n terfa ces. A g ood
a rm ’s-l en g th su ppl i er, for exa m pl e, m a y n ot be th e best ch oi ce
wh en con si d eri n g a m ore i n teg ra ted a pproa ch .

I t i s i m porta n t to u n d ersta n d th e d i fferi n g d yn a m i cs of a col l a bora ti ve

a pproa ch a n d a ssess th e stren g th s a n d wea kn esses, wh a tever th e rou te to
sel ecti on . Wh ere a n exi sti n g provi d er i s perh a ps a si n g l e-sou rce opti on
th ei r col l a bora ti ve ca pa bi l i ty i s freq u en tl y i g n ored , a s th ere i s n o oth er
ch oi ce. I t i s cl ea rl y i m porta n t to en su re th a t sel ecti on m a i n ta i n s th e
com peti ti ve ed g e th a t m a n y see on l y com i n g from com peti ti on . To bu i l d
con fi d en ce i n th e sel ecti on process, a com peti ti ve sta rti n g a pproa ch i s
a l wa ys d esi ra bl e – or a wa y of con d u cti n g a form of robu st
ben ch m a rki n g . I t sh ou l d , h owever, cl ea rl y d efi n e th e en d g a m e u pfron t to
a voi d con fu si on l a ter.

Th e process of con si d eri n g col l a bora ti ve a pproa ch es often sta rts from a n
i n tern a l perspecti ve on th e ba si s of wh a t i s wa n ted from su ch a n
a rra n g em en t. I t i s, h owever, eq u a l l y i m porta n t to recog n i ze th a t i f
col l a bora ti on i s to work su ccessfu l l y i t h a s to g i ve ben efi ts to both si d es.
B efore sta rti n g to con si d er m ovi n g forwa rd wi th a col l a bora ti ve
prog ra m m e, org a n i za ti on s sh ou l d ta ke ti m e ou t to u n d ersta n d wh a t
m i g h t be expected by poten ti a l pa rtn ers a n d (m ore i m porta n tl y) wh a t
you a re prepa red to g i ve. M a tch i n g stra teg i c i n ten t i s a n i m porta n t pa rt
of u n d ersta n d i n g th e poten ti a l for su ccessfu l col l a bora ti on .

O n on e si d e, th ere i s a poten ti a l pa rtn er wh o m a y be l ooki n g to d evel op

m a rkets or fi n d a cu stom er wh o i s a stra teg i c bu si n ess opportu n i ty. O n
th e oth er si d e, th ere i s a poten ti a l cu stom er wh o m a y be l ooki n g to
reg u l a ri ze su ppl y, red u ce a bottl en eck, expl oi t l on g -term su ppl y or
i n teg ra te cri ti ca l stra teg i c n eed s. E a ch h a s a rel a ti ve va l u e; th e
com bi n a ti on s ca n be h i g h ri sk i f n ot a l i g n ed , so th e pa rtn er perspecti ve i s
a key con si d era ti on . I f i t d oes n ot work for th em i t wi l l n ot work for you .

117
PART 2: How?

As th e bu si n ess l a n d sca pe becom es m ore com pl ex a n d ch a l l en g i n g , th e

rel a ti on sh i ps between org a n i za ti on s ta ke on n ew a n d va ri ed
con fi g u ra ti on s. M ost org a n i za ti on s a re both cu stom er a n d su ppl i er i n
rel a ti on to d i fferen t a spects of th e va l u e ch a i n , bu t often m i ss
opportu n i ti es by m a i n ta i n i n g ri g i d bou n d a ri es between th ei r i n tern a l
fu n cti on s. H owever, a s th e m a rket profi l e ch a n g es, so th e com pl exi ty of
th ese rel a ti on sh i ps i n crea ses.

Id enti fy collabo rative p a rtne rs

Wh a tever th e d ri vers for col l a bora ti on , i t i s i m porta n t to h a ve a cl ea r
perspecti ve on wh o th e poten ti a l pa rtn er(s) m i g h t be. E xperi en ce
su g g ests th a t i n m a n y org a n i za ti on s th ere wi l l be preferred con ten d ers
for a va ri ety of rea son s. U n d ersta n d i n g wh o cou l d be i n th e g a m e a l l ows
a tra n spa ren t process to be d evel oped . I t i s u n l i kel y th a t every poten ti a l
pa rtn er wou l d m eet th e a spi ra ti on s a n d i t i s sen si bl e to el i m i n a te th ese
ea rl y. Pri ori ti zi n g th e bu si n ess obj ecti ves i s cri ti ca l , focu si n g on th e
n ecessa ry, n i ce-to-h a ves a n d fi n a l l y th e bon u s i ssu es. Th i s provi d es a ba si s
to d ri ve th e sel ecti on of th e poten ti a l pa rtn ers, wh i l e ta ki n g i n to a ccou n t
ca ses wh ere sou rci n g restra i n ts a n d ch oi ce a re l i m i ted ; th i s m a y m a ke th e
process ea si er, bu t m a kes th e sel ecti on m ore cri ti ca l . I n th e previ ou s sta g e
th e org a n i za ti on sh ou l d h a ve esta bl i sh ed wh a t th e i d ea l pa rtn er wou l d
l ook l i ke a n d h ow th e org a n i za ti on ’s vi si on s a n d va l u es ca n be i d en ti fi ed .
Th i s n ow form s a corn erston e for th e sel ecti on process.

Th e poi n t, wh i ch m a n y peopl e m a y recog n i ze a n d oth ers n eed to

a d d ress, i s th a t th e th rea d of effecti ve rel a ti on sh i ps sh ou l d be
con si sten tl y woven i n tern a l l y th rou g h ou t th e org a n i za ti on a n d n ot
l oca l i zed si m pl y to extern a l i n terfa ces. B ri d g i n g th e rel a ti on sh i p d i vi d e
sh ou l d be a key focu s th rou g h ou t every org a n i za ti on th a t wa n ts to
i m prove perform a n ce a n d be a n effecti ve col l a bora ti ve pa rtn er. O n e
a pproa ch th a t wa s i n corpora ted wi th i n B S 1 1 000 wa s th e m a tu ri ty m a tri x
a s a con si sten t ben ch m a rk to m eet th e n eed s of th e bu si n ess com m u n i ty.
G etti n g bel ow th e su rfa ce of a com pa n y i s n ot ea sy, bu t i t i s essen ti a l i f
you a re g oi n g to j oi n forces. O rg a n i za ti on s n eed to h a ve a d eg ree of
com pa ti bi l i ty, oth erwi se th ere i s l i ttl e h ope of m eeti n g th e expecta ti on s.
Wh i l e a com pa n y m a y be a n en ti ty i n l eg a l term s, i t i s th e peopl e wi th i n
i t th a t m a ke i t wh a t i t i s a n d wi th ou t th ei r com m i tm en t th e su ccess of
th e ven tu re i s d oom ed . Th i s i s often th e ca se wh ere col l a bora ti on m a y
resu l t i n som e d own si zi n g on ei th er si d e a n d peopl e a re u n d ersta n d a bl y
protecti ve of th ei r own posi ti on .

H ow org a n i za ti on s expect th ey wi l l be worki n g tog eth er wi l l h el p to

d efi n e th e n a tu re of th e con tra cti n g rel a ti on sh i p a n d th e styl e of
i n teg ra ti on a n d l evel of i n terfa ces. Th i s wi l l h a ve a si g n i fi ca n t i m pa ct on
th e d evel opm en t of ri sk m a n a g em en t a pproa ch es.

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 Chapter 1 2 – Partner selection

Pa rtne r s election proce ss

M ost org a n i za ti on s wi l l h a ve esta bl i sh ed processes for provi d er sel ecti on
a n d th ese sh ou l d be fol l owed a s th e sta rti n g poi n t to seek ou t th e i d ea l
col l a bora ti ve pa rtn er. Wh ere th i s i n vol ves pu bl i c ten d ers a n d so on th e
a i m s of th e col l a bora ti on n eed to be d efi n ed , tog eth er wi th th e rel a ti ve
va l u e th a t wi l l be pl a ced on th ei r col l a bora ti ve ca pa bi l i ty. Th e referen ce
poi n t of B S 1 1 000 ca n provi d e a va l u a bl e ben ch m a rk for a ssessi n g a
poten ti a l col l a bora ti ve a pproa ch .

I n a ssessi n g a stra teg i c pa rtn er, you m u st l ook d eeper th a n com pl i a n ce to

a con tra ct. O rg a n i za ti on s m a y h a ve th e a ttri bu tes to d el i ver a sou n d
proposi ti on a n d a n esta bl i sh ed perform a n ce record th a t su pports th ei r
a bi l i ty to m eet th e req u i red perform a n ce. H owever, th ey m a y h a ve n ot
prog ressed i n d evel opi n g a n a ppropri a te perform a n ce cu l tu re th a t wou l d
en a bl e th em to fi t i n to th e bu si n ess process of oth er org a n i za ti on s. A
m ore su bj ecti ve eva l u a ti on tri es to i d en ti fy th e a tti tu d e of a poten ti a l
pa rtn er; th i s d oes n ot m ea n th e corpora te i m a g e th a t i s portra yed , bu t
u n d ersta n d i n g th ei r i n tern a l bu si n ess cu l tu re a n d th e a pproa ch of th ose
ch a rg ed wi th d el i veri n g th e prog ra m m e. A M AP 1 0 tri pl e A ra ti n g (a s
ou tl i n ed i n th e B S 1 1 000-2 g u i d a n ce) wou l d i d ea l l y m ea n th a t a s a n
org a n i za ti on th ey wou l d be a bl e to opera te a s pa rt of th e org a n i za ti on
th ey a re proposi n g to serve. Cl ea rl y th e opti m u m ben ch m a rk for
col l a bora ti on wou l d be certi fi ca ti on to B S 1 1 000.

E s tabli s h common objective s

Th rou g h ou t th e sel ecti on process i t i s a d vi sa bl e to work wi th th e
poten ti a l pa rtn ers to u n d ersta n d th ei r obj ecti ves, a s wel l a s bu i l d i n g a
d i a l og u e a rou n d com m on obj ecti ves a n d ou tcom es. Th ese m a y n ot
a l wa ys be th e sa m e a s you rs bu t sh ou l d be eva l u a ted for a l i g n m en t a n d
com pa ti bi l i ty.

Negotiation s trategy
M ovi n g a rel a ti on sh i p forwa rd g en era l l y req u i res a process of n eg oti a ti on
before d evel opi n g a con tra ct ba se. Th i s i s freq u en tl y a si g n i fi ca n t
wea kn ess i n th e d evel opm en t of col l a bora ti ve a rra n g em en ts. Th e
tra d i ti on a l n eg oti a ti n g m od el s h a ve been ba sed on a com bi n a ti on of
a rm -wrestl i n g a n d poker to extra ct m a xi m u m a d va n ta g e, often referred
to a s wi n /l ose. N eg oti a ti on s wi l l set a ba sel i n e for th e rel a ti on sh i p a n d
n eed to be m a n a g ed i n a m ore stru ctu red wa y a rou n d th e con cepts of

10
M AP = M a tu ri ty Assessm en t Prog ra m m e wh i ch i s ba sed o n a tri pl e A ra ti n g , e. g . Attri b u tes,

Abi l i ty a n d Atti tu d e.

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PART 2: How?

wi n /wi n . I t i s i m porta n t to recog n i ze th a t tryi n g to force a com m erci a l

a d va n ta g e a t th i s ea rl y sta g e wi l l a l m ost certa i n l y d a m a g e th e fu tu re
rel a ti on sh i p.

Concl us ion
For a col l a bora ti ve rel a ti on sh i p th e tra d i ti on a l con tra cti n g sa feg u a rd s
m a y be l ess a ppl i ca bl e, so overa l l m a n a g em en t a n d org a n i za ti on h a ve
m u ch m ore rel eva n ce. Th e m a n a g em en t styl e a n d ca pa bi l i ty a re
extrem el y i m porta n t fea tu res of th e sel ecti on . Th e pa rtn er’s org a n i za ti on
wi l l proba bl y becom e a n i n teg ra l pa rt of you r own processes. E ven i f th i s
i s n ot th e ca se, you a re l i kel y to rel i n q u i sh pa rt (i f n ot a l l ) of you r
i n vol vem en t i n th ei r d a y-to-d a y a cti vi ti es. I t i s essen ti a l to h a ve rea l
con fi d en ce i n th ei r stru ctu re a n d ca pa bi l i ty to m a n a g e th e n eed s a n d
h a rn ess th e ben efi ts of col l a bora ti on th rou g h a voi d i n g d u pl i ca ti on . Th i s
process sh ou l d a l so h i g h l i g h t speci fi c a rea s wh ere som e con sol i d a ti on
m a y be n eed ed , to d evel op a n a ccepta bl e l evel to m eet req u i rem en ts.
I d en ti fi ca ti on of th ese i ssu es u pfron t i s essen ti a l si n ce th ey wi l l n eed to
be i n corpora ted i n a n y fu tu re a g reem en t.

An effecti ve stra teg y m u st be ba sed n ot on d esi res, bu t on a fi rm

fou n d a ti on of ca pa bi l i ti es a n d sou n d a ssessm en t of th e bu si n ess a ren a
th a t wi l l be en cou n tered . Th i s a ssessm en t wi l l h a ve i d en ti fi ed th e n eed to
tea m or pa rtn er wi th oth ers, to overcom e th e obsta cl es a h ea d or to
com pl ete a proposi ti on th a t th e m a rketpl a ce req u i res. B S 1 1 000 provi d es
a fra m ework wi th i n wh i ch org a n i za ti on s ca n u n d erta ke a system a ti c
a pproa ch to con sol i d a ti n g th ei r i n tern a l expecta ti on s a n d vi ews of
poten ti a l pa rtn ers, th en d epl oy th ese fi n d i n g s to crea te th e a ppropri a te
n eg oti a ti on stra teg y.

1 20
 Checklist
Pa rtn e r s e l e cti o n i s cl e a rl y a n e s s e n ti a l s te p in d e ve l o p i n g a n y co l l a b o ra ti ve p ro g ra m m e . To o o fte n t h i s e va l u a ti o n i g n o re s

th e re l a t i o n s h i p , b e h a vi o u ra l and cu l tu ra l a s p e cts o f a p o te n ti a l p a rtn e r i n fa vo u r o f s i m p l e co m m e rci a l a sse ssm e n ts. Th e

q u e s ti o n s g i ve n in Ta b l e 1 2.1 sh o u l d h el p to fo cu s o n th i s a re a o f d e ve l o p m e n t.

Ta b l e 1 2 . 1 – P r
a tn e rs e l e cti o n i n i ti a l p r
a a m e te rs

P r
a tn e rs e l e cti o n Ye s /N o

1 D o e s th e o rg a n i z a ti o n h a ve an e s ta b l i s h e d co m m e rci a l s e l e ct i o n p ro ce s s ?

2 Are th e re e s ta b l i s h e d e va l u a ti o n cri t e ri a fo r p o te n ti a l p a rtn e rs ?

3 I s th e re a d e fi n e d p ro ce s s to cre a t e a ca p a b i l i ty p ro fi l e o f p o te n ti a l p a rtn e rs ?

4 I s th e re a d e fi n e d p ro ce s s a n d m e th o d o l o g y t o u n d e rta ke a cu l tu ra l and b e h a vi o u ra l

Chapter 1 2 – Partner selection

p ro fi l i n g o f p a rtn e rs ?

5 I s th e re an e s ta b l i s h e d p o rtfo l i o o f p ro s p e cti ve co l l a b o ra ti ve p a rt n e rs ?

6 Are th e re e xi s t i n g i n te rn a l m o d e l s o f ‘ ri s k a n d re wa rd s ’ co n tra ct i n g m o d e l s?

7 D o e s th e o rg a n i z a ti o n h a ve a s tru c tu re d a p p ro a ch t h a t m o n i to rs a n d m e a s u re s

p e rfo rm a n ce ?

8 H a s th e o rg a n i z a t i o n u n d e rt a ke n re vi e ws o f e xi s ti n g re l a t i o n s h i p s t o a s s e s s wh e re th ese
1 21

m i g h t be i m p ro ve d th ro u g h co l l a b o ra ti ve wo rki n g ?
1 22

PART 2: How?
9 Does the organization have a history of recognizing external partners’ objectives and
drivers that they can then support?

10 Is there a process in place to ensure that development and negotiation strategies take
account of collaborative business relationships?

I f th e a n s we r to a l l o f th e s e q u e s ti on s i s ‘Ye s ’, th e n th e o r g a n i za ti o n i s we l l p l a ce d to d e ve l o p a n d s e l e ct p roa cti ve

p a r tn e rs a n d e s ta b l i s h co l l a bo r a ti ve rel a ti on s h i p s .
Ch a p te r 1 3 – Wo rkin g togeth e r

E sta bl i sh i n g th e ri g h t pl a tform on wh i ch to crea te a

col l a bora ti ve rel a ti on sh i p i s cru ci a l , a s d escri bed i n th i s ch a pter.
Cl ea rl y th ere wi l l n eed to be a n a g reed con tra ct; h owever, i t i s
i m porta n t to work j oi n tl y on setti n g ou t th e a ppropri a te
g overn a n ce m od el th a t wi l l su pport col l a bora ti ve worki n g .
Wh en fi n a l i zi n g th e con tra cti n g a rra n g em en t i t sh ou l d (wh ere
possi bl e) i n corpora te th e key req u i rem en ts a n d pri n ci pl es for
col l a bora ti on . Th ese i n cl u d e th e n eed to a d d ress th e opera ti n g
pra cti ce a n d system s to be em pl oyed to m a n a g e th e opera ti on s.
O n ce th e pa rtn er(s) a re sel ected th e focu s sh i fts to en su ri n g
th a t th e rel a ti on sh i p i s pl a ced on a sou n d fou n d a ti on .

Th e key a spects of col l a bora ti on a re tru st, cl ea r obj ecti ves a n d va l u e

crea ti on . Th ese a spects form a fou n d a ti on for i n n ova ti ve a pproa ch es a n d
th e wa y to su pport i n teg ra ti on , ei th er i n tern a l l y or extern a l l y, a cross
tra d i ti on a l tra d i n g bou n d a ri es. Col l a bora ti on i s n ot a n ea sy opti on ; th e
m ore i n teg ra ted th e rel a ti on sh i p, th e h i g h er th e i n terd epen d en ce a n d
th u s th e i n crea sed n eed for su sta i n a bl e rel a ti on sh i ps. I t i s a g a i n st th ese
ch a l l en g es th a t B S 1 1 000 wa s d evel oped to provi d e a sector-n eu tra l a n d
con si sten t fra m ework to crea te th i s su sta i n a bl e fou n d a ti on .

E ffecti ve a n d su sta i n a bl e col l a bora ti on req u i res a robu st a pproa ch to

both org a n i za ti on a l d evel opm en t a n d person a l beh a vi ou rs; th ese fa ctors
a re i n extri ca bl y l i n ked . Th i s sta rts wi th a focu s on i n d i vi d u a l a n d j oi n t
pa rtn er obj ecti ves, tog eth er wi th a g reem en t on rol es a n d respon si bi l i ti es.
To esta bl i sh a worki n g pl a tform on wh i ch col l a bora ti on ca n d el i ver th e
ben efi ts of com bi n i n g ski l l s, resou rces a n d d ri vi n g i n n ova ti on , th ere m u st
be cl ea r g overn a n ce th a t i s su pported by i n teg ra ted bu si n ess processes,
m ea su rem en t a n d peopl e d evel opm en t.

As org a n i za ti on s seek to opti m i ze th ei r own perform a n ce a n d provi d e

cu stom ers wi th m ore com preh en si ve sol u ti on s, th e ch a l l en g e to m a n a g e
th rou g h -l i fe i n teg ra ted opera ti on s becom es i n crea si n g l y com pl ex a n d h a s
to l ook beyon d th e tra d i ti on a l cri teri a of pri ce, q u a l i ty a n d d el i very. Th e
i n trod u cti on of col l a bora ti ve rel a ti on sh i p m a n a g em en t sh ou l d n ot be
seen a s a sepa ra te i n i ti a ti ve, bu t a s a n i n teg ra ted el em en t of th e
exten d ed en terpri se. Th i s sh ou l d en su re th a t over ti m e l i fe cycl e
m a n a g em en t i s su pported by effecti ve j oi n t m a n a g em en t a n d su sta i n a bl e
rel a ti on sh i ps.

1 23
PART 2: How?

J oi n t sp on s o rs h i p
As o p e ra ti o n s a re l i ke l y to re a ch b e yo n d th o s e i n i ti a l l y i n vo l ve d in

e sta b l i sh i n g th e re l a ti o n s h i p , i t i s i m p o rta n t th a t th e re i s j o i n t e xe cu ti ve

s p o n s o rs h i p to p ro vi d e o ve ra l l s u p p o rt. Th e re n e e d s to be cl e a r a n d

t ra n s p a re n t a g re e m e n t o n th e d e s i re d o u tco m e s a n d o b j e ct i ve s o f th e

re l a ti o n s h i p , wh i ch m u st a l so re fl e ct j o i n t o wn e rs h i p o f th e p ri n ci p l e s

t h a t wi l l g o ve rn th e b e h a vi o u rs o f th o s e i n vo l ve d . Ap p ro p ri a t e

g o ve rn a n c e m o d e l s a re cru ci a l in s u p p o rti n g b o th co rp o ra te and

o rg a n i z a ti o n a l cu l t u re , b a cke d b y e xe cu ti ve s p o n s o rs h i p to p ro vi d e

s u p p o rt. C re a ti n g o rg a n i z a t i o n a l cu l tu re o r ch a n g e re q u i re s a ro b u s t

a p p ro a ch to b o th o rg a n i z a ti o n a l d e ve l o p m e n t a n d p e rs o n a l b e h a vi o u rs ;

th e se fa cto rs a re i n e xtri c a b l y l i n ke d th ro u g h a so u n d g o ve rn a n ce

s tru ctu re , wh i ch m u st be s u p p o rte d b y i n t e g ra te d b u s i n e s s p ro c e s s e s ,

m e a s u re m e n t a n d peopl e d e ve l o p m e n t.

Obj ecti ve s an d pri n ci p l e s

It is in th e bl en d i n g o f b o th com m o n and i n d i vi d u a l o b j e cti ve s th a t

o rg a n i z a ti o n s a re a bl e to re m o ve m a n y o f th e h i d d en a g e n d a s th a t m a y

a ffe ct s u cce s s fu l co l l a b o ra ti o n . I t i s e q u a l l y i m p o rta n t to e s ta b l i s h th e

co re p ri n ci p l e s u p o n wh i ch th e re l a ti o n s h i p i s to be d e ve l o p e d and

o p e ra te d . Th e d e ve l o p m e n t o f a co l l a b o ra ti ve ch a rte r ca n p ro vi d e a b a si s

to e n s u re th e re i s cl a ri ty fo r a l l i n vo l ve d a b o u t th e wa y i n wh i ch th e

o rg a n i z a ti o n s wi l l i n t e ra ct. Th e co m m o n fa i l i n g o f th e s e ch a rt e rs i s t h a t

t h e y a re fre q u e n tl y ve ry a b s t ra ct a n d va g u e . To be e ffe cti ve , th e s e

p ri n ci p l e s s h o u l d d e fi n e th e a i m s o f th e co l l a b o ra ti o n ; th e y s h o u l d a l so

d e fi n e wh a t i s e xp e cte d o f th o s e i n vo l ve d and h o w th e s e a ttri b u te s wi l l

be m e a s u re d . Th e j o i n t e xe cu ti ve s p o n s o rs a n d m a n a g e m e n t te a m m u st

a l so d e te rm i n e th e a ct i o n s re q u i re d i f th e s e p ri n ci p l e s a re n ot

m a i n ta i n e d .

Ca p abi l i ty/com p eten cy revi ew

Yo u sh o u l d u n d e rta ke a j o i n t a sse ssm e n t o f th e co m p e t e n ci e s a n d s ki l l s

o f th e p a rtn e r o rg a n i z a t i o n s to be en g a g ed in d e l i ve ry a n d , wh e re

a p p ro p ri a te , a g re e a j o i n t d e ve l o p m e n t p l a n ; so m e a s p e cts m a y h a ve

been i d e n ti fi e d d u ri n g th e p a rtn e r s e l e cti o n p ro ce s s . I n d i vi d u a l

co m p e te n ci e s ca n s t ro n g l y i n fl u e n ce b e h a vi o u rs a n d th u s th e s u cc e s s o f

re l a ti o n s h i p s . Th i s co n ce p t i s n o t n e w b u t re fl e cts a n u n d e rs ta n d i n g of

th e i m p o rta n ce o f b e h a vi o u ra l tra i ts a n d ca p a b i l i ti e s , wh i ch i s n ot a

s i g n i fi ca n t fa ct o r i n t ra d i ti o n a l co m m a n d - a n d - co n tro l o rg a n i z a t i o n s .

F i g u re 1 3.1 h i g h l i g h ts s o m e o f th e se co m p e te n ci e s ; th e y a re fu rth e r

h i g h l i g h te d wi th i n BS 1 1 000-1 : 2 01 1 , An n e x C .

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 Chapter 1 3 – Working together

Fi g ur e 1 3.1 – Co m p e te n ci e s an d b e h a vi o urs

J o i n t m a n a g e m e n t te a m

E sta bl i sh i n g a m a n a g em en t tea m , tog eth er wi th a cl ea rl y d efi n ed profi l e

of rol es a n d respon si bi l i ti es, en su res th a t a l l pa rti ci pa n ts fu l l y u n d ersta n d
th ei r con tri bu ti on . Th e ch a l l en g e for th e l ea d ersh i p wi l l be bu i l d i n g a
tea m wi th ou t perh a ps bri n g i n g a l l th e pl a yers tog eth er. M a n y
tech n ol og i sts wi l l n ot see th i s a s a probl em , a s th ey expect to opera te i n
a wi red worl d ; experi en ce, h owever, wou l d su g g est th a t i n m ost bu si n ess
tra d i n g rel a ti on sh i ps i t i s i m porta n t to h a ve som e fa ce-to-fa ce
i n tera cti on . As we sta rt to see th e i n terd epen d en ce of org a n i za ti on s
bei n g n etworked a n d i n teg ra ted , th i s soci a l ch a l l en g e wi l l n eed to be
a d d ressed a t person a l a n d org a n i za ti on a l l evel s to su pport th e
expl oi ta ti on of col l a bora ti on . Th e col l a bora ti ve tea m h a s to m eet th e
everyd a y d em a n d s of th e bu si n ess l a n d sca pe a n d con ten d wi th th e
i n tern a l stresses a n d stra i n s of bei n g sepa ra ted from (or ou t of step wi th )
i ts h om e org a n i za ti on . Th e tea m l ea d ers m u st coa ch a n d m oti va te, wh i l e
m a i n ta i n i n g focu s on th e overa l l obj ecti ves. Th e org a n i za ti on a n d
reporti n g stru ctu re sh ou l d be d efi n ed a n d a g reed . As th e process m oves
forwa rd th e i n form a ti on a n d a u th ori ty ch a i n m u st be cl ea r to a l l .
U n d ersta n d i n g wh o ca n d o wh a t (or n ot, a s th e ca se m a y be) i s
i m porta n t i n a n y org a n i za ti on ; bu t i n si d e a col l a bora ti ve stru ctu re, wi th
two sepa ra te bu si n ess en ti ti es i n vol ved , i t i s cru ci a l .

1 25
PART 2: How?

I n o mation management
f r

E ffecti ve m a n a g em en t of kn owl ed g e a n d i n form a ti on i s essen ti a l to

en su re th a t th e pa rtn ers a re cl ea r on wh a t i n form a ti on th ey n eed a n d
h ow to sh a re i t. I d en ti fyi n g th e key processes i s a n i n teg ra l pa rt of
kn owl ed g e m a ppi n g , si n ce i t i s th e i n terfa ces between fu n cti on s or
a cti vi ti es wh ere th e kn owl ed g e tra n sfer becom es cru ci a l to su ccess.
I n form a ti on fl ow i s a m a j or ben efi t from col l a bora ti on , bu t freq u en tl y i t
i s a n a rea of con fl i ct wh en worki n g tog eth er. Th e g a ps i n kn owl ed g e a n d
u n d ersta n d i n g a re wh ere m ost of th e opera ti on a l fa i l u res a n d fri cti on s
wi l l occu r, wh eth er th i s i s between cu stom ers, i n tern a l g rou ps a n d
i n d i vi d u a l s or extern a l provi d ers a n d pa rtn ers. Th e tru e ben efi t of a
kn owl ed g e-ba sed a pproa ch i s th a t rea l va l u e ca n be i d en ti fi ed a n d
expl oi ted by en su ri n g th e a ppropri a te i n terfa ces a re a d d ressed .

Comm nication u s p lan

A key a spect of m a i n ta i n i n g a sou n d rel a ti on sh i p between org a n i za ti on s
a n d th ei r sta keh ol d ers i s to en su re th a t th ere i s a sol i d process of
com m u n i ca ti on s. As th e rel a ti on sh i p becom es esta bl i sh ed i t i s a d vi sa bl e
to esta bl i sh a pl a n for effecti ve com m u n i ca ti on s a cross th e sta keh ol d er
com m u n i ty. Keepi n g peopl e i n form ed h el ps to stren g th en a wa ren ess a n d
th u s m a i n ta i n th e su pport for col l a bora ti on .

Joint i k management
r s

D evel opi n g a robu st j oi n t ri sk m a n a g em en t prog ra m m e a s pa rt of th e

opera ti n g process i s a cru ci a l fa ctor i n bei n g a bl e to bu i l d su sta i n a bl e a n d
fl exi bl e opera ti on s. Th e expl oi ta ti on of col l a bora ti ve rel a ti on sh i ps wi th i n
a bu si n ess en vi ron m en t i s often vi ewed a s bei n g th e a n swer to som e
el em en ts of ri sk. H owever, th e rel a ti on sh i ps m a y a d d ress m a n y of th e
ch a l l en g es th a t a re crea ted by tod a y’s bu si n ess en vi ron m en t, bu t i n d oi n g
so th ey m a y a l so i n trod u ce n ew ri sks – so col l a bora ti on sh ou l d n ot be
seen a s a rea son to i g n ore th e pri n ci pl es of sou n d ri sk m a n a g em en t
processes. J oi n t ri sk reg i sters a re often esta bl i sh ed , bu t th ese a re
freq u en tl y l i m i ted to th ose ri sks th a t a re a ssoci a ted wi th th e sh a red
obj ecti ves. I t i s l ess com m on to fi n d th e recog n i ti on th a t i n d i vi d u a l
pa rtn er’s ri sks (wh eth er corpora te or i n d i vi d u a l ) stron g l y i n fl u en ce
beh a vi ou rs. Th e evi d en ce of a stron g rel a ti on sh i p i s th e fa ct th a t th e
pa rtn ers su pport ea ch oth er’s ri sks wh ere pra cti ca l . I n som e ca ses th i s m a y
n ot be possi bl e, bu t even a ckn owl ed g i n g th ese ri sks ca n h a ve a posi ti ve
i m pa ct.

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 Chapter 1 3 – Working together

Pr ocess review
Wh en fi rst esta bl i sh i n g th e rel a ti on sh i p i t i s va l u a bl e to u n d erta ke a j oi n t
revi ew of th e d el i very processes. Th i s wi l l esta bl i sh th e pl a tform for
effecti ve perform a n ce a n d provi d e a ba si s to en su re th a t a l l key i ssu es
h a ve been j oi n tl y a d d ressed before form a l l y con tra cti n g . O pti m i za ti on of
bu si n ess processes i s a key ben efi t of worki n g i n col l a bora ti on
a rra n g em en ts, bu t th i s ca n often crea te th e n ext l evel of poten ti a l
con fl i ct. So i t i s i m porta n t to d efi n e h ow th e i n teg ra ted tea m wi l l d el i ver
th ei r obj ecti ves; th i s i s a n essen ti a l a spect of esta bl i sh i n g a sou n d ba si s
for worki n g tog eth er.

Th e a d opti on of process m a ppi n g h a s becom e a sta n d a rd tool for m ost

org a n i za ti on s i n u n d ersta n d i n g a n d d evel opi n g th ei r opera ti on a l
a pproa ch es. I t provi d es a ba si s on wh i ch to ch a l l en g e a n d en h a n ce both
d el i very a n d servi ce. U n d ersta n d i n g h ow ea ch pa rty opera tes i s a key
sta g e i n th e process of eva l u a ti n g wh ere kn owl ed g e i s l a cki n g a n d h ow
crea ti n g n ew kn owl ed g e m a y sti m u l a te a n d en h a n ce va l u e. Worki n g
tog eth er to d evel op a TCO a pproa ch ca n be a com pl ex process, wh i ch
ch a l l en g es org a n i za ti on s to u n d ersta n d th e tru e cost a n d va l u e of th e
opera ti on a l processes. M ovi n g towa rd s i n teg ra ted own ersh i p ta kes m u ch
m ore com pl ex a n a l ysi s. I t freq u en tl y req u i res g rea ter i n teg ra ti on wi th th e
pa rti es i n vol ved to en com pa ss a tru e th rou g h -l i fe opti m i za ti on ,
recog n i zi n g th a t l on g -term com m i tm en ts m a y n ot si m pl y be a q u esti on
of exten d ed con tra cts bu t a l so of m a i n ta i n i n g j oi n t com m i tm en ts to
resou rces, m a i n ten a n ce, prod u ct su pport a n d fu tu re prod u ct or servi ce
d evel opm en t.

Monito r an d mea sure

I n a n y rel a ti on sh i p i t i s i m porta n t to u n d ersta n d h ow th e rel a ti on sh i p
a n d d el i very perform a n ce wi l l be m ea su red , to en su re th a t perform a n ce
i n cen ti ves a l so su pport req u i red beh a vi ou rs. Crea ti n g a col l a bora ti ve
prog ra m m e i s on l y th e sta rt of a process; wh i l e ta rg eted i n th e ea rl y
sta g es, i t ca n often l ose m om en tu m over ti m e. Th e l on g er th e
rel a ti on sh i p i s i n pl a ce th e g rea ter th e possi bi l i ty for com pl a cen cy to
bu i l d between th e va ri ou s pa rti es, so a g reei n g a j oi n t m on i tori n g a n d
m ea su rem en t prog ra m m e provi d es a va l u a bl e i n d i ca tor of th e
rel a ti on sh i p’s cu rren t con d i ti on a n d fu tu re d evel opm en t n eed s. Th i s
en su res th a t overa l l perform a n ce i s focu sed on con ti n u ou s i m provem en t.

D i spu te resol u ti on i n th e process i s a m u st. I n a n y col l a bora ti on i ssu es wi l l

a ri se a n d i t i s essen ti a l th a t th e rel a ti on sh i p protects i tsel f from th ese
stresses. G en era l l y th i s i s h a n d l ed by som e form of esca l a ti on process,
wh i ch u l ti m a tel y en d s wi th th e respecti ve Ch i ef execu ti ve offi cers (CE O s) .
I f i t g oes beyon d th a t poi n t, th en th e rel a ti on sh i p h a s proba bl y broken

1 27
PART 2: How?

d own i rretri eva bl y, bu t n everth el ess fu rth er a cti on m a y en su e. B y d ri vi n g

a d i spu te process d own to th e worki n g l evel m a n y (i f n ot m ost) con fl i cts
ca n be a voi d ed .

Contracting a rrangement
E very bu si n ess rel a ti on sh i p n eed s to a n ch or i ts con tra cti n g a rra n g em en ts
from th e poi n t of esta bl i sh i n g wh a t i t h opes to a ch i eve th rou g h th e
rel a ti on sh i p. I n d evel opi n g a con tra cti n g a pproa ch i t i s essen ti a l to d efi n e
th e i n d i vi d u a l respon si bi l i ti es a n d to pl a ce th ese obl i g a ti on s wi th th e
correct pa rty. I n th e i n i ti a l sta g es of d evel opi n g a col l a bora ti ve stra teg y
th e tem pta ti on i s to set obj ecti ves th a t a re too fa r-rea ch i n g a n d h a ve
va ryi n g ch a n ce of a ctu a l l y bei n g a ch i eved . Setti n g expecta ti on s too h i g h
wi l l a l so i n fl u en ce th e stru ctu re of th e con tra ct a n d proba bl y pl a ce
u n rea son a bl e d em a n d s on pa rtn ers, wh i ch wi l l u l ti m a tel y resu l t i n
con tra ct con fl i ct wh en th ey a re n ot a ch i eved .

Relation s hi p management p lan

Wh en th e d eci si on i s m a d e for on e or m ore org a n i za ti on s to work
tog eth er th e RM P becom es a j oi n t pl a n , wh i ch wi l l ou tl i n e th e wa y th ey
i n ten d to m a n a g e th e rel a ti on sh i p i n fu tu re. Th ere a re a va ri ety of wa ys
th i s ca n be a d d ressed a s ou tl i n ed i n B S 1 1 000. I t m a y be i n teg ra ted i n to
con tra cts or a l l i a n ce a g reem en ts; h owever, for m a n y org a n i za ti on s a
sepa ra te d ocu m en t often proves m ost m a n a g ea bl e – ei th er a s a
sta n d a l on e d ocu m en t or a s a n a n n ex to a con tra ct. Th e pri n ci pl e,
h owever, sh ou l d a l wa ys be th a t th i s i s a m u tu a l l y a g reed a pproa ch
between th e pa rti es.

Concl us ion
Wh a tever con tra cti n g m od el i s u sed i t n eed s to be j oi n tl y a g reed a n d
eva l u a ted a g a i n st th e rel a ti on sh i p a pproa ch . I t m u st be com pa ti bl e wi th
th e j oi n t pri n ci pl es, a i m s a n d obj ecti ves of th e pa rti es i n ord er to
esta bl i sh th e g overn a n ce th a t wi l l su pport a col l a bora ti ve a pproa ch .

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 Chapter 1 3 – Working together

To o o fte n co l l a b o ra ti ve a rra n g e m e n t s a re e s ta b l i s h e d in i so l a ti o n to th e

n e ce s s a ry co n tra cti n g a rra n g e m e n ts a n d th u s cre a ti n g p o te n ti a l fri cti o n

a t l a te r s ta g e s o f th e re l a ti o n s h i p . In a s tro n g re l a ti o n s h i p t h a t co n tra ct

m a y n ot be p re d o m i n a n t, b u t fre q u e n tl y a s i n d i vi d u a l s ch a n g e ro l e s

th ro u g h th e p ro g ra m m e th e c o l l a b o ra ti ve co n ce p t s ca n b e co m e d i l u te d

and th e co n t ra ct ta ke s p re ce d e n ce . Th u s th e re l a t i o n s h i p o b j e ct i ve s a n d

th e co n tra ct s h o u l d a l wa ys b e co m p a ti b l e . I t i s a l so wo rth co n s i d e ri n g

e va l u a ti o n o f th e co n tra ct a g a i n s t t h e ‘ co n tra ct i n g fo r fa i l u re ’ e t h o s – fo r

e xa m p l e , re vi e wi n g th e te rm s o f co n tra ct a s to wh e th e r th e y s u p p o rt

s u cce s s o r s i m p l y d ri ve to wa rd s a cco u n ta b i l i t y a n d bl a m e.

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PART 2: How?

Checklist
Ta b l e 1 3.1 wi l l h el p yo u to a s s e s s yo u r o rg a n i z a t i o n ’s re a d i n e s s fo r

wo rki n g to g e th e r.

Ta b l e 1 3 . 1 – Wo r ki n g to g e th e r i n i ti a l p r
a a m e te rs

Wo r ki n g to g e th e r Ye s /N o

1 D o e s th e o rg a n i z a ti o n h a ve e s ta b l i s h e d

co m m e rci a l m o d e l s to s u p p o rt e ffe cti ve

m a n a g e m e n t o f co l l a b o ra ti ve p ro g ra m m e s ?

2 D o e s th e o rg a n i z a ti o n h a ve e s ta b l i s h e d

a p p ro a ch e s to e n s u re th a t p ro ce s s e s a re

re vi e we d to i d e n t i fy i n te rfa ce s a n d

i m p l e m e n t a cti o n s t o cl o s e g a p s?

3 Are th e re e s ta b l i s h e d m od el s i n p l a ce to

d ri ve j o i n t o b j e cti ve s a n d m e a s u re th e

e ffe cti ve n e s s o f i m p l e m e n ti n g a co l l a b o ra t i ve

o p e ra ti n g a p p ro a ch ?

4 I s th e c u rre n t o rg a n i z a ti o n a l s tru c tu re

fl e xi b l e en ou g h to a cco m m o d a te a p ro a cti ve

ri s k- s h a ri n g a p p ro a ch ?

5 I s th e re a s tru ct u re d p l a tfo rm o f d e fi n e d

ro l e s , re s p o n s i b i l i t i e s a n d re p o rt i n g th a t ca n

be a d a p te d wh e n wo rki n g wi t h e xte rn a l

p a rti e s ?

6 I s th e re an e s ta b l i s h e d j oi n t pl a n n i n g and ri s k

m a n a g e m e n t a p p ro a ch th a t re co g n i z e s b o t h

i n d i vi d u a l and j o i n t ri s ks ?

7 D o e s th e o rg a n i z a ti o n h a ve a p p ro p ri a te s ki l l s

d e ve l o p m e n t a n d tra i n i n g p ro g ra m m e s i n

p l a ce wh i ch ca n be j o i n tl y a cce s s e d by

p o te n ti a l p a rtn e rs ?

8 I s th e re a p ro ce s s i n p l a ce to manage i ssu e

re s o l u ti o n th a t p ro m o t e s s o l u t i o n s b e i n g

d e ve l o p e d a t th e l o we s t l e ve l o f th e

o p e ra ti o n s ?

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 Chapter 1 3 – Working together

9 Is the current commercial approach focused

on developing joint early wins for the
partners?

10 Are there established contracting models

available within the organizations that
support collaborative engagements?

I f th e a n s we r to a l l o f th e s e q u e s ti on s i s ‘Ye s ’, th e re i s p o s i ti ve f o c u s

to e s ta b l i s h co l l a b o r a ti ve re l a ti on s h i p s .

1 31
Ch a p te r 1 4 – Val u e c reation

E xp e ri e n ce h a s s h o wn t h a t th e b e n e fi t s o f co l l a b o ra ti ve

re l a ti o n s h i p s wi l l te n d to l o se m om e n tu m o ve r ti m e i f n ot

d ri ve n to m a i n ta i n co n ti n u a l i m p ro ve m e n t. Re l a ti o n s h i p s th a t

a re p a rti cu l a rl y fo cu s e d on l o n g - te rm b e n e fi t m u s t m a i n ta i n a

re l e va n ce to m a rke ts a n d cu s to m e r n e e d s . A m a j o r va l u e fro m

co l l a b o ra ti ve a p p ro a ch e s co m e s fro m th e a b i l i ty to s h a re i d ea s

and h a rn e s s a l te rn a t i ve p e rs p e ct i ve s ; th o s e t h a t l o o k fo r

a d d i ti o n a l b e n e fi t o fte n e xc e e d th e i r o ri g i n a l o b j e cti ve s a n d

p e rfo rm m u ch b e tt e r o ve ra l l . Va l u e cre a t i o n i s cl e a rl y i m p o rta n t

to s u cce s s , a s d i s cu s s e d in th i s ch a p te r.

A p a ra l l e l b e n e fi t t h a t co m e s fro m i n tro d u ci n g a s tru c tu re d a p p ro a ch to

va l u e cre a ti o n i s t h a t i t s u p p o rts o rg a n i z a t i o n s a n d te a m s wo rki n g

to g e th e r. H o w o rg a n i z a ti o n s ch o o s e to e n co u ra g e i n n o va t i o n d epen d s on

a wi d e va ri e ty o f fa cto rs , b u t i s o ft e n m a n a g ed we l l b y e sta b l i sh i n g j oi n t

cro s s - fu n cti o n a l te a m s th a t ca n be b ro u g h t to g e th e r t o a d d re s s s p e ci fi c

ch a l l e n g e s o r i d e a s .

To h a rn e s s th i s a d d e d va l u e m e a n s ch a l l e n g i n g th e t ra d i ti o n a l th i n ki n g

and g e tti n g ‘ o u ts i d e th e b o x’ , cre a ti n g n e w va l u e o r a l te rn a ti ve va l u e

p ro p o s i ti o n s . Va l u e cre a ti o n p ro g ra m m e s s h o u l d m a i n ta i n a fo cu s o n th e

e n d - cu sto m e r, wh i l e ca p tu ri n g p o te n ti a l b e n e fi t s fo r a l l p a rti ci p a n ts t h a t

m a y o r m a y n o t d i re ctl y a ffe ct t h e cu s to m e r. To o o fte n o rg a n i z a t i o n s s e e k

to d ri ve co s t o u t o f t h e i r o p e ra ti o n s a n d i g n o re th e i m p a ct o n th e

cu s to m e r. I n n o va t i o n is a cri ti ca l fa cto r i n th e va l u e cre a ti o n p ro ce s s , s i n ce

s i m p l y re a l l o ca ti n g co s ts o r o b l i g a ti o n s d o e s n o t b ri n g n e w va l u e to th e

ta b l e . Som e re l a t i o n s h i p s m a y b e i n s t i g a te d fo r a s p e ci fi c o b j e cti ve bu t

th i s s h o u l d n o t p re ve n t e xp l o i ti n g o t h e r a s p e cts o f th e va l u e ch a i n .

M u ch of th e re s o u rce s th a t o rg a n i z a ti o n s s p e n d on managing b u si n e ss

p ro ce s se s a re u se d to co n t ro l o r co m p e n s a t e fo r a cti o n s a n d ri s ks i n

d ea l i n g wi t h e xte rn a l o rg a n i z a ti o n s . I t i s to a l a rg e e xt e n t th e ri g i d i t y o f

th e s e p ro ce s s e s t h a t s e ts th e cu l tu re of a n o rg a n i z a t i o n . G i ve n th e

o p p o rt u n i ty t o e xp o s e d u p l i ca ti o n o r e l i m i n a te a cti vi ti e s , th e va l u e

cre a t i o n p ro ce s s b ri n g s o u t i m p ro ve m e n ts , b e n e fi ts a n d s a vi n g s t h a t h a d

n e ve r b e e n re co g n i z e d b e fo re . In th e p ro ce s s o f e l i m i n a ti n g p ro ce s s a n d

m a n a g e m e n t co n tro l s , i t ca n h el p to i m p ro ve re l a ti o n s h i p s a n d tru s t,

wh i ch a re ca t a l ys ts fo r e ve n m o re i m p ro ve m e n t.

1 33
PART 2: How?

Val e c eation oce

u r pr ss

Wh i l e th ere i s g rea t va l u e i n a spon ta n eou s a pproa ch to i n n ova ti on ,

esta bl i sh i n g a j oi n t process th a t en su res both ta rg eted su pport a n d
en cou ra g es n ew i d ea s i s very powerfu l . A stru ctu red a pproa ch wi l l
u n d erpi n su sta i n a bl e en g a g em en t; i t wi l l provi d e a m ea su re of
i n teg ra ti on a n d con ti n u a l focu s on d ri vi n g g rea ter va l u e from th e
rel a ti on sh i p. Th e a d va n ta g e of d evel opi n g a col l a bora ti ve rel a ti on sh i p i s
i n expl oi ti n g th e j oi n t kn owl ed g e a n d ca pa bi l i ti es of org a n i za ti on s to
crea te a d d ed va l u e for th e pa rtn ers, a n d for th e en d -cu stom er or
con su m er. H owever, th e expl oi ta ti on of col l a bora ti ve a pproa ch es m u st
h a ve a fou n d a ti on th a t i s ba sed on d el i veri n g a d d ed va l u e to th e pa rti es.
I n i ti a l l y i t wi l l ca pi ta l i ze on th e syn erg i es i n th e rel a ti on sh i p; su bseq u en tl y
i t sh ou l d be a focu s for con ti n u a l i m provem en t a n d en a bl i n g
org a n i za ti on s to sh a re resou rces or rem ove a cti vi ti es th a t d o n ot a d d
va l u e. Th e l on g er-term ben efi t i s i n m ovi n g th e rel a ti on sh i p forwa rd to
provi d e m ore com peti ti ve opti on s for th e en d -cu stom ers th ey serve, a n d
th u s crea ti n g even g rea ter va l u e.

I nnovation g o r u ps

E very org a n i za ti on wi l l h a ve i ts own speci fi c ta rg ets to en su re a va l u e

crea ti on prog ra m m e th a t ca ptu res a l l opportu n i ti es. I t h el ps to a d opt a
fra m ework th a t provi d es a robu st pl a tform i n vol vi n g a l l a spects a n d
fu n cti on s wi th i n th e org a n i za ti on . Th e va l u e crea ti on m od el (see
Fi g u re 1 4. 1 ) ca ptu res th e ba si c fu n cti on a l a cti vi ti es of a bu si n ess
opera ti on or org a n i za ti on a l process, wh i ch ca n be con ta i n ed wi th i n on e
of si x key a rea s (tota l cost, cycl e ti m e, bu si n ess process, resou rces,
speci fi ca ti on s a n d perform a n ce) . Wi th i n th ese th ere wi l l be m a n y
i n d i vi d u a l i ssu es a n d ta rg ets i d en ti fi ed by th e pa rtn ers. I t sh ou l d a l so be
recog n i zed th a t m a n y of th e poten ti a l ben efi ts a n d opportu n i ti es m a y
cross between th ese a rea s. For exa m pl e, cycl e ti m e red u cti on m a y h a ve a
cost–ben efi t a ssoci a ted wi th i t, wh i l e process i m provem en t m a y bri n g
i m provem en ts i n cycl e ti m e.

Th e va l u e crea ti on process m a y n ot n ecessa ri l y d el i ver i m m ed i a te retu rn s,

bu t for th e n ew pa rtn eri n g tea m fi n d i n g som e ea rl y wi n s i s q u i te
i m porta n t to boost con fi d en ce a n d en cou ra g e th e tea m to becom e m ore
i n n ova ti ve. I t i s i m porta n t n ot to focu s si m pl y on cost, a s th i s wi l l ten d to
crea te fri cti on , bu t focu s on th e ca u ses of cost.

A ea o im ovement
r s f r pr

Th e key to opti m i zi n g th i s co-crea ti on i s to en su re th a t i d en ti fi ed i ssu es

a re reg u l a rl y revi ewed a n d , wh ere n ecessa ry, rem oved i f n ot d el i veri n g .
Th i s en su res resou rces a re n ot wa sted or d i verted from th e pri m a ry
obj ecti ves. Va l u e i s on l y crea ted i f i t bri n g s ben efi t to th ose i n vol ved ;

1 34
 Chapter 1 4 – Value creation

Fi g ur e 1 4. 1 – Va l u r
e c e a ti o n mo d el

wh e n d e ve l o p i n g a va l u e cre a ti o n p ro g ra m m e i t i s i m p o rta n t to re m a i n

fo cu s e d on th e ke y p ri o ri ti e s a n d e va l u a t e e ve ry i n i ti a ti ve in t e rm s o f

s tra t e g i c d ri ve rs . Th e o p p o rt u n i ti e s fo r o rg a n i z a t i o n s to l ook

co n s tru cti ve l y a t th e i r o wn p ro ce s s e s , a s we l l a s th e wi d e r i n t e g ra te d

p ro ce s s e s th a t d e l i ve r p ro d u cts a n d s e rvi ce s , o p e n s th e vi s ta o f cre a ti n g

n e w va l u e fo r cu s to m e rs b y i m p ro vi n g cu rre n t p e rfo rm a n ce and

e xp l o i ti n g n e w o p e n i n g s th ro u g h th e e xte n d e d e n t e rp ri s e . In a

co l l a b o ra ti ve e n vi ro n m e n t, va l u e cre a ti o n i s a b o u t d e l i ve ri n g i n n o va t i ve

s o l u ti o n s o r re l e a s i n g va l u e th a t co u l d n ot be g e n e ra t e d by on e

o rg a n i z a ti o n a l on e. Th i s e vo l ve s i n to i n t ro d u ci n g n e w va l u e p ro p o s i t i o n s

th a t fu l fi l th e fu tu re a s p i ra ti o n s a n d e xp e cta t i o n s o f cu s to m e rs , or

p e rh a p s th o s e th a t h a ve ye t to be re co g n i z e d .

De f i n e va l u e

On e o f th e m a j o r ch a l l e n g e s i n a n y re l a ti o n s h i p i s to d e fi n e wh a t va l u e

m e a n s fo r th o s e i n vo l ve d . F o r e ve ry o rg a n i z a ti o n th e fo cu s fo r va l u e

cre a ti o n wi l l be d i ffe re n t , s i n ce e ve ry b u s i n e s s s tra te g y cre a te s d i ffe re n t

d e m a n d s. D e ve l o p i n g a co l l a b o ra ti ve i n n o va ti o n p ro g ra m m e to d e l i ve r

b e s t va l u e s ta rts wi th th e p a rtn e rs s e tti n g cl e a rl y d e fi n e d d e fi n i ti o n s o f

va l u e fo r th e i r o wn o rg a n i z a ti o n s . Wh e n e s ta b l i s h i n g va l u e - b a s e d

o b j e cti ve s , th e p a rti e s h a ve to re co g n i z e th a t wi th i n a re l a t i o n s h i p t h e re

wi l l be j o i n t o b j e cti ve s i n a d d i ti o n to th o s e wh i ch a re p a rtn e r- s p e ci fi c.

C o m m o n l y wh e n two o rg a n i z a ti o n s g e t to g e th e r th e re a re th re e s e ts o f

o b j e cti ve s : yo u rs , mine and o u rs . I t i s cru ci a l to u n d e rs ta n d th e se m u l ti p l e

1 35
PART 2: How?

aims and bl en d th e m i n to a j o i n t s tra te g y to d e l i ve r m u t u a l b e n e fi t .

D e fi n i n g va l u e is a fo cu s th a t n o t o n l y va ri e s i n d i ffe re n t o rg a n i z a ti o n s ; it

a l so m a y ch a n g e o ve r t i m e . As i n i ti a l p ro g ra m m e s d e ve l o p , th e wi d e r

a s p e cts o f i m p ro ve d s e rvi ce d e l i ve ry a n d m a rke t g ro wth s tra te g i e s ta ke

th e va l u e d e fi n i ti o n to a b ro a d e r l e ve l , a l on g wi t h th e i d e n ti fi c a t i o n of

o p e ra ti o n a l i m p ro ve m e n t s d ri ve n b y i n cre a s e d co n fi d e n ce and t ru s t. To

i m p l e m e n t e ffe ct i ve va l u e cre a ti o n p ro g ra m m e s , i t i s i m p o rt a n t to d e fi n e

va l u e in th e re l a t i o n s h i p , b o th to e s ta b l i s h ta rg e t s to s tri ve to wa rd s a n d

to i d e n ti fy b e n ch m a rks a g a i n s t wh i ch to m e a s u re s u cce s s .

Va l u e cre a ti o n sh ou l d be vi e we d as a co n ti n u o u s i te ra ti ve p ro ce s s th a t

p ro vi d e s a fo cu s fo r d e ve l o p m e n t a n d a ca t a l ys t fo r ch a n g e .

Lea r ning from exp e rience

As o rg a n i z a t i o n s b e g i n to wo rk to g e th e r m o re cl o s e l y i t i s e q u a l l y

i m p o rta n t t o ca p t u re th e l e s s o n s l e a rn e d . Th i s i s a ke y a s p e ct o f cre a ti n g

va l u e and s e tti n g th e a g en d a fo r i n n o va ti o n . Th e tra d i t i o n a l co m p e ti ti ve

a p p ro a ch h a s been to fo cu s o n re d u ci n g p ri ce , b u t a s m a n y wi l l

a p p re ci a t e , l o we s t p ri ce i s n o t a l wa ys l o we s t co s t ; ce rta i n l y th i s a p p ro a ch

i s sel d om a ca t a l ys t fo r co l l a b o ra ti o n and s u s ta i n a b l e va l u e . D e ve l o p i n g

n e w va l u e p ro p o s i ti o n s h a s to s ta rt fro m an u n d e rs t a n d i n g t h a t th e

o ve ra l l o b j e ct i ve i s to re d u ce to ta l co s t to th o s e i n vo l ve d ; th i s m a y

re q u i re so m e tra n s fe r a cro s s wh a t we re tra d i ti o n a l l y tra d i n g ‘ b a ttl e l i n e s’ .

To open up th e fu l l p o te n ti a l o f i n te g ra te d o p e ra ti o n s , t h e re h a s to be a

ch a n g e in th e wh o l e o rg a n i z a ti o n on b o th s i d e s o f th e re l a ti o n s h i p to

e n s u re th a t e xi s ti n g ru l e s d o n o t co n s tra i n i n n o va ti o n . I t m a y be th a t a

sm a l l te a m i s d ri vi n g a p ro g ra m m e b u t th e b i g g e r o rg a n i z a ti o n wi l l

i n fl u e n ce m a n y o f th e p ro ce s s e s a n d d e ci s i o n s . U l ti m a te l y, th e

co l l a b o ra ti ve a p p ro a ch sh ou l d be d e l i ve ri n g a l te rn a t i ve va l u e

p ro p o s i t i o n s th a t h a ve m u ch wi d e r i m p l i ca t i o n s a n d b e n e fi ts .

G ene rating innovation

F e w b u s i n e s s a cti vi ti e s wi l l s t a y u n ch a n g e d fo r ve ry l o n g ; p a rt i cu l a rl y i n a

t e c h n o l o g y- fo cu s e d e n vi ro n m e n t, i n n o va ti o n i s cru ci a l to m a i n ta i n

co m p e ti ti ve ed g e fo r th e re l a ti o n s h i p . Wh i l e t h e re m a y be m a n y co m m o n

o p p o rtu n i ti e s , i t i s a l so i m p o rta n t t o re co g n i z e th a t s o m e o p p o rt u n i ti e s

m a y o n l y b e n e fi t o n e p a rty – b u t j o i n t s u p p o rt fo r t h e s e i s eq u a l l y

i m p o rta n t.

Th e d e ve l o p m e n t o f i n n o va ti ve i d e a s h a s to be an i te ra ti ve p ro ce s s t h a t

p ro m o te s a co n ti n u o u s cycl e o f i m p ro ve m e n t. M o s t o rg a n i z a ti o n s ,

p a rti cu l a rl y th o s e p a rtn e ri n g te a m s th a t a re n e wl y b ro u g h t t o g e th e r, wi l l

on l y be a bl e to fo c u s o n a sm a l l n u m b e r o f o p p o rt u n i ti e s a t o n e ti m e . It

sh ou l d a l so be a p p a re n t th a t m o s t o p p o rtu n i ti e s wi l l co m e by

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 Chapter 1 4 – Value creation

co m b i n a ti o n s o f a cti o n s wi th i n th e s i x ke y a re a s o f to ta l co s t, cycl e ti m e ,

b u s i n e s s p ro ce s s , re s o u rce s , s p e ci fi ca ti o n s a n d p e rfo rm a n ce . P ri o ri ti e s

m u st b e se t to e n s u re fo cu s o n th e s tra te g i c o b j e cti ve s o f th e p a rtn e rs h i p .

A m a j o r ta rg e t fo r o rg a n i z a ti o n s i s h o w to i m p ro ve cycl e ti m e , wi t h o u t

re d u ci n g co n t ro l and q u a l i ty. To p ro vi d e so m e fo cu s s o m e ke y a re a s a re

l i s te d b e l o w fo r co n s i d e ra ti o n :

• p ro d u ct d e ve l o p m e n t ti m e ;

• i n te g ra te d pl a n n i n g ;

• i n fo rm a t i o n fl o w;

• d e l i ve ry ti m e to cu s to m e r;

• re d u ce d ri s k.

E a ch o ffe rs th e o p p o rtu n i ty fo r a va l u e cre a ti o n te a m to co n s i d e r th e

co s t–b e n e fi t a n a l ys i s o f wh a t i m p ro ve m e n t wo u l d m ea n in t e rm s o f

i n te rn a l b e n e fi ts , cost a n d re s o u rce s , a s we l l a s cu s to m e r a n d m a rke t

p o s i ti o n i n g . E ffe cti ve pl a n n i n g ca n p ro vi d e s u b s ta n ti a l re tu rn s fo r wh a t i s

o fte n o n l y th e i n te g ra ti o n o f cri ti ca l fa cto rs wi th i n e a ch o rg a n i z a ti o n .

Th e l o n g e r- te rm b e n e fi t o f i n t e g ra te d pl a n n i n g i s th e i m p a ct o f re l i a b l e

i n fo rm a t i o n fl o ws t h a t e n s u re a cti o n s a re u n d e rta ke n o n l y wh e n n eed ed ,

th u s a vo i d i n g wa s te d e ffo rt, l a te ch a n g e and re d u ci n g th e ri s k o f d e l a ys .

C ycl e ti m e i s n ot on l y a m a rke t d ri ve r, b u t a l so a p o te n ti a l co s t re d u cti o n

a cti vi ty, wh i ch in th e e a rl y s ta g e s o f a re l a ti o n s h i p d o e s n o t i n vo l ve

s i g n i fi ca n t e xp o s u re .

Th e main b e n e fi t o f co l l a b o ra ti ve b u s i n e s s re l a ti o n s h i p s i s to b ri n g

to g e th e r te a m s fro m e xte rn a l o rg a n i z a ti o n s , a s i t p ro vi d e s a m o re h o l i s ti c

vi e w o f o p e ra ti o n a l p ro ce s s e s . B u s i n e s s re - e n g i n e e ri n g is a co m m o n

a s p e ct o f i n te rn a l i m p ro ve m e n t p ro g ra m m e s , b u t i s ra re l y e xp l o re d a cro s s

th e b o rd e rs o f o rg a n i z a ti o n s – ye t m a n y o f th e p ro ce s s e s h a ve been

e s ta b l i s h e d to manage e xte rn a l o rg a n i z a ti o n s . Lo o ki n g b e yo n d th e

i m p ro ve m e n t o f e xi s ti n g a ct i vi ti e s , th e fu tu re d e ve l o p m e n t o f i n te g ra te d

a p p ro a ch e s m a y p ro vi d e n ew a n d i n n o va t i ve p ro p o s i t i o n s th a t a re on l y

a ch i e va b l e t h ro u g h co l l a b o ra ti ve p a rtn e ri n g ve n tu re s . B u s i n e s s p ro ce s s e s

i n vo l ve re s o u rce s a n d co s ts , so th e i r i m p ro ve m e n t p ro vi d e s a re a l

o p p o rtu n i t y fo r o rg a n i z a t i o n s wh o a re p re p a re d to s h a re th e i r

kn o wl e d g e and s ki l l s .

Th e m a j o r a re a fo r i n ve s t i g a ti o n and d e ve l o p m e n t i s t o l o o k a t p ro ce s s

fl o ws i n te rm s o f d u p l i ca ti o n and re cycl i n g . Th e s e a re p o te n ti a l b e n e fi t s

th a t o ft e n re q u i re o n l y si m p l e a d j u s t m e n ts t o th e o ve ra l l p ro ce s s , bu t

m a y o ffe r s u b s ta n ti a l b e n e fi ts to b o th p a rti e s . Th e n e xt p h a s e of

i n te g ra ti o n i s ra ti o n a l i z i n g d a ta fl o w. D u p l i ca ti o n o f a ct i vi ti e s a n d e ffo rt ,

and d ou bl e handling, a re co m m o n b e t we e n o rg a n i z a ti o n s ; wh e n th e s e

p ro ce s s e s a re ra t i o n a l i z e d t h e y cre a te a d d i ti o n a l va l u e , c o m p e ti ti ve n e s s

and p e rfo rm a n ce .

R e s o u rce s a re th e m a j o r co s t fa cto r fo r m o s t o rg a n i z a ti o n s a fte r e xt e rn a l

sp e n d , wh e th e r th e s e a re m a te ri a l s o r s ki l l s . E xp l o i ti n g th e fu l l p o te n ti a l

1 37
PART 2: How?

of resou rce opti m i za ti on h a s to sta rt wi th th e org a n i za ti on s i n vol ved

pa rtl y rel ea si n g con trol i n ord er to eva l u a te wh ere ea ch a cti vi ty sh ou l d
be u n d erta ken a n d by wh om . Th i s i n i ti a l a ssessm en t req u i res th e
pa rti ci pa n ts to see th ei r rol e a n d fu n cti on i n term s of con tri bu ti on to th e
process ra th er th a n person a l respon si bi l i ty a n d sta tu s. As wi th m ost
rel a ti on sh i p i ssu es, prog ress i s often sm ooth ed by focu si n g on wh a t a l l
a g ree on a n d th en m ovi n g to th e m ore con ten ti ou s i ssu es, d ri l l i n g d own
th rou g h th e m a n y resou rce-rel a ted a cti vi ti es th a t cross bou n d a ri es. Wh i ch
pa rty u l ti m a tel y u n d erta kes th e a cti vi ty sh ou l d be d efi n ed th rou g h
ca pa bi l i ty a n d ri sk a ssessm en t.

Th e poten ti a l for org a n i za ti on s to sh a re i n form a ti on a n d d evel op n ew

i d ea s i s g en era l l y on l y con stra i n ed by th ei r d esi re to reta i n kn owl ed g e
wi th i n th ei r own bou n d a ri es. Crea ti n g va l u e from i n teg ra ti on offers th e
opportu n i ty to l ook con stru cti vel y a t wh a t h a s been com m on pra cti ce,
th en d i ssem i n a te th e fa ctors th a t m a y be a d d i n g to th e cost a n d
resou rces wi th ou t tru e a d d ed va l u e (see Ta bl e 1 4. 1 ) . E ffecti ve i n teg ra ti on
sta rts wi th th e u n con ten ti ou s i ssu es th a t exi st a t th e i n terfa ce poi n ts
between m ost org a n i za ti on s, wh eth er m a n u fa ctu ri n g or servi ce-rel a ted .
Th ere a re a l wa ys con stra i n ts th a t ea ch wou l d l i ke to rem ove. O ften , th ese
a re si m pl e req u i rem en ts th a t h a ve ei th er g rown ou t of pa st probl em s or
h a ve n ever been a ppreci a ted by con si d eri n g both si d es of th e su ppl y
rel a ti on sh i p. O n ce th e process sta rts th e open n ess a n d tru st wi l l g row, a s
wi l l th e opportu n i ti es.

Table 1 4.1 – Val e c eation oc

u r f us

Eliminate wa te s S tan a ize mate ial

d rd r s Enhance e vice s r

Rationalize S im li y
p f sp eci ication
f s Joint e ea ch
r s r

doc mentation
u

Re cedu O timize o ction

p pr du Long-te m r

contingencie s inve tment

s

Remove con t aint s r s I m ove maintenance

pr S ha e e i ment
r d qu p

I nteg ate a embly

r ss Enhance e vice s r S ha e
r d pr o ct R&D
du

P ha e evelo ment
s d p Common o t o cing u s ur

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 Chapter 1 4 – Value creation

Concl us ion
I m p ro vi n g p e rfo rm a n ce cl e a rl y s u p p o rts th e i n i ti a l o b j e ct i ve s i n d i ffe re n t

wa ys , i n cl u d i n g i n d i vi d u a l s a ti s fa ct i o n th a t c o m e s fro m a ch i e vi n g g oa l s

th a t s tre tch th e o rg a n i z a ti o n s . In a d d i ti o n , g e tt i n g i m p ro ve m e n t fro m a

p ro d u ct o r s e rvi ce fo r th e sa m e i n ve s t m e n t i m p ro ve s th e re l a ti o n s h i p s

a cro s s th e wh o l e va l u e ch a i n and a t th e sa m e ti m e re i n fo rce s th e va l u e of

co l l a b o ra ti o n .

1 39
 Checklist
1 40

PART 2: How?
Ta b l e 1 4. 2 wi l l h el p yo u to a s s e s s yo u r o rg a n i z a t i o n ’s a p p ro a ch to i n n o va ti o n and co n ti n u o u s i m p ro ve m e n t .

Ta b l e 1 4. 2 – Va l u r
e c e a ti o n i n i ti a l p r
a a m e te rs

Va l u r
e c e a ti o n Ye s /N o

1 D o e s th e o rg a n i z a ti o n h a ve a cl e a r p e rs p e cti ve on wh a t va l u e m ea n s a n d d o e s th i s a l s o

re co g n i z e t h a t e xte rn a l p a rti e s m a y h a ve o t h e r va l u e d ri ve rs ?

2 I s th e re a cl e a r fo cu s o n cu s to m e r s a ti s fa ct i o n wi th i n th e o rg a n i z a t i o n ?

3 D o e s th e o rg a n i z a ti o n re co g n i z e th e p o te n ti a l n eed fo r j o i n t i n ve s tm e n t wh e re

a d d i ti o n a l va l u e ca n be cre a te d ?

4 D o e s th e o rg a n i z a ti o n h a ve an i n te rn a l fo cu s o n re s o u rce p ro fi l i n g to e n s u re th a t

i n n o va ti o n ca n be d e ve l o p e d a l o n g si d e p ro g ra m m e d e l i ve ry?

5 D o e s th e o rg a n i z a ti o n h a ve an e s ta b l i s h e d p ro ce s s t o p ro m o t e and d e ve l o p i n n o va ti o n ?

6 D o e s th e o rg a n i z a ti o n h a ve an e s ta b l i s h e d b u s i n e s s fo cu s to re vi e w th e e ffe ct i ve n e s s o f

i t s p ro ce s s ?

7 D o e s th e o rg a n i z a ti o n h a ve e s ta b l i s h e d p ro ce s s e s to u n d e rt a ke co s t–b e n e fi t a n a l ys i s

wh e n co n s i d e ri n g p ro ce s s i m p ro ve m e n ts ?
 8 When establishing collaborative programmes does the organization seek to develop
benchmarks over time?

9 Does the organization focus on implementing key initiatives to deliver additional value
from its relationships?

10 Is there an ethos of continuous improvement within the organization?

I f th e a n s we r to a l l o f th e s e q u e s ti on s i s ‘Ye s ’, th e n th e o r g a n i za ti o n h a s a p o s i ti ve f oc u s o n i n n o va ti on a n d co n ti n u o u s

i m p ro vem e n t. Th i s i s a s t ro n g p l a t f o r m to e n h a n ce re l a ti o n s h i p s f o r m u t u a l be n e f i t.

Chapter 1 4 – Value creation

1 41
Ch a p te r 1 5 – S taying tog eth e r

M a rket d em a n d s, org a n i za ti on s a n d th u s bu si n ess rel a ti on sh i ps

wi l l be l i kel y to ch a n g e over ti m e. Th i s m a y be a s a resu l t of
i n tern a l a n d extern a l fa ctors or pressu res. E ven wh ere pa rtn ers
h a ve i n vested i n crea ti n g a fi rm fou n d a ti on a n d g overn a n ce,
th e peopl e i n vol ved wi l l d evel op or m ove on , wh i ch wi l l ch a n g e
th e d yn a m i cs of th e rel a ti on sh i p. Th i s i s a stron g rea son for
em bed d i n g col l a bora ti ve pra cti ces i n th e opera ti n g m od el . To
a ch i eve perform a n ce g oa l s con ti n u ou sl y i t i s essen ti a l to
esta bl i sh a prog ra m m e th a t works to m a i n ta i n a su sta i n a bl e
rel a ti on sh i p th rou g h on g oi n g j oi n t m a n a g em en t; th i s i s th e
focu s of th i s ch a pter.

I n a ch a n g i n g worl d th e i n tern a l a n d extern a l pressu res on a n y

col l a bora ti ve rel a ti on sh i p wi l l i n evi ta bl y l ea d to i m pa cts on effecti ven ess.
I t i s a l so i m porta n t to recog n i ze th a t a s rel a ti on sh i ps evol ve th ey wi l l
u n d erg o ch a n g e, so to en su re th e m a xi m u m ben efi t i t i s i m porta n t to
u n d erta ke reg u l a r va l i d a ti on to m a i n ta i n focu s a n d effi ci en cy. N o two
rel a ti on sh i ps a re th e sa m e a n d th e d yn a m i cs of org a n i za ti on a l a n d
peopl e ch a n g es ca n i n fl u en ce perform a n ce, so i t i s eq u a l l y i m porta n t to
recog n i ze th a t a s rel a ti on sh i ps prog ress th ey n eed to be m on i tored to
en su re th a t a ppropri a te focu s i s m a i n ta i n ed on a rea s wh ere con verg en ce
m i g h t n ot be h a ppen i n g to m a xi m u m ben efi t.

E xperi en ce su g g ests th a t col l a bora ti ve rel a ti on sh i ps h a ve a m i n i m u m

effecti ve d evel opm en t cycl e, wh i ch ta kes between 1 2 m on th s to
2 4 m on th s d epen d i n g on th e com pl exi ty of th e rel a ti on sh i p. O ver th i s
peri od of ti m e m a n y fa ctors ca n a l ter, so i t i s essen ti a l th a t org a n i za ti on s
recog n i ze th e n eed to reva l i d a te a pproa ch es. Th i s wi l l i n cl u d e th e n eed
to rea d d ress th e ori g i n a l obj ecti ves a n d a ssess wh eth er th ese h a ve been
(or a re bei n g ) m et a n d wh eth er th ey sh ou l d be m od i fi ed , wh i ch i n tu rn
m a y crea te a n i m pa ct th rou g h ou t th e col l a bora ti on . Th ere a re a l so l i kel y
to be ch a n g es i n person n el , wh i ch m a y a l ter th e d yn a m i cs of th e
pa rtn eri n g tea m a n d perh a ps th e wi d er org a n i za ti on s. B S 1 1 000 ca n be
reg u l a rl y u sed to provi d e a ben ch m a rk of h ow th e opera ti on a n d th e
tea m a re con verg i n g or d i verg i n g over ti m e.

1 43
PART 2: How?

Monitor performance
I t i s com m on pra cti ce to u se both servi ce l evel a g reem en ts (SLAs) a n d key
perform a n ce I n d i ca tors (KPI s) ; h owever, th ese a re often con fu sed , wh i ch
crea tes ten si on between th e pa rti es. Accord i n g to th e I ACCM , 1 1

a n SLA typi ca l l y i d en ti fi es th e fi xed m ea su rem en ts for th e d el i very of

th e servi ces a n d spel l s ou t m ea su rem en ts for perform a n ce a n d
con seq u en ces for fa i l u re. I t m u st i n cl u d e: l evel s of req u i red
perform a n ce; con seq u en ces for fa i l u re to rea ch or m a i n ta i n th ese
l evel s; a n d d escri pti on s of th e pa rti es’ rol es a n d respon si bi l i ti es i n
a ch i evi n g th e perform a n ce l evel s.

I n bri ef, a n SLA i s a con tra ctu a l com m i tm en t; i t i s a d eta i l ed a n d

com preh en si ve d escri pti on of th e perform a n ce a spects of th e servi ce. I n
con tra st, KPI s a re h i g h -l evel m ea su res (q u a n ti ta ti ve or q u a l i ta ti ve) th a t
en a bl e th e overa l l d el i very of a servi ce to be a ssessed by both cu stom er
a n d servi ce provi d er. KPI s sh ou l d be few i n n u m ber a n d focu s on th e
servi ce’s con tri bu ti on to th e cu stom er’s bu si n ess su ccess; th ey a re often
l i n ked to a ba l a n ced scoreca rd a n d typi ca l l y m on i tor perform a n ce i n
term s of fi n a n ci a l cri teri a , cu stom er sa ti sfa cti on , i n tern a l process q u a l i ty
a n d perform a n ce, a n d sta ff ski l l s/com peten ce.

I t i s i m porta n t to u n d ersta n d a n d a g ree h ow th e perform a n ce of th e

con tra ct a n d th e rel a ti on sh i p wi l l be j oi n tl y m ea su red a n d en su re
a ppropri a te revi ews a re u n d erta ken . I n m ost org a n i za ti on s th ere wi l l be
esta bl i sh ed processes for m on i tori n g perform a n ce; freq u en tl y, h owever,
th ese a re focu sed on ou tcom es, d el i vera bl es or even profi ta bi l i ty. Th ese
a re cl ea rl y very i m porta n t, bu t wh ere col l a bora ti on i s a n i n teg ra l pa rt of
th e bu si n ess perform a n ce th i s sh ou l d a l so i n cl u d e m on i tori n g th e
stren g th of th e rel a ti on sh i p. Al l rel a ti on sh i ps a re su bj ect to ch a n g e ei th er
from i n tern a l or extern a l i n fl u en ces th a t a ffect th e ba si s of th e ori g i n a l
prog ra m m e, so i f th e rel a ti on sh i p i s d el i veri n g a n d rem a i n s a stra teg i c
a pproa ch th en i t sh ou l d be peri od i ca l l y tested a n d a d a pted to refl ect
ch a n g es i n th e bu si n ess en vi ron m en t. Th ese m a y be a s a resu l t of i n tern a l
ch a n g es by on e or both of th e pa rtn ers or (m ore l i kel y) m a rket ch a n g es
th a t m a y a l ter th e va l u e proposi ti on .

Mea su rement
I n ra i si n g th e profi l e of col l a bora ti ve a pproa ch es th e ch a l l en g e i s a l wa ys
to sh ow th a t sou n d rel a ti on sh i p m a n a g em en t a i d s effecti ven ess a n d
effi ci en cy wh i l e d el i veri n g extra va l u e. We a l l kn ow i n tu i ti vel y th a t i t
d oes, bu t provi n g th e poi n t ca n be m ore d i ffi cu l t a n d we often fi n d
ou rsel ves stru g g l i n g to m a ke th e l i n ks. Th ere i s a wel l -kn own sa yi n g th a t
‘i f you ca n ’t m ea su re i t you ca n ’t m a n a g e i t’, wh i ch m a kes a bsol u te sen se

11
I n tern a ti on a l Associ a ti o n for Con tra ct a n d Com m erci a l M a n a g em en t.

1 44
 Chapter 1 5 – Staying together

and is a p o s i ti o n th a t m o s t p e o p l e wo u l d e n d o rs e . B u t th e re a re ti m e s

wh e n th e q u e s t fo r m e a s u re m e n t g o e s b e yo n d co m m o n sen se. C l e a rl y we

sh o u l d m e a s u re p e rfo rm a n ce , i f o n l y to see wh e re we ca n i m p ro ve o r to

judge th a t we a re g e tt i n g va l u e fo r m o n e y. Th e ch a l l e n g e i s to s ta rt fro m

a p o i n t o f u n d e rs t a n d i n g wh a t i s i m p o rta n t i n re l a t i o n to th e o b j e cti ve s ,

and tra n s l a t i n g th i s i n t o re a l i s ti c m e a s u re m e n t s t h a t p ro vi d e va l u e to

th o s e managing th e p ro ce s s . F re q u e n tl y, wh e n o rg a n i z a ti o n s l o o k to

co l l a b o ra ti o n , t h e y d ri ft to wa rd s a s p i ra t i o n - b a s e d o b j e cti ve s , wh i ch is

wh y l a wye rs h a ve co n s i s te n tl y ch a l l e n g e d th e co n ce p ts o f p a rtn e ri n g .

Al te rn a ti ve l y, we re ve rt to th e l o we s t p o s s i b l e d e n o m i n a t o rs wh e re we

a re s u re to be a bl e to d e l i ve r e xa ct m e a s u re m e n t. E i th e r wa y, we a re

d e ce i vi n g o u rs e l ve s a n d fa i l i n g , wh i l e cre a ti n g th e co n d i t i o n s fo r co n fl i ct .

Joint team management

Th e p ri n ci p a l ke y t o s u s ta i n i n g a n y re l a t i o n s h i p i s to e n s u re th e re is

e ffe ct i ve j o i n t m a n a g e m e n t o f th e a p p ro a ch . Th i s s h o u l d n ot be a ta s k

fo r e xe cu ti ve m a n a g e m e n t; i t sh o u l d be fo cu s e d on th e o p e ra ti o n a l l e ve l ,

managing th e d a y- to - d a y a ct i vi ti e s o f th e re l a ti o n s h i p and e n s u ri n g

co n t i n u e d fo cu s a n d s u p p o rt . M a i n ta i n i n g b o th d e l i ve ry a n d

d e ve l o p m e n t fo cu s i s cru c i a l to e n s u re th e re l a t i o n s h i p re m a i n s p ro a cti ve .

Th i s m u s t i n vo l ve j o i n t o b j e cti ve s fo r m e a s u ri n g and m o n i to ri n g to

m a i n ta i n a d yn a m i c a p p ro a ch a cro s s t e a m s . Re va l i d a ti n g e ffe cti ve

a g re e m e n ts a n d co n tra ct s i s cru ci a l to e n s u ri n g th e a p p ro p ri a t e p l a tfo rm

fo r co l l a b o ra ti ve o p e ra ti o n s .

Supp o rt innovation
Th e re sh o u l d be co n ti n u o u s s u p p o rt a n d m o n i to ri n g o f i n n o va ti o n and

co n t i n u a l i m p ro ve m e n t, to e n s u re t h a t th e p a rtn e ri n g te a m s a re

e xp l o i ti n g th e i r j o i n t kn o wl e d g e and, wh e re a p p ro p ri a te , e n h a n ci n g th e i r

s ki l l s .

Behavio urs an d trus t

D e ve l o p i n g tru s t i n th e re l a ti o n s h i p s a n d e n s u ri n g th e a p p ro p ri a te

b e h a vi o u rs i s a ke y a s p e ct o f j o i n t m a n a g e m e n t. As t ru s t i n cre a s e s th e

p e rfo rm a n ce o f th e re l a ti o n s h i p sh ou l d i n cre a s e th e va l u e i t d e l i ve rs . Th e

wro n g b e h a vi o u rs wi l l q u i ckl y u n d e rm i n e th e si tu a ti o n , wi th o b vi o u s

i m p a ct s o n o u t p u t.

1 45
PART 2: How?

Maintain p e rfo rmance

B u si n ess rel a ti on sh i ps a re crea ted to m eet th e ch a l l en g es a n d d em a n d s of
th e m a rket a n d cu stom ers, wh eth er i n tern a l or extern a l – a n d cl ea rl y
col l a bora ti ve i n i ti a ti ves a re n o d i fferen t. I t sh ou l d be recog n i zed th a t
wh i l e i t i s i m porta n t to d evel op th e rel a ti on sh i p th e pri m e bu si n ess
obj ecti ves m u st be m et. A cri ti ca l a spect of a n y rel a ti on sh i p i s th a t i t
d el i vers th e perform a n ce th a t wa s i n i ti a l l y en vi sa g ed a n d a g reed ; a n y
fa i l u re by a pa rtn er i n a col l a bora ti ve en vi ron m en t wi l l i n evi ta bl y l ea d to
a brea kd own i n th e rel a ti on sh i p. Wh i l e th i s m a y seem obvi ou s to m a n y
peopl e, i t i s essen ti a l th a t th e pa rtn ers con ti n u e to m eet or exceed th ei r
obl i g a ti on s; i t i s a l so i m porta n t to recog n i ze th a t a fa i l u re to provi d e
ea rl y wa rn i n g s of probl em s wi l l si g n i fi ca n tl y u n d erm i n e tru st. Th i s
en su res th a t overa l l perform a n ce i s focu sed on con ti n u ou s i m provem en t.
Crea ti n g a col l a bora ti ve prog ra m m e i s on l y th e sta rt of a process;
freq u en tl y wh i l e ta rg eted i n th e ea rl y sta g es i t ca n l ose m om en tu m over
ti m e, so i t i s essen ti a l to esta bl i sh ea rl y on a prog ra m m e of
ben ch m a rki n g th a t ca n i d en ti fy a rea s of poten ti a l stress or con fl i ct th a t
m a y req u i re i n terven ti on to opti m i ze perform a n ce. Th e l on g er th e
rel a ti on sh i p i s i n pl a ce, th e g rea ter th e possi bi l i ty for com pl a cen cy to
bu i l d between th e va ri ou s pa rti es.

Di spu te re sol u tion

M a n a g i n g con fl i ct towa rd s a con stru cti ve a n d m u tu a l l y ben efi ci a l
ou tcom e i s a n essen ti a l el em en t of effecti ve col l a bora ti on . I n a n y ven tu re
wh ere peopl e a re i n vol ved th ere i s a l wa ys th e possi bi l i ty of d i fferen ces;
col l a bora ti ve worki n g i s n o d i fferen t. I t i s i m porta n t to en su re th a t th ere
i s a d i spu te resol u ti on process th a t provi d es a m ech a n i sm a n d esca l a ti on
proced u re wh ere a ppropri a te. Freq u en tl y d i spu tes, wh eth er i n tern a l or
extern a l , becom e d i sproporti on a te to th ei r rea l i m pa ct i f n ot a d d ressed
ea rl y. D i spu tes m a y be crea ted m ore from th e posi ti on i n g of i n d i vi d u a l s
th a n from th e rel a ti ve posi ti on s of th e org a n i za ti on s, so a n a l ysi s of th e
va ri ou s perspecti ves wi l l h el p to g en era te focu s. I t i s i m porta n t n ot on l y
to esta bl i sh th e percei ved ba si s of th e d i spu te bu t a l so to g a i n exa m pl es
of h ow th i s d i spu te h a s sh own i tsel f; freq u en tl y th e ou twa rd
d em on stra ti on of a d i spu te h i d es a n u n d erl yi n g probl em . Th e m ost l i kel y
ca u se i s a l a ck of tru st, wh i ch tra n sl a tes i n to a h a rd en i n g of i n terfa ces
a n d i s th en i n terpreted a s a l a ck of coopera ti on . Th e n ext m ost l i kel y
a rea for d i spu te i s a ch a n g e i n th e m a rket (by cu stom ers or extern a l
i n fl u en ces) th a t a ffects th e pa rtn er(s) . Con fl i ct wi th bu si n ess processes
often becom es a ch a l l en g e to th e tea m , wh o fi n d th em sel ves opera ti n g
ou tsi d e th ei r own org a n i za ti on . Th e m ost com m on ca u se of d i spu tes i s a
si m pl e brea kd own i n com m u n i ca ti on s wh i ch , on ce re-esta bl i sh ed ,
d i ssol ves th e con fl i ct.

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 Chapter 1 5 – Staying together

Joint exit s trategy

D e ve l o p i n g a s tru ct u re d j o i n t a p p ro a ch to fo rm u l a t i n g an e xi t s tra te g y i s

an i m p o rt a n t fa ce t o f co l l a b o ra t i o n . Th e re is a cl e a r ra ti o n a l e fo r

u n d e rs ta n d i n g on b o th s i d e s o f th e re l a ti o n s h i p h o w e a ch wi l l a ct i f o r

wh e n th e e n vi ro n m e n t ch a n g e s o r wh e n th e a g re e m e n t re a ch e s th e en d

o f i ts n a tu ra l ti m e spa n . E ve n m o re i m p o rta n t i n th e s h o rt te rm i s th a t

m u ch o f th e e xi t s tra te g y wi l l b ri n g to th e s u rfa ce i ssu e s a n d co n ce rn s o n

b oth si d e s; th e s e wi l l n eed to be a d d re s s e d to h el p th e p ro ce s s o f

bu i l d i n g t ru s t a n d o p e n n e ss, so th a t fo cu s ca n be m a i n ta i n e d on va l u e

cre a ti o n and n o t d e fe n s i ve p ro te cti o n i s m . C o n s i d e ri n g an e xi t s tra te g y

m a y be vi e we d a s n e g a ti ve , bu t i n fa c t i t i s o n e o f th e ke y s tru ct u re s th a t

a d d s s tre n g th to th e re l a ti o n s h i p and a i d s th e bu i l d i n g o f g re a te r

i n te g ra ti o n .

The relation s hi p health check

A re l a t i o n s h i p h e a l th ch e ck a p p ro a ch d ra ws u p o n th e ke y e l e m e n t s o f

BS 1 1 000 and h o w th e s e a re vi e we d by b oth p a rtn e rs i n th e re l a ti o n s h i p .

Th i s i s a cru ci a l fa ce t o f t h e a p p ro a ch , s i n ce a re l a t i o n s h i p ca n n o t b e

co n s i d e re d s a t i s fa ct o ry u n l e s s i t i s m e e ti n g th e o b j e cti ve s a n d a s p i ra ti o n s

o f b o th p a rtn e rs . Tru s t i s e s s e n t i a l to b u si n e ss, so i t i s p e rh a p s fi tti n g to

s ta rt fro m a p e rs p e cti ve o f l o o ki n g a t th e i ssu e o f tru s t a s a ke y fa ct o r i n

bu i l d i n g m o re e ffe ct i ve b u s i n e s s re l a ti o n s h i p s . Th e re a re n u m e ro u s

b e h a vi o u r p ro fi l i n g to o l s , s u ch a s M ye rs B ri g g s , wh i ch l o o k a t th e

p e rs o n a l a tt i tu d e s a s we l l a s th o s e t h a t a re re fl e ct i ve o f th e o rg a n i z a ti o n s

i n vo l ve d , as an i n d i ca to r o f th e s t re n g t h o f th e re l a ti o n s h i p ; th e

p e rs p e cti ve o f th e o rg a n i z a t i o n p ro vi d e s a n o ve rvi e w o f b e h a vi o u ra l

tra i ts . As s e s s i n g h o w e a ch i n d i vi d u a l s e e s th e fra m e wo rk wi th i n wh i ch

b e h a vi o u rs a re d e ve l o p i n g p ro vi d e s a h e l p fu l b e n ch m a rk o f p o te n ti a l

co n s tra i n t s .

Concl us ion
Ri sk – a n d th e p e rce p ti o n o f ri s k – i s a m a j o r co n s t ra i n t to any

re l a t i o n s h i p , and in p a rti cu l a r o n e t h a t i s fo cu s e d on i n n o va ti o n . B u si n e ss

in g e n e ra l and co l l a b o ra ti ve re l a ti o n s h i p s m u s t m a n a g e ri s k e ffe ct i ve l y, so

th e e s t a b l i s h m e n t o f ri s k re g i s te rs i s a ke y to o l in a n y m a n a g em en t

p ro ce s s . As a m e a s u re o f th e s tre n g th and e ffe ct i ve n e s s o f a re l a ti o n s h i p ,

a n a l ys i s o f th e cu rre n t ri s k p ro fi l e ca n p ro vi d e a va l u a b l e i n d i ca ti o n of

h o w we l l th e re l a t i o n s h i p i s p e rfo rm i n g . Th e te s t o f wh e th e r a

p ro g ra m m e i s en g a g i n g th e o p e ra ti o n i s th e a d d i ti o n a l i n i t i a ti ve s t h a t

a re d e ve l o p i n g co m p l e m e n ta ry n e w i d e a s ; th e re l a ti o n s h i p wi l l e n h a n ce

i t s s t re n g t h . An y re l a t i o n s h i p wi l l i n e vi ta b l y fa ce so m e d i s p u te s b e twe e n

th e p a rti e s ; th e s t re n g t h o f th e re l a ti o n s h i p i s fo u n d e d on h o w we l l th e s e

a re a d d re s s e d and re s o l ve d . I n cre a s e s i n d i s p u t e s m a y n o t n e ce s s a ri l y b e

1 47
PART 2: How?

n e g a ti ve , s i n ce a s o rg a n i z a t i o n s s e e k to e xp l o i t th e b e n e fi ts o f

co l l a b o ra ti ve wo rki n g t h e re is an i n cre a s e d te n d e n cy fo r co n fl i cts i n

t h i n ki n g to a ri s e . Wh a t i s cru ci a l i s th a t th e s e a re re s o l ve d to m u tu a l

a d va n ta g e and n o t l e ft to cre a te a p o te n ti a l b re a kd o wn o f th e

re l a ti o n s h i p .

Re l a ti o n sh i p m a t u ri ty a g a i n s t o rg a n i z a t i o n a l co l l a b o ra ti ve co m p e te n ce of

an o rg a n i z a ti o n in i ts co l l a b o ra ti ve a p p ro a ch e s ca n be u se d a s p a rt o f th e

s e l e cti o n p ro ce s s , b u t m o re i m p o rta n tl y i t g i ve s a m e a s u re d a p p ro a ch to

m o n i to ri n g i m p ro ve m e n t s . As p a rt o f th e o ve ra l l h e a l th ch e ck th e annual

va l i d a ti o n o f p ro g re s s p ro vi d e s a b e n ch m a rk i n b oth m e a s u ri n g th e

s tre n g t h o f th e re l a ti o n s h i p and a sse ssi n g th e d e ve l o p m e n t o f ca p a b i l i ty

a g a i n st BS 1 1 000.

1 48
 Chapter 1 5 – Staying together

Checklist
R e l a ti o n s h i p s n e e d co n s ta n t m o n i t o ri n g and s u p p o rt to a ch i e ve th e fu l l

va l u e o f th e co l l a b o ra t i o n , to e n s u re d e l i ve ry o f p ri m a ry o b j e cti ve s

th ro u g h p e rfo rm a n ce and to e n co u ra g e th e d e ve l o p m e n t o f a d d e d va l u e .

Ta b l e 1 5. 1 h e l p s yo u to a s s e s s th e e xt e n t to wh i ch yo u r o rg a n i z a ti o n ’s

i n te rn a l p ro ce s s e s a re ca p a b l e o f m o n i to ri n g p e rfo rm a n ce j o i n tl y wi t h

p a rtn e rs .

Ta b l e 1 5 . 1 – S ta yi n g to g e th e r i n i ti a l p a ra m e te rs

S ta yi n g to g e th e r Ye s/
No

1 I s t h e re an e s ta b l i s h e d b a s i s fo r j o i n t e xe cu ti ve

s p o n s o rs h i p and re g u l a r re vi e ws ?

2 I s t h e re a s t ru ctu re d a p p ro a ch e d to e s ta b l i s h i n g a

j o i n t m a n a g e m e n t a p p ro a ch th a t re co g n i z e s t h e

m u tu a l re s p o n s i b i l i ti e s o f co l l a b o ra ti ve

p ro g ra m m e s ?

3 D o e s th e o rg a n i z a t i o n h a ve a fl e xi b l e a p p ro a ch to

p e rfo rm a n ce re p o rti n g t h a t wo u l d a cco m m o d a te

th e n e e d s o f e xte rn a l p a rti e s ?

4 Are th e o rg a n i z a ti o n ’s i n ce n ti ve p ro g ra m m e s

co n d u c i ve to wo rki n g a cro s s o rg a n i z a ti o n a l

b o u n d a ri e s a n d s u p p o rti n g j oi n t m a n a g em en t of

p ro g ra m m e s ?

5 I s t h e re an e s ta b l i s h e d m a n a g e m e n t p ro ce s s th a t

s u p p o rts th e j o i n t m a n a g e m e n t o f co l l a b o ra ti ve

p ro g ra m m e s ?

6 D o e s th e o rg a n i z a t i o n h a ve e s ta b l i s h e d p ro ce s s e s i n

p l a ce to m o n i to r a n d m e a s u re re l a ti o n s h i p s a n d

b e h a vi o u rs ?

7 I s t h e re a m od el i ssu e re s o l u ti o n p ro ce s s i n p l a ce ?

8 Do e xi s ti n g m a n a g e m e n t m o d e l s i n co rp o ra te th e

n eed to j o i n tl y m o n i t o r m a rke t ch a n g e s th a t m i g h t

i n fl u e n ce a c o l l a b o ra ti ve a rra n g e m e n t?

1 49
PART 2: How?

9 Do the current skills development programmes

extend to external parties and do current processes
recognize the needs for joint programmes?

10 Does the organization have established guidelines

for the development and monitoring of joint exit
strategies?

I f th e a n s we rs to a l l th e q u e s ti o n s a re ‘Ye s ’, th e o r g a n i za ti o n h a s

i n te r n a l p ro ce s s e s th a t re co g n i ze th e n e e d s to j o i n tl y m o n i to r

p e rf o r m a n ce a n d m a n a g e i s s u e s . I t i s p o s i ti ve l y p l a ce d to a ch i e ve

b en e f i t s fro m col l a b o r a ti ve a p p ro a ch e s .

1 50
Ch a p te r 1 6 – Exit s trategy

Th e exi t stra teg y i s th e l a st sta g e i n th e rel a ti on sh i p l i fe cycl e,

bu t i s i n fa ct a key a spect th a t sh ou l d be a d d ressed a s pa rt of
th e i n i ti a l th i n ki n g a n d ca rri ed th rou g h th e wh ol e l i fe cycl e, a s
d escri bed i n th i s ch a pter. Th e exi t stra teg y sh ou l d n ot be
con fu sed wi th con tra ct term i n a ti on ; a l th ou g h th i s i s i m porta n t
i t a d d resses a n oth er a spect of rel a ti on sh i ps wi th su ppl i ers. Th e
stra teg y sh ou l d focu s on h ow th e pa rti es pl a n to d i sen g a g e
wh en n ecessa ry a n d en su re effecti ve bu si n ess con ti n u i ty a n d
cu stom er su pport.

A stron g rel a ti on sh i p wi l l recog n i ze th e va l u e of l ooki n g to m on i tor th e

ch a n g es a n d en su re th a t th e con cern s a n d n eed s of ea ch pa rtn er a re d u l y
a d d ressed . I t i s i m porta n t to en su re th a t wh i l e on e pa rti cu l a r i n i ti a ti ve
m a y com e to i ts u sefu l en d d u e to a va ri ety of fa ctors, oth ers m a y – a n d
sh ou l d – em erg e from su ccessfu l col l a bora ti on . Th e i m pl i ca ti on of
term i n a ti n g a n a g reem en t a n d h ow th i s i s vi ewed i n tern a l l y (a n d from
th e m a rket) i s cru ci a l to th e repu ta ti on of th e pa rti es. Wh i l e i t m a y be
a ppropri a te to cea se a cti vi ty, h ow th i s i s presen ted a n d i n terpreted wi l l
i n fl u en ce th e wa y ea ch pa rty proa cti vel y a pproa ch es d i sen g a g em en t. Th i s
i s pa rti cu l a rl y i m porta n t i n su ppl y ch a i n prog ra m m es wh ere servi ces a n d
ou tsou rci n g prog ra m m es a re i n vol ved , wh i ch m a y req u i re peri od i c
re-ten d eri n g for reg u l a tory or com peti ti ve rea son s.

Th e l i fespa n of a n y bu si n ess rel a ti on sh i p wi l l va ry between org a n i za ti on s

a n d m a rket i n fl u en ces; a d a pti n g to th ese ch a n g es i s a cru ci a l pa rt of
d evel opi n g effecti ve col l a bora ti ve pa rtn eri n g a rra n g em en ts. Th e
d evel opm en t of effecti ve i n teg ra ted a cti vi ti es req u i res th e bu i l d i n g of
tru st between th e pa rti es, wh i ch over ti m e wi l l en h a n ce th e
opportu n i ti es – th ose wh o expect to m a xi m i ze th ei r i n vestm en t over a
l i m i ted ti m e wi l l g en era l l y fi n d th a t col l a bora ti on d oes n ot provi d e
sol u ti on s. M a n y peopl e m a y con si d er th a t to a d d ress a n exi t stra teg y a t
th e ou tset of a rel a ti on sh i p i n fers a n a ccepta n ce th a t th e rel a ti on sh i p wi l l
fa i l , bu t th i s i s n ot th e ca se. E xperi en ce su g g ests th a t bei n g open a bou t
a l l possi bi l i ti es a l l ows th e pa rtn ers to focu s on every a spect of
i n teg ra ti on .

1 51
PART 2: How?

M aintain a joint exit s trategy

J o i n tl y d e ve l o p i n g and m a i n ta i n i n g a fo cu s o n d i s e n g a g e m e n t e n s u re s

t h a t th e p a rtn e rs h a ve a cl e a r fo cu s o n th e va l u e o f th e co l l a b o ra ti o n .

Ta ki n g i n to a cco u n t th e p o te n ti a l p ro b l e m s o f d i s e n g a g i n g th e

re l a ti o n s h i p m e a n s th a t a l l p a rti e s ca n e s ta b l i s h an e xi t s tra te g y th a t

a l l o ws th e m to d e fi n e th e l i m i ts o f e n g a g e m e n t . Th e d e ve l o p m e n t o f

co l l a b o ra ti ve re l a t i o n s h i p s wi l l o ft e n h a ve a d e fi n e d l i fe s p a n to m eet

s p e ci fi c p ro j e ct re q u i re m e n ts , and a l o n g si d e th i s th e b u si n e ss

e n vi ro n m e n t i s s u b j e ct to ch a n g e . I t i s th e re fo re i m p o rt a n t i n any

d e ve l o p m e n t t o ta ke i n to co n s i d e ra ti o n th e i m p a ct s o f ti m e and th e

i m p l i ca ti o n s th a t a n i n t e g ra te d o p e ra t i o n m a y i n tro d u ce . D u ri n g i ts

fo rm a ti o n th e re l a ti o n s h i p m u s t ta ke i n to a cco u n t th e p ro ce s s th a t wi l l

l ea d to th e e ve n tu a l d i se n g a g em e n t o f th e p a rtn e rs . Th i s m a y n o t n e e d

to be pl a n n ed in d e ta i l , b u t sh o u l d i d e n ti fy th e ke y i m p l i ca ti o n s o f

s h a ri n g kn o wl e d g e a cro s s o rg a n i z a ti o n a l b o u n d a ri e s . Wh a t m a n y p e o p l e

do n o t co n s i d e r wh e n e n te ri n g i n to a m o re i n te g ra te d re l a ti o n s h i p i s th a t

p re vi o u s co n t ra cti n g i n te rfa ce s ca n n e ve r b e th e sa m e .

E s tabli s h bo u n d a rie s
I t i s i m p o rta n t t o d e fi n e th e b o u n d a ri e s o f th e re l a ti o n s h i p cl e a rl y,

th o u g h i t i s a cce p te d th a t t h e s e m a y ch a n g e o ve r ti m e b y m u tu a l

a g re e m e n t. Th i s s h o u l d i n cl u d e th e b u s i n e s s ri s ks ; in a n y b u si n e ss

e n vi ro n m e n t th e re a re m a n y fa ct o rs a n d p re s s u re s th a t ca n h a ve an

i m p a ct o n th e o p e ra ti o n a l d ri ve rs . Wh e n co n s i d e ri n g th e n eed fo r a n e xi t

s tra te g y a n d d e ve l o p i n g th e a p p ro p ri a t e a p p ro a ch , th e s e ca n g e n e ra l l y

be fo cu s e d i n to e i g h t ke y p h a s e s o f B S 1 1 000, th o u g h e ve ry b u s i n e s s a n d

o rg a n i z a ti o n wi l l e ve n tu a l l y re fi n e th e s e to re fl e ct th e i r l o ca l i ssu e s a n d

i m p a cts . As p a rt o f th e p ro ce s s o f wo rki n g to g e t h e r i n th e d e ve l o p m e n t

of a n i n te g ra te d re l a ti o n s h i p , th e se p ri m a ry co n ce rn s wi l l i n fl u e n ce th e

wa y th a t t e a m m e m b e rs p a rti ci p a te . I n t e g ra t i o n is a p ro g re s s i ve p ro ce s s

t h a t g ro ws a s th e te a m i n ve s t i g a te s va l u e cre a t i o n o p p o rtu n i t i e s ; h a vi n g

cl e a r b o u n d a ri e s a l l o ws th e m to a vo i d p o te n t i a l a re a s o f co n fl i ct t h a t

re a ch b e yo n d th e i r b ri e f.

M onito r change s
Th e re sh ou l d be re g u l a r j o i n t re vi e ws o f b o th th e m a rke t a n d th e

re l a ti o n s h i p , to e n s u re i t i s s ti l l re l e va n t a n d d e l i ve ri n g va l u e to th e

p a rti e s . Afte r t h e i m p l e m e n ta ti o n of a n i n i ti a l co l l a b o ra t i ve p ro g ra m m e it

i s i n e vi ta b l e th a t ch a n g e s wi l l o ccu r, b o th i n si d e th e p a rtn e rs h i p and in

th e wi d e r tra d i n g e n vi ro n m e n t. M a n y o f th e s e wi l l be a d d re s s e d b y th e

tea m and a d o p te d wi th i n th e i r o p e ra t i o n s , wh i l e o th e rs m a y a ffe ct th e

l o n g - t e rm va l i d i t y o f t h e re l a t i o n s h i p . I t i s e s s e n ti a l t h a t p a rtn e rs

re c o g n i z e th e s e ch a n g e s a n d ta ke a cti o n to manage th e i m p l i ca ti o n s .

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 Chapter 1 6 – Exit strategy

Th ere a re m a n y fa ctors th a t th e bu si n ess com m u n i ty h a s to con ti n u a l l y

a d j u st a n d a d a pt to. I n th e con text of th e g l oba l bu si n ess en vi ron m en t
th ese i ssu es ca n crea te both opportu n i ti es a n d ri sks; th e poten ti a l
a d va n ta g es th a t col l a bora ti ve rel a ti on sh i ps ca n d el i ver a re often focu sed
a rou n d th e n eed to m eet som e of th ese ch a l l en g es, bu t th ey ca n a l so be
fa ctors th a t rel a ti on sh i ps n eed to con si d er i n term s of ch a n g i n g th e
prem i se for worki n g cl oser tog eth er.

Ch a n g e i s wh a t every bu si n ess h a s to a ccom m od a te u n d er n orm a l

con d i ti on s, bu t th e i m pl i ca ti on for col l a bora ti ve rel a ti on sh i ps i s th a t th ese
ch a n g es m a y a ffect on l y on e pa rtn er – bu t a s a resu l t a ffect th e oth er.
Al tera ti on s i n reg u l a tory d em a n d s or pol i ti ca l stru ctu res ca n i n trod u ce
con stra i n ts th a t cross org a n i za ti on a l bou n d a ri es; a n d econ om i c va ri a ti on s
a l ter th e cu stom er perspecti ve, wh i ch ca n provi d e a d va n ta g es to th e
com peti ti on . An y col l a bora ti on m u st be esta bl i sh ed a g a i n st th e
ba ckg rou n d of th e m a rket en vi ron m en t. I n th e sa m e wa y i t ca n esta bl i sh
th e pa ra m eters a n d ben ch m a rks a g a i n st wh i ch th e pa rtn ers con si d er
bei n g rel ea sed from th ei r obl i g a ti on s. E sta bl i sh i n g cl ea r ru l es of
d i sen g a g em en t m ea n s th a t both pa rti es ca n m on i tor th e m a rket a n d
recog n i ze th e d evel opi n g ch a n g es so a s to ta ke a l tern a ti ve opti on s.

E s tabli s h trigge rs
I t i s essen ti a l to u n d ersta n d th e tri g g ers th a t wou l d i n d i ca te th e
rel a ti on sh i p h a s fu l fi l l ed i ts u sefu l l i fe. Th i s d oes n ot m ea n th a t
col l a bora ti on h a s fa i l ed ; on th e con tra ry, j oi n t forwa rd pl a n n i n g i s th e
key to a n effecti ve rel a ti on sh i p. E a ch org a n i za ti on i s a con sti tu en t of th e
col l a bora ti on , so i f on e of th em u n d erg oes a si g n i fi ca n t ch a n g e i n
stru ctu re or own ersh i p th i s a ffects th e overa l l proposi ti on . Th i s d oes n ot
m ea n th a t rel a ti on sh i ps m u st fa i l u n d er th ese con d i ti on s, bu t i t n eed s to
recog n i ze th e possi bi l i ty th a t (for exa m pl e) own ersh i p cou l d h a ve a
fu n d a m en ta l ch a n g e i n d i recti on . Th i s a l l ows th e pa rtn ers to con si d er
opti on s.

I n th e tra d i n g m a rketpl a ce m a n y fa ctors d ri ve th e sh a reh ol d ers a n d

d i recti on of bu si n ess ven tu res. So restru ctu ri n g a n d ra ti on a l i za ti on m a y
often d ri ve th e n eed for pa rtn eri n g ; i t m a y a l so crea te a n ew worki n g
en vi ron m en t th a t i s cou n ter to th e oth er pa rtn er(s) . Th e va l u e-a d d ed
ca pa bi l i ty of th e a rra n g em en t i s cru ci a l to i ts su ccess; th e m ore robu st th e
rel a ti on sh i p, th e g rea ter th e proba bi l i ty th a t i t wi l l su rvi ve m a j or
corpora te ch a n g e. Th e a rea th a t presen ts th e bi g g est ch a l l en g e wi l l com e
from m erg ers a n d a cq u i si ti on s, wh ere a d d i ti on a l i n tern a l resou rces a n d
ca pa bi l i ti es con fl i ct wi th extern a l pa rtn ers or wh ere th e stra teg y of th e
n ew org a n i za ti on ta kes a d i fferen t d i recti on from th a t wh en th e
pa rtn ersh i p wa s esta bl i sh ed .

Th e effecti ven ess of a n exten d ed en terpri se d epen d s l a rg el y on th e

person n el wh o opera te th e a cti vi ty on a d a y-to-d a y ba si s. Th ere i s a l wa ys

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PART 2: How?

a ch a l l e n g e wh e n ke y i n d i vi d u a l s m o ve on o r a re re p l a ce d o ve r ti m e . Th e

ro b u s tn e s s o f th e b u s i n e s s p ro ce s s e s th a t a re pu t i n p l a ce and th e

s tre n g t h o f th e va l u e p ro p o s i ti o n s wi l l be te s t e d wh e n th e re a re ch a n g e s

to th e i n fl u e n ci n g p l a ye rs . E ve ry re l a t i o n s h i p fa ce s th e s e ch a l l e n g e s a t

som e p o i n t, b u t i f th e re l a ti o n s h i p i s ro b u s t i t ca n o ve rco m e som e

va ri a ti o n s i n th e te a m . H o we ve r, i t h a s to be re co g n i z e d t h a t wh e n th e re

a re m a j o r co rp o ra te ch a n g e s th e s p o n s o rs h i p o f s p e ci a l re l a ti o n s h i p s m a y

a l so co m e u n d e r p re s s u re .

Som e p e rs o n n e l ch a n g e s wi l l ce rta i n l y te s t th e s tre n g th o f th e te a m and

m a y re s u l t i n th e re l a ti o n s h i p h a vi n g to l o o k to wa rd s d i s co n n e cti n g th e

o rg a n i z a ti o n s . Th e g re a t e r d i ffi cu l ty co m e s i n ca s e s wh e re s ta ff h a ve been

t ra n s fe rre d b e twe e n p a rtn e rs o r h a ve been a ssi g n e d to s p e ci a l

p ro g ra m m e s o u ts i d e th e i r o rg a n i z a t i o n ’s n o rm a l s tru ct u re . Wh e n cre a t i n g

co l l a b o ra ti ve ve n t u re s th a t e xte n d th e o rg a n i z a ti o n s , i t i s i m p o rta n t t o

e n s u re th a t s t a ff d o n ot see th e a rra n g e m e n t a s a cu l - d e - s a c i n te rm s o f

t h e i r i n d i vi d u a l ca re e rs . Th i s fa cto r m u s t a l s o co n s i d e r th e re g u l a to ry

i m p a cts o f s ta ff a s s i g n m e n ts a n d th e l o n g - te rm l o ca l i m p a cts .

B u s ine ss contin u ity

Th e fo u n d a ti o n of a so u n d re l a ti o n s h i p i s th a t wh i l e i t co n t i n u e s to add

va l u e i t m u st a l so re co g n i z e th e i m p l i ca t i o n s o f m a i n ta i n i n g co n t i n u i ty

fo r b o t h th e p a rtn e rs a n d th e i r cu s to m e rs . C l e a rl y, b u s i n e s s o p e ra t i o n s d o

n o t s i m p l y i n vo l ve th e p a rtn e rs ; th e y e xt e n d i n to th e cu s t o m e r b a s e and

th e wi d e r m a rke tp l a ce . Th e re s p o n s i b i l i ti e s th a t o p e ra t i n g o rg a n i z a ti o n s

a ccu m u l a te m a y re m a i n a fte r th e p a rtn e rs h a ve a g re e d n o t to co n ti n u e

th e re l a ti o n s h i p . In a n y ca s e wh e re th e p a rt i e s a g re e th a t fu t u re j oi n t

a ct i vi t y m a y n o t b e a p p ro p ri a te , th e re wi l l be o b l i g a t i o n s t h a t s ti l l

re q u i re s e rvi ci n g and th e s e m a y h a ve been d e ve l o p e d th ro u g h j oi n t

p a rti ci p a ti o n and re s o u rce s . Wh e n d e ve l o p i n g a co l l a b o ra t i ve co n ce p t i t i s

i m p o rta n t t o u n d e rs t a n d th e i m p l i ca ti o n s o f t h e p ro p o s e d m a rke t

o ffe ri n g s , wh i l e i t i s g e n e ra l l y o n e o r o th e r p a rtn e r wh o a ct u a l l y

co n tra ct s wi th cu s t o m e rs . Th e m a n n er i n wh i ch th e s e rvi c e o r p ro d u ct i s

p ro vi d e d wi l l be d epen d en t on re s o u rce s a n d i n p u t fro m s e ve ra l p a rt n e rs

and th e i r s u p p l i e rs . In d e ve l o p i n g an e xi t s tra te g y t h e p a rtn e rs m u s t

co n s i d e r th e wa y i n wh i ch cu rre n t l i a b i l i ti e s wi l l be fu l fi l l e d ; th e

re p u ta ti o n s o f a l l p a rti e s a re i m p o rta n t a n d s u p p o rt to th e cu s to m e r i s

cru ci a l fo r fu tu re a cti vi ti e s .

Tran s ition
Th e t e rm i n a ti o n o f a n y co l l a b o ra ti ve i n i t i a ti ve n e e d s to be e ffe cti ve l y

o rch e s t ra te d b y th e p a rt n e rs . Th i s i s p a rt i cu l a rl y i m p o rta n t wh e re s e rvi ce

p ro vi s i o n i s bei n g tra n s fe rre d to a n o th e r p a rty. Th e tra n s fe rri n g of

re s o u rc e s a n d p ro d u cti o n a cti vi ti e s b e twe e n p a rt n e rs o fte n a ri s e s o u t o f

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 Chapter 1 6 – Exit strategy

expl ori n g th e opti m i za ti on of bu si n ess d el i very processes, bu t i n d oi n g so

vu l n era bi l i ti es ca n be crea ted ; th u s th ese a l tern a ti ve va l u e proposi ti on s
m u st ta ke i n to a ccou n t th e i m pl i ca ti on s of fu tu re a bi l i ti es to m eet
con tra ctu a l n eed s. Cl ea rl y, u n d er th e ba n n er of a robu st rel a ti on sh i p
th ese i ssu es ca n be a ccom m od a ted , bu t i n ca ses wh ere th e pri m e pa rtn er
m a kes d eci si on s ou tsi d e th e m od el th en g a ps ca n be l eft on a l l si d es – to
th e d etri m en t of both pa rti es a n d th ei r rel a ti on sh i ps wi th th ei r
cu stom ers.

F u ture o pp o rtu nitie s

Col l a bora ti ve i n teg ra ti on offers th e opportu n i ty for org a n i za ti on s to
exten d th ei r i n d i vi d u a l ca pa bi l i ti es a n d m a rket rea ch th rou g h com bi n ed
opera ti on s. Th ese m a y be ti m e-l i m i ted or open -en d ed , bu t i n every ca se
th ere i s a n eed for th e pa rti es to open l y a d d ress wh a t th ey n eed to d o i n
th e even t th a t th e rel a ti on sh i p i s n o l on g er vi a bl e. E a ch pa rty m u st
con si d er wh a t th ey wi l l con tri bu te for sh ort-term g a i n a n d wh a t m a y be
a t ri sk i n th e l on g er term . Fi n a l l y, i f th e rel a ti on sh i p h a s been wel l
m a n a g ed a n d h a s d el i vered i ts obj ecti ves, th en th e wa y sh ou l d be open
to con si d er fu tu re possi bi l i ti es for col l a bora ti on . Th e fu tu re offers th e
perspecti ve th a t m ore a n d m ore org a n i za ti on s wi l l l ook towa rd s th i s
a pproa ch a s a vi a bl e a l tern a ti ve. I n ti m e, com peti ti ven ess wi l l be between
bu si n ess cl u sters ra th er th a n between i n d i vi d u a l org a n i za ti on s. Th i s open s
u p th e prospect of pa rtn ers l ea vi n g on e rel a ti on sh i p a n d l i n ki n g wi th
com peti ti ve cl u sters, wh i ch a g a i n ra i ses th e prospect of kn owl ed g e
fl owi n g a cross com peti ti ve bou n d a ri es.

Concl us ion
Th e exi t stra teg y i s freq u en tl y con si d ered a s bei n g n eg a ti ve. H owever,
from experi en ce a wel l -d efi n ed stra teg y wi l l h el p to su pport en g a g em en t
a n d en su re cl a ri ty for th e pa rti es a s th ei r cu rren t bu si n ess a cti vi ty cea ses
or rea ch es th e en d of i ts u sefu l n ess. E xperi en ce su g g ests th a t effort
d u ri n g th e d evel opm en t of col l a bora ti ve prog ra m m es a n d th rou g h ou t
th ei r l i fe cycl e (to m a i n ta i n a focu s on th e en d g a m e a n d perh a ps th e
fu tu re) wi l l u n d erpi n th e rel a ti on sh i p.

H ow we exi t from a rel a ti on sh i p sa ys a g rea t d ea l a bou t th e i n teg ri ty of

th e pa rti es, th e stren g th of th ei r rel a ti on sh i p a n d th ei r poten ti a l to
col l a bora te i n th e fu tu re.

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PART 2: How?

Checklist
E sta bl i sh i n g a n exi t stra teg y ca n be on e of th e m ost posi ti ve a spects i n
d evel opi n g a col l a bora ti ve a pproa ch , si n ce i t a l l ows th e pa rti es to
con si d er th e i m pl i ca ti on s for th ose i n vol ved a n d en su re a con ti n u ed focu s
on su sta i n a bl e rel a ti on sh i ps (see Ta bl e 1 6. 1 ) .

Ta b l e 1 6 . 1 – E xi t sr
t a te g y i n i ti a l p r
a a m e te rs

E xi t sr
t a te g y Ye s /

No

1 I s th ere a recog n i zed process for crea ti n g a n d

m a i n ta i n i n g a n exi t stra teg y?

2 I s th ere a req u i rem en t for j oi n t m a n a g em en t tea m s

to m a i n ta i n a focu s on th e l i fe cycl e of rel a ti on sh i ps
a n d i ts va l u e to th e org a n i za ti on ?

3 D oes th e org a n i za ti on cl ea rl y d efi n e th ose tri g g ers

th a t m i g h t n ecessi ta te th e a cti va ti on of a n exi t
stra teg y?

4 I s th ere a cl ea rl y d efi n ed process for th e

org a n i za ti on to secu re i n tel l ectu a l property?

5 D o cu rren t processes recog n i ze th e n eed to d efi n e

own ersh i p of I PR th a t i s crea ted th rou g h a
col l a bora ti ve worki n g a rra n g em en t?

6 I n d evel opi n g a col l a bora ti ve a pproa ch d o th e

cu rren t processes recog n i ze th e poten ti a l ri sks for
kn owl ed g e tra n sfer or l oss of ski l l s?

7 As pa rt of th e d evel opm en t of col l a bora ti ve

i n i ti a ti ves, d o th e cu rren t bu si n ess processes
recog n i ze th e i m pl i ca ti on s for both cu stom ers a n d
su ppl i ers i n th e even t of h a vi n g to exi t th e
rel a ti on sh i p?

8 D o cu rren t d evel opm en t processes ta ke fu l l a ccou n t

of a l l sta keh ol d ers wh en con si d eri n g th e
esta bl i sh m en t of a col l a bora ti ve m od el ?

9 D o cu rren t con tra ct m od el s i n corpora te cl ea rl y

d efi n ed l i a bi l i ti es for a l l pa rti es?

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 Chapter 1 6 – Exit strategy

10 Is it part of the current business processes to

incorporate a focus on future joint relationships
with collaborative partners?

I f th e a n s we r to a l l o f th e q u e s ti on s i s ‘Ye s ’, th e o r g a n i za ti o n h a s

c re a te d a co l l a b o r a ti ve o p e r a ti n g m o d e l th a t i n i ti a l l y con s i d e rs th e

i m p l i ca ti on s o f e xi ti n g th e re l a ti o n s h i p , wh i ch p ro vi d e s a b a s i s to

a s s e s s r i s k s a n d be n e f i t s . Th e o r g a n i za ti on i s s o u n d l y p l a ce d to c re a te

m o re rob u s t a n d s u cce s s fu l p ro g r a m m e s .

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Ch a p te r 1 7 – I m p lem en ting collabo r ative
ce rti fication p rog ram m e s

Th e a i m of a d opti n g a sta n d a rd for col l a bora ti on i s to provi d e

a pl a tform for su sta i n a bl e rel a ti on sh i ps by i n teg ra ti n g best
pra cti ce i n to th e opera ti n g processes of org a n i za ti on s. Th i s wi l l
esta bl i sh con si sten cy of a pproa ch a n d crea te th e fou n d a ti on for
d ri vi n g a ppropri a te beh a vi ou rs a n d ski l l s d evel opm en t.
Certi fi ca ti on to a sta n d a rd sh ou l d be seen a s va l i d a ti on of th ose
a pproa ch es; th i s ch a pter d escri bes th e process of i m pl em en ti n g
col l a bora ti ve certi fi ca ti on prog ra m m es.

For m a n y org a n i za ti on s col l a bora ti on i s a n i n teg ra l pa rt of th ei r

m a ke-u p, bu t for oth ers i t m a y req u i re a cu l tu ra l sh i ft a n d ch a n g es to
th ei r cu rren t opera ti on a l a pproa ch es. Th i s cl ea rl y m a y n ot be a ppl i ca bl e
to every bu si n ess a cti vi ty or rel a ti on sh i p, so i n d evel opi n g a n
i m pl em en ta ti on pl a n for col l a bora ti on i t pa ys to focu s from th e top a s to
wh ere col l a bora ti ve worki n g wi l l a d d va l u e. I t th en req u i res a n
a ssessm en t or g a p a n a l ysi s to u n d ersta n d wh a t i t m a y be n ecessa ry to
ch a n g e or be com pl em en ted to m a ke u se of th e B S 1 1 000 fra m ework. I f
you r org a n i za ti on h a s g i ven posi ti ve respon ses to th e ch eckl i sts i n th e
previ ou s ch a pters coveri n g th e B S 1 1 000 fra m ework, th en i t i s l i kel y th a t
exi sti n g col l a bora ti ve prog ra m m es a l rea d y m eet m ost (i f n ot a l l ) of th e
sta n d a rd ’s req u i rem en ts.

Th e focu s for a d opti n g a n y sta n d a rd i s to i n teg ra te best pra cti ce to

en h a n ce th e opera ti on s of th e bu si n ess, so a s to expl oi t th e ben efi ts. I n
m ost ca ses th i s wi l l l ea d to som e d eg ree of org a n i za ti on a l ch a n g e.
Certi fi ca ti on sh ou l d be seen n ot a s th e g oa l bu t a s a con si sten t
ben ch m a rk for su sta i n a bl e perform a n ce a n d recog n i ti on th a t a ca pa bi l i ty
h a s been esta bl i sh ed . Th ere ca n be m a n y rea son s for seeki n g certi fi ca ti on
– cu stom er d ri vers, d i fferen ti a ti on , process i m provem en t a n d so on , bu t
pri m a ri l y i t sh ou l d be seen a s a m ea n s to en su re a su sta i n a bl e a pproa ch ,
crea ti n g a n en vi ron m en t wh ere best pra cti ce becom es com m on pra cti ce
for th e org a n i za ti on . Th i s i s pa rti cu l a rl y a ppl i ca bl e to col l a bora ti ve
bu si n ess rel a ti on sh i ps, wh ere i m pl em en ta ti on m a y be con stra i n ed by
tra d i ti on a l th i n ki n g .

Th i s ch a pter on i m pl em en ta ti on h a s been d evel oped from B S 1 1 000 to

su pport org a n i za ti on s from con cept th rou g h to i m pl em en ta ti on .

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PART 2: How?

BS 1 1 000 h a s been d e ve l o p e d to re co g n i z e th e i n d i vi d u a l i ty o f

o rg a n i z a ti o n s ; i t d o e s n o t try to i m pose a s tru ctu re on e xi s ti n g p ro ce s s e s

b u t ra th e r t o co m p l e m e n t th e b e s t p ra ct i ce t h a t m a y a l re a d y b e in p l a ce .

Th e ke y re q u i re m e n t s fo r ce rti fi ca t i o n a re l i ke m a n y o th e r b u s i n e s s

m a n a g e m e n t s ys t e m s s ta n d a rd s , wh i ch a re :

• th e re m u st b e e s ta b l i s h e d and re co g n i z a b l e b u s i n e s s p ro ce s s e s i n

p l a ce ;

• th e re m u st b e e vi d e n ce th a t th e s e p ro ce s s e s a re bei n g ro b u s t l y

a ppl i ed ;

• th e re m u st b e a l e ve l o f u n d e rs ta n d i n g fo r th e re q u i re m e n ts b y th o s e

i n vo l ve d .

F i g u re 1 7.1 p ro vi d e s a m od el th a t o u t l i n e s th e fi ve s t a g e s fo r

d e ve l o p m e n t u s i n g th e e xp e ri e n ce , kn o wl e d g e and to o l s d e ve l o p e d as

p a rt o f th e cre a ti o n of B S 1 1 000 and th e e xp e ri e n ce g a i n ed d u ri n g th e

p i l o ti n g o f th e ce rti fi ca ti o n p ro g ra m m e .

Fi g u re 1 7 . 1 – I m p l e m e n ta ti o n s te p s

Th e va l u e o f a n y s ta n d a rd o r p ro ce s s s h o u l d a l wa ys b e fo cu s e d on

e s ta b l i s h i n g th e i d e n t i fi a b l e va l u e fo r t h e o rg a n i z a ti o n and th e d e g re e of

i n te g ra ti o n , p ro ce s s a n d e ffo rt th a t i s co n s i s te n t wi th th e va l u e i t ca n

d e l i ve r. To b e n e fi t fro m BS 1 1 000, o rg a n i z a ti o n s d o n ot n eed to be

ce rti fi e d ; h o we ve r, th e ri g o u r th a t t h e ce rti fi ca t i o n re q u i re s a n d th e

annual re a s s e s s m e n ts e n s u re th a t o rg a n i z a ti o n s m a i n t a i n th e i r a p p ro a ch .

E s ta b l i sh th e b a ckg ro u n d

B e fo re s ta rti n g a n y b u s i n e s s i n i t i a ti ve i t i s i m p o rta n t to d ra w o n a ra n g e

o f i n fo rm a t i o n a g a i n s t wh i ch to m a ke a va l u e j u d g e m e n t. Yo u wi l l n eed

to o b ta i n a co p y o f t h e s ta n d a rd and g a t h e r o th e r p u b l i cl y a va i l a b l e

m a t e ri a l . Th e m o s t i m p o rta n t s te p in th e ca s e of B S 1 1 000 i s to e s ta b l i s h

th e i m p o rta n ce o f re l a t i o n s h i p s wi th i n th e o rg a n i z a ti o n s – wh e th e r th e s e

a re cu s to m e rs , s u p p l i e rs o r d e l i ve ry p a rtn e rs . Th e n yo u wi l l n eed to a ssess

th e l e ve l o f i m p a ct th e s e re l a t i o n s h i p s h a ve on b u s i n e s s o p e ra ti o n s . Th i s

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wi l l en a bl e th e o rg a n i z a t i o n to a s s e s s wh e t h e r th e s t a n d a rd ’s

i m p l e m e n ta ti o n i s l i ke l y to b ri n g b e n e fi t to cu rre n t o r fu tu re o p e ra ti o n s .

U n d e r ta ke i n i ti a l g a p a n a l y s i s

U si n g th e s t a n d a rd ’ s ch e ckl i s t, i t i s re c o m m e n d e d t h a t o rg a n i z a ti o n s

u n d e rt a ke an i n i ti a l gap a n a l ys i s a g a i n s t cu rre n t o p e ra ti n g p ra cti ce . At

th i s s ta g e i t i s l i ke l y to be high l e ve l , b u t i t i s a l so i m p o rta n t t o be h o n e st

a b o u t wh e th e r e xi s ti n g p ro ce s s e s re a l l y a re in p l a ce o r a re j u s t p e rce i ve d

to be. M a n y o f th e s ta n d a rd ’ s re q u i re m e n ts m a y co ve r t h i n g s th a t a re

d on e cu rre n t l y, bu t i n an ad h oc m a n n er a n d u n s cri p te d . Wo rs e s ti l l ,

p o l i ci e s , p ro ce s s e s a n d p ro ce d u re s m a y b e in p l a ce b u t th e y a re

i n e ffe cti ve o r n o t g e n e ra l l y fo l l o we d wi th a n y d e g re e o f ri g o u r.

Obta i n exec u ti ve a p p rova l

As wi th a n y s t a n d a rd t h a t cro s s e s fu n cti o n a l b o u n d a ri e s wi t h i n

o rg a n i z a ti o n s , i t i s i m p o rta n t to e n s u re th e re i s e ffe cti ve s u p p o rt fro m

th e to p ; i f ch a n g e s a re n e ce s s a ry, s u p p o rt wi l l be re q u i re d . At th e sa m e

ti m e th i s p ro vi d e s th e o p p o rtu n i t y to va l i d a te th e h i g h - l e ve l b e n e fi ts

a n a l ys i s .

B r i e f th e exec u ti ve tea m

I t i s i m p o rt a n t th a t t h e e xe cu t i ve te a m has a fu n d a m e n ta l u n d e rs ta n d i n g

o f th e s ta n d a rd ’s s co p e and p o ssi b l e i m p a ct. I t m a y be a p p ro p ri a te a t th i s

s ta g e to b ri n g in s p e c i a l i s t i n d e p e n d e n t a d vi ce to a ssi st i n ‘ wa l ki n g

th ro u g h ’ th e ke y re q u i re m e n ts .

I d en ti f y p oten ti a l i n te r n a l p i l ot(s )

I n tro d u ci n g a n y s t a n d a rd ca n co n s u m e re s o u rce s a n d d i s ru p t d a y- to - d a y

o p e ra t i o n s , wi th th e p o te n ti a l to c re a te a d e g re e o f n e g a ti vi t y wi th i n th e

o rg a n i z a ti o n . Wi th a d i s cre te p i l o t a p p l i ca ti o n th e s e i m p a cts ca n be

co n t a i n e d , wh i l e a t th e sa m e ti m e th e p i l o t ca n be u se d to t e s t e xi s ti n g

o p e ra t i o n a l p ro ce s s e s a n d p ro d u ce a b l u e p ri n t fo r fu rth e r d e p l o ym e n t.

Th e co l l a b o ra ti ve m od el m a y n ot be s u i ta b l e fo r e ve ry a s p e ct o f th e

b u si n e ss, so p i l o ti n g e n a b l e s d e e p e r a s s e s s m e n t o f va l u e and i m p a ct .

N om i n a te a p i l ot l ea d e r

Al l ch a n g e p ro g ra m m e s n e e d l e a d e rs h i p and fo cu s , so i t i s i m p o rta n t to

e n s u re th e re is a cl e a rl y d e fi n e d ro l e in p l a ce to d ri ve fo rwa rd th e

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i n i ti a ti ve. Th ere i s l i kel y to be a h i g h l evel of i n tern a l d i scu ssi on a n d

perh a ps som e sel l i n g to be d on e, so i t i s va l u a bl e to h a ve a key poi n t of
referen ce wi th i n th e org a n i za ti on wh o ca n a ct a s i n tern a l ch a m pi on .

Id enti y the key e onnel involve in the ilot

f p rs d p

Col l a bora ti ve i n tera cti on wi l l tra verse th e org a n i za ti on , so i t i s i m porta n t

to i d en ti fy th ose g rou ps wh o wi l l i n i ti a l l y be i n vol ved , wh eth er fu n cti on a l
or opera ti on a l . Col l a bora ti on ca n be com pl ex, so th ese key pl a yers sh ou l d
represen t th e rol es th a t wi l l be a ffected a n d th ey sh ou l d be cl ea rl y
esta bl i sh ed to provi d e cross-fu n cti on a l su pport a n d kn owl ed g e.

Un e take awa ene an ga analy i

d r r ss d p s s

Th e key pl a yers sh ou l d u n d erta ke a g a p a n a l ysi s to esta bl i sh a sou n d

ba sel i n e for d evel opm en t; i f th ey a re worki n g wi th a speci a l i st a d vi ser
th i s ca n a l so provi d e a m ore d eta i l ed l evel of a wa ren ess for th e tea m . I t
i s i m porta n t to en su re th a t a n y extern a l a d vi ce com es from a va l i d a ted
sou rce. B S 1 1 000 m a y a ppea r on th e su rfa ce to be stra i g h tforwa rd , bu t
experi en ce h a s sh own th a t u n d ersta n d i n g th e d epth s beh i n d th e
req u i rem en ts i s cru ci a l to su ccessfu l i m pl em en ta ti on . Th i s g a p a n a l ysi s
sh ou l d provi d e a fou n d a ti on for th e eva l u a ti on of i m pa cts a n d l evel of
com pl i a n ce, a n d th e scope of ch a n g e req u i red . I t m a y a l so ch a l l en g e th e
i n i ti a l pi l ot sel ecti on cri teri a .

Eval ate im act

u p s

From th e g a p a n a l ysi s, th e i n tern a l ch a m pi on a n d pi l ot tea m (s) sh ou l d be

a bl e to provi d e a d eta i l ed a ssessm en t of th e opera ti on a l i m pa cts, d eg ree
of ch a n g e req u i red a n d poten ti a l cost a n d d u ra ti on for i m pl em en ta ti on .
For org a n i za ti on s wi th wel l -esta bl i sh ed bu si n ess processes a n d a n eth os
of col l a bora ti on , experi en ce h a s i n d i ca ted th a t perh a ps a s h i g h a s 80 per
cen t com pl i a n ce m a y a l rea d y be i n pl a ce. Th i s ca n va ry g rea tl y, of cou rse.

Develo bene it analy i

p f s s s

B a sed on eva l u a ti on of th e i m pa cts, th e i m pl em en ta ti on tea m sh ou l d

n ow be a bl e to d evel op a ben efi ts a n a l ysi s to a ssess th e va l u e of m ovi n g
forwa rd a n d th e poten ti a l wi d er ben efi ts of d epl oym en t beyon d th e
pi l ot.

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D e fi n e th e s co p e o f a ss e s s m e n t

I f th e b u s i n e s s ca s e s ta cks u p , th e n th e n e xt s te p i s to en g a g e B SI and

s e e k to a g re e b oth th e s co p e and co s t fo r a s s e s s m e n t o f th e p i l o t. As

h i g h l i g h te d e a rl i e r, th e d e p l o ym e n t o f B S 1 1 000 ca n be s e l e cti ve a cro s s

th e o rg a n i z a ti o n b y fu n ct i o n , l o ca ti o n o r typ e o f a ct i vi ti e s , b u t th e

a s s e s s o rs wi l l n eed to u n d e rs ta n d wh a t th e y a re re q u i re d to a sse ss.

In th e e a rl y s ta g e s o f i n tro d u ci n g a n y n e w s ta n d a rd th e re wi l l be

e l e m e n ts th a t s o m e o rg a n i z a ti o n s m a y n o t b e a bl e to s u p p o rt i n a n y on e

g i ve n p i l o t re l a ti o n s h i p . Th e ch a l l e n g e th e n i s h o w to p ro vi d e re l i a b l e

a s s e s s m e n t, i f th a t i s a d ri ve r. Th e a p p ro a ch th a t h a s b e e n a d o p te d in

so m e ca s e s i s th e e vi d e n ce m a p, s h o wn in F i g u re 1 7.2. Th i s p ro vi d e s a

m a tri x o f e vi d e n ce a cro s s a n u m b e r o f re l a ti o n s h i p s , wh i ch m a y be at

va ryi n g s ta g e s o f d e ve l o p m e n t, b u t d e m o n s tra t e s th e o rg a n i z a t i o n ’s

u n d e rs ta n d i n g and i m p l e m e n ta ti o n ca p a b i l i ty.
a ssessm en t

to g e th e r

to g e th e r
Pa rtn e r s e l e cti o n

Va l u e cre a ti o n

E xi t s tra te g y
Re l a ti o n s h i p

Kn o wl e d g e
Awa re n e s s

Wo rki n g
I n te rn a l

S ta yi n g

On e

Two

Th re e

Fo u r

Fi g u re 1 7 . 2 – E vi d e n ce m a p

O b ta i n e xe cu ti ve a p p ro va l a n d i m p l e m e n ta ti o n bu d g et

O rg a n i z a t i o n s wi l l n eed to a ssi g n a d e q u a te and a p p ro p ri a te re s o u rce s to

s u cce s s fu l l y d e p l o y a n y ch a n g e p ro g ra m m e . Th e y wi l l be en g a g i n g

i n te rn a l re s o u rce s , p e rh a p s wi th p a rt n e r/cu s to m e r s u p p o rt , and in so m e

ca s e s a l s o re q u i ri n g high l e ve l s o f e xte rn a l s u p p o rt .

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PART 2: How?

Pr e p a re o u tline pr oce s s review an d evi d en ce

Th i s i s th e m o s t i n t e n s i ve a s p e ct o f i m p l e m e n ta t i o n . Th e re n e e d s to be an

o u tl i n e re vi e w o f e xi s t i n g p ro ce s s e s a n d n e ce s s a ry ch a n g e s , co l l a ti o n of

p a s t e vi d e n ce and cre a ti o n o f a d d i ti o n a l p ro ce s s e s , i f n e ce s s a ry. BS 1 1 000

re q u i re s th e cre a ti o n of a n RM P fo r t h i s p u rp o s e . Th i s c a n ta ke many

fo rm s b u t o u tl i n e s a re i n cl u d e d in th e s t a n d a rd . E xi s ti n g p ro ce s s e s s h o u l d

be si g n p o ste d , n o t d u p l i ca t e d , b u t th e RM P ca n a l so a ct a s a re p o s i t o ry

fo r a n y n e w re q u i re m e n ts s p e ci fi c to co l l a b o ra ti ve p ro g ra m m e s .

Fo rm alize s co p e with a s s e s s o r
At t h i s s ta g e th e te a m sh o u l d be in a p o s i ti o n to m e e t wi th th e a ssi g n e d

a sse sso r a n d a g re e a p ro g ra m m e fo r th e a s s e s s m e n t. In so m e ca s e s

o rg a n i z a ti o n s m a y co n s i d e r a p re - a s s e s s m e n t i n o rd e r to va l i d a te th e

a p p ro a ch bei n g ta ke n and i d e n ti fy a n y s i g n i fi ca n t g a p s th a t m a y n e e d to

be a d d re s s e d .

I m p lement d etaile d pr oce ss review

E xp e ri e n ce s h o ws t h a t i n a l m o st a l l ca s e s – e ve n in th e m o s t co l l a b o ra ti ve

o f o rg a n i z a ti o n s – s o m e d e ve l o p m e n t wi l l be n e ce s s a ry t o m e e t th e

re q u i re m e n ts o f th e s t a n d a rd . At th i s s ta g e an a ct i o n pl a n sh ou l d be

e sta b l i sh e d wh i ch wi l l fu rt h e r h e l p to re fi n e th e a sse ssm e n t p l a n n i n g .

I m p lement action p lan

Th i s p h a s e ca n on l y be e s ta b l i s h e d on an o rg a n i z a ti o n - b y- o rg a n i z a ti o n

b a si s, ba sed on h o w m u ch wo rk n e e d s t o be d on e. Som e o rg a n i z a ti o n s

m a y d e ci d e to d ra w i n e xte rn a l s p e c i a l i s t s u p p o rt; o th e rs wi l l h a ve th e i r

o wn d e d i ca t e d te a m .

I nte r n al a u d it review
I t i s re co m m e n d e d t h a t o rg a n i z a ti o n s e s ta b l i s h an i n t e rn a l a u d i t re vi e w

to e n s u re th a t a l l re q u i re m e n ts h a ve been a d d re s s e d and th a t s u ffi ci e n t

e vi d e n ce is in p l a ce to m e e t th e re q u i re m e n t s o f th e s ta n d a rd . S u ch

a u d i ts wi l l be a re q u i re d a s p e ct o f th e on g oi n g o p e ra ti o n s to th e

s ta n d a rd in a n y e ve n t, so it is a so u n d p l a t fo rm fo r th e fu t u re .

S tag e 1 a ss e s s m ent
Th e s ta g e 1 a ssessm e n t b y B S I is a d e ta i l e d p ro ce s s re vi e w wh e re th e

a s s e s s o r wi l l s e e k to i d e n t i fy a n y p ro ce s s g a p s a n d be s a t i s fi e d th a t ro b u s t

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p ro ce sse s, p ro ce d u re s a n d syste m s a re i n p l a ce . Th i s sta g e fre q u e n tl y

re ve a l s m i n o r i ssu e s th a t m a y re q u i re a tte n ti o n

I m p lement nece s s a ry u pd ate s

Wh e re g a p s m a y h a ve b e e n i d e n ti fi e d , th e se n e e d to b e a d d re sse d a n d

i n co rp o ra te d i n to th e RM P.

Pr e p a re evi d ence
U n d e r n o rm a l ci rcu m sta n ce s th e re wi l l b e a th re e m o n th wi n d o w

b e twe e n sta g e 1 a n d sta g e 2 . Th i s a l l o ws o rg a n i z a ti o n s to e n su re th a t a l l

i ssu e s h a ve b e e n a d d re sse d a n d th a t th e re i s su ffi ci e n t e vi d e n ce i n p l a ce

th a t th e p ro ce sse s a re b e i n g fo l l o we d .

S tage 2 a s s e s s ment
Th e se co n d sta g e o f th e a sse ssm e n t i s fo cu se d o n a sse ssi n g th e a ctu a l

o p e ra ti o n a l p ra cti ce s a n d th e i r a d h e re n ce to th e o rg a n i z a ti o n ’s

o p e ra ti o n a l p ro ce sse s, th e RM P a n d e vi d e n ce o f p e rfo rm a n ce to th e

sta n d a rd . Th e sco p e m a y d i ffe r d e p e n d i n g o n th e ra n g e o f a cti vi ti e s,

l o ca ti o n s a n d p e o p l e i n vo l ve d . I t wi l l , h o we ve r, b e re l a ti ve l y d e ta i l e d a n d

i n m a n y ca se s i t wi l l se l e ct ra n d o m a sp e cts o f th e p ro ce ss a cro ss th e

o rg a n i z a ti o n . I t i s i m p o rta n t, th e re fo re , th a t a t th e o p e ra ti o n a l l e ve l a l l

p e rso n n e l u n d e rsta n d th e b a ckg ro u n d to th e sta n d a rd a n d wh e re th e i r

ro l e fi ts i n th e p ro ce ss.

Babcock I nte r national – ca s e s tu d y

I n th e fa ce o f th e g l o b a l cre d i t cru n ch a n d th e va ri o u s kn o ck-o n

e ffe cts fo l l o wi n g i t, th o se wh o a re p re va i l i n g a re fa ci n g d i ffi cu l t

d e ci si o n s h e a d -o n . At ti m e s l i ke th e se i t h a s p e rh a p s n e ve r b e e n

m o re i m p o rta n t to ta ke a n o p e n a n d h o n e st a p p ro a ch , a n d b re a k

d o wn th e tra d i ti o n a l cu sto m e r–su p p l i e r b a rri e rs. D e ve l o p i n g th e

a b i l i ty to wo rk i n p a rtn e rsh i p i s n o t o n l y a n e n a b l e r to a n

o rg a n i z a ti o n , b u t a l so h e l p s i t to b u i l d fo r th e fu tu re .

B a b co ck i s co l l a b o ra ti ve b y i ts n a tu re , so th e B S 1 1 0 0 0 a ccre d i ta ti o n

p ro ce ss wa s m o re a b o u t fi n d i n g a n d m a n a g i n g i n fo rm a ti o n th a n

a b o u t ch a n g i n g p ro ce sse s. Th e m o st co m m o n e xp re ssi o n h e a rd wh e n

g a th e ri n g e vi d e n ce fo r th e a ccre d i ta ti o n wa s, ‘ O h , yo u m e a n th i s! ’

B a b co ck wi l l u se th i s e xp e ri e n ce to b u i l d fu tu re re l a ti o n sh i p s.

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B a b co ck’s re l a t i o n s h i p wi th i ts ke y cu s to m e r h a s d e ve l o p e d o ve r th e

l i fe o f th e co n tra ct s , fro m th e i n i ti a l bi d d i n g , m o b i l i z a ti o n , s te a d y

s ta te ru n n i n g and e xi t p l a n n i n g . Th e re h a ve been n u m e ro u s

e xa m p l e s th ro u g h o u t m a n y co n t ra cts wh e re b o th p a rti e s h a ve

n eed ed to be open and h o n e s t wi t h e a ch o t h e r.

I t wa s i n t e re s ti n g th a t, wh e n B a b co ck’s q u a l i ty a s s u ra n ce te a m

a n a l ys e d th e s ta n d a rd and a ssesse d h o w we co u l d a d a pt ou r

p ro ce s s e s , i t se e m e d th a t B a b co ck wa s m e e ti n g m o s t o f th e

re q u i re m e n ts . Al l th a t re m a i n e d wa s to m a ke a n u m ber of m i n or

a d d i ti o n s to o u r s e t o f co rp o ra t e l e ve l p ro ce d u re s , a d d i ti o n s t o

m ee ti n g a g en d a s a n d th e cre a ti o n of a re l a ti o n s h i p m a n a g em en t

pl a n . Au d i ts a n d m a n a g e m e n t re vi e ws fo r t h e co l l a b o ra ti o n we re

i n cl u d e d in o u r n o rm a l m a n a g e m e n t s ys te m s ch e d u l e s .

F o r s e ve ra l ye a rs we h a ve been e n co u ra g i n g o u r cu s to m e rs to

s u p p o rt j o i n t b u s i n e s s p l a n s fo r t h e i r co n tra ct s a n d , wh e re p o ssi b l e ,

co - l o ca ti o n o f s ta ff. A g ood e xa m p l e o f th i s re l a t i o n s h i p wo rki n g wa s

wh e n , in re s p o n s e to o u r cu s to m e r’s co n ce rn re g a rd i n g fu n d i n g

l e ve l s , B a b co c k d e ve l o p e d an i n n o va t i ve and fl e xi b l e a p p ro a ch to

fa c i l i ti e s m a n a g e m e n t t h a t p ri o ri ti z e d b u d g e ts a n d fo cu s e d on th e

m o s t cri ti ca l a s s e ts . Th i s a p p ro a ch p ro vi d e d a co m m e rci a l m od el ,

e m b ra ce d b y o u r cu s to m e r, and d e ve l o p e d i n to a p ro g ra m m e th a t

co u l d be ro l l e d o u t n a t i o n a l l y th ro u g h o u t th e U K. On so m e co n tra cts

t h i s s o rt o f i n n o va ti o n s a ve d j u st u n d e r 2 p e r c e n t. I t wa s d u e to th e

s tro n g re l a ti o n s h i p b e twe e n o u r cu s t o m e r a n d B a b co ck th a t th i s

s ch e m e wa s s u ch a s u cce s s .

Wo rki n g to wa rd s a ccre d i ta ti o n wa s ve ry m u ch a l e a rn i n g e xp e ri e n ce

fo r th e te a m . I t wa s e n l i g h t e n i n g to se e h o w m u ch o f wh a t we did

wa s co n s i d e re d co l l a b o ra ti ve . An o t h e r a s p e ct t h a t wa s p a rti cu l a rl y

i m p o rta n t wa s g e tti n g th e s co p e o f th e a ccre d i ta t i o n ri g h t. Wh e n th e

s co p e wa s a d j u s t e d to s u i t th e s tru ctu re o f B a b co ck a n d th e wa y i t

wo rks , i t wa s e a s i e r to se e th a t m u l ti p l e p a rts o f th e b u s i n e s s we re

wo rki n g co l l a b o ra t i ve l y. Th i s m e a n t th e a ccre d i t a ti o n co u l d co ve r th e

wo rk b e i n g d on e b y te a m s wo rki n g on bi d d i n g co n tra cts ri g h t

t h ro u g h to th o s e wo rki n g to wa rd s e xi t i n g co n t ra cts . Th i s wa y o f

wri t i n g th e s co p e a l l o we d an a l l - i n cl u s i ve a p p ro a c h , wh i ch h a s m ea n t

t h a t e ve ry co n tra ct th a t B a b co ck d e l i ve rs ca n be a ccre d i te d a s l on g as

th o se o p e ra ti n g th e co n tra ct fo l l o w co rp o ra te p ro ce d u re s .

Th e re a re two th i n g s th a t s to o d o u t th e m o s t d u ri n g th e p ro ce s s o f

g e tti n g a ccre d i t a t i o n . F i rs t, th e re wa s th e fa ct th a t a l o t o f wh a t

B a b co ck d o e s i s a l re a d y co l l a b o ra ti ve ; and s e co n d l y, th e fl e xi b i l i ty o f

th e s ta n d a rd a l l o ws fo r th e s co p e o f th e a ccre d i t a ti o n to be a d j u s te d

to fi t wi th yo u r co m p a n y. To a ch i e ve th e m o s t fro m th e a c cre d i ta ti o n

i t i s i m p o rta n t t o u n d e rs t a n d n o t j u s t h o w yo u r o rg a n i z a ti o n fi ts

wi th th e s ta n d a rd , b u t h o w yo u ca n fi t th e s t a n d a rd to th e wa y yo u r

o rg a n i z a ti o n o p e ra t e s .

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 Chapter 1 7 – Implementing collaborative certification programmes

J oh n Ro we , P ro ce s s a n d S ys te m s M a n a g e r – I n fra s t ru ctu re

B a b co ck I n te rn a ti o n a l G ro u p

Receive ce rti fication

Al l bei n g we l l , th e a s s e s s m e n t wi l l be s u c ce s s fu l and th e ce rti fi ca te wi l l be

i ssu ed . Th i s i s th e s t a rt o f th e j o u rn e y; th e p ro ce s s e s m u s t b e ri g o ro u s l y

m a i n ta i n e d , a s th e re wi l l be annual re vi e ws . An d , wh e re d e s i ra b l e ,

fu rth e r d e p l o ym e n t o f th e p ro ce s s fro m th e i n i ti a l b l u e p ri n t R M P ca n be

i n co rp o ra te d b y a g re e m e n t wi t h B SI . I t i s th e ri g o u r o f th e s ta n d a rd and

a s s e s s m e n t p ro ce s s th a t e n s u re s o rg a n i z a ti o n s e ffe cti ve l y m a i n ta i n th e i r

o p e ra t i o n a l p ro ce s s e s , ba sed on th e va l u e t h a t wa s i n i t i a l l y i d e n t i fi e d ,

and b e n e fi t fro m a co n s i s te n t a n d va l i d a te d a p p ro a ch to co l l a b o ra ti o n .

Concl u s ion
I t n eed s be re i te ra te d t h a t ce rti fi ca ti o n to th e s ta n d a rd sh o u l d be se e n as

an o u tpu t of g o od co l l a b o ra ti o n and n o t th e o b j e cti ve . Wh i l e it is

re co g n i z e d th a t s o m e cu s to m e rs m a y m a n d a te s ta n d a rd s a n d co m p l i a n ce ,

in th e ca s e of B S 1 1 000 th i s wo u l d be a co n tra d i cti o n in te rm s o f

co l l a b o ra ti o n . C e rti fi ca ti o n sh ou l d be vi e we d as an i n d epen d en t

va l i d a t i o n o f p e rfo rm a n ce ca p a b i l i ty; th i s h a s th e i n te rn a l b e n e fi t t h a t

o n ce o rg a n i z a ti o n s a re ce rti fi e d th e y a re p ro m p te d to m a i n ta i n th e i r

s ta n d a rd s o f p e rfo rm a n ce th ro u g h annual re a s s e s s m e n ts , ke e p i n g

o p e ra t o rs o n th e i r to e s .

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PART 2: How?

Checklist
F o r th o s e o rg a n i z a ti o n s th a t fe e l i n d e p e n d e n t ce rti fi ca t i o n co u l d be of

b e n e fi t i n e s ta b l i s h i n g m a rke t re co g n i ti o n and to cre a te a b a s i s fo r

m a i n ta i n i n g i n te rn a l co m p l i a n ce , th e n th e ch e ckl i s t g i ve n in Ta b l e 1 7.1

m a y h el p to e s ta b l i s h i n i ti a l fo cu s fo r d e ve l o p m e n t.

Ta b l e 1 7 . 1 – I m p l e m e n ta ti o n ch e ckl i s t

Acti vi ty Acti o n s /co m m e n ts D on e

1 I d e n ti fy p o t e n t i a l fo r t h e O b ta i n s ta n d a rd and

o rg a n i z a ti o n s u p p o rt p u b l i ca ti o n s

2 U n d e rta ke an i n i ti a l gap C h e ck l e ve l o f co m p l i a n ce

re vi e w

3 E s ta b l i s h e xe cu ti ve s u p p o rt M a ke s u re th e e xe cu t i ve

sp o n so r i s b e h i n d th e

d e ve l o p m e n t

4 B ri e f th e e xe cu ti ve G e t th e ke y p l a ye rs b o u g h t

m a n a g e m e n t te a m in

5 I d e n ti fy i n i ti a l pi l ot Ke e p th e fo cu s a s t i g h t a s

p o ssi b l e i n i ti a l l y

6 Ap p o i n t p i l o t p ro j e c t M a ke s u re th e p ro j e ct

m a n a g er m a n a g e r u n d e rs t a n d s th e

re q u i re m e n ts

7 I d e n ti fy ke y p l a ye rs i n Engage i n te rn a l ch a m p i o n s

pi l ot

8 U n d e rta ke d e ta i l e d gap Co n si d e r u si n g s p e ci a l i s t

a n a l ys i s e xt e rn a l s u p p o rt

9 E va l u a te co s t a n d i m p a cts R e vi e w t h e co m m e rci a l

of pi l ot b e n e fi ts a n d i n te rn a l

i m p a cts

1 0 D e ve l o p b e n e fi ts a n a l ys i s G e t th e b u s i n e s s ca s e in

p l a ce

1 1 D e fi n e s co p e and co s t o f Co n ta ct B S I

a sse ssm e n t

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 Chapter 1 7 – Implementing collaborative certification programmes

12 O bta i n execu ti ve su pport E sta bl i sh th a t th e n ecessa ry

a n d bu d g et resou rces ca n be m a d e

a va i l a bl e

13 Prepa re ou tl i n e process U n d erta ke a i n i ti a l process

revi ew revi ew to i d en ti fy

m a g n i tu d e of ch a n g es

14 Form a l i ze a ssessm en t Con ta ct B SI

prog ra m m e

15 I m pl em en t d eta i l ed Assess a l l bu si n ess processes

process revi ew to i d en ti fy n ecessa ry

ch a n g es

16 E sta bl i sh a cti on pl a n I m pl em en t a n a cti on pl a n

to en su re a l l req u i rem en ts

a re a d d ressed

17 I m pl em en t i n tern a l a u d i t Ca rry ou t a n a u d i t to

en su re th e processes a re i n

pl a ce

18 Proceed wi th sta g e 1 Con ta ct B SI

a ssessm en t

19 I m pl em en t process I m pl em en t a n y n ecessa ry

ch a n g es/u pd a tes u pd a tes to bu si n ess

processes

20 Prepa re d eta i l ed evi d en ce Col l ect evi d en ce to en su re

su pport for sta g e 2

a ssessm en t

21 Proceed wi th sta g e 2 Con ta ct B SI

a ssessm en t

22 Recei ve certi fi ca te Th i s i s th e sta rt of th e

col l a bora ti ve j ou rn ey;

con si d er expa n d i n g scope

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PART 3 : Wh ere?

Ch a p te r 1 8 – C us tom e r eng agem en t

Pa rt 3 l ooks a t a n u m ber of speci fi c a ppl i ca ti on s, sta rti n g wi th

th e cu stom er – si n ce wi th ou t th em th ere i s n o bu si n ess. Th i s
ch a pter beg i n s th e ‘wh ere’ j ou rn ey wi th cu stom ers a n d
cu stom er en g a g em en t. We sh ou l d recog n i ze th a t we a re a l l
both cu stom er a n d su ppl i er. As cu stom ers seek to i m prove th ei r
own obj ecti ves a n d d evel op m ore effecti ve sol u ti on s a n d
effi ci en ci es, th i s ca sca d es th rou g h th e su ppl y or va l u e ch a i n .
Col l a bora ti ve a pproa ch es ca n be u sed i n ei th er d i recti on to
i m prove th e rel a ti on sh i ps to m eet th ese ch a l l en g es; th i s,
h owever, req u i res opera ti on a l a n d cu l tu ra l ch a n g e on ei th er
si d e of th e rel a ti on sh i p.

Th e poten ti a l to expl oi t col l a bora ti ve m od el s h a s m a n y ben efi ts, bu t a

key fa ctor i s th a t th ese a pproa ch es h a ve to recog n i ze th e two-wa y
process th a t m u st be crea ted . H i stori ca l l y th e con cept of pa rtn eri n g wa s
si g n i fi ca n tl y d eva l u ed by cu stom ers. Th e percepti on wa s th a t cu stom ers
were u si n g th e pa rtn eri n g m essa g es a s a ru se to d ra w i n th ei r su ppl i ers
a n d th en expl oi t th em , wh i l e often th e su ppl i er a pproa ch wa s seen a s
si m pl y tryi n g to secu re som e form of excl u si vi ty a n d freeze ou t
com peti ti on . N ei th er a pproa ch worked wel l ; m a n y peopl e d evel oped a
vi ew th a t th ese rel a ti on sh i ps were u n ten a bl e – even u n com peti ti ve – a n d
perh a ps so cosy th a t com m erci a l ben efi t wa s erod ed . I f th ere i s n o
recog n i ti on of m u tu a l ben efi t, ri sk a n d rewa rd th ere ca n be l i ttl e (i f a n y)
rea l a d va n ta g e to be g a i n ed from th e su perfi ci a l a d opti on of a
col l a bora ti ve m essa g e. Term s su ch a s pa rtn eri n g , col l a bora ti on or
a l l i a n ces ca n often l ea d to g rea ter con fu si on a n d n ot m eet expecta ti on s,
resu l ti n g i n fa i l u re, wh ere a m ore tra d i ti on a l a pproa ch wou l d h a ve been
a d eq u a te to d ri ve th e d esi red ou tcom es. Th e two g ol d en ru l es ou g h t to
be:

• on e: d on ’t g o i n to col l a bora ti on pu rel y to expl oi t th e oth er pa rty;

• two: d on ’t tra n sfer a probl em th rou g h col l a bora ti on si m pl y to ‘pa ss
th e bu ck’.

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PART 3: Where?

‘ Pus h’ o r ‘ pu ll’ fo r collabo ration

Th ere a re m a n y rea son s wh y a cu stom er m i g h t prom ote a n d seek
col l a bora ti ve rel a ti on sh i ps. Th e m ost obvi ou s i s to expl oi t ski l l s a n d
ca pa bi l i ti es th a t th ey d on ’t h a ve. M ore recen tl y th ere h a s been th e n eed
for i n n ova ti on to red u ce opera ti n g costs, or to bri n g tog eth er m ore
prog ressi ve a pproa ch es from i n d u stry. I t i s a l so th e ca se th a t a s d em a n d
i n crea ses, cu stom ers l ook towa rd s m ore com pl ex opera ti n g m od el s a n d
ra n g es of ca pa bi l i ty th a t ca n on l y be h a rn essed th rou g h com bi n a ti on s of
provi d ers. Wh ere h i stori ca l l y th ey m a y h a ve tra d ed i n d i vi d u a l l y, n ow th ey
recog n i ze th e n eed to ta ke a broa d er perspecti ve of th e va l u e ch a i n .
Wh a tever th e d ri ver, th e cu stom er m a kes a ‘pu l l ’ ca l l on th e m a rket,
wh i ch i s th en ch a l l en g ed wi th respon ses. Too often th e cu stom er’s
i n vi ta ti on spa rks a rea cti ve a pproa ch from th e m a rket, wh i ch i s ba sed on
l a rg el y presen ti n g th e best possi bl e posi ti on i n g ; th i s freq u en tl y d oes n ot
ch a l l en g e th e va l i d i ty of th e req u est (th e cu stom er i s a l wa ys ri g h t even i f
we feel th ey m a y n ot be) . Th e ‘pu sh ’ com es from th ose provi d ers wh o
ei th er wa n t to com ba t com peti ti on or seek a d va n ta g e by offeri n g a n
en h a n ced a pproa ch th a t m a y be ben efi ci a l to th e cu stom er. I n ei th er ca se
of ‘pu sh ’ or ‘pu l l ’, th e robu stn ess of th e a pproa ch or th e recog n i ti on of
th e com pl exi ty i t i n vol ves i s often i g n ored for sh ort-term g a i n . I t i s i n th i s
a ren a th a t B S 1 1 000 ca n provi d e a fra m ework th a t wi l l h el p to stru ctu re
th e a pproa ch es, h i g h l i g h t th e ch a l l en g es a n d i d ea l l y i n trod u ce m ore
su sta i n a bl e proposi ti on s.

The ‘intelligent cus tome r’

Th e con cept of th e ‘i n tel l i g en t cu stom er’ i s n ot n ew, bu t wh en en teri n g
th e worl d of col l a bora ti ve prog ra m m es th e tra d i ti on a l stren g th s of
pu rch a si n g power m a y n ot be en ou g h to d el i ver th e req u i red resu l ts. Th e
i d ea th a t a su ppl i er m a y n ot wa n t you r col l a bora ti ve bu si n ess beca u se
th ey feel exposed to tra d i ti on a l pressu res sel d om seem s to reson a te. B u t
i f th ere i s a rea l d esi re to pu rsu e th i s type of m od el , th en a n eu tra l
sta n d a rd th a t works for a l l ca n be a va l u a bl e ca ta l yst. From d i scu ssi on s
wi th org a n i za ti on s a rou n d th e i m pl em en ta ti on a d opti on of th e sta n d a rd ,
i t often becom es cl ea r th a t h i stori ca l l y ‘pu sh ’ or ‘pu l l ’ h a s been fra u g h t
wi th ri sk on both si d es. Cu stom ers fa i l to recog n i ze th a t th ei r pressu re on
th e m a rket to u se col l a bora ti on i s open i n g a l i n e of en g a g em en t th a t
th ey a re n ot rea d y for, or th a t su ppl i ers h a ve i g n ored th e ri sks si m pl y to
be com pl i a n t.

Th e fi rst th i n g to con si d er a s a cu stom er, wh en i n vi ti n g offers ba sed on

col l a bora ti on , i s th a t th e sm a rt su ppl i er wi l l be i n i ti a l l y prej u d g i n g th e
cu stom er’s i n ten t a n d ca pa bi l i ty to su pport su ch a ch a n g e i n wh a t m a y
h a ve been a tra d i ti on a l a d versa ri a l bu si n ess m od el . Wh i l e su ppl i ers m a y
be ou twa rd l y respon d i n g to th e col l a bora ti ve ca l l , th e u n d erl yi n g
respon se wi l l be ba sed on tra d i ti on a l th i n ki n g a n d ra i se th e q u esti on , ‘D o

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 Chapter 1 8 – Customer engagement

th ey rea l l y m ea n wh a t th ey a re a ski n g for?’ O n th e oth er si d e of th e

eq u a ti on , wh en seeki n g to eva l u a te th e tra d i ti on a l su ppl y ba se a g a i n st
a n a l tern a ti ve bu si n ess m od el , i t i s cru ci a l to en su re th a t th e ca pa bi l i ti es
a n d processes a re i n pl a ce to be effecti ve. Th i s i s pa rti cu l a rl y i m porta n t i n
(sa y) pu bl i c bod i es, wh ere th e con stra i n ts a n d d em a n d s of procu rem en t
ru l es m a y l ea ve org a n i za ti on s exposed wh en a ssessi n g a n d sel ecti n g
pa rtn ers a g a i n st col l a bora ti ve pri n ci pl es, ra th er th a n sol el y tech n i ca l or
com m erci a l el em en ts.

S trategic d evelo p ment

For som e org a n i za ti on s th e a d opti on of col l a bora ti ve m od el s i s seen a s a
‘pa ra d i g m sh i ft’, wh i ch n eed s to be effecti vel y com m u n i ca ted a n d
su pported i n ord er to open m ore effecti ve d i a l og u e. Th e va l u es, ben efi ts
a n d ch a l l en g es n eed to be a ckn owl ed g ed . Ad opti n g a stru ctu red
a pproa ch i m m ed i a tel y si g n a l s a ch a n g e, bu t th i s h a s to be seen i n a cti on
to esta bl i sh th e cred i bi l i ty of th e cu stom er. I t i s a bra ve sa l esperson wh o
tu rn s d own possi bl e bu si n ess; bu t, i n th i s en vi ron m en t of col l a bora ti on
a n d i ts poten ti a l to l ea d to i n terd epen d en ce a n d vu l n era bi l i ty, d ecl i n i n g
to pl a y ca n be th e m ost sen si bl e step. Som e bu si n ess m a y on l y be worth
h a vi n g u n d er a ch a n g e of en g a g em en t ru l es. Th ere a re oth er pressu res
for th e su ppl y ch a i n , wh ere (for exa m pl e) d em a n d s by cu stom ers to
red u ce costs si m pl y resu l t i n ever-i n crea si n g pressu re on th e su ppl y ch a i n ,
wh i ch m a y n eg a te th e va l u e of th e bu si n ess. I n th i s ca se th e prom oti n g
of a n a l tern a ti ve bu si n ess m od el cou l d be m u tu a l l y ben efi ci a l to both
cu stom er a n d su ppl i er.

The val u e pro p o s ition

Th e key to a n y ch a n g e i n bu si n ess m u st be crea ti on of va l u e; i n th e
col l a bora ti ve en vi ron m en t th ere n eed s to be a n a ccepta n ce th a t th i s
va l u e i s m u tu a l l y ben efi ci a l , th ou g h n ot n ecessa ri l y i n eq u a l pa rts. I f
org a n i za ti on s, wh eth er bu yi n g or sel l i n g , a re g oi n g to a sk oth ers to step
ou tsi d e tra d i ti on a l wel l -esta bl i sh ed opera ti n g m od el s, th en WI I FM (wh a t’s
i n i t for m e?) m u st be a ppreci a ted .

Cu stom ers n eed to d em on stra te wh a t th ey expect to a ch i eve a n d wh a t

th ei r pa rtn ers (n o l on g er su ppl i ers) ca n expect to g a i n . Wh ere cu stom ers
a re bei n g a sked to con si d er a m ore i n teg ra ted a pproa ch th ey n eed to see
wh ere th e va l u e wi l l com e from a n d – perh a ps eq u a l l y i m porta n t to both
si d es – wh ere th e ri sk wi l l resi d e wh en ei th er si d e i s a sked to d rop th ei r
con ven ti on a l protecti on i st a pproa ch es (see Fi g u re 1 8. 1 ) . We l i ve i n a
worl d th a t h a s becom e very l i ti g a ti on -focu sed , so ch a n g i n g th e ru l es of
en g a g em en t h a s to be ba sed on a ba l a n ced a pproa ch .

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PART 3: Where?

Fi g ur e 1 8. 1 – A d va n ta g e s an dds d i a va n ta g e s fo co l l a b o r a ti o n

Ma r ke ti n g co l l a b o r a ti o n

I t i s e a s y to p ro m o te th e co n ce p t th a t co l l a b o ra ti ve wo rki n g is a g ood

th i n g , and i t i s g e n e ra l l y i n tu i ti ve l y a ckn o wl e d g e d wh i l e th e re is no

co m m i tm e n t to be si g n e d . H o we ve r, wh e n we m o ve fro m co n ce p t t o

i m p l e m e n ta t i o n , th e n a wi d e ra n g e o f i s s u e s e m e rg e . In a d o p ti n g a

s tru ctu re d m e th o d , o rg a n i z a ti o n s ca n d e ve l o p s u s ta i n a b l e a p p ro a ch e s

and open up a co n s tru cti ve d i a l og u e. Th i s s h o u l d d ri ve th e p a rti e s

t o wa rd s a s a ti s fa cto ry co n cl u s i o n – o r i t m a y, on o cca s i o n , ca u s e on e or a l l

p a rti e s t o d e ci d e th a t i t i s n o t vi a b l e a fte r a l l .

Bal f ur
o B e a tty – ca s s ud
e t y

B a l fo u r B e a tty a s a G ro u p i s n ow a g l oba l , m u l ti d i m e n si o n a l b u si n e ss

wi th b o th th e d e s i re and ca p a b i l i ty to e xp a n d o u r vi s i o n . I n cre a s i n g l y,

o u r vi e ws a n d e xp e ri e n ce a re s o u g h t a fte r a l l a ro u n d th e g l obe. We

see i t a s o u r re s p o n s i b i l i ty to s h a re ou r d eep re s o u rce s o f kn o wl e d g e

to h el p sh a p e th e fu tu re p ro a c ti ve l y.

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B a l fo u r B e a tt y i s a m a rke t l e a d e r i n a rti cu l a ti n g , d e ve l o p i n g ,

o p e ra t i n g , o wn i n g and m a i n ta i n i n g s tra t e g i c a s s e ts t h a t a re th e

l i fe b l o o d to a s o ci e ty. Th e G ro u p h a s g a i n ed a re p u ta ti o n fo r

d e ve l o p i n g b e s t p ra ct i ce t h a t i s a t th e h e a rt o f i ts s u cce s s s to ry.

C e n t ra l to th i s n a rra ti ve h a s been a n e w s tyl e o f wo rki n g b a se d on

o p e n n e ss, tru s t a n d h o n e s t y. We h a ve s h a re d t h i s a p p ro a ch a m on g st

o u rs e l ve s a n d wi t h o u r cl i e n t s a n d th e i r cu s to m e rs , s ta ke h o l d e rs a n d

o u r s u p p l i e rs .

B a l fo u r B e a tt y’s s a fe ty p ro g ra m m e , ‘ Z e ro H a rm ’ a l so h a s co l l a b o ra ti ve

wo rki n g as an e s s e n ti a l en a bl er a n d re l i e s o n th e a p p ro a ch – we ca n

o n l y a ch i e ve o u r a m b i ti o u s ta rg e ts th ro u g h wo rki n g to g e th e r wi th

o th e rs . We re c o g n i z e d t h a t wh e re fo cu s a n d e ffo rt h a s b e e n p u t i n to

th e s e re l a ti o n s h i p s , all p a rti e s h a ve e n j o ye d th e p ro ce s s a n d h a ve

se e n th e vi rtu e and b u s i n e s s b e n e fi ts i n j oi n i n g t o g e th e r i n th e Z e ro

H a rm j o u rn e y. O u r s e n i o r m a n a g e m e n t h a s a l wa ys b e e n d eepl y

co m m i tte d to fi n d i n g n e w a p p ro a ch e s to cre a te va l u e o ve r th e wh o l e

l i fe cycl e of a n a s s e t, to e l i m i n a te wa s te , and to i m p ro ve th e s a fe t y

o f co n s tru cti o n .

O u r wo rk i n th e B a l fo u r B e a tt y Al l i a n ce E xch a n g e h a s been ce n t ra l to

re co g n i z i n g th i s s t o re o f kn o wl e d g e and b ri n g s i t to th e s u rfa ce fo r

u s to e xp l o re i t s fu l l p o te n ti a l . C o l l a b o ra ti ve wo rki n g i s a t th e h e a rt

o f o u r s t ra te g i c vi s i o n . We re co g n i z e d th a t t h e i n tro d u cti o n of

BS 1 1 000 p ro vi d e s a n o p p o rtu n i ty fo r u s a n d o u r cu s to m e rs to o bta i n

re co g n i ti o n fo r o u r j o i n t d e ve l o p m e n t o f e xp l o i ti n g th e b e n e fi ts o f

co l l a b o ra ti ve wo rki n g . M o s t i m p o rt a n t l y, th i s n e w s ta n d a rd p ro vi d e s

a s t ru ctu re d a p p ro a ch to en a bl e th e t ra n s fe r o f b e s t p ra ct i ce a cro s s

s e cto rs , p ro g ra m m e s a n d p ro j e cts . BS 1 1 000 a l so g i ve s u s a

‘ u n i ve rs a l l y’ re co g n i z e d s tru ctu re and th e ca ta l ys t to d e ve l o p th e n e xt

s ta g e o f o u r wo rk i n th e Al l i a n ce E xch a n g e .

M a rk S e we l l ,

H ea d o f co l l a b o ra ti ve b u s i n e s s re l a ti o n s h i p s

B a l fo u r B e a tt y G ro u p

Sou n d co l l a b o ra ti o n s t a rts b y i n cre a s i n g o p e n n e ss a n d t ra n s p a re n cy,

wh i ch i s n o t s o m e th i n g th a t tra d i t i o n a l b u si n e ss m a n a g e m e n t i s b a se d

on . We g e n e ra l l y s ta rt fro m a p o s i ti o n o f m i s tru s t a n d s h a re o n l y th e

minimum we n eed to in o rd e r to e xp l o i t th e p o s i ti o n l a te r, o r s i m p l y to

p ro te ct o u r p o s i ti o n . I f o rg a n i z a ti o n s a i m to h a rn e s s co l l a b o ra ti o n th e n

th i s i s th e fi rs t m a j o r co n s i d e ra ti o n ; wh e th e r b u yi n g o r se l l i n g , o n ce yo u

h a ve s te p p e d a cro s s th e R u b i co n th e re m a y n ot be a wa y b a ck to

b u si n e ss a s u su a l .

Th e tra n s i ti o n fro m ‘ s te a d y s t a te ’ to a l e s s we l l - d e fi n e d p o si ti o n i s n ot

on e a n yb o d y ta ke s e a s i l y; wh e re th i s m a y i n vo l ve som e d e g re e of

e xp o s u re i t i s n o t s u rp ri s i n g t h a t m a n y a re re l u cta n t to co n s i d e r e ve n

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PART 3: Where?

sm a l l s te p s . Th i s p a rti cu l a rl y h a s i m p l i ca ti o n s wh e re s u ch a ch a n g e ca n

i n vo l ve th e fu t u re ro l e s o f th o s e p e rs o n n e l on e i th e r s i d e ; th e te rm

‘ tu rke ys vo ti n g fo r C h ri s tm a s ’ ca n e a s i l y a p p l y. So, fro m a cu s to m e r

p e rs p e cti ve , th o s e ch a rg e d wi th d e ve l o p i n g th e a p p ro a ch m a y be l e ss

th a n e n th u s i a s ti c; and fro m th e su p p l i e r si d e , sel l i n g to som eon e wh o

co u l d b e co m e vu l n e ra b l e is no e a s y ta s k. U n d e rs ta n d i n g th e se d yn a m i cs i s

cru ci a l . F o r co l l a b o ra ti o n to wo rk e ffe cti ve l y t h e co n ce p t o f ‘ wh o d oes

b e st d o e s’ h a s to be th e u l ti m a t e g oa l .

Th e n e xt ke y e l e m e n t i n vo l ve s cre a ti n g a cl e a r vi s i o n fro m wh i ch to

d e ve l o p th e a p p ro a ch . In m o s t ca s e s th e co s t a s p e cts c a n be e a si l y

d e fi n e d , b u t i t i s l e ss si m p l e to e sta b l i sh th e ri s k p ro fi l e th a t i n t e g ra t i o n

ca rri e s . C l e a rl y, p a rt o f th e ri s k e n co m p a s s e s th e ca p a b i l i ty o f th e

o rg a n i z a ti o n s to a d a pt a n d h a ve th e e xp e ri e n ce and s ki l l s to see it

t h ro u g h . Afte r a t l e a s t a ce n tu ry o f b u s i n e s s d e ve l o p m e n t b a s e d on

co m m a n d and co n tro l , th e se s ki l l s a re n o t co m m o n p l a ce . Th i s i s wh y o n e

o f th e unique fe a tu re s o f B S 1 1 000 i s i ts fo cu s o n cu l tu re s a n d b e h a vi o u rs

in s u p p o rt o f p ro ce s s ch a n g e , wh i ch u n d e rp i n s e ve ry re q u i re m e n t o f t h e

s ta n d a rd . Wh i l e m a n y o rg a n i z a ti o n s ci te ca s e s tu d i e s p ra i s i n g th e

s u cce s s e s o f wo rki n g in a l l i a n ce s a n d co l l a b o ra ti ve ve n t u re s , fe w ca n

d e m o n s tra t e h o w th e s e we re a ch i e ve d ; and e ve n fe we r a re p re p a re d to

s h a re th e i r e xp e ri e n ce s o f wh e n i t we n t wro n g . I f o rg a n i z a ti o n s a re

g oi n g to p ro m o te co l l a b o ra ti o n o r s e e k co l l a b o ra ti ve p ro p o s i ti o n s , th e n

th e y n e e d d e m o n s tra b l e e vi d e n ce o f ca p a b i l i ty a n d s tru ct u re th a t wi l l

p ro vi d e co n fi d e n ce fo r o th e rs to fo l l o w.

Key relation s hi p management

M o s t o rg a n i z a ti o n s h a ve wh a t i s a co m m o n l y re co g n i z e d as a ke y a cco u n t

m a n a g e m e n t fu n cti o n ; o ft e n th i s i s ca p t u re d u n d e r b u si n e ss

d e ve l o p m e n t. H o we ve r, n o t m a n y h a ve i n co rp o ra te d s u p p l i e r re l a ti o n s h i p

m a n a g e m e n t p ro g ra m m e s a n d s a d l y m o s t o f th e s e a re fo cu s e d on a

l i m i te d p ro fi l e o f p e rfo rm a n ce m e a s u re s a n d co m p l i a n ce . In th i s b ra ve

n e w e n vi ro n m e n t o f n e two rks , a l l i a n ce s a n d co l l a b o ra ti ve p ro g ra m m e s

e ve n fe we r h a ve re l a ti o n s h i p m a n a g em en t a s a re co g n i z e d fu n cti o n .

R e l a t i o n s h i p s a re cru ci a l to all b u si n e ss, b u t wh e re co l l a b o ra ti ve wo rki n g

p ra ct i ce s a re i n vo l ve d th e n managing re l a t i o n s h i p s b e co m e s a cri ti ca l

s u cce s s fa ct o r. Som e fo rwa rd - l o o ki n g o rg a n i z a ti o n s h a ve e m b ra ce d th i s

i d ea ; th o s e th a t h a ve i n t e g ra t e d co l l a b o ra ti ve b e s t p ra cti c e i n to th e ke y

a cco u n t o r s tra te g i c s u p p l i e r p ro g ra m m e s ca n s h o w th e b e n e fi ts . If

o rg a n i z a ti o n s a re to b ri n g i n n o va ti o n , ri s k m a n a g e m e n t a n d va l u e to

t h e i r p a rtn e rs , th ey n e ed to be re a ch i n g b e yo n d tra d i t i o n a l t ra n s a cti o n a l

re l a ti o n s h i p s a n d a d o p t n e xt - g e n e ra t i o n th i n ki n g . I t i s i m p o rta n t to

u n d e rs ta n d th e t yp e o f re l a ti o n s h i p s a n d , in so m e ca s e s , re co g n i z e th a t

t h e re m a y be a va ri e t y e ve n wi th on e o rg a n i z a ti o n . Th i s i s s u e is

a d d re s s e d in m o re d e ta i l in C h a p te r 2 1 ‘ C o l l a b o ra t i ve co n tra ct i n g ’ ; wh a t

i s i m p o rta n t i s t h a t th e p a rti e s u n d e rs ta n d th e ru l e s o f e n g a g e m e n t.

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Joint d evelo p ment

Wh e re th e b e n e fi ts o f co l l a b o ra ti ve a p p ro a ch e s h a ve been a sse sse d and

va l i d a t e d , th e d e ve l o p m e n t o f th e a p p ro a ch wi l l be j o i n t. Th i s m a y s e e m

o b vi o u s , b u t fre q u e n tl y i n i ti a ti ve s a re d ri ve n b y cu s to m e rs wi th o u t

re co g n i z i n g th e i m p l i ca ti o n s fo r p o te n ti a l p a rtn e rs . Th e o p p o s i te ca n a l so

be tru e , wh e n o rg a n i z a ti o n s p u rs u e a co l l a b o ra t i ve a p p ro a ch wh e re th e

cu s to m e r h a s n o t b e e n fu l l y e n g a g e d . I t i s e q u a l l y co m m o n fo r

o rg a n i z a ti o n s th a t h a ve m o re tra d i t i o n a l t ra d i n g m od el s i n p l a ce to

l a u n ch co l l a b o ra t i ve a p p ro a ch e s wi th o u t wo rki n g th ro u g h th e

i m p l i ca ti o n s a n d s e tt i n g th e e xp e cta ti o n s a n d o b j e cti ve s . Th e re s u l t i s th a t

wh a t m a y h a ve been a so u n d b u s i n e s s re l a ti o n s h i p b e co m e s co n fu s e d

and e ve n fra ctu re d . B y d e ve l o p i n g an a l t e rn a ti ve m od el j o i n tl y,

o rg a n i z a ti o n s a n d t h e i r p a rt n e rs ca n a sse ss th e p ra cti ca l a p p ro a ch e s a n d

b e n e fi ts wi th o u t i n i t i a l co m m i tm e n t a n d o n l y p ro ce e d to i m p l e m e n ta ti o n

i f a p p ro p ri a te .

Exit s trategie s
C o l l a b o ra ti ve m o d e l s ca n ch a n g e th e re l a t i o n s h i p i n t e ra cti o n and

i n tro d u ce p ro g re s s i ve l y h i g h e r l e ve l s o f i n te rd e p e n d e n ce . It is a va l u a b l e

e xe rci s e to i n d i vi d u a l l y a n d j o i n t l y co n s i d e r th e i m p l i ca ti o n s i f th e

re l a t i o n s h i p wa s to fa i l , o r p e rh a p s b e co m e no l o n g e r va l i d b e ca u s e of

ch a n g e s i n m a rke t re q u i re m e n t s . Th e d e ve l o p m e n t o f a n e xi t s tra te g y

wi l l h el p fi rs t l y t o d e fi n e th e l e ve l s o f i n te rd e p e n d e n ce and th e n th e

ru l e s fo r co n tro l l e d d i s e n g a g e m e n t.

Concl us ion
C u s to m e rs a re e s s e n ti a l to a n y o rg a n i z a ti o n and a l te rn a ti ve b u si n e ss

m o d e l s ca n , wi th o u t d o u b t, b ri n g b e n e fi ts t o all p a rti e s . Th e ch a l l e n g e is

to e n s u re t h a t s u ch a p p ro a c h e s a re m u t u a l l y b e n e fi ci a l and a re

d e ve l o p e d to u n d e rp i n th e s e b e n e fi t s . Wh e re cu s to m e rs s e e co l l a b o ra ti ve

m o d e l s a s p o te n ti a l l y a d va n ta g e o u s , th e n th e y n e e d to co n s i d e r th e

i m p l i ca ti o n s fo r th e i r p a rtn e rs a n d th e p ro fi l e th e y p ro j e ct , s i n ce th i s wi l l

i n fl u e n ce th e re s p o n s e and co m m i tm e n t t h e y g e t fro m th e m a rke t. Th e

i n n o va ti ve s u p p l i e r, on th e o th e r h a n d , n e e d s to co n s i d e r th e a p ti t u d e

and a b i l i ty o f th e cu s to m e r to en g a g e in an i n t e g ra te d m a n n e r wh e re

th e va l u e p ro p o s i ti o n ca n be i d e n t i fi e d .

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PART 3: Where?

Key messages
Wh en d evel opi n g col l a bora ti ve bu si n ess m od el s th e cu stom er perspecti ve
i s cru ci a l . To h el p focu s, th e key m essa g es g i ven i n Ta bl e 1 8. 1 m a y provi d e
th e ca ta l yst for bu si n ess d evel opm en t.

Ta b l e 1 8 . 1 – Key m e ss a g e s fo r b us i n e ss d e ve l o p m e n t, r
m a ke ti n g a n d
sa l es

B S 1 1 000 B us i n e ss d e ve l o p m e n t/m a rketi n g /s a l e s

Fo c us p o i n t Ra ti on a l e

1 r
Al te n a ti ve Col l a bora ti ve a pproa ch es broa d en th e ca pa bi l i ty of
bus i n e ss org a n i za ti on s to respon d to (pu l l ) or propose (pu sh )
m od el s m ore com pl ex proposi ti on s to m eet th e d em a n d s of
th e m a rket or speci fi c cu stom er ch a l l en g es

2 C us to m e r M a rketi n g col l a bora ti ve a pproa ch es rests both on

pro fi l i n g i n tern a l ca pa bi l i ty a n d th e wi l l i n g n ess of cu stom ers
to respon d posi ti vel y to th ese a pproa ch es

3 C us to m e r Wh ere a col l a bora ti ve m od el i s bei n g req u ested or

co n fi d e n ce offered th e sta n d a rd provi d es a n i n d epen d en tl y
va l i d a ted a pproa ch . Th i s ca n be a m a rket
d i fferen ti a ti on , provi d i n g con fi d en ce beyon d a sa l es
posi ti on i n g

4 S o l u ti o n Th e i n teg ra ti on of col l a bora ti ve th i n ki n g en a bl es

d e ve l o p - org a n i za ti on s to a d d to th ei r own ca pa bi l i ty a n d
m en t resou rces to expa n d th e scope of a n y proposi ti on or
req u i red sol u ti on by i n corpora ti n g th i rd pa rti es to
esta bl i sh a sea m l ess d el i very sol u ti on

5 D e l i ve r y I d en ti fyi n g a n d sel ecti n g a d d i ti on a l pa rtn ers to m eet

p a rtn e rs bu si n ess d em a n d s req u i res org a n i za ti on s to seek
pa rtn ers wi th com pa ti bl e vi si on s a n d va l u es a n d to
d evel op j oi n t obj ecti ves th a t su pport th e cu stom er
req u i rem en t

6 Ri sk Ad opti on of a l tern a ti ve bu si n ess m od el s i n trod u ces

m a n a g e- th e percepti on of ri sk for a cu stom er a n d poten ti a l
m en t i n tern a l ri sks. Th e sta n d a rd ou tl i n es a stru ctu red
a pproa ch to bu i l d i n g a n d su sta i n i n g th ese m od el s
th rou g h j oi n t ri sk m a n a g em en t

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7 B us i n e ss Gaining s u p p o rt fo r a n i n te g ra te d so l u ti o n a g a i n st a

s
ca e m o re tra d i ti o n a l o p e ra t i n g m od el ca n i n cre a s e

d evel o p - i n te rn a l co n s tra i n t s . In th i s s i tu a ti o n th e s ta n d a rd ’s

m en t p ro ce s s e s a n d re q u i re m e n ts e n s u re th a t

o rg a n i z a ti o n s t a ke due a cco u n t o f th e ke y fa cto rs i n

d e ve l o p i n g th e b u s i n e s s ca s e

8 Sp ee d to Co m p l e x re l a ti o n s h i p s ca n ta ke ti m e to d e ve l o p ;

m a r ket th ro u g h th e a d o p ti o n of B S 1 1 000 o rg a n i z a ti o n s ca n

h a ve a co m m o n language and u n d e rs t a n d i n g to

sp e e d i m p l e m e n t a ti o n

9 r
C ea ti ve M o vi n g fro m a tra d i ti o n a l re l a ti o n s h i p to on e th a t i s

n eg oti a - m o re i n t e g ra te d ch a n g e s th e d yn a m i cs fo r

ti on s n e g o ti a ti o n s . Ad o p ti o n o f th e s ta n d a rd en a bl es a l l

p a rti e s to a d d re s s th e i r i s s u e s i n a m o re open and

tra n s p a re n t wa y

1 0 r
Col l a bo a - In th e m o d e rn wo rl d th e fo u n d a ti o n o f b u si n e ss i s

ti ve ca p t u re d in fo rm a l co n tra cts , wh i ch ca n on o cca s i o n s

r
con t a ct s be d i vi s i ve . I n co rp o ra ti n g th e s ta n d a rd is an

a l te rn a ti ve p l a t fo rm to e n s u re e q u i ta b l e b e n e fi ts

and u n d e rp i n th e re q u i re d b e h a vi o u rs t o a ch i e ve

s u cce s s

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Ch a p te r 1 9 – Supp ly ch ain

I n th i s ch a pter we l ook a t a ssessi n g th e poten ti a l ben efi ts from

i n corpora ti n g col l a bora ti ve a pproa ch es, wh ere a ppropri a te, to
exten d th e rea ch of su ppl y ch a i n m a n a g em en t to focu s on
su sta i n a bl e va l u e. Th e su ppl y ch a i n i s a m a j or a spect of m ost
bu si n ess opera ti on s a n d i n tod a y’s m a rket i t i s n ot u n com m on
to fi n d th a t th e extern a l spen d represen ts between 60 per cen t
to 80 per cen t of opera ti n g cost. Th i s i s both a si g n i fi ca n t
opportu n i ty a n d a m a j or poten ti a l ri sk.

We h a ve becom e a ccu stom ed to term s su ch a s ‘su ppl i er rel a ti on sh i p

m a n a g em en t’ (SRM ) , ‘stra teg i c sou rci n g ’ or ‘ca teg ory m a n a g em en t’, a l l of
wh i ch wi l l con tri bu te to m a n a g i n g h i g h spen d s. Perh a ps l ess obvi ou s i s
th e recog n i ti on th a t m a n y of th ese rel a ti on sh i ps a re m i ssi on cri ti ca l a n d
crea te i n terd epen d en cy th a t n eed s speci a l ca re. I d en ti fyi n g provi d ers th a t
fi t th i s a g en d a a n d d evel opi n g a m ore i n teg ra ted a pproa ch th rou g h th e
m ed i u m of B S 1 1 000 wi l l u n d erpi n th e obj ecti ves, opportu n i ti es a n d ri sk
m a n a g em en t.

Cost i s a l wa ys a si g n i fi ca n t i ssu e; i t i s u su a l l y a n i m porta n t a spect of th e

eva l u a ti on process a l on g si d e tra d i ti on a l a spects of q u a l i ty a n d d el i very.
H owever, th ese a l on e sh ou l d n ot be th e on l y cri teri a wh en con si d eri n g
a n y con tra cti n g a rra n g em en t th a t h a s to be ba l a n ced a g a i n st a spects of
perform a n ce a n d overa l l ri sk. Ri sk i s a cru ci a l fa ctor for a n y bu si n ess; i n
d evel opi n g a stra teg y, th e exposu re to poten ti a l ri sk i s a key a spect th a t
ca n be cl a ssi fi ed i n m a n y wa ys from si m pl e secu ri ty of su ppl y to th e
m i ssi on -cri ti ca l n a tu re of th e req u i rem en t for overa l l su ccess.

Com pl exi ty i n th e m od ern m a rketpl a ce i s a broa d -ra n g i n g stra teg i c

a spect of procu rem en t, wh i ch m a y cover a va ri ety of i ssu es resu l ti n g from
th e i n tera cti on between con tra cti n g pa rti es a n d – si g n i fi ca n tl y – th ei r
perform a n ce over ti m e. I n terd epen d en ce i s th e m ost d i ffi cu l t a spect of
m od ern bu si n ess m od el s wh ere th e perform a n ce of th e pa rti es i s by
n ecessi ty i n terwoven . Th i s m a y resu l t from j oi n t d evel opm en t of prod u cts
a n d sol u ti on s ba sed on sh a ri n g of i n form a ti on a n d resou rces beyon d
tra d i ti on a l con tra cts, to th e crea ti on of j oi n t sol u ti on s a n d proposi ti on s
wh ere i n terd epen d en ce i s cru ci a l , wh ere th e ou tcom e ca n on l y be
d el i vered th rou g h th e j oi n t a cti vi ti es of th e pa rti es.

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PART 3: Where?

N AT S (N a ti on a l Ai r Tr a ffi c S e rvi ce s ) – ca s e s tud y

N ATS so u g h t to p u rs u e a ccre d i ta ti o n to BS 1 1 000 fro m th e ve ry e a rl y

s ta g e s o f i ts d e ve l o p m e n t. It made a co n s ci o u s a n d d e l i b e ra te

d e ci s i o n to i n ve s t i n th e co n ce p t o f a co l l a b o ra ti ve wo rki n g s ta n d a rd

b e ca u se o f th e va l u e i t b e l i e ve s th i s wi l l add to i ts b u s i n e s s . I t wa s

s u p p l y ch a i n m a n a g em en t i n N ATS th a t i n i ti a l l y re co g n i z e d i ts

p o te n ti a l . Th i s i s a s tra te g i c b u s i n e s s fu n ct i o n , wh i ch co n tro l s o ve r

95 p e r ce n t o f e xte rn a l sp e n d . I t ta ke s th e l ea d ro l e in managing

N ATS ’ s tra t e g i c s u p p l i e r re l a ti o n s h i p s , d e te rm i n i n g su ppl y

ch a i n /su p p l i e r s t ra te g i e s th ro u g h wo rki n g cl o s e l y wi th i n te rn a l

s ta ke h o l d e rs .

N ATS d e ci d e d to a d o p t th e s ta n d a rd to manage i ts s u p p l i e r p a rtn e r

re l a t i o n s h i p s , bu i l d i n g on e xi s ti n g co l l a b o ra ti ve p ro ce s s e s . I t b ro u g h t

a d d i ti o n a l re a l b e n e fi ts b e ca u s e i t:

• e sta b l i s h e d an o ve ra rch i n g g o ve rn i n g s t ru ctu re to manage

co l l a b o ra ti ve re l a ti o n s h i p s ;

• e n s u re d p ro c e s s e s we re pu t i n p l a ce to manage fu tu re

co l l a b o ra ti ve re l a ti o n s h i p s a s we l l a s th e d e ve l o p m e n t o f

s u p p l i e rs wi th i n i ts s u p p l i e r b a s e i n to p a rt n e r s u p p l i e rs ;

• en a bl ed b e n ch m a rki n g o f th e wo rk th a t i t i s d o i n g wi th i ts

co l l a b o ra ti ve s u p p l i e rs t o e n s u re co n ti n u o u s i m p ro ve m e n t ;

• e sta b l i s h e d a co m m o n fra m e wo rk fo r wo rki n g wi t h p a rtn e rs .

B a sed on N ATS ’ s u cce s s fu l a p p l i ca t i o n of B S 1 1 000 wh e n wo rki n g

wi t h p a rtn e r s u p p l i e rs , N ATS i s i n tro d u ci n g i t i n to re l a ti o n s h i p s wi th

m a j o r cu s to m e rs . Th ro u g h a d o p ti n g a co l l a b o ra ti ve fra m e wo rk wi th

i n d i vi d u a l cu s to m e rs , a s tro n g m e ssa g e i s e s ta b l i s h e d of a co m m i t te d

re l a t i o n s h i p th a t ca n g e n e ra t e m u tu a l b e n e fi t. Th i s i s o f p a rti cu l a r

re l e va n ce , wi th an i n cre a s i n g n eed to wo rk d i ffe re n t l y i n th e Ai r

Tra ffi c M a n a g e m e n t I n d u s t ry wi th m a n y typ e s o f o rg a n i z a t i o n s ,

d ri ve n b y th e a s p i ra ti o n s o f S i n g l e E u ro p e a n S ky a n d i ts p re d i ct e d

i m p a ct o n ch a n g i n g th e fu tu re b u s i n e s s e n vi ro n m e n t. In vi e w o f th i s

N ATS i s m a ki n g s u re i t i s a t th e ve ry l e a d i n g ed g e o f t h i n ki n g and

b e s t p ra cti ce in b u s i n e s s re l a t i o n s h i p d e ve l o p m e n t.

N ATS i s a l so ke e n to d e m o n s tra t e h ow B S 1 1 000 ca n s u p p o rt i ts

‘ i n n o va ti n g fo r g ro wth ’ s tra te g y th ro u g h s u c ce s s fu l l y d e m o n s tra t i n g

th e b e n e fi ts o f i ts co l l a b o ra ti ve ca p a b i l i ti e s a n d p ra cti ce s wh e n

bi d d i n g fo r e xt e rn a l b u s i n e s s o p p o rt u n i ti e s – a s we l l a s e xp l o ri n g

o p p o rtu n i ti e s t o wo rk wi th o th e r o rg a n i z a ti o n s , p a rti cu l a rl y o ve rs e a s

wh e re i t ca n e xp l o i t n e w m a rke ts . N o t o n l y d o e s i t d i ffe re n t i a te N ATS

fro m o t h e r a i r n a vi g a ti o n s e rvi ce p ro vi d e rs , b u t b e ca u s e o f th e

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con ti n u ou sl y evol vi n g , l on g -term a n d com pl ex n a tu re of ven tu res

syn on ym ou s wi th th e ATM bu si n ess i t i s cru ci a l i n en su ri n g better
va l u e for th ei r cu stom ers.

Ad ri a n M i l l er,
Su ppl y Ch a i n M a n a g er, N ATS

For m ost org a n i za ti on s, opera ti n g cost i s l a rg el y spen t th rou g h i ts su ppl y

ch a i n . Wi th h i g h l evel s of extern a l spen d , i t i s l i ttl e won d er th a t th ere
h a s been a m a rked i n crea se of focu s both i n th e pri va te a n d pu bl i c
sectors to opti m i ze th ese costs. Th i s l ea d s to m a n y i n i ti a ti ves to i m prove
procu rem en t th rou g h en h a n ci n g ski l l s, i m provi n g processes a n d
h a rn essi n g tech n ol og y. I n m a n y ca ses th ese i n i ti a ti ves h a ve d el i vered
si g n i fi ca n t resu l ts, possi bl y beca u se th ey focu sed on opera ti on s th a t h a d a
d eg ree of i n effi ci en cy. D evel opi n g a stra teg y for su sta i n a bl e effi ci en cy
req u i res org a n i za ti on s to l ook beyon d th e tra d i ti on a l ‘cu t a n d th ru st’ of
pu rch a si n g power. Th e con cept of th e g l a ss fl oor (see Fi g u re 1 9 . 1 )
su g g ests th a t i n m a n y org a n i za ti on s th e i n i ti a l focu s on pu rch a si n g wa s
d i rected towa rd s i m provi n g processes a n d ski l l s.

Fi g u re 1 9. 1 – Th e g l a ss fl o o r

Crea ti n g a n a wa ren ess of th e i ssu es a n d focu si n g a tten ti on on h a rn essi n g

th e va l u e of th e su ppl y ch a i n to a d d ress effi ci en cy i s often a ch a l l en g e i n
org a n i za ti on s wh ere expen d i tu re i s sol el y ben ch m a rked on pri ce.
U n d ersta n d i n g th e spen d profi l e a n d ra ti on a l i zi n g spen d h el ps
org a n i za ti on s sta rt to d i rect a tten ti on wh ere i t wi l l d el i ver m ost va l u e.
Con sol i d a ti on of req u i rem en ts, wh eth er th rou g h sta n d a rd i za ti on or

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PART 3: Where?

a g g re g a ti o n , cre a t e s p o te n ti a l l e ve ra g e in th e m a rke t. Th e n , i n c re a s i n g

th e ri g o u r o f th e p ro ce s s a n d i m p l e m e n ti n g a d i s ci p l i n e d a p p ro a ch s ta rts

to b ri n g g re a te r e ffi ci e n cy to th e i r s p e n d i n g ; t h i s cre a te s t h e e ffi ci e n cy

zon e s h o wn in F i g u re 1 9. 1 , wh i ch sh o u l d b ri n g a m o re re a l i s ti c m a rke t

p ri ce . Th e n e xt s t a g e i s to l o o k a t h a rm o n i z i n g th e a p p ro a ch and ra i s i n g

th e ca p a b i l i ty t o e xp l o i t th e m a rke t . O fte n th e e a rl y wi n s co m e fro m

re d u ci n g th e su p p l y b a se , en a bl i n g g re a t e r fo cu s o n th e ke y i s s u e s a n d

co n s o l i d a ti n g spen d – th u s i n cre a s i n g l e ve ra g e . As o rg a n i z a ti o n s s ta rt to

g e n e ra t e g re a te r fo cu s th e y s o o n re co g n i z e th e n eed to i m p ro ve th e i r

o p e ra t i n g p ro ce s s e s , wh i ch l ea d s on to ta ckl i n g tra n s a cti o n co s ts . Th i s i s

a i m ed a t co s t re d u ct i o n and a l so fre e s u p re s o u rc e s to d i re ct e ffo rts

to wa rd s d e l i ve ri n g s a vi n g s . Th e i m p l e m e n ta ti o n o f te ch n o l o g y a n d

e - p ro cu re m e n t ca n e l i m i n a te m u ch o f th e l o w- va l u e h i g h - vo l u m e a cti vi ty.

Th e m o re d i ffi cu l t e l e m e n t o f th i s s ta g e in cre a ti n g th e s a vi n g zon e i s th e

re co g n i ti o n th a t s ki l l s n e e d to be i m p ro ve d o r re p l a ce d , in p a rt i cu l a r

th o s e o f n e g o ti a ti o n s ki l l s .

At th i s p o i n t th e o rg a n i z a t i o n re a ch e s a s ta b l e s ta te , b u t a l so i t b e co m e s

th e ‘ cru n ch p o i n t’ . As th e m e th o d s a n d ca p a b i l i ty i n cre a s e , so th e m a rke t

wi l l re a ct a n d re p o s i ti o n i ts e l f. Th o s e wh o h a ve e n j o ye d a fa vo u ra b l e

p o s i ti o n a s s u p p l i e rs a n d re co g n i z e th e ch a n g e s i n a p p ro a c h wi l l a d opt

a l te rn a ti ve a p p ro a ch e s . M a rke t a wa re n e s s b e co m e s t h e en em y of

s u s ta i n a b l e s a vi n g s . R e d u ce d co m p e ti ti o n t h ro u g h co n s o l i d a t i o n ca n l ea d

to ch a l l e n g e s . Ri si n g i n p u t co s t s th a t h a d p re vi o u s l y b e e n a b s o rb e d

th ro u g h high m a rg i n s s ta rt to b i te . On th e o th e r s i d e o f th e fe n ce , th e

s a vi n g s a ch i e ve d m a y i n d u ce co m p l a ce n cy a n d l ea d to o p p o rtu n i s m by

s u p p l i e rs , l ea d i n g to th e d a n g er zon e wh e re o rg a n i z a ti o n s n e e d to

co n s i d e r th e i r n e xt m o ve s . I t i s a t th i s s t a g e in th e d e ve l o p m e n t cycl e th a t

o rg a n i z a ti o n s n e e d to c o n s i d e r th e i m p l i ca ti o n s o f th e g l a s s fl o o r. I f th e y

do n o th i n g , th e n th e i n ve s tm e n t a n d th e s a vi n g s a ch i e ve d wi l l s l o wl y b e

e ro d e d . Lo o ki n g b e yo n d th e co n ve n ti o n a l s ta g e s , o rg a n i z a ti o n s n e e d to

co n s i d e r wh a t to do n e xt a n d h o w wo rki n g to g e th e r ca n su sta i n s a vi n g s

– and p e rh a p s e n h a n ce th e m .

Th e re a re two co m p l e m e n ta ry i n fl u e n ce s th a t c a n be b ro u g h t to b e a r. On

th e b u y si d e , s u p p l y ch a i n m a n a g e m e n t n e e d s to b e co m e m o re s tra t e g i c

in i ts th i n ki n g . I m p ro vi n g th e l o n g e r- te rm d e m a n d s e n a b l e s o rg a n i z a t i o n s

to ra ti o n a l i z e th e p ote n ti a l fo r fra m e wo rk a g re e m e n ts , wh i ch ca n be

va l u a b l e to b o th b u ye r a n d su ppl i er i n p re d i cti n g re q u i re m e n ts a n d

re d u ci n g co s ts . I n t e g ra t e d pl a n n i n g a l l o ws m o re tra n s p a re n cy a n d l e ss

o p p o rtu n i ty fo r s h o rt - te rm e xp l o i t a t i o n . P ro ce s s i m p ro ve m e n t ca n

d e ve l o p th ro u g h u n d e rs ta n d i n g th e j o i n t i m p a ct o n co s t a n d

p e rfo rm a n ce . Th ro u g h co l l a b o ra t i o n , s p e ci fi ca ti o n s a n d re q u i re m e n ts c a n

be h a rm o n i z e d to e l i m i n a te s p e ci a l ty p ri ci n g . E s ta b l i s h i n g th e s tra t e g i c

zon e p ro vi d e s a n e n ti c i n g o p p o rtu n i t y fo r th e s u p p l i e r to be m o re

cre a ti ve and i n n o va t i ve in b ri n g i n g va l u e to th e ta bl e .

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Th e m ore soph i sti ca ted su ppl i er wi l l proba bl y see th i s a s a n opportu n i ty

zon e, wh ere by h a rn essi n g forwa rd pl a n n i n g th ey ca n opti m i ze
prod u cti on d em a n d s a n d presen t l on g er-term pri ci n g m od el s th a t provi d e
sta bi l i ty. Th i s i n tu rn h el ps to focu s fu tu re i n vestm en t a n d , th rou g h
col l a bora ti on , i n trod u ce i n n ova ti on , process i m provem en t a n d red u ced
overh ea d s, a l l of wh i ch ca n i n crea se th ei r com peti ti ve ed g e. Cl ea rl y,
g oi n g beyon d th e g l a ss fl oor i s n ot a ppropri a te for a l l procu rem en t; bu t
ta rg eted correctl y i t ca n i n trod u ce g rea ter sta bi l i ty for key m a rkets a n d
offers m ore su sta i n a bl e sa vi n g s.

s r
M OD (M i n i t y o f f
De en ce) – ca e s s tud y

Th e D efen ce I n form a ti on I n fra stru ctu re (D I I ) G rou p i s th e fi rst

prog ra m m e i n M O D to a ch i eve B S 1 1 000 certi fi ca ti on a n d we bel i eve
th a t th i s i s recog n i ti on of ou r con ti n u a l com m i tm en t to col l a bora ti ve
worki n g . Th e Stra teg i c D efen ce a n d Secu ri ty Revi ew req u i res M O D to
seek to m eet d efen ce ou tpu ts wi th fewer peopl e a n d D I I G rou p
bel i eved th a t a m ore col l a bora ti ve wa y of worki n g cou l d d el i ver
si g n i fi ca n t va l u e wh en i m pl em en ted a n d m a n a g ed correctl y. Th e
q u esti on wa s h ow to em bed a n d su sta i n col l a bora ti ve worki n g i n th e
D I I prog ra m m e a n d h ow we wou l d kn ow we h a d a ch i eved th i s.

Col l a bora ti ve worki n g i s a bou t d evel opi n g two-wa y, m u tu a l l y

ben efi ci a l rel a ti on sh i ps th a t d el i ver g rea ter l evel s of i n n ova ti on a n d
com peti ti ve a d va n ta g e th a n cou l d be a ch i eved by opera ti n g
i n d epen d en tl y. I t i m proves cost m a n a g em en t, u se of resou rces a n d
ri sk m a n a g em en t to i n crea se bu si n ess va l u e a n d u n l ock i n n ova ti on .

Th e D I I Com bi n ed O pera ti n g M od el wa s esta bl i sh ed to expl oi t

col l a bora ti ve worki n g pri n ci pl es a n d pu t i n pl a ce a n opera ti n g
fra m ework th a t wou l d en a bl e i m proved d el i very of D I I bu si n ess
ou tpu ts a n d better posi ti on D I I to su pport th e fu tu re D efen ce Core
N etwork Servi ces prog ra m m e. I t a l so provi d ed a sta bl e fra m ework to
m i n i m i ze d i sru pti on from a n ti ci pa ted reorg a n i za ti on s a n d en a bl e
sea m l ess su ccessi on pl a n n i n g .

B S 1 1 000 provi d ed a m ech a n i sm to m ea su re th e effecti ven ess of

col l a bora ti ve worki n g a n d va l i d a te th e Com bi n ed O pera ti n g M od el ,
g i vi n g M O D a n extern a l m ea su rem en t veh i cl e to su sta i n th ei r
col l a bora ti ve bu si n ess rel a ti on sh i p.

M i ke Rog ers
M O D Pa rtn eri n g Su pport G rou p

Pa rtn eri n g a n d col l a bora ti on h a s becom e pa rt of th e su ppl y ch a i n

a rm ou ry i n th e sea rch to m a i n ta i n com peti ti ven ess a n d d evel op
a l tern a ti ve bu si n ess m od el s. Th i s a pproa ch m a y ta ke m a n y d i fferen t
form s, from ou tsou rci n g of i n tern a l su pport a cti vi ti es th rou g h to extern a l

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i n te g ra ti o n o f b u s i n e s s p ro c e s s e s . Th e re a re m a n y e xa m p l e s wh e re th e

co l l a b o ra ti ve a p p ro a ch h a s s h o wn s i g n i fi ca n t b e n e fi t to o rg a n i z a ti o n s ,

b u t th e re a re a l so m a n y p ote n ti a l p i tfa l l s th a t a ri s e fro m g re a t e r

i n te rd e p e n d e n ce . Th e s e ch a l l e n g e s m a y re fl e ct p e rfo rm a n ce or

re p u t a ti o n i ssu e s, wh i ch n eed to be a d d re s s e d a s p a rt o f a n y o ve ra l l

s tra t e g y.

Co l l a b o ra ti o n p ro m o te s i n te g ra t i o n o f th e va l u e ch a i n , p l a ci n g th e fo cu s

on th e wi d e r d e l i ve ry s t ru ctu re b y re m o vi n g n o n - va l u e a d d ed a ct i vi ti e s

and s h a ri n g s ki l l s , re s o u rce s a n d kn o wl e d g e to i m p ro ve b u si n e ss

p ro ce s s e s . P a rtn e ri n g m a y be m o re h e l p fu l l y i l l u s t ra te d b y re p l a ci n g th e

‘ ch a i n ’ m e ta p h o r wi th a ‘ b ri d g e ’ , wh e re fo cu s i s d ra wn to th e

i n te rd e p e n d e n t s tre n g th o f th e i n te rfa ce s i n s te a d o f th e i n d i vi d u a l

s tre n g th o f th e co m p o n e n t l i n ks th e m s e l ve s . B ri d g i n g th e va l u e ch a i n

s u p p o rts a n d a cce l e ra t e s th e c o m p l e x fl o w o f i d e a s , i n g e n u i ty, re s o u rce s

and e xp e rti s e th a t i n t e rco n n e ct d e s i g n e rs , p ro d u ce rs a n d co n s u m e rs .

B ri d g e s u l ti m a t e l y co n n e ct a l l s e g m e n t s o f th e ch a i n to on e a n o th e r,

m a ki n g all p a rt i e s i n so m e wa y re s p o n s i b l e fo r th e e ffi ci e n cy a n d

co m p e t i ti ve n e s s o f th e wh o l e . Th i s n e two rk o f i n te rd e p e n d e n ce fo rm s

th e fo u n d a ti o n o f s t ra te g i c p ro g ra m m e s a n d o ve ra l l p e rfo rm a n ce is

e n h a n ce d b y i n t e g ra t i n g s u p p l y p a rt n e rs .

At e ve ry s ta g e o f th e s tra te g y d e ve l o p m e n t p ro ce s s i t i s i m p o rta n t to

m a i n ta i n a p e rs p e cti ve on th e ri s k a n d p o te n ti a l va l u e of a p a rt i cu l a r

b u s i n e s s re l a ti o n s h i p . In m a n y ca s e s , wh i l e a l e s s co n fro n ta ti o n a l

re l a t i o n s h i p wi l l add va l u e , d e ve l o p i n g a fo rm a l c o l l a b o ra ti ve

a rra n g e m e n t m a y n o t b e j u s ti fi e d . C o l l a b o ra t i ve ve n tu re s ta ke ti m e and

e ffo rt a n d m u st b e a bl e to d e m o n s tra t e a va l u e co n t ri b u ti o n t h a t fi ts

wi t h th e o ve ra l l b u s i n e s s p ro fi l e and ta rg e te d o b j e cti ve s . In th e sa m e wa y

th e ri s ks n e e d to be e va l u a te d and a b a l a n ce d vi e w ta ke n t h a t re fl e cts

th e s e sa m e o b j e cti ve s . E ffe cti ve re l a ti o n s h i p s b ri n g m a n y p o te n ti a l

b e n e fi ts , b u t th e s e wi l l , co n ve rs e l y, g e n e ra t e a n u m b e r o f l i m i ta t i o n s o n

th e tra d i ti o n a l wa y o f wo rki n g wi th e i th e r cu s to m e rs o r s u p p l i e rs .

Supp ly chain ri s k
O rg a n i z a ti o n s s h o u l d co n s i d e r t h e s u p p l y ch a i n as a m a j o r p o te n ti a l a re a

o f ri s k, in te rm s o f e ve ry a s p e ct o f th e b u s i n e s s p ro fi l e fro m p ro fi t a b i l i ty

to l o n g - te rm re p u t a ti o n . F a i l u re b y a n y m a j o r s u p p l y co m p o n e n t wi l l be

vi e we d b y cu s to m e rs a s a fa i l u re in th e sel l i n g o rg a n i z a ti o n . Th e wh o l e

p ro ce s s o f ri s k m a n a g e m e n t h a s , in g e n e ra l , tra d i ti o n a l l y fo cu s e d on

p a ssi n g ri s k d o wn th e co n tro l ch a i n , th ro u g h t i g h t co n tra cts a n d

p e n a l ti e s fo r p o o r p e rfo rm a n ce . Wh a t i s o fte n i g n o re d in th i s p ro fi l e is

th e a b i l i ty o f th e su p p l i e r a l o n e to i n fl u e n ce th e o u tco m e , o r th e i m p a ct

o f p e n a l ti e s to tru l y re fl e ct th e o ve ra l l i m p a ct o f p o o r p e rfo rm a n ce . Th u s ,

b a l a n ci n g o f cu s to m e r ri s k a n d s u p p l i e r ri s k s h o u l d be a c ru ci a l p a rt o f

cre a t i n g an o p ti m i z e d ri s k s tra te g y.

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Th e s u p p l y ch a i n i s th e m o s t u n d e rra t e d fa ce t o f th e b u s i n e s s l a n d s ca p e ;

th e p o te n ti a l th a t i t ca n i n tro d u ce to i m p ro ve p e rfo rm a n ce and re d u ce

co s t i s s i g n i fi ca n t. H o we ve r, th e g re a te r th e l e ve l o f e xp l o i ta ti o n th e

h i g h e r th e ri s k p o te n ti a l , th u s , high on th e ri s k m a n a g e m e n t a g e n d a

m u st b e th e d e ve l o p m e n t o f s tra te g i c p ro cu re m e n t a p p ro a ch e s . Ke y

e l e m e n ts s u ch a s co m p l e xi t y, cri t i ca l i ty a n d h a z a rd e va l u a ti o n s a re n o rm a l

p a rts o f m o s t s e l e ct i o n p ro ce s s e s , b u t wi d e r i s s u e s s u ch a s cu s t o m e r

a cce p ta b i l i ty ca n be a m a j o r d e ci d i n g fa cto r. Th e i ssu e o f ri s k i s n o t s i m p l y

a q u e s ti o n fo r th e b u ye r; it has a m a j o r i m p a ct o n th e p ro fi l e o f th e

s u p p l i e r. H ow a s u p p l i e r i s p e rce i ve d in th e m a rke t i s a cri ti ca l p a rt o f

th e i r m a rke ti n g p ro fi l e and a ke y e l e m e n t o f h o w th e y p re s e n t

th e m s e l ve s to cu s to m e rs .

Concl us ion
Th e a d o p ti o n o f co l l a b o ra t i ve co n ce p ts i n to s t ra te g i c s u p p l y p ro g ra m m e s

p ro vi d e s a n a l te rn a ti ve p e rs p e cti ve on th e tra d i ti o n a l tra d i n g

re l a t i o n s h i p . B e yo n d th e co m m e rci a l b e n e fi t s th a t a re u s u a l l y th e p ri m e

fo cu s fo r p u rs u i n g co l l a b o ra t i o n to fi n d o r i m p ro ve co m p e ti t i ve ed g e, it

o ffe rs a so u n d and m u tu a l p l a tfo rm on wh i ch to s u p p o rt a n d d e ve l o p

n ew i d ea s, manage ri s k a n d h el p to u n d e rp i n s u s ta i n a b i l i ty ta rg e t s .

P o o r re l a t i o n s h i p s b e t we e n o rg a n i z a ti o n s a n d t h e i r s u p p l y ch a i n s a re

p e rh a p s th e m a j o r co n tri b u to r i n th e fa i l u re to a d d re s s m a n y a s p e cts o f

g l o b a l i za ti o n . Th e ch a ra c te ri s ti cs o f a n y s u cce s s fu l b u s i n e s s a re th e

co m m o n fa cto rs i n bu i l d i n g e ffe cti ve re l a t i o n s h i p s . C o l l a b o ra ti o n ca n

m o ve th i s i n t e g ra ti o n e ve n fu rt h e r to wa rd s s u cce s s , u n d e rp i n n e d by

d e ve l o p i n g tru s t , t h ro u g h m u tu a l p e rfo rm a n ce , and i t i s th ro u g h th i s

tru s t th a t m o re e ffe ct i ve o p ti m i z a t i o n and d e ve l o p m e n t ca n ta ke p l a ce .

Th i s i n tu rn wi l l i d e n t i fy o p p o rtu n i t i e s fo r co s t a n d ti m e e ffi ci e n ci e s ,

wh i l e a t th e sa m e ti m e cre a ti n g th e fra m e wo rk a n d b a ckg ro u n d to

d e ve l o p m o re e ffe cti ve l y t h e ro l e s a n d re s p o n s i b i l i ti e s , wh i ch wi l l l a rg e l y

d e fi n e th e s u cce s s o f th e p a rtn e rs h i p .

C o l l a b o ra ti o n a d d re s s e s s h o rt a n d l o n g - te rm i n te g ra ti o n , so i t m u s t t a ke

co n s i d e ra ti o n fo r th e wi d e r i m p l i ca ti o n s o f s o ci a l i n te ra cti o n a t th e

b u s i n e s s l e ve l . Th e m u tu a l fo cu s o n th e fu tu re wi l l i n e vi ta b l y l e a d to

o rg a n i z a ti o n s h a vi n g g re a te r kn o wl e d g e o f e a ch o t h e r, and m o re fu l l y

a p p re c i a ti n g th e b e n e fi ts th a t ca n be d e ri ve d fro m j o i n t d e ve l o p m e n t

ra th e r th a n s h o rt- te rm e xp l o i ta ti o n . Th e BS 1 1 000 fra m e wo rk p ro vi d e s a

ro b u s t a n d n e u t ra l p l a tfo rm on wh i ch to e xp l o re th e p o te n ti a l b e n e fi ts

o f co l l a b o ra ti o n to s u p p o rt th e m o ve th ro u g h th e g l a s s fl o o r to wa rd

s u s ta i n a b l e p ro cu re m e n t.

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PART 3: Where?

Key messages
Th e i n cre a s e d fo cu s o n s t ra te g i c s o u rci n g and s u p p l y ch a i n s o ffe rs m a n y

o p p o rtu n i ti e s to e xp l o i t t h e p o te n ti a l o f co l l a b o ra t i ve m o d e l s. Th e ke y

i s s u e s g i ve n in Ta b l e 1 9. 1 ca n h el p to p ro m o te co n s i d e ra ti o n s fo r

co l l a b o ra ti ve wo rki n g .

Ta b l e 1 9 . 1 – Ke y m e ss age sf rs r
o t a te g i c supp l y ch a i n

B S 1 1 000 s r
t a te g i c supp l y ch a i n

Fo c us p oi n t Ra ti o n a l e

1 B us ine ss E ffe cti ve s u p p l y ch a i n o p t i m i z a ti o n has

o b j e cti ve s b e co m e a cri ti ca l a s p e ct o f o ve ra l l b u si n e ss

p e rfo rm a n ce . Co l l a b o ra ti ve re l a t i o n s h i p s re a ch

b e yo n d th e t ra d i ti o n a l p e rs p e cti ve o f p ri ce ,

q u a l i ty a n d d e l i ve ry b u t m u s t b e i n te g ra l to

th e g o a l s o f th e o rg a n i z a ti o n to co n s i d e r

a l te rn a t i ve a p p ro a ch e s a n d d i re ct e ffo rts t o

th o s e re l a ti o n s h i p s wh i ch wi l l co n tri b u t e

m a xi m u m va l u e

2 Ben e f sit Wh i l e p ri ce wi l l a l wa ys re m a i n a ke y fa cto r i n

s u p p l y ch a i n m a n a g e m e n t, a d o pti o n o f th e

s ta n d a rd e s ta b l i s h e s a ro b u s t fra m e wo rk t o

e va l u a te m o re i n cl u s i ve a p p ro a ch e s i n

a sse ssi n g i n n o va ti ve s o l u ti o n s to m eet

b u si n e ss g o a l s

3 Ri s k Re l i a n ce on th e s u p p l y ch a i n to s u p p o rt

b u s i n e s s d ri ve rs i n cre a s e s th e ri s ks a n d

vu l n e ra b i l i ty o f o p e ra ti o n s ; th u s t h e s e

s tra t e g i c re l a ti o n s h i p s b e co m e an i n te g ra l

a s p e ct o f b u s i n e s s ri s k wh i l e a t th e sa m e ti m e

i n tro d u ci n g so m e a d d i ti o n a l ri s ks

4 Co l l a b o r a ti ve In s e e ki n g to d e ve l o p a l te rn a ti ve b u si n e ss

pr f o ile m o d e l s, o rg a n i z a ti o n s fre q u e n t l y a s s u m e th e

m a rke tp l a ce i s wi l l i n g to co l l a b o ra te or

co n s i d e rs th e cu s to m e r h a s a co l l a b o ra ti ve

e th o s

5 P r
a tn e r Th e p ro ce s s o f ch o o s i n g th e a p p ro p ri a te

e va l u a ti o n co l l a b o ra ti ve p a rtn e r ca n fre q u e n t l y i g n o re

th e cu l t u re th a t wi l l be a cru ci a l i n g re d i e n t

fo r s u cce s s . B a si n g e va l u a ti o n and s e l e cti o n on

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p u re p e rce p ti o n ra i s e s i s s u e s o f a u d i ta b i l i ty,

wh e th e r p ri va te o r p u b l i c s e cto r

6 Cont acting
r Th e re l i a n ce on co n tra ct s to e n fo rce

p e rfo rm a n ce and b e h a vi o u rs i s s e l d o m

s u cce s s fu l . Th e i n t e g ra t i o n o f th e s ta n d a rd

e n s u re s th e re is a s tru ctu re d a p p ro a ch wh i ch

ca n be d e ve l o p e d b y th e p a rt i e s wi t h o u t

co m p ro m i s i n g th e i n te g ri ty o f t h e co n t ra ct

and i t s i n h e re n t l i a b i l i ti e s

7 Management Th e co n tro l o f co m p l e x s u p p l y ch a i n s i s m o s t

fre q u e n tl y d i re ct e d th ro u g h a m a s te r/s e rva n t

re l a ti o n s h i p , wh i ch co n s tra i n s e ffe ct i ve

en g a g em en t a n d l i m i t s m u tu a l d e ve l o p m e n t

of a d d ed va l u e

8 I nte e en ency
rd p d S u p p l y ch a i n vu l n e ra b i l i ty i n cre a s e s wh e re ke y

a s p e cts o f p e rfo rm a n c e a re e xt e rn a l l y

d e l i ve re d and i s fu rt h e r co m p l i ca te d wh e re

i n t e g ra te d m o d e l s a re a d o pte d th a t h a rn e s s

j o i n t ca p a b i l i ty a n d o wn e rs h i p

9 P e o mance
rf r In a n y b u s i n e s s ve n t u re d e l i ve ri n g th e

re q u i re d o u tc o m e s i s cru ci a l , wh i c h ca n be

d a m a g ed b y p ro te cti o n i s m and ‘bl a m e

cu l tu re ’ d i ve rti n g re s o u rce s . A ro b u s t

co l l a b o ra ti ve a p p ro a ch e n s u re s th a t

tra n s p a re n cy a n d j o i n t re s p o n s i b i l i ty a re

e sta b l i sh e d

1 0 I nnovation S h a ri n g kn o wl e d g e and ca p a b i l i t y a l l o ws

o rg a n i z a ti o n s to h a rn e s s va l u e a cro s s th e

re l a ti o n s h i p and p o te n ti a l l y e xte n d th e

co n tri b u t i o n to o ve ra l l s u cc e s s

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Cha p te r 20 – O u ts o urcing

O u ts o u rci n g h a s b e co m e a m a j o r a re a o f b u s i n e s s fo cu s o ve r

th e p a s t d e ca d e . I t h a s d e m o n s tra te d th e va l u a b l e p o te n ti a l to

e n h a n ce co m p e ti ti ve ed g e, b u t h a s a l so h i g h l i g h te d th e many

ch a l l e n g e s th a t o rg a n i z a ti o n s fa ce wh e n s e e ki n g to ca p i ta l i z e

on th e p o te n ti a l o f tra n s fe rri n g i n te rn a l a cti vi ti e s a n d re s o u rce s

to a th i rd p a rty o rg a n i z a t i o n . In th i s ch a p te r we e xa m i n e th e

ke y ro l e o f re l a ti o n s h i p s i n th i s e n vi ro n m e n t a n d th e ‘ o u ts i d e

in’ th e o ry.

O u t s o u rci n g cre a te s a wh o l e n e w s p e ctru m o f ch a l l e n g e s a n d ri s ks ,

wh e th e r i t i s fo r i n te rn a l s u p p o rt s e rvi ce s , th e d e ve l o p m e n t o f e xt e rn a l

m a n u fa ctu ri n g o r th e cre a ti o n o f e xt e n d e d e n te rp ri s e b u si n e ss m o d e l s.

Th e s e e xt e rn a l o rg a n i z a ti o n s a re m o vi n g i n si d e a n o t h e r o rg a n i z a ti o n ’s

i m a g i n a ry b o u n d a ri e s o r fi re wa l l s t o b ecom e p a rt o f th e o ve ra l l d e l i ve ry

p ro ce s s. H o we ve r, th e i r re m o t e l o ca ti o n o fte n m e a n s t h a t th e y a re n ot

p h ys i ca l l y a b s o rb i n g th e e th o s o r cu l tu re o f th e h o s t cu s t o m e r. In so m e

ca s e s th e y m a y b e o p e ra ti n g wi th a co m p l e te l y d i ffe re n t s e t o f co n fl i cti n g

va l u e s . Th e p ro ce s s o f i n te g ra ti n g e xte rn a l o rg a n i z a ti o n s i n to a co h e s i ve

b u s i n e ss p ro ce s s p l a ce s i n cre a s e d d em a n d s on th e tra d i n g re l a t i o n s h i p s

and th o s e ch a rg e d wi th managing th e m . Th e outside i s co m i n g inside bu t

i s fre q u e n tl y e va l u a te d on th e b a s i s o f tra d i ti o n a l co m m a n d - a n d - co n tro l

th i n ki n g . Th e ru s h to e xp l o i t th e p o te n ti a l o f o u ts o u rci n g o p p o rtu n i ti e s

m u s t b e b a l a n ce d wi th a ro b u s t p ro ce s s t h a t e n s u re s a h o l i s t i c a p p ro a ch

i s cre a te d , wh i ch co n s i d e rs th e wi d e r i m p l i ca t i o n s o f th i s s tra t e g y.

Th e p ro g re s s i ve m o ve fro m a co m m a n d - a n d - co n tro l s tru c tu re to on e of

i n t e rd e p e n d e n ce , h o we ve r, h i g h l i g h ts t h e n eed to d e ve l o p a m o re

co l l a b o ra ti ve a p p ro a ch . Th e d e p l o ym e n t o f co l l a b o ra ti ve a p p ro a ch e s ca n

h el p to u n d e rp i n e ffe cti ve o u ts o u rci n g s tra te g i e s , en a bl i n g o rg a n i z a ti o n s

to ca p i ta l i z e on th e b e n e fi ts and cre a t e fu t u re o p p o rtu n i ti e s .

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PART 3: Where?

E M CO R Gro up (U K) – ca s e s tud y
E M CO R U K i s th e fi rst fa ci l i ti es m a n a g em en t (FM ) provi d er to a ch i eve
B S 1 1 000 certi fi ca ti on , recog n i zi n g E M CO R’s tra ck record i n
d evel opi n g l on g -term cl i en t rel a ti on sh i ps. E M CO R’s cl i en ts h a ve
a l wa ys ben efi ted from i ts col l a bora ti ve a pproa ch , bu t si n ce Apri l
2 01 0 a n i n d epen d en tl y a ssessed fra m ework h a s been i n pl a ce th a t
effecti vel y en su res th e kn owl ed g e, ski l l s, processes a n d resou rces to
m eet m u tu a l l y d efi n ed obj ecti ves a re i n pl a ce. B S 1 1 000 sets ou t a
fra m ework th a t wi l l en a bl e com pa n i es l i ke E M CO R to a ppl y g ood
pra cti ce pri n ci pl es to i ts own wa y of worki n g , a n d h a s wi d e
a ppl i ca ti on s on h ow to m a n a g e va l u a bl e bu si n ess rel a ti on sh i ps
wi th i n th e su ppl y ch a i n .

At E M CO R U K we focu s on th e con cept of ‘col l a bora ti ve worki n g ’ a s

we feel th i s better su m s u p th e pra cti ca l rel a ti on sh i p between
i n d epen d en t bu si n esses worki n g tog eth er. Col l a bora ti ve worki n g
i m pl i es th a t org a n i za ti on s a re n ot ‘j oi n ed a t th e h i p’, bu t th a t th ey
sh a re m u tu a l g oa l s on speci fi c prog ra m m es. I a m fi rm l y of th e vi ew
th a t a n y bu si n ess rel a ti on sh i p n eed s sh a red ou tcom es th a t sh ou l d be
a g reed form a l l y, so th a t a l l th ose i n vol ved kn ow exa ctl y wh a t i s
expected of th e oth er a n d th a t a ssu m pti on s a re n ot m a d e a bou t
m oti va ti on s th a t m a y be wron g . I n d oi n g so, col l a bora ti ve
org a n i za ti on s g et to th i n k i n m ore d eta i l a bou t wh a t th ey wa n t to
a ch i eve tog eth er.

M a n y org a n i za ti on s a n d th e com pa n i es th a t serve th em a re si m pl y

l ocked i n to th e tra n sa cti on a l a pproa ch a n d ca n n ot see pa st i t. Th i s i s
exa cerba ted wh en m a n y FM servi ce provi d ers a re seen to be too fa r
d own th e ‘food ch a i n ’, wh en a ctu a l l y th ei r kn owl ed g e a n d experti se
cou l d m a ke a rea l d i fferen ce i f a m ore col l a bora ti ve a pproa ch wa s
con si d ered . Th i s i s si m pl e com m on sen se a n d recog n i ti on of th e va l u e
of FM to a n org a n i za ti on .

Th e Lea n Lea rn i n g Aca d em y i m pl em en ted by ou r a erospa ce cl i en t

en cou ra g es m a xi m u m focu s on th e a l i g n ed g oa l s a n d th e d i sm i ssa l of
th ose i ssu es th a t a re i rrel eva n t to a ch i evi n g th em . Th e resu l t ca n
provi d e i n n ova ti ve bu t pra cti ca l sol u ti on s to probl em s or th e
g ra spi n g of opportu n i ti es th a t presen t th em sel ves wh en everyon e on
th e tea m kn ows exa ctl y wh a t th ey a re con tri bu ti n g to a n d wh y. I n
pra cti ca l term s th i s h a s a m ou n ted to cost sa vi n g s i n excess of £5 00K
per a n n u m a n d fa ster j ob com pl eti on .

Ch ri stoph er Keh oe,

D i vi si on a l D i rector, E M CO R U K

E xpl oi ti n g a n y ou tsou rci n g i n i ti a ti ve i s com m on l y focu sed on th e prom i se

of si g n i fi ca n t cost sa vi n g s. Wh i l e th i s i s cl ea rl y possi bl e, th e a bi l i ty of

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 Chapter 20 – Outsourcing

org a n i za ti on s to ca pi ta l i ze on th e opportu n i ti es d epen d s very m u ch on

h ow th e prog ra m m e i s eva l u a ted , a n d – m ore i m porta n tl y – d evel oped
a n d i m pl em en ted . O u tsou rci n g wi l l h a ve a n i m pa ct on th e wh ol e
org a n i za ti on , ei th er d i rectl y or i n d i rectl y, a n d i t i s l i kel y to m eet
resi sta n ce. I t a l so h a s to be d evel oped wi th i n th e wi d er m a rket
en vi ron m en t. Crea ti n g a n effecti ve prog ra m m e m u st be ba sed on fu l l y
u n d ersta n d i n g th e i n tern a l ca pa bi l i ti es a n d d ri vers; a t th e sa m e ti m e a n y
prog ra m m e m u st i n corpora te recog n i ti on of i n teg ra ti n g a ri sk
m a n a g em en t a pproa ch wi th i n i ts d evel opm en t. D efi n i n g cl ea r obj ecti ves
wi l l h el p to a ssess a spects of kn owl ed g e tra n sfer a n d th e wi d er
i m pl i ca ti on s of m eeti n g th e su sta i n a bi l i ty a g en d a .

Th e d evel opm en t of a n ou tsou rci n g prog ra m m e sh ou l d be revi ewed fi rst

from a stra teg i c perspecti ve, a n d th en wi th a n eva l u a ti on pl a n set i n
pl a ce th a t wi l l en a bl e va ri ou s a spects of th e bu si n ess to be revi ewed a n d
a ssessed , to en su re th a t every a spect a n d i m pa ct h a s been ta ken i n to
a ccou n t. Th e i m porta n ce of rel a ti on sh i ps i n th i s bu si n ess en vi ron m en t i s
fu n d a m en ta l ; yet wh i l e th ere i s often a ckn owl ed g em en t of th e pri n ci pl e,
freq u en tl y rel a ti on sh i p m a n a g em en t i s l ow on d evel opm en t prog ra m m es.
Th i s i s perpl exi n g , pa rti cu l a rl y wh en you con si d er th e g rowth of
ou tsou rci n g a n d offsh ori n g , wh ere th e i n terfa ces between org a n i za ti on s
a re a l wa ys a poi n t of vu l n era bi l i ty a n d ri sk. O ften th e a ssu m pti on i s
m a d e th a t m a n a g i n g rel a ti on sh i ps i s j u st a n orm a l pa rt of bu si n ess l i fe
a n d th u s l ow on th e ‘n eed s d evel opm en t’ profi l e. Th i s d i l em m a prom pts
con si d era ti on a bou t h ow org a n i za ti on s l ook a t th em sel ves a n d th e
m a rketpl a ce a s a wh ol e, a n d h ow th i s m a y a ffect th e wa y th e i m pa ct of
rel a ti on sh i ps i s percei ved . M a n y tra d i ti on a l org a n i za ti on s h a ve d evel oped
u n d er a com m a n d -a n d -con trol stru ctu re th a t l ooked from th e i n si d e ou t
to th e m a rketpl a ce a n d were con trol l ed th rou g h a rm ’s-l en g th con tra cts
wi th ei th er cu stom ers or su ppl i ers. Th i s a pproa ch a ssu m ed th a t th ey
wou l d opera te wi th i n kn own ru l es a n d beh a vi ou rs; i t i s rel a ti vel y ea sy to
m a n a g e rel a ti on sh i ps a n d beh a vi ou rs a s a fa ctor of l oca ti on .

Th e ‘ou tsi d e i n ’ th eory poses th e vi ew th a t wh en a ssessi n g th e

i m porta n ce a n d va l u e of rel a ti on sh i ps we sh ou l d be eva l u a ti n g from
a n oth er perspecti ve. I f org a n i za ti on s l ooked a t th ei r opera ti on s from th e
perspecti ve of ‘ou tsi d e i n ’ th en th e rea l i za ti on i s th a t m a n a g i n g
rel a ti on sh i ps i s a m ore com pl ex a n d cru ci a l i n g red i en t for th ese d i verse
bu si n ess m od el s. I t h i g h l i g h ts th e n eed to bri n g i n to pl a y a m u ch wi d er
ra n g e of con si d era ti on s th a n th e tra d i ti on a l pri ce, q u a l i ty a n d d el i very
m i x. I t a l so bri n g s i n to q u esti on wh eth er th e tra d i ti on a l a pproa ch es of
con tra cti n g ca n effecti vel y be a ppl i ed i n th i s en vi ron m en t.

Th e tra d i ti on a l tri ed a n d tested opera ti n g m od el (see Fi g u re 2 0. 1 ) for

su ppl y ch a i n s – a n d perh a ps th e ba si s of m ost org a n i za ti on a l a pproa ch es
– h a s been d evel oped a rou n d m a n u fa ctu ri n g con cepts: we vi ew th e
m a rketpl a ce from a perspecti ve of h ow i t fi ts wi th ou r opera ti on s. I n th i s
con text org a n i za ti on s a cq u i re m a teri a l s or com pon en ts, m ove th ese i n to

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PART 3: Where?

Fi g ur e 2 0. 1 – Th e t r d
a i ti o n a l r d
t a ing mo d el

a prod u cti on prog ra m m e wh ere th ey a re processed , th en possi bl y

d i stri bu te to th e poi n t of sa l e. I n th i s m od el th e key i s to en su re th a t we
a ch i eve th e m ost com peti ti ve pri ce a n d th e ri g h t l evel of q u a l i ty, a n d ou r
prod u cts a re a va i l a bl e wh en n eed ed . Th e on l y ch a l l en g e i s to orch estra te
th e ba l a n ce between th ese th ree key d ri vers. Th e m od el becom es sl i g h tl y
m ore com pl ex wh en d eci si on s a re m a d e to h a ve certa i n el em en ts of th e
processi n g u n d erta ken by extern a l speci a l i sts. Th i s often occu rs wh ere
org a n i za ti on s h a ve a peri od i c req u i rem en t th a t d oes n ot j u sti fy a
fu l l -ti m e i n tern a l ca pa bi l i ty. I n th ese ca ses th e i n teg ra ti on of th e extern a l
ca pa bi l i ty i s l a rg el y a ch i eved th rou g h effecti ve m a n a g em en t a t a l oca l
l evel (see Fi g u re 2 0. 2 ) . Th i s en su res th a t th ose th i rd pa rty provi d ers
opera te wi th i n th e i n tern a l stru ctu res a n d g overn a n ce. Th e extern a l
pa rti es wi l l often , to g rea ter or l esser exten t, a l so a bsorb th e eth os a n d
cu l tu re of th e org a n i za ti on .

As org a n i za ti on s l ook for g rea ter effi ci en cy a n d stri ve to focu s on th ei r

core ca pa bi l i ti es wh i l e red u ci n g costl y i n tern a l i n fra stru ctu res, th e n ext
step i s to con si d er extern a l con tra ctors to u n d erta ke a l l or pa rt of th e
processi n g , a n d often d i stri bu ti on too (see Fi g u re 2 0. 3 ) . Prog ressi on to
th i s m od el l ea d s to a g rea ter em ph a si s on th e scope a n d ri g ou r of
con tra cts. I n m a n y ca ses th ese rel a ti on sh i ps or con tra cts a i m to tra n sfer
ri sk a n d respon si bi l i ty to th e h i g h est possi bl e exten t, rel yi n g on th e
con tra ct to a l l oca te l i a bi l i ty i n th e even t of a brea kd own . Cl ea rl y, a t th i s
poi n t th e rel a ti on sh i p h a s becom e fra g m en ted , wh ere on ea ch si d e of
th e con tra ct wa l l th e pa rti es a re worki n g to protect th ei r posi ti on wh i l e
expl oi ti n g th ei r rel a ti ve posi ti on s a s m u ch a s possi bl e i n term s of
perform a n ce. Wh i l e m a n y org a n i za ti on s seek to i m pose th ei r pri n ci pl es
a n d va l u es th rou g h con tra cts th i s i s sel d om fu l l y effecti ve.

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 Chapter 20 – Outsourcing

Fi g u re 2 0 . 2 – I n co rp o ra ti n g e xte rn a l co n tra cto rs

Fi g u re 2 0 . 3 – M o vi n g to o u ts o u rci n g

P e rh a p s t h e m o s t vu l n e ra b l e sta g e i s wh e re o rg a n i z a ti o n s s e e k t o re d u ce

co s t b y o u t s o u rci n g l a rg e a re a s o f o p e ra t i o n a l p ro ce s s a cti vi ty. Th e s e

e xte rn a l p ro vi d e rs b e co m e an i n te g ra l p a rt o f th e o ve ra l l d e l i ve ry m o d e l

b u t re m a i n co m p l e t e l y i n d e p e n d e n t co m p a n i e s . At th i s p o i n t t h e co n t ra ct

ca n o n l y p ro vi d e th e fi n a n ci a l and p e rfo rm a n ce fra m e wo rk; i t i s u n l i ke l y

to be a bl e to i n fl u e n ce i n t e g ra te d p e rfo rm a n ce o r – e q u a l l y i m p o rta n t –

a s p e cts s u ch a s m a i n ta i n i n g vi s i o n s a n d va l u e s , cu l t u re , e th o s a n d

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PART 3: Where?

com m i tm en t. Th ere i s pl en ty of evi d en ce th a t i t i s th e cu l tu re a n d va l u es

of a n org a n i za ti on th a t rea l l y d ri ve excel l en t perform a n ce, n ot
reg u l a ti on s a n d m ea su res.

At th i s poi n t th e rel a ti on sh i p a n d profi l e of th e provi d er, wh o m a y be

d i rectl y i n terfa ci n g wi th cu stom ers, becom es a cri ti ca l fa ctor. H ow th ey
represen t th e org a n i za ti on a n d perform i s a d i rect refl ecti on on th e
pri m e com pa n y a n d i ts repu ta ti on . Wh en vi ewi n g th e m od el from th e
ou tsi d e i n i t becom es cl ea r th a t tra d i ti on a l th i n ki n g ba sed a rou n d a
si m pl e sel f-con ta i n ed prod u cti on en vi ron m en t i s n o l on g er su ffi ci en t to
en su re th e su ccess of a n i n teg ra ted opera ti on . Th e ‘ou tsi d e’ com es i n si d e
th e fi rewa l l a n d n eed s to be a ssessed , d evel oped a n d d i rected wi th fa r
g rea ter focu s on th e a bi l i ty of extern a l provi d ers to bl en d i n a n d su pport
th e h ost org a n i za ti on ’s g oa l s a n d va l u es.

E ffecti ve perform a n ce i s crea ted th rou g h i n teg ra ti on of both i n tern a l a n d

extern a l su ppl i ers. Awa ren ess of th e h ol i sti c i m pa cts of m a n a g em en t
m u st exten d beyon d th e fu n cti on a l bou n d a ri es of pu rch a si n g
org a n i za ti on s i n ord er to en su re th a t opportu n i ti es a re fu l l y expl oi ted .
B u i l d i n g on th e stren g th s of th e org a n i za ti on , i t i s cri ti ca l to esta bl i sh th e
l evel of kn owl ed g e a n d ski l l s th a t exi st to en su re th a t su i ta bl e tra i n i n g
ca n be d evel oped to provi d e a n effecti ve pl a tform to m ove to
ou tsou rci n g wi th con fi d en ce. Th e su ppl y ch a i n h a s d evel oped over th e
st
l a ter pa rt of th e l a st cen tu ry a n d m oves i n to th e 2 1 cen tu ry wi th m a n y
i n n ova ti ve a pproa ch es; h owever, th ese m u st be ba l a n ced a g a i n st tru e
n eed a n d ri sk m a n a g em en t processes. O ften wh a t i s n eed ed i s best
pra cti ce a pproa ch es cou pl ed wi th th e a bi l i ty to spot th e stra teg i c
opportu n i ti es. H owever, i n m a n y ca ses org a n i za ti on s i g n ore th ei r own
ca pa bi l i ti es a n d focu s sol el y on th e poten ti a l ou tsou rci n g provi d er, wh i ch
i s a reci pe for d i sa ster beca u se i n tern a l con stra i n ts wi l l a l m ost certa i n l y
em erg e to d i l u te perform a n ce.

Wh en a n org a n i za ti on h a s stru ctu red i ts i n tern a l perspecti ve i t n eed s to

eva l u a te a n d sel ect pa rtn ers. Th e n a tu re of th e provi d er’s org a n i za ti on i s
cru ci a l to overa l l su ccess i n d evel opi n g va l u e for m on ey proposi ti on s. Th e
rel a ti on sh i ps (verti ca l l y a n d h ori zon ta l l y) i n th e va l u e ch a i n a re a key
fa ctor i n expl oi ti n g th e va l u e d evel opm en t process. O rg a n i za ti on s sh ou l d
(a n d freq u en tl y n eed to) l ea rn from ea ch oth er; th u s, en su ri n g th a t th e
poten ti a l pa rtn er h a s a com pa ti bl e eth os a n d cu l tu re i s a n i m porta n t
con tri bu tor to opti m i zi n g va l u e. Th e n a tu re of a n a rra n g em en t wi l l be
d evel oped ba sed on th e obj ecti ves a n d g oa l s from ea ch si d e of th e
rel a ti on sh i p. H ow org a n i za ti on s expect th ey wi l l be worki n g tog eth er wi l l
h el p to d efi n e th e n a tu re of th e con tra cti n g rel a ti on sh i p, th e styl e of
i n teg ra ti on a n d th e l evel of i n terfa ces; th i s wi l l h a ve a si g n i fi ca n t i m pa ct
on th e d evel opm en t of ri sk m a n a g em en t a pproa ch es. Th e key to
effecti ve ou tsou rci n g i s en su ri n g a cl ea r d efi n i ti on of scope a n d servi ces
to be provi d ed , wh i ch ca n th en be a ssessed to crea te a n overa l l a pproa ch
a n d esta bl i sh SLAs.

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 Chapter 20 – Outsourcing

Th e b a l a n ce o f p o we r i n a n y re l a t i o n s h i p s h i fts o ve r th e p e ri o d o f th e

a s s o ci a ti o n ; in an o u ts o u rci n g co n te xt th i s s h i ft m a y b e cri ti ca l to o ve ra l l

d e l i ve ry p e rfo rm a n ce fo r t h e b u ye r. S ta yi n g to g e th e r, wh e th e r o ve r s h o rt

d u ra ti o n c o n tra c ts o r l o n g - te rm s u p p l y a rra n g e m e n ts , re q u i re s th a t b o th

p a rti e s m a i n ta i n an e ffe cti ve wo rki n g re l a t i o n s h i p . D i s p u te re s o l u ti o n is

se l d o m si m p l y a q u e s ti o n of d epen d i n g on th e te rm s o f co n tra ct .

E ffe cti ve m a n a g em en t d epen d s u pon th e l e a d e rs h i p a b i l i ti e s o f th e ke y

p l a ye rs to u n d e rs ta n d and re s p o n d e ffe ct i ve l y to i ss u e s th a t co u l d

u n d e rm i n e th e d e l i ve ry p ro ce s s . H a vi n g a cl e a r fo cu s o n th e e xi t s tra t e g y

p ro vi d e s b o th p a rtn e rs wi th a cl e a r p e rs p e cti ve o f th e i r i n d i vi d u a l

p o si ti o n s; i t wi l l a l so ce rta i n l y h e l p to p ro vi d e a cl e a r b a ckg ro u n d , wh i ch

wi l l a l l o w th e re l a t i o n s h i p to m a tu re m o re e ffe ct i ve l y.

Building on th i s fo u n d a ti o n o f co l l a b o ra t i o n , i t i s i m p o rta n t n o t to fo rg e t

th e fu n d a m e n ta l s o f a n y g o o d co n tra cti n g re l a ti o n s h i p ; i d e a l l y th e s e ca n

be a g re e d wi th a fo cu s o n s u cce s s a n d n o t th e tra d i ti o n a l co n ce p ts o f

co n tra cti n g fo r i n e vi ta b l e fa i l u re and l eg a l co n fl i ct. We d o n ’t h a ve to

ch a n g e th e fu n d a m e n ta l s ; we s i m p l y h a ve to a d d re s s th e m to e n s u re th a t

th e y fa ci l i ta t e s u cce s s . S co p e and s ta n d a rd s a re cl e a rl y i m p o rta n t, a l on g

wi th fre q u e n cy o f p e rfo rm a n ce co n tra ct re vi e ws a n d a cl e a r

u n d e rs ta n d i n g o f tota l co s t . Wh a t wi l l co m p l e m e n t th e a rra n g e m e n t i s a

fo cu s o n co m m u n i ca ti o n , cro s s - tra i n i n g wh e re n e ce s s a ry, s ki l l s

a s s e s s m e n ts , and we l l - d e ve l o p e d and vi s i b l e p ro ce ss e s . C e rta i n l y q u a l i ty

m u st b e m a i n ta i n e d and p e rfo rm a n ce l i n ke d to e ffe cti ve and m e a n i n g fu l

m e a s u re m e n t, wh i ch d ri ve s i m p ro ve m e n t – n o t co n fl i ct . P e rh a p s m o s t

i m p o rta n t o f a l l i s th e n eed to u n d e rs ta n d h o w ch a n g e wi l l be m a n a g ed

wi th i n th e re l a t i o n s h i p . Th i s i s fre q u e n t l y l o s t i n th e e u p h o ri a of bu i l d i n g

a p ro a cti ve a p p ro a ch , b u t wi l l l i ke l y b e co m e a m a j o r b u rd e n in th e

fu tu re .

Th e fo cu s fo r a n o u ts o u rci n g p ro g ra m m e m a y o ft e n be o b vi o u s to th o s e

cl o s e s t t o th e p ro b l e m , b u t i s fre q u e n tl y l o s t i n th e wi d e r co n te xt o f th e

o rg a n i z a ti o n . Th e fi rs t p a rt o f th e s t ra te g i c fo cu s i s to p re s e n t th e s e

ta rg e t s wi th i n th e co n t e xt o f a wi d e r p ro fi l e , wh i ch h e l p s to fo cu s t h e

va l i d i t y o f th e a p p ro a ch . Th i s h e l p s to d e m o n s tra t e th a t s e l e cti o n has

been d on e e ffe cti ve l y, e n s u ri n g a b u y- i n a cro s s th e o rg a n i z a ti o n th a t wi l l

l ea d to s u cce s s . Th e s i m p l e s t o f a s s e s s m e n ts i s o ft e n en ou g h to p u t th e

fo cu s i n th e ri g h t p l a ce fo r t h e o rg a n i z a ti o n as a wh o l e , b u t i t m a y a l so

d e m o n s tra t e th a t i n i ti a l th i n ki n g re q u i re s fu rt h e r e va l u a ti o n . Th e s e co n d

cri ti ca l s ta g e i s to a s s e s s th e p ote n ti a l i m p a ct o f o u ts o u rci n g , wh e re th e

tru e i m p a ct o f e xte rn a l i n t e g ra t i o n s t a rts to ch a n g e th e o rg a n i z a ti o n ’s

tra d i ti o n a l p ro fi l e . I t wi l l ce rta i n l y ra i s e m a n y q u e st i o n s a ro u n d e xi s ti n g

re s o u rce s a n d a p p ro a ch e s , i n t e l l e ct u a l p ro p e rty a n d – m o s t i m p o rta n tl y –

th e re te n ti o n o f s ki l l s wi th i n th e o rg a n i z a t i o n . Th i s i s wh e re th e cru n ch

co m e s fo r m o s t o rg a n i z a ti o n s wi th i n th e co n te xt o f i n t e g ra ti n g co rp o ra te

s t ra te g y a n d o rg a n i z a ti o n a l d e ve l o p m e n t, a s o u ts o u rci n g wi l l i n e vi ta b l y

l ea d to i n te rn a l ch a n g e s a t e ve ry l e ve l . U n d e rs ta n d i n g wh y o u ts o u rci n g is

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PART 3: Where?

bei n g co n s i d e re d m e a n s d e fi n i n g th e ra ti o n a l e fo r ta ki n g i t fo rwa rd .

Re a s o n s wh y o u ts o u rci n g i s bei n g co n s i d e re d i n cl u d e :

• co s t a n d co m p e ti ti ve ed g e;

• e ffo rt a n d o p ti m i z a ti o n o f re s o u rce s ;

• p ro d u ct o r s e rvi ce a va i l a b i l i ty;

• s u s ta i n a b i l i ty a n d e th i ca l p e rfo rm a n ce ;

• ri s k – b o th p e rfo rm a n ce and m a rke t;

• co m p l e xi t y;

• p e rfo rm a n ce i m p ro ve m e n t;

• cu s to m e r b e n e fi t.

Cre a ti n g an o u ts o u rci n g s tra te g y s h o u l d be a p p ro a ch e d in a h o l i sti c

m a n n e r. D e ve l o p i n g a p ro g ra m m e th a t b l e n d s th e a t tri b u te s o f d i ve rs e

o rg a n i z a ti o n s m u s t b e g i n wi th re co g n i t i o n th a t e a ch m a y h a ve

s i g n i fi ca n tl y d i ffe re n t a p p ro a ch e s a n d d em a n d s. Th i s m a y b e m o re cl e a rl y

a p p a re n t i n th e co n te xt o f g l o b a l tra d i n g , b u t sh o u l d n ot be i g n o re d

e ve n in th e m o re l o ca l i z e d and tra d i ti o n a l m a rke ts . In a co n ve n ti o n a l

tra d i n g re l a ti o n s h i p th e a b i l i ty to bu i l d s u ch ch a l l e n g e s i n to a u n i fo rm

a p p ro a ch ca n be ve ry d i ffi cu l t a n d o fte n th e c o n tra c ti n g ru l e s ca n be

co u n te rp ro d u cti ve .

Th e m u l ti d i m e n s i o n a l n a tu re o f th e g l oba l l a n d s ca p e cre a te s a n

e n vi ro n m e n t th a t i n h e re n tl y g e n e ra t e s a n e ve r- i n cre a s i n g p ro fi l e o f ri s k

and o p p o rtu n i ty. Th e s e a rch to e xp l o i t th e s e o p p o rtu n i ti e s o f th e g l oba l

m a rke t, and th e vo l a t i l i ty o f th e m a n y fa cto rs th a t ca n ch a n g e th e

p l a tfo rm of a b u si n e ss d e a l , m e a n s th a t t h e re m u st b e a fo cu s o n

managing th e ri s k. Th e p re s s u re s o f re g u l a ti o n and e n vi ro n m e n ta l

l i a b i l i ti e s , to g e th e r wi th th e wi d e r a n d m o re i n d i re ct ra m i fi c a t i o n s o f

g l oba l tra d i n g , a re fa cto rs th a t e ve ry o rg a n i z a ti o n m u s t re co g n i z e . Th e

p o l i ti ca l and c u l tu ra l ch a l l e n g e s o f wo rki n g o u ts i d e th e co m fo rt z o n e of

tra d i t i o n a l b u s i n e s s n e two rks a re co m p l e x; d e ve l o p i n g a s tru ct u re d

a p p ro a ch i s cri ti ca l . Th e i m p l i ca ti o n s fo r o rg a n i z a ti o n s a re fa r- re a ch i n g

and n e ce s s i ta t e an i n cre a s i n g fo cu s o n ri s k m i ti g a ti o n and m a n a g em en t

to e n s u re s u cce s s fu l ve n t u re s . Th e a ttra cti o n o f l o w- co s t s o u rci n g and

m a n u fa ctu ri n g i s ce rt a i n l y a p o te n ti a l o p p o rt u n i ty fo r a l l o rg a n i z a ti o n s ,

b u t th e i m p l i ca ti o n s a n d ri s ks s h o u l d n ot be u n d e re s ti m a t e d .

Concl us ion
Th e ch a l l e n g e i s fo r o rg a n i z a t i o n s to a d opt a m o re fl e xi b l e p e rs p e cti ve

t h a t e n a b l e s m a xi m u m e xp l o i ta ti o n o f th e p o te n ti a l b u t re ta i n s e ffe cti ve

m a n a g e m e n t o f th e p ro ce s s e s a n d p e rfo rm a n ce . O u ts o u rci n g h a s b e co m e

an a cce p te d m e th o d o l o g y to ca p t u re co m p e ti t i ve a d va n ta g e , b u t th i s

e xte n d e d e n te rp ri s e a p p ro a ch b ri n g s i ts o wn l e ve l o f ri s k th ro u g h

i n te rd e p e n d e n ce and re p u ta ti o n a l ri s k. Th e n eed to e n s u re th a t e xt e rn a l

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 Chapter 20 – Outsourcing

p ro vi d e rs s h a re a co m m o n fo c u s o n th e b u s i n e s s vi s i o n s a n d va l u e s i s

cru ci a l to l o n g - te rm s u s ta i n a b i l i t y a n d m a i n ta i n i n g a p e rs p e cti ve on

co rp o ra te s o ci a l re s p o n s i b i l i ty.

To d a y th e p a ra m o u n t ch a l l e n g e fo r a n y b u s i n e s s i s to cre a te va l u e fo r i ts

s h a re h o l d e rs , wh i l e m ee ti n g th e d em a n d s of a n i n cre a s i n g l y co m p e ti ti ve

m a rke tp l a ce . Th e co m p l e xi ty a n d vo l a ti l i t y o f t h i s b u s i n e s s e n vi ro n m e n t

cre a te s a l a n d s ca p e t h a t re q u i re s co n s ta n t fl e xi b i l i ty o f a p p ro a ch and

re s o u rce i n ve s tm e n t. Building an i n te g ra te d b u s i n e s s re l a ti o n s h i p

b e twe e n two o r m o re o rg a n i z a t i o n s i n vo l ve s a n i n cre a s i n g n u m ber of

p l a ye rs fro m e a ch si d e ; fo cu s i n g on th e cri ti ca l pa th i s s u e s wi l l h el p to

m a i n ta i n m o m e n tu m . C o m p a n y s u cce s s i s i n fl u e n ce d b y b o th i n te rn a l and

e xte rn a l fa cto rs ; o u ts o u rci n g h a s i m p a cts a cro s s a n o rg a n i z a ti o n and

b e yo n d , ye t to o fre q u e n tl y co rp o ra te s tra te g y i s n o t a d e q u a te l y

i n te g ra te d , e va l u a te d , co m m u n i ca te d , a b s o rb e d and ri s k- a s s e s s e d . In

a d d i ti o n , p a rtn e r s e l e cti o n i s d ri ve n b y co s t ra th e r th a n co m p a t i b i l i t y. Th e

fo u n d a ti o n of B S 1 1 000 p ro vi d e s a s tru c tu re d a p p ro a ch to a d d re s s i n g

th e s e ch a l l e n g e s th ro u g h bu i l d i n g m o re e ffe ct i ve o u ts o u rci n g

re l a t i o n s h i p s .

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PART 3: Where?

Key messages
In d e ve l o p i n g an o u t s o u rci n g p ro g ra m m e i t i s i m p o rta n t to co n s i d e r h o w

th e re l a ti o n s h i p s a re d e ve l o p e d and s u s ta i n e d . Ta b l e 2 0. 1 p ro vi d e s ke y

m e s s a g e s a b o u t th e BS 1 1 000 a p p ro a ch to o u ts o u rci n g .

Ta b l e 2 0 . 1 – Ke y m e s s a g e s fo r o u ts o u rci n g

B S 1 1 0 0 0 o u ts o u rci n g

Fo cu s p o i n t Ra ti o n a l e

1 I n te g ra te d Th e i n t e g ra ti o n o f th e s ta n d a rd p ro vi d e s a

d e l i ve ry p l a t fo rm on wh i ch to e va l u a t e and d e ve l o p

th e s e co l l a b o ra ti ve m od el s on a m o re ri g o ro u s

b a si s

2 Al te rn a ti ve O u t s o u rci n g h a s b e co m e a m a j o r e ffi ci e n cy t o o l

bu si n ess in th e b u s i n e s s a rm o u ry; h o we ve r, in m a n y ca s e s

m od el s th e d e ci s i o n s a n d e ffe cti ve n e s s o fte n fa i l to

co n s i d e r th e co m p a ti b i l i ty o f o rg a n i z a ti o n s t o

u n d e rta ke ke y a s p e ct s o f t h e cu rre n t b u s i n e s s

p ro ce s s e s

3 Cu s to m e r M a rke t i n g o u t s o u rci n g ca p a b i l i ty i s l a rg e l y

p ro fi l i n g d epen d en t on ca p a b i l i ty a n d th e wi l l i n g n e s s o f

cu s to m e rs t o re s p o n d p o s i ti ve l y to th e se

a p p ro a ch e s

4 Cu s to m e r Wh e re a co l l a b o ra ti ve m od el i s bei n g o ffe re d

co n fi d e n ce th e s ta n d a rd p ro vi d e s a n i n d e p e n d e n tl y

va l i d a te d a p p ro a ch ; in so m e ca s e s th i s ca n be a

m a rke t d i ffe re n ti a ti o n bu t i n a n y e ve n t p ro vi d e s

co n fi d e n ce t h a t co l l a b o ra t i o n is in th e m i n d se t

o f th e o rg a n i z a ti o n

5 S o l u ti o n O u t s o u rci n g s o l u t i o n s ca n o ft e n re q u i re

d e ve l o p m e n t o rg a n i z a ti o n s to e xp a n d th e i r o wn ca p a b i l i ty

and re s o u rce s to th e s co p e o f a n y p ro p o s i ti o n

b y i n co rp o ra t i n g th i rd p a rti e s to e sta b l i sh a

s e a m l e s s d e l i ve ry s o l u t i o n

6 D e l i ve ry I d e n ti fyi n g and s e l e cti n g p a rtn e rs t o m eet

p a rtn e rs b u si n e ss d e m a n d re q u i re s o rg a n i z a ti o n s to se e k

o th e r o rg a n i z a t i o n s wi th co m p a ti b l e vi s i o n s a n d

va l u e s a n d to d e ve l o p j o i n t o b j e cti ve s t h a t

s u p p o rt t h e cu s to m e r re q u i re m e n t

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 Chapter 20 – Outsourcing

7 Ri s k Th e a d o p ti o n o f o u t s o u rci n g m o d e l s i n tro d u ce s

management th e p e rce p ti o n o f i n cre a s e d ri s k fo r a cu s t o m e r

and p o te n ti a l i n te rn a l ri s ks . A s tru ctu re d

a p p ro a ch to bu i l d i n g and s u s ta i n i n g th e s e

m o d e l s t h ro u g h j o i n t ri s k m a n a g e m e n t e n a b l e s

m o re e ffe cti ve m a n a g e m e n t o f ri s ks

8 C reative M o vi n g fro m a tra d i ti o n a l re l a t i o n s h i p to on e

negotiation s th a t i s m o re i n te g ra te d ch a n g e s t h e d yn a m i cs

fo r n e g o ti a ti o n s . Ad o p t i o n o f th e s ta n d a rd

m od el p ro ce s s a s a s ta rt i n g p o i n ti n g en a bl es a l l

p a rti e s to a d d re s s th e i r i s s u e s i n a m o re open

and tra n s p a re n t wa y, b a se d on j o i n t o b j e ct i ve s

and d e s i re d o u tco m e s

9 Collabo rative In th e m o d e rn wo rl d th e fo u n d a ti o n o f b u si n e ss

contracts i s ca p tu re d in fo rm a l co n tra cts ; h o we ve r, th e s e

ca n on o cca s i o n be d i vi s i ve . Th i s i s wh y t h e

s ta n d a rd i n tro d u ce s a n a l te rn a ti ve p l a t fo rm to

e n s u re e q u i ta b l e b e n e fi ts , b a se d on ri s k a n d

re wa rd , wh i c h u n d e rp i n s th e b e h a vi o u rs

n e ce s s a ry t o a ch i e ve s u cce s s fu l o u tco m e s

1 0 Te rmination Th e m o s t vu l n e ra b l e a s p e ct o f o u ts o u rci n g

an d tran s ition p ro g ra m m e s i s t h e e ve n t u a l te rm i n a ti o n o f th e

co n tra ct a n d tra n s i ti o n to o th e r p ro vi d e rs . Th e

e xi t s tra t e g y i s a ke y a s p e ct o f re l a ti o n s h i p

m a n a g e m e n t, wh i ch ca n be b o th an e va l u a ti o n

cri t e ri o n and a m e a n s to e n s u re b u si n e ss

co n ti n u i ty

2 01
Ch a p te r 21 – Collabo rative cont ractin g

In th e m o d e rn m a rke tp l a ce re l i a n ce on co n tra cts h a s b e c o m e

n o rm a l p ra ct i ce . Th e re i s o fte n a p e rce p t i o n th a t c o l l a b o ra ti ve

wo rki n g i s n o t co m p a ti b l e wi th m ost m od el co n tra cts , wh i ch

m a y l ea d to p o o r b e h a vi o u rs . Wh i l e th i s m a y b e tru e in so m e

a re a s , i t i s i m p o rt a n t to e n s u re t h a t wh e re co l l a b o ra ti ve

wo rki n g i s e sta b l i sh e d as a ro u te to d e l i ve r o u t co m e s t h e

co n tra ct s u p p o rts t h e s e a rra n g e m e n ts . Th i s ch a p t e r e xp l a i n s

h ow B S 1 1 000 ca n p ro vi d e a m od el wi th wh i ch to bu i l d m o re

e ffe cti ve co n tra cti n g a rra n g e m e n ts .

To d a y m o s t b u s i n e s s a cti vi ty n e e d s t h e s tru ct u re d s u p p o rt o f a co n tra ct to

u n d e rp i n wh a t i t h o p e s t o a ch i e ve . In d e ve l o p i n g a co n tra cti n g a p p ro a ch

i t i s i m p o rta n t t o d e fi n e th e i n d i vi d u a l re s p o n s i b i l i t i e s a n d th e n to p l a ce

th e s e o b l i g a ti o n s wi t h th e co rre ct p a rty. In th e i n i ti a l sta g e s o f

d e ve l o p i n g a c o l l a b o ra ti ve s tra te g y th e te m p t a ti o n i s to s e t o b j e ct i ve s

th a t a re to o wi d e - re a ch i n g and h a ve va ryi n g ch a n ce s o f b e i n g a ch i e ve d .

Wh e n co n s i d e ri n g th e a p p ro p ri a te co n tra ct i n g m od el i t i s i m p o rta n t to

d i s ti n g u i s h b e twe e n a co l l a b o ra t i ve a rra n g e m e n t a n d co n t ra ctu a l

d e l i ve ra b l e s . Th e fo rm e r o f th e s e i s o fte n th e ro u te ta ke n by

o rg a n i z a ti o n s a n d i s o u tsi d e th e co n tra ct. F re q u e n tl y th i s m a y b e a si m p l e

a rra n g e m e n t wi t h i n wh i ch o rg a n i z a ti o n s a d o p t a m o re open wa y o f

d ea l i n g wi t h e a ch o th e r; th e d o wn s i d e o f th i s i s th a t a s a n o n - co n tra ctu a l

re q u i re m e n t i t o fte n fa i l s to d e l i ve r th e fu l l p o te n ti a l . H o we ve r, by

i n co rp o ra ti n g th e p ri n ci p l e s o f th e s t a n d a rd th e p a rti e s ca n bl en d b o th

co n tra ct a n d re l a ti o n s h i p .

Contractin g fo r fail u re
In ca s e s wh e re th e p a rti e s re co g n i z e th e co m m e rci a l o r te ch n i ca l b e n e fi ts

fro m a cl o s e r co m m i tm e n t o ve r ti m e th e re is a co m m e rci a l co n s i d e ra ti o n

bei n g ta ke n , wh i ch re fl e cts h o w th e p a rt i e s m a y co n tra ct wi t h e a ch o th e r.

An y co n tra ct th a t i n co rp o ra te s ri s k a n d re wa rd e l e m e n ts n e e d s ca re fu l

co n s i d e ra ti o n b y b o th p a rt i e s to e n s u re t h e re i s so u n d u n d e rs ta n d i n g of

th e p o te n ti a l o u tco m e s , b e ca u s e co n t ra cts a re o n l y va l u a b l e in a l eg a l

se n se wh e n p a rt i e s fa i l to m e e t th e i r i n d i vi d u a l o b l i g a ti o n s . Th e re a l i ty o f

a n y co n t ra ct i s th a t i t s h o u l d p ro vi d e th e p l a tfo rm on wh i ch

o rg a n i z a ti o n s ca n p e rfo rm ; h o w o rg a n i z a ti o n s e xp e ct th e y wi l l be

2 03
PART 3: Where?

wo rki n g to g e th e r wi l l h el p to d e fi n e th e n a t u re o f th e co n tra ct a n d l e ve l

o f i n te rfa c e s . Th e g e n e ra l tre n d , u n fo rtu n a t e l y, i s to ‘ co n t ra ct fo r fa i l u re ’

so we te n d to se e m o s t e l e m e n ts a s n e g a ti ve . Collaborative Change 1 2
by

H u m p h ri e s a n d G i bb d ra ws to g e th e r a wi d e ra n g e o f p ro fe s s i o n a l and

a ca d e m i c vi e ws t h a t co m p l e m e n t th i s s u b j e ct. Th e fo cu s fo r a n y co n tra ct

sh ou l d be to e n s u re th a t i t d e l i ve rs wh a t i s re q u i re d and wh e n . Th i s i s t h e

sa m e in a co l l a b o ra t i ve re l a ti o n s h i p , b u t m a n y tra d i t i o n a l co n tra ct s a re

d e ve l o p e d wi th o u t th e p a rti e s i d e n t i fyi n g wh a t i s re a l l y cru ci a l to e a ch of

th e m .

M o s t co n tra cts a re fo cu s e d a s e ffe ct i ve l eg a l too l s a n d in co n fi g u ri n g a

co n tra ct i t i s th e p o te n ti a l i m p a ct o f fa i l u re th a t m a y ra i s e q u e s ti o n s

a ro u n d e xi s ti n g re l a ti o n s h i p s , a p p ro a ch e s , i n te l l e ctu a l p ro p e rty a n d ri sk.

Th e cru n ch p o i n t fo r m o s t o rg a n i z a ti o n s i s th e ch a l l e n g e o f i n te g ra t i n g

co rp o ra te s tra t e g y wi t h o rg a n i z a ti o n a l d e ve l o p m e n t a n d co n tra cts th a t

a re s o l u ti o n - b a s e d . Th e re a re m u l t i p l i ci ti e s o f co n t ra cti n g o p ti o n s , many

o f wh i ch m a y s u i t th e n e e d s o f th e o rg a n i z a ti o n and do n o t re q u i re th e

e ffo rt o f d e ve l o p i n g a co l l a b o ra ti ve a p p ro a ch ; so i t i s o fte n wo rth wh i l e

s ta rti n g wi t h th e m o s t a p p ro p ri a te tra d i ti o n a l co n tra cti n g m od el and

bu i l d i n g on th i s to i n co rp o ra te th e wi d e r i s s u e s t h a t h a ve been i d e n ti fi e d

a s p ote n ti a l co l l a b o ra t i ve b e n e fi t s . Th i s a p p ro a ch p ro vi d e s a so l i d b a si s

fo r th e p a rti e s t o wo rk fro m and ca n o fte n be th e fi rs t t e s t a b o u t th e

p a rt i e s ’ co m m i tm e n t fo r co l l a b o ra ti o n .

Lockhee d M a rtin – ca s e s tud y

Lo ckh e e d M a rti n h a s l on g re co g n i z e d th a t i n o rd e r to d e l i ve r a

s u cce s s fu l p ro g ra m m e th e p a rt i e s i n vo l ve d h a ve to wo rk to g e th e r.

P ro g ra m m e o b j e cti ve s a re m o re l i ke l y to be s u cc e s s fu l l y a ch i e ve d if

all p a rti e s i n vo l ve d a re fo cu s e d on th o s e en d g o a l s, e n co u ra g i n g

p o s i ti ve b e h a vi o u rs a n d re m o vi n g ro a d b l o cks to th e a b i l i t y to wo rk

t o g e th e r.

Th e t yp e o f l o n g - te rm , l a rg e s ca l e , co m p l e x p ro g ra m m e s th a t fo rm

th e co re o f Lo ckh e e d M a rti n ’s b u s i n e s s o fte n d em a n d a d i ffe re n t

t yp e o f wo rki n g re l a ti o n s h i p fro m th e tra d i ti o n a l ‘ a rm ’ s l e n g th ’

co n tra ct i n g m o d e l s o f th e p a st. Th e p a rt i e s i n vo l ve d n eed to wo rk

co l l a b o ra ti ve l y o ve r th e l on g te rm to s u cce s s fu l l y d e l i ve r ch a l l e n g i n g

p ro g ra m m e o b j e cti ve s . Th e BS 1 1 000 s ta n d a rd h a s p ro vi d e d Lo ckh e e d

M a rti n wi th a fra m e wo rk fo r i m p l e m e n t i n g and o b j e cti ve l y

m e a s u ri n g th e b e n e fi ts o f co l l a b o ra ti ve wo rki n g . U si n g th e s ta n d a rd

to e va l u a te p a s t a cti vi ti e s , Lo ckh e e d M a rti n h a s been a bl e to i d e n t i fy

re p e a ta b l e co l l a b o ra t i ve wo rki n g g ood p ra ct i ce , a s we l l a s a re a s th a t

co u l d b e n e fi t fro m i n cre a s e d fo cu s .

1 2
Collaborative Change: Creating High Performance Partnerships and Alliances , H u m p h ri e s A

and G i b b s R, C re a t e S p a c e , 201 0.

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 Chapter 21 – Collaborative contracting

Our approach to working with suppliers and customers has always

included many of the collaborative working concepts articulated in
BS 1 1 000. This meant that the business case to justify inclusion of the
standard into our policy and process baseline was relatively easy to
define. With accreditation gained, our focus is now on continuous
improvement of our collaborative engagement that will allow us, our
suppliers and our customers to achieve success on increasingly
demanding programmes in the future.
Mark Cooper, Managing Director,
Lockheed Martin UK IS&GS Civil

If the desire for collaboration is strong, then the traditional contractual

debates will be a catalyst for change. Where the concept is weak these
exchanges will highlight the true focus of the organizations. More
importantly, in the cases where collaboration can really add value to both
parties the process of evaluating a conventional model helps to focus the
potential for long-term benefits. The more that organizations are
prepared to engage in this process in depth, the greater the probability
they will uncover potential value. Most organizations today have
established contracting procedures, incorporating necessary safeguards,
but in many cases these have been incorporated into the operating
structures and will be extremely difficult to change. The process of
challenging these procedures in developing a more open relationship
with partners is a valuable test of the organization’s ability to actually
operate within the more integrated nature of collaboration.
Unfortunately, it is often the case that an ingrained culture creates so
much tension that organizations give up trying to exploit the potential of
collaboration; while operators may see the potential, the resistance of
corporate process, lawyers and auditors means these opportunities for
benefit are not pursued. It is important to differentiate between the way
in which organizations want to collaborate and the need to establish
workable legal frameworks that support these objectives. A legally
binding agreement needs to define tasks, allocate responsibilities, and
state the consequences in the event of specific circumstances, recognizing
the implications of regulatory demands such as the European
procurement directives; but with careful consideration these issues can be
developed to be inclusive and complementary. It is also important to
avoid creating a legal partnership. The standards framework can be a
useful tool to evaluate both the objectives and issues that will ultimately
be reflected in the contract, by understanding what really drives the
contracting arrangements and giving focus to what helps success rather
than legal conflict. Working through the culture, organizational
structure, disposition of resources, skills and operating processes

205
PART 3: Where?

con cen tra tes a tten ti on towa rd s th e su ccess fa ctors a n d u l ti m a te

obj ecti ves i n corpora ti n g :

• cl a ri ty of pu rpose;
• con tra ct stru ctu re;
• term or d u ra ti on ;
• ri sk a n d rewa rd ;
• kn owl ed g e sh a ri n g ;
• obl i g a ti on s;
• l i a bi l i ti es;
• costi n g ;
• con fi d en ti a l i ty;
• com m erci a l m a n a g em en t a n d i n cen ti ves.

A cru ci a l pa rt of a n y con tra ct i s to en su re th a t th e sel ecti on process

m eets th e req u i rem en ts of th e org a n i za ti on . Th e focu s for col l a bora ti on
rea ch es beyon d th e tra d i ti on a l eva l u a ti on s of pri ce, d el i very a n d q u a l i ty,
so th e process sh ou l d i n corpora te th e key el em en ts of sel ecti on th a t
rea ch beyon d con ven ti on a l con tra cti n g .

S co p e an d objective s
Con tra cts req u i re a n a g reed con cl u si on poi n t th a t i s ti m e-ba sed on
com pl eti on a n d i d en ti fi es both obj ecti ves a n d scope (see Ta bl e 2 1 . 1 ) .
Col l a bora ti ve rel a ti on sh i ps a re g en era l l y m ore va l u a bl e th e l on g er th ey
opera te; en su ri n g th ere a re ren ewa l poi n ts h el ps to m a i n ta i n con ti n u i ty
wh i l e con si d eri n g key ci rcu m sta n ces wh ere i t m a y be i n a ppropri a te to
con ti n u e (su ch a s ch a n g e of own ersh i p) a n d ra i se th e focu s on exi t
stra teg y. Wh en crea ti n g a con tra cti n g a pproa ch i t i s i m porta n t to
form a l l y recog n i ze th e g overn a n ce stru ctu re th a t wi l l be j oi n tl y opera ted
by th e col l a bora ti on , wh i ch wi l l i n cl u d e d efi n i n g poi n ts of con ta ct,
a u th ori ti es a n d d i spu te resol u ti on processes.

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 Chapter 21 – Collaborative contracting

Ta b l e 2 1 . 1 – Co l l a b o ra ti ve co n t ra ct s co p e an d o b j e cti ve s

S co p e O b j e cti ve s

S t a n d a rd s Kn o wl e d g e s h a ri n g

D e l i ve ry Va l u e cre a ti o n

P ri ce s tru ctu re R i s k s h a ri n g

C o m m u n i ca t i o n s R e wa rd s h a ri n g

Tra i n i n g C o s t re d u ct i o n

P e rfo rm a n ce ta rg e ts C ycl e ti m e

B u s i n e s s p ro ce s s e s I n ve s tm e n t p ro fi l e s

Q u a l i ty re q u i re m e n t s S u sta i n a b l e d e ve l o p m e n t

S e rvi ce l e ve l s Vi s i b i l i ty

Ch a n g e m a n a g em en t I n n o va ti o n

D o cu m e n t a ti o n Pl a n n i n g

R e g u l a ti o n s R e s o u rce s h a ri n g

I n ce n t i ve s Te a m bu i l d i n g

C o n fi d e n ti a l i ty C o n ti n u o u s i m p ro ve m e n t

P a ym e n t O rg a n i z a ti o n

Te rm s D i s p u te re s o l u ti o n

Li a b i l i ti e s E xi t s tra te g y

Ri sk C u s to m e r s a ti s fa cti o n

O rg a n i z a t i o n s n e e d a g re e m e n ts to e n s u re t h e re is a d o cu m e n t e d

p l a tfo rm , wh i ch ca n va ry d u e to m a n y d i ffe re n t fa cto rs . Th e p ro b l e m

wi th all th e s e a g re e m e n ts i s t h a t wh i l e o rg a n i z a ti o n s a l l h a ve e xp e ri e n ce

wi th th e ta n g i b l e si d e o f co n tra ct d ra fti n g i t i s m o re d i ffi cu l t wh e n t ryi n g

to a d d re s s th e aims and a s p i ra ti o n s o f co l l a b o ra ti o n . Th i s i s wh e re th e

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PART 3: Where?

l a wyers often g et exci ted , a s th ese con cepts ca n be va g u e i n con tra cti n g
term s. For exa m pl e, h ow d o you en force (i f you n eed to) term s su ch a s
‘th e pa rti es wi l l en d ea vou r to red u ce cost’ or ‘coopera ti on a n d g ood
fa i th ’. You ca n set ta rg ets, bu t wh o d eci d es th e stren g th of th e effort
th a t h a s been a ppl i ed i f th e ta rg ets a re n ot a ch i eved ?

We m a y h a ve som e sym pa th y wi th th e l a wyers’ vi ewpoi n t; th ei r rol e i s to

protect th ei r cl i en t. Sta tem en ts of pri n ci pl e su ch a s ‘worki n g tog eth er i n
a spi ri t of tru st a n d coopera ti on ’, ‘u si n g i n n ova ti ve en g i n eeri n g
tech n i q u es’, ‘stri vi n g for con ti n u ou s i m provem en t’ or ‘bei n g com m i tted
to a ch i evi n g effecti ve i n terfa ces’ a l l offer a va l i d styl e of worki n g bu t a re
extrem el y h a rd to bu i l d i n to q u a n ti fi a bl e m ea su res.

Perh a ps th e m ost d i ffi cu l t con cept to i n corpora te i s a n exi t stra teg y. I t i s

si m i l a r to th e d eba te on pren u pti a l a g reem en ts – for i f th e com m i tm en t
i s th ere, th en wh y pl a n to fa i l , wh i ch m a y u n d erm i n e th e pri n ci pl es of
col l a bora ti on a n d crea te th e ea sy wa y ou t? Th ere a re g ood rea son s wh y
a n exi t stra teg y i s n eed ed . Th e pa rti es h a ve sh a reh ol d ers, a n d possi bl y
pa ren t com pa n i es, wh ose l on g -term pl a n s m a y ch a n g e, a ffecti n g th e
a g reem en t; ta keovers m a y pl a ce th e a g reem en t i n th e h a n d s of
com peti tors or own ersh i p th a t restri cts th e con tra ct’s opera bi l i ty; worse,
th ere m a y be a n i rrevoca bl e brea kd own of th e rel a ti on sh i p. N obod y
kn ows for su re, bu t th e resu l t cou l d m ea n th a t th e a rra n g em en t h a s to
be d i sm a n tl ed a n d provi si on m u st be i n cl u d ed to cover th e d own strea m
effects of su ch a brea k-u p.

Al l of th i s seem s very form a l wi th i n th e con text of col l a bora ti on ,

coopera ti on a n d m u tu a l i ty, bu t i f col l a bora ti on i s to work effecti vel y,
th en th e g rou n d ru l es n eed to be cl ea r a t th e sta rt. O n e a spect of
B S 1 1 000 i s th e i n trod u cti on of th e RM P. Th i s m a y h a ve been esta bl i sh ed
a t th e stra teg y sta g e; i t ca n be j oi n tl y d evel oped a s th e fou n d a ti on for
rel a ti on sh i p m a n a g em en t i n fu tu re a n d ca n (wh en a ppropri a te) becom e
a n a n n ex to th e con tra ct, en a bl i n g th e pa rti es to d efi n e h ow th ey wi l l
j oi n tl y m a n a g e perform a n ce a s opposed to con tra ctu a l d el i vera bl es.

Litigation
Th e tren d of l i ti g a ti on h a s d on e l i ttl e to h el p th e focu s on d evel opi n g
effecti ve col l a bora ti ve con tra cts. Across a broa d ra n g e of i n d u stri es,
i n cl u d i n g th e pu bl i c sector, i t seem s we a re m ovi n g cl oser to m a n a g i n g
ou r bu si n ess th rou g h th e l eg a l system s. Th i s i s n ot to su g g est th a t a cl ea r
con tra ct a g reem en t i s n ot i m porta n t; h owever, i t d oes ra i se th e q u esti on
a s to wh eth er th e a m ou n t of effort pu t i n to a d d ress fa i l u re i s a ctu a l l y
d etra cti n g from th e pri n ci pa l a i m s of both bu yer a n d sel l er: su ccess. For
exa m pl e, i n pu bl i c–pri va te pa rtn ersh i ps i t seem s th a t th e stra teg i c a i m s
a re freq u en tl y l ost i n a d ri ve to sh i ft ri sk a n d cost, often i n a ppropri a tel y.
At th e sa m e ti m e th e ch a l l en g es of a ccou n ta bi l i ty i n th e pu bl i c sector d o
pl a ce h i g h l evel s of stress on h a vi n g a ‘wa terti g h t’ con tra ct. As a resu l t,

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 Chapter 21 – Collaborative contracting

d u ri n g th e e va l u a t i o n and n e g o ti a ti o n s t a g e s th e p re s s u re i s on to

m a i n ta i n a d e fe n s i ve p o s i ti o n ; t h i s s u b s e q u e n tl y a cq u i re s a p a rtn e ri n g

l a bel , wi th th e e xp e ct a ti o n th a t th e p a s t p re s s u re wi l l e va p o ra te .

E xp e ri e n ce in th e p ri va te s e ct o r s i m i l a rl y o ffe rs l i ttl e e n co u ra g e m e n t ,

e ve n wh e n th e re i s m o re l a t i tu d e fo r i n n o va t i ve a p p ro a ch e s . Th e b u ye r i s

‘ ki n g ’ and to o fre q u e n tl y th i s l e a d s t o o ve r- a g g re s s i ve co n tra cts th a t h a ve

l i ttl e ch a n ce o f p ro d u c i n g a n yth i n g o th e r th a n co n fl i ct. P e rh a p s t h e

wi n /wi n sh o u l d fo cu s o n m a ki n g s u re th a t b o th p a rt i e s a re s a t i s fi e d wi th

th e co n tra ct s o th a t i t i s n o t co n s ta n tl y u s e d as a we a p o n to b e a t th e

o th e r p a rty. F o r e xa m p l e , th e d e p e n d e n ce on S LAs ca n be a wa y o f

m e a s u ri n g p e rfo rm a n ce , b u t to o o fte n S LA p ro b l e m s a re n o t re co g n i z e d

a s i n d i ca to rs o f a p ro ce s s p ro b l e m bu t a s a co n tra ct fa i l u re , wi th th e

re s u l t i n g a tti tu d e s p re va i l i n g .

D e ve l o p i n g an e ffe cti ve co n tra cti n g and d e l i ve ry a p p ro a ch i s n ot

s o m e th i n g t h a t e m e rg e s o u t o f a n e g o ti a ti o n , ra t h e r, i t sh o u l d be

co n s i d e re d we l l in a d va n ce . If a co l l a b o ra ti ve re l a ti o n s h i p i s wh a t i s m o s t

l i ke l y t o d e l i ve r b e s t va l u e , th e n i t m u st b e co n s i d e re d fro m th e o u t s e t.

Th i s d o e s n o t m e a n th a t s o u n d co n tra cts a re n o t re q u i re d o r a cce p ta b l e ,

b u t th e wa y i n wh i ch th e re l a ti o n s h i p i s co n t ra cte d wi l l i n fl u e n ce th e wa y

i t i s p e rfo rm e d . F o cu s i n g on s u cce s s m e a n s th a t i n m a n y ca s e s we sh o u l d

ch a n g e th e wa y i n wh i ch we a p p ro a c h co n tra cts , and n o t th e co n tra cts

th e m s e l ve s , wh i ch sh ou l d be m o re p ro a cti ve and l e s s d e s tru cti ve . Th e

fo cu s o n j o i n t o u tco m e s wi l l be l i ke l y to se t a s tru ctu re th a t d e l i ve rs th e

d e s i re d re s u l ts , wh i l e ce n tri n g on th e p o te n ti a l fo r fa i l u re wi l l m o s t l i ke l y

re s u l t i n a s e l f- fu l fi l l i n g p ro p h e s y.

Collabo rative negotiation s an d contracts

N e g o ti a t i o n s a re an i n te g ra l p a rt o f b u s i n e s s l i fe and h a ve been fo r

th o u s a n d s o f ye a rs . Th e s e a re a re a s wh e re co l l a b o ra ti ve l e a d e rs m u s t

ta ke a s tro n g p o s i ti o n to a vo i d th e m b e co m i n g p ote n ti a l p o i n ts o f

fa i l u re . Th e tra d i t i o n a l u se o f p o we r n e g o ti a t i o n s m a y n o t a l wa ys b e th e

b e s t a p p ro a ch , and wh e n l o o ki n g at a fu t u re co l l a b o ra t i ve re l a ti o n s h i p

th e n e g o t i a ti o n s s h o u l d be p a rt o f th e re l a ti o n s h i p - b u i l d i n g p ro ce s s .

Va l u e i s a ccu m u l a t e d th ro u g h m a n y d i ffe re n t a ve n u e s ; u n d e rs ta n d i n g

th e s e i m p a cts i s a ke y p a rt o f n e g o t i a ti o n s tra te g y a n d p ro ce s s a n d a

cri ti ca l fa ct o r i n o ve ra l l s u cce s s . U n d e rs ta n d i n g th e typ e and n a tu re of

th e re l a ti o n s h i p d e s i re d in th e fu tu re sh o u l d fe a tu re in d e ve l o p i n g a

n e g o ti a ti o n a p p ro a ch to d e l i ve r p ro s p e cti ve b e n e fi t s . Wh i l e m a n y peopl e

m a y t a l k a b o u t th e wi n –wi n a p p ro a ch , i t i s se l d o m a ke y d ri ve r a n d

fre q u e n t l y n o t a co n s i d e ra ti o n fo r m a n y n e g o ti a t i o n s .

S e l e cti n g a co l l a b o ra ti ve p a rtn e r ca n h a ve m a n y ra m i fi ca ti o n s i n th e

m a rke tp l a ce , b o th fro m co m p e ti to rs a n d cu s to m e rs . Th e cu l tu re of a n

o rg a n i z a ti o n i s o ft e n a ch a l l e n g e . In a g l oba l m a rke t th i s b e co m e s e ve n

m o re co m p l e x; wh e n c o n s i d e ri n g a co l l a b o ra ti ve a p p ro a ch i t i s i m p o rta n t

2 09
PART 3: Where?

to en su re th i s i s fu l l y u n d erstood a n d recog n i zed by poten ti a l pa rtn ers.

Ri sk wi l l a l wa ys be h i g h on th e a g en d a , bu t to expl oi t th e poten ti a l of
col l a bora ti on , ri sk sh ou l d be j oi n tl y m a n a g ed by th ose best pl a ced to
h a n d l e i t a n d sh ou l d n ot si m pl y be tra n sferred – wh i l e recog n i zi n g th e
poten ti a l for col l a bora ti on to i n trod u ce n ew ri sk el em en ts i n to th e
eq u a ti on . Th e worl d of bu si n ess h a s evol ved towa rd s g rea ter d epen d en ce
on con tra cts a n d l i ti g a ti on ; wh i l e cl ea rl y th ere n eed s to be a n effecti ve
l eg a l fra m ework, i t i s i m porta n t to recog n i ze th a t su ccessfu l ou tcom es
wi l l sel d om com e th rou g h th e cou rts. Con tra ct m a n a g em en t i s a bou t
d el i veri n g su ccessfu l prog ra m m es, wh i ch open u p a m u ch wi d er a ren a for
con si d era ti on a bou t wh a t th e rol e of con tra ct m a n a g em en t becom es a n d
wh a t pa rt i t wi l l pl a y i n h ow we ra i se ou r g a m e to d el i ver su ccess.

Fi g ur e 21 .1 r
– Co n t a cti n g c ur ve

r
Co n t a cti n g mo d s
el

Th ere i s often a vi ew wi th i n org a n i za ti on s th a t con tra cti n g sh ou l d be

ei th er tra d i ti on a l or pa rtn ersh i p; th i s cl i n i ca l d i vi si on freq u en tl y l ea d s to
d ri vi n g con tra cti n g m od el s i n on e d i recti on or th e oth er (see Fi g u re 2 1 . 1 ) .
Th e resu l t i s th a t poten ti a l con tra cts becom e over-com pl ex, su ch a s
a l l i a n ces, or th e ben efi ts of col l a bora ti on a re i g n ored i n fa vou r of
bu si n ess a s u su a l . Wh en a d opti n g a l tern a ti ve bu si n ess m od el s
org a n i za ti on s sh ou l d recog n i ze th a t th ere i s a spectru m of en g a g em en t
m od el s wh ere col l a bora ti ve worki n g cou l d be a ben efi t. Wh i ch opti on i s

21 0
 Chapter 21 – Collaborative contracting

ch osen , cl ea rl y d epen d s on th e d esi red d eg ree of i n teg ra ti on a n d th e

poten ti a l va l u e th a t i t m a y d el i ver. Ta bl e 2 1 . 2 m a y h el p to focu s on th e
va l u e proposi ti on a g a i n st Fi g u re 2 1 . 1 , wh i ch ou tl i n es th e prog ressi on
from tra n sa cti on a l con tra cts to col l a bora ti ve j oi n t ven tu res.

Concl us ion
Al l com m erci a l opera ti on s a re ba sed on ba l a n ci n g ri sk; th i s i s pa rti cu l a rl y
tru e wh en l ooki n g a t con tra ct m a n a g em en t. Th e con tra ct process i s too
often l ed by com pl i a n ce, n ot com m i tm en t. O rg a n i za ti on s a re g ood a t
d efi n i n g wh a t th ey wa n t from oth ers, bu t perh a ps l ess wi l l i n g to a ssess
th ei r own ca pa bi l i ty to m eet th e d em a n d s of col l a bora ti on . A
col l a bora ti ve rel a ti on sh i p i s a two-wa y process a n d to a ch i eve th e d esi red
g oa l s i t req u i res com m i tm en t on a l l si d es. Th i s i s n ot j u st a bou t processes,
proced u res, system s a n d con tra cts (th e ‘h a rd process i ssu es’) . I t i s a
q u esti on of th e peopl e d ri vers (th e ‘soft i ssu es’) su ch a s l ea d ersh i p, ski l l s
a n d m oti va ti on . Th ese wi l l g overn th e beh a vi ou rs a n d a pproa ch es a t th e
worki n g l evel by u n d ersta n d i n g th e i n tern a l en a bl ers th a t bu i l d tru st
between th e pa rti es, ba sed on m u tu a l ben efi t a n d eq u i ta bl e rewa rd ,
wh i l e m a n a g i n g a n d red u ci n g ri sk. Th e process sh ou l d be cen tred on
rem ovi n g a cti vi ti es th a t d o n ot a d d va l u e from wi th i n th e rel a ti on sh i p.

21 1
 Key messages
21 2

PART 3: Where?
Th ere i s a wi d e va ri ety of con tra cti n g m od el s. As ou tl i n ed ea rl i er, n ot a l l wi l l fa l l i n to th e profi l e of col l a bora ti ve worki n g ,
th ou g h i n m a n y ca ses col l a bora ti on cou l d becom e a fa ci l i ta tor to crea te a d d i ti on a l va l u e i n i ti a l l y or over ti m e. Th e ou tl i n es
g i ven i n Ta bl e 2 1 . 2 a re offered for con si d era ti on .

Ta b l e 2 1 . 2 – As s e s s i n g co n tra ct typ e s

Tra n s a cti o n a l s u p p l y ch a i n : sta n d a rd prod u cts a n d com m od i ti es

Ch a ra cteri sti cs Rel a ti vel y l ow va l u e wi th a focu s on m a rket-a va i l a bl e prod u cts

B en efi ts E a sy to eva l u a te a n d repea ta bl e req u i rem en ts

O pportu n i ty/ Low ri sk a n d m u l ti pl e sou rces of su ppl y

ri sk

Con tra ct types Sta n d a rd pu rch a se con tra ct

E va l u a ti on Com peti ti ve a pproa ch ba sed on pri ce, q u a l i ty a n d d el i very

Col l a bora ti ve worki n g Li m i ted n eed to i n vest resou rces i n col l a bora ti ve d evel opm en t

E q u i p m e n t s u p p l y co n tra cts : com m erci a l off th e sh el f (CO TS) prod u cts

Ch a ra cteri sti cs Tech n i ca l req u i rem en t wi th h i g h er va l u es bu t n o d esi g n req u i rem en t

B en efi ts Ca ptu res sta n d a rd proven prod u cts

 O pportu n i ty/ Li m i ted ri sk, except for l on g -term su pport
ri sk

Con tra ct types Sta n d a rd su ppl y con tra ct

E va l u a ti on Si m pl i fi ed eva l u a ti on a g a i n st tech n i ca l su i ta bi l i ty, m a tch i n g speci fi ed req u i rem en t a n d

com m erci a l d ri vers

Col l a bora ti ve worki n g Possi bl e ben efi t i n l i m i ted ca ses wh ere th ere i s poten ti a l for repea t req u i rem en ts wh ere
exten d ed a g reem en ts m a y provi d e som e cost sa vi n g s

S e rvice contracts : fa ci l i ti es m a n a g em en t, sta n d a rd servi ces

Chapter 21 – Collaborative contracting

Ch a ra cteri sti cs Loca l i zed d efi n ed servi ce req u i rem en ts

B en efi ts Si m pl i fi ed m a n a g em en t a g a i n st SLAs

O pportu n i ty/ Low ri sk bu t su bj ect to l i m i ted fl exi bi l i ty for scope ch a n g es. Freq u en tl y com pl i ca ted by TU PE 1 3
ri sk req u i rem en ts

Con tra ct types M od el type servi ce con tra ct

E va l u a ti on Ca pa bi l i ty, cost a n d perform a n ce eva l u a ti on

21 3

13
TU PE : Tra n sfer of U n d erta ki n g s (Protecti on of E m pl oym en t) Reg u l a ti o n s, wh i ch protect U K em p l o yees’ term s a n d co n d i ti on s of em pl o ym en t wh en a

bu si n ess i s tra n sferred from on e o wn er to a n o th er.

21 4

PART 3: Where?
Co l l a b o ra t i ve wo rki n g P ro b a b l e b e n e fi t a t a l o ca l l e ve l to e n s u re th e co n ti n u a t i o n o f a p p ro p ri a te s e rvi ce l e ve l s a n d

a cc e p ta n ce o f s e rvi ce p ro vi d e r

F ramewo rk contracts : l o n g e r- t e rm e n g a g e m e n ts fo r e q u i p m e n t, s u p p o rt o r s e rvi ce s

Ch a ra cte ri s ti cs H i g h e r va l u e fo r m o re co m p l e x re q u i re m e n ts . M a y re q u i re a d e g re e o f p ro d u ct e n h a n ce m e n t

o r s o l u ti o n d e ve l o p m e n t

B e n e fi t s Li ke l y to be fo r e xte n d e d ti m e p e ri o d s a n d re q u i re a fl e xi b i l i t y o f o u tp u t a n d /o r p e rfo rm a n ce

n e e d s. Va l u a b l e in re d u ci n g re p e a t p ro cu re m e n t co s ts th ro u g h s tru ctu re d ca l l - o ff

a rra n g e m e n t s a n d fo r e s ta b l i s h i n g e co n o m i e s o f s ca l e o ve r ti m e

O p p o rtu n i t y/ H i g h e r ri s k g i ve n l e s s d e fi n i ti o n b u t p ro vi d e s a b a s i s fo r a fl e xi b l e a p p ro a ch

ri s k

Co n t ra ct t yp e s Ti m e - l i m i te d p e rfo rm a n ce - b a s e d co n tra ct wi t h e ffe ct i ve ch a n g e m a n a g e m e n t m e ch a n i s m s a n d

s ch e d u l e o f ra t e s /co s t s

E va l u a t i o n Re q u i re s s t ru ctu re d a p p ro a ch to e s ta b l i s h va ri a ti o n s a n d m od el fo r m o n i to ri n g ch a n g e and

va l u e fo r m o n e y

Co l l a b o ra t i ve wo rki n g Cl e a r b e n e fi t i n m o s t c a s e s to e s ta b l i s h m e d i u m - to l o n g - t e rm p ro vi s i o n and d ri ve i n n o va ti o n

t h ro u g h j o i n t a p p ro a ch e s
 Collabo ative evelo ment cont act
r d p r s : i n te g ra te d e n g a g e m e n t s fo r e q u i p m e n t /s u p p o rt/s e rvi ce s /tra i n i n g

Ch a ra cte ri s ti cs High va l u e d e ve l o p m e n ts re q u i ri n g a c o l l a b o ra ti ve a p p ro a ch to d e ve l o p m e n t b a s e d on

o u tp u ts th a t ca n n o t b e fu l l y d e fi n e d in a d va n ce . S o l u ti o n -b a se d wh e re va l u e fo r m o n e y n e e d s

to be j o i n t l y d e ve l o p e d and a g re e d

B e n e fi t s P ro vi d e s a b a s i s fo r i n n o va ti ve d e ve l o p m e n t, s h a re d kn o wl e d g e to wa rd s a d e fi n a b l e p ro d u ct

o r s e rvi ce wi th o u t l o n g - te rm i n ve s t m e n t

O p p o rtu n i t y/ D e g re e o f j o i n t ri s k i n t e rm s o f p e rfo rm a n ce m e a s u re s . Cou l d b e co m e th e b a si s o f th e

ri s k l o n g e r- te rm p a rtn e ri n g m od el to be a d o p te d . O fte n co m p l i ca te d b y s ki l l s a n d s ta ff tra n s fe rs

i n cl u d i n g TU P E

Chapter 21 – Collaborative contracting

Co n t ra ct typ e s Co s t - p l u s o r ta rg e t c o n tra ct co ve ri n g a g re e d e xp e n d i tu re a g a i n s t j o i n tl y a g re e d m i l e sto n e

d e l i ve ra b l e s

E va l u a t i o n Re q u i re s s t ru ctu re d a p p ro a ch to e s ta b l i s h va l u e fo r m o n e y wi th d e fi n e d co s t m o d e l s . Th e

e va l u a ti o n n e e d s to re fl e ct th e co l l a b o ra ti ve ca p a b i l i ti e s o f t h e p a rti e s to wo rk j o i n tl y to wa rd s

o u tco m e s

Co l l a b o ra t i ve wo rki n g H i g h l y d e s i ra b l e to c re a te th e a p p ro p ri a t e l e ve l o f i n te g ra te d re l a ti o n s h i p th a t wi l l u n d e rp i n

co n s i s te n t p e rfo rm a n ce and s u p p o rt i n n o va ti o n and fl e xi b i l i t y

P a tne hi
r rs ps an alliance
d s : j o i n t p ro g ra m m e s i n co rp o ra t i n g m u l ti p l e p a rtn e rs o r p ri m e co n t ra cto rs /co n s o rti a
21 5
21 6

PART 3: Where?
Ch a ra cteri sti cs H i g h va l u e req u i rem en ts wh ere th e rel a ti on sh i ps a re com bi n i n g com pl em en ta ry ski l l s a n d
resou rces, con fi g u red to m eet m a rket opportu n i ti es wh i ch n ei th er pa rty cou l d a ch i eve a l on e

B en efi ts H i g h l y fl exi bl e m od el th a t provi d es a sou n d pl a tform for i n n ova ti ve a pproa ch es. Ski l l s ra th er
th a n i n vestm en t-focu sed to esta bl i sh a vi a bl e a l tern a ti ve to m erg ers a n d a cq u i si ti on s.
Pa rtn eri n g m od el ca n be d epl oyed for l on g er-term i n teg ra ted worki n g

O pportu n i ty/ Rel a ti vel y l ow i n vestm en t bu t h i g h poten ti a l for com m erci a l su ccess. Th e su sta i n a bi l i ty of th e
ri sk rel a ti on sh i p i s a cri ti ca l su ccess fa ctor. M a y i n vol ve j oi n t a n d severa l l i a bi l i ty

Con tra ct types M u l ti pl e com pl ex m od el s d evel oped from com pl ex su ppl y or i n d u stry con tra ct m od el s

E va l u a ti on H i g h l evel of d epen d en cy on esta bl i sh i n g th e stren g th of col l a bora ti ve ca pa bi l i ty tog eth er

wi th tech n i ca l a n d com m erci a l ski l l s.

Col l a bora ti ve worki n g Su sta i n a bl e col l a bora ti ve worki n g i s a fu n d a m en ta l a spect of d evel opi n g a m u tu a l l y ben efi ci a l
rel a ti on sh i p

Pu blic–p rivate p a rtne rs hi p s : j oi n t d evel opm en ts wi th l on g -term d evel opm en t/i n vestm en t

Ch a ra cteri sti cs H i g h va l u e wi th th e n eed for i n vestm en t a n d retu rn on i n vestm en t (RO I ) over ti m e by

pa rtn ers. Focu sed on l on g -term com m i tm en t to g en era te pri va te sector fu n d i n g ca pa bi l i ty.
Focu sed on com pl ex sol u ti on req u i rem en ts
 B en efi ts Provi d es a pl a tform for l on g -term i n vestm en t by ei th er or both pa rti es. I t ca n provi d e a
fl exi bl e pl a tform of j oi n t tech n i ca l sol u ti on s, servi ce or tra i n i n g d evel opm en t a n d con stru cti on
d evel opm en ts ba sed on j oi n tl y a g reed va l u e for m on ey m od el a n d j oi n t own ersh i p

O pportu n i ty/ Va l u a bl e m od el to h a rn ess pri va te sector fi n a n ce bu t n eed s stru ctu red focu s on l on g -term
ri sk i n vestm en t. Freq u en tl y l ess fl exi bl e ba sed on fu n d i n g m od el s. E ffecti ven ess d epen d en t on h i g h
l evel of col l a bora ti ve worki n g to a ch i eve d esi red ou tcom es a n d m a i n ta i n va l u e for m on ey

Con tra ct types H i g h l y com pl ex m od el s wh i ch a re often ba cked by g overn m en t g u a ra n tees to su pport

l on g -term i n vestm en t a n d fi n a n ci n g a rra n g em en ts

E va l u a ti on A com pl ex eva l u a ti on ba l a n ce between fi n a n ci a l stru ctu re a n d fu n d i n g m od el , d el i very

req u i rem en ts versu s ca pa bi l i ty a n d th e a bi l i ty to work i n a pa rtn eri n g en vi ron m en t, wh i ch i s

Chapter 21 – Collaborative contracting

freq u en tl y n eg oti a ted ou t of ba l a n ce

Col l a bora ti ve worki n g Col l a bora ti ve worki n g m u st be i n teg ra ted a s a key a spect of th ese types of rel a ti on sh i ps to
en su re servi ce perform a n ce a n d opti m i za ti on of fi n a n ci a l a n d perform a n ce req u i rem en ts
overti m e

Joi n t ven tu re/con s o r ti a : l on g -term j oi n t i n vestm en t ven tu res for i n teg ra ted sol u ti on s a n d sa l es

Ch a ra cteri sti cs Poten ti a l l y h i g h va l u e stra teg i c rel a ti on sh i p req u i ri n g j oi n t i n vestm en t, often th rou g h speci a l
pu rpose veh i cl e (SPV) . M ostl y crea ted wh ere opera ti on a l req u i rem en ts n ecessi ta te m u l ti pl e
ca pa bi l i ti es
21 7
21 8

PART 3: Where?
B e n e fi t s Pro vi d e s a co m p o s i te /i n te g ra te d so l u ti o n . Th ro u g h S P V cre a te s a si n g l e e n ti ty fo r co n t ra cti n g

and fu n d i n g i n ve s tm e n t. S u i ta b l e fo r s u p p o rti n g l o n g - te rm co n tra cts a n d /o r m a rke t

d e ve l o p m e n t o p p o rtu n i ti e s

O p p o rtu n i t y/ B ri n g s to g e th e r co m p l e m e n ta ry s ki l l s /re s o u rce s t o cre a te unique ca p a b i l i ty. F re q u e n tl y a

ri s k s e l f- fu n d i n g i n i t i a ti ve b a se d on m a rke t p o t e n ti a l . H i g h l y d epen d en t on th e ro b u s tn e s s o f th e

re l a ti o n s h i p s b e twe e n i n i ti a ti n g p a rt i e s

Co n t ra ct t yp e s F re q u e n tl y g o ve rn e d b y co m p l e x co n tra ct i n g m o d e l s wi t h j oi n t a n d s e ve ra l l i a b i l i ti e s a ke y

th e m e . Th e S PV m o d e l cre a te s a l eg a l e n ti ty wi th s tru ctu re d o wn e rs h i p and l i a b i l i ti e s . May

i n vo l ve co m p l e x TU P E

E va l u a t i o n E va l u a ti o n g e n e ra l l y fo cu s e d on th e ro b u s tn e s s o f co m m e rci a l m od el and ca p a b i l i t y o f th e

d e l i ve ry o rg a n i z a ti o n s . Th e i n te g ra t i o n o f th e p a rt i e s n e e d s to be e q u a l l y a sse sse d e n s u ri n g a

s u s ta i n a b l e p ro p o s i ti o n

Co l l a b o ra t i ve wo rki n g Th e s e m o d e l s re q u i re co l l a b o ra ti ve wo rki n g to be a fu n d a m e n t a l a s p e ct o f t h e co n s o rt i u m or

S PV to e n s u re i n t e g ri ty o f p e rfo rm a n ce and, wh e re a p p ro p ri a te , co l l a b o ra ti ve cu s to m e r

re l a ti o n s h i p s
Cha p te r 22 – Alliance mo d elling

Th e co n ce p t o f a l l i a n ce s h a s b e e n p a rt o f t h e b u s i n e s s a re n a fo r

a n u m b e r o f ye a rs b u t h a s i n m o re re ce n t ti m e s b e co m e a ke y

fe a tu re in m a n y i n d u s tri e s . Al l i a n ce s ca n be a p o we rfu l

co m m e rci a l a p p ro a ch , b u t e a ch h a s i ts o wn unique

re q u i re m e n ts a n d re q u i re s c o n s i d e ra b l e e ffo rt t o be s u cce s s fu l .

I t i s i m p o rta n t to e n s u re th a t d e ve l o p m e n t o f t h e s tra t e g y

ta ke s i n t o a cco u n t a b ro a d ra n g e o f i n p u ts . Th e ch a l l e n g e ,

h o we ve r, h a s been th a t a m u l ti p l i ci ty o f a p p ro a ch e s h a ve been

i m p l e m e n te d and m a n y o f th e s e ca n l e a ve s i g n i fi ca n t g a p s i n

th e d e ve l o p m e n t p ro ce s s . In th i s ch a p te r we d e s cri b e th e

p ro ce s s e s o f a l l i a n ce m od el l i n g .

Al l i a n ce s m a y b e cre a te d fo r m a n y d i ffe re n t re a s o n s ; to e n s u re a

s a t i s fa cto ry o u tco m e i t i s cru ci a l to h a ve a s tru ctu re d a p p ro a ch to

d e ve l o p i n g th e ri g h t m o d e l . I t i s i m p o rta n t t o te s t th e va l i d i ty o f th e

a l l i a n ce co n ce p t a g a i n s t th e o b j e cti ve s , ca p a b i l i ti e s a n d re s o u rc e s o f t h e

o rg a n i z a ti o n s i n vo l ve d , to g e th e r wi th th e ri s ks a n d b e n e fi ts . Th e a l l i a n ce

a p p ro a ch m a y a ppea r a n a t tra cti ve o p ti o n and fre q u e n tl y o n e th a t i s

a d o pted a s bei n g th e tre n d o f th e m o m e n t. To be s u cce s s fu l an a l l i a n ce

m u s t h a ve fi rm fo u n d a ti o n s th a t co n s i d e r th e i m p l i ca t i o n s fo r th e

cu s to m e r a n d th e a l l i a n ce p a rtn e rs . Ta ki n g an a l l i a n ce to m a rke t i s n o t

si m p l y a s a l e s s t ra te g y; i t a ffe ct s th e re l a ti o n s h i p s b e twe e n th e

o rg a n i z a ti o n s i n vo l ve d , th e cu s t o m e rs t h e y s e rve and o fte n fu n cti o n a l

g ro u p s wi th i n th e o rg a n i z a ti o n s ch a rg e d wi th d e l i ve ri n g th e p ro p o s i ti o n ,

fre q u e n tl y th ro u g h a vi rtu a l o rg a n i z a ti o n .

th
Th e 1 8 ce n tu ry e co n o m i s t Ad a m S m i th ’s vi s i o n o f p e rfe ct co m p e ti ti o n

1 4
and p e rfe ct kn o wl e d g e may in p a rt b e e m e rg i n g fro m th e ra p i d

e xp a n s i o n o f g l o b a l i z a ti o n and te ch n o l o g y. Th ro u g h o u t h i s to ry th e

b u s i n e s s m o d e l s h a ve ch a n g e d to re fl e ct th e d e ve l o p m e n t o f th e

m a rke tp l a ce . Th i s n e w e n vi ro n m e n t i s ch a n g i n g th e wa y th a t co m p a n i e s

co m p e te in fu tu re and s h a re m a rke t i n fo rm a t i o n ; o wn e rs h i p o f th e

co m p l e t e p ro ce s s i s m o vi n g to wa rd s th e cre a ti o n o f s m a l l e r, s p e ci a l i z e d ,

fo cu s e d u n i ts. I n n o va t i o n in t e ch n o l o g y p ro vi d e s th e p l a t fo rm fo r e ve n

1 4
An Inquiry into the Nature and Causes of the Wealth of Nations , g e n e ra l l y re fe rre d to by

The Wealth of Nations

i ts s h o rt e n e d ti tl e , 1 7 7 6.

21 9
PART 3: Where?

m ore ra d i ca l reposi ti on i n g , wi th th e n eed to con si d er org a n i za ti on a l

d evel opm en t i n th e fl u i d en vi ron m en t of ou tsou rci n g a n d col l a bora ti ve
pa rtn ersh i ps.

Vi rtu a l o r g a n i z a ti o n s

Th e vi rtu a l org a n i za ti on i s n ot som eth i n g th a t ca n si m pl y be bol ted on to

a n exi sti n g org a n i za ti on ; i t req u i res th e d evel opm en t of n ew types of
th i n ki n g a n d perh a ps n ew m a n a g em en t a pproa ch es. Al tern a ti ve
con tra ctu a l m od el s m a y be n eed ed , wi th a g rea ter em ph a si s on bu i l d i n g
i n d i vi d u a l i zed proposi ti on s to m eet a m ore va ri ed a n d d em a n d i n g
cu stom er ba se. Th ese n eed to be su sta i n a bl e a n d th e a d opti on of
B S 1 1 000 ca n provi d e th e fra m ework on wh i ch to bu i l d robu st a l l i a n ces.

Fi g u re 22.1 – M o vi n g to vi rtu a l i n te g ra ti o n

We ca n expect to see th e crea ti on of vi rtu a l org a n i za ti on s th a t ca n sh a re

th e i n fra stru ctu re d evel opm en t, wh i l e reta i n i n g th ei r i n d i vi d u a l cu stom er
ba se. Th ese cl u sters of com pl em en ta ry ski l l s n eed n ot be l oca ti on -d ri ven
a n d th erefore ca n respon d m ore rea d i l y to wi d er m a rkets. M eeti n g th ese
a spi ra ti on s a n d d ri vers – wh i l e reta i n i n g con trol of th e bu si n ess processes
a n d org a n i za ti on a l ou tpu t, tog eth er wi th th e expecta ti on s of
sh a reh ol d ers – wi l l crea te a d i l em m a for m a n y org a n i za ti on s a n d
con si d era bl e com peti ti ve a d va n ta g e for oth ers. Th ere h a s been a
prog ressi ve m ove towa rd s a n etwork econ om y (see Fi g u re 2 2 . 1 ) th a t h a s
i ts roots i n th e expl oi ta ti on of a l l i a n ce rel a ti on sh i ps. I n th i s worl d ,

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 Chapter 22 – Alliance modelling

dependence on trust becomes even more of a valuable commodity in the

exploitation of the potential benefits of alliance operations and
streamlining of processes. This is not simply about greater openness in
the external relationships; it is a major factor when considering the
harnessing of internal networks.
Supermarket banks or gas companies selling insurance are examples of
developing the extended enterprise. In these cases the objective is to
combine the specialized skills of one organization and exploit it through
the customer base of a partner. The concept can, however, be deployed
in many aspects of business development – creating alternative outlets,
linking skills into alternative solutions or combining skills to address new
markets, or used to bring new combined products or solutions to market.

Fi g ur e 2 2 . 2 – Th e e xte n d d
e e n te rpr s
i e

In many cases the extended enterprise approach (see Figure 22.2) is being
adopted simply to build delivery processes that are based on
complementary capabilities rather than investment and ownership. The
future offers the prospect of organizations being more constrained in
their investment and needing to maintain greater flexibility. For some
organizations, the solution to these pressures may be solved through
mergers but others are considering the concept of virtual integration to
address specific needs from R&D to market delivery. The mutual interests
of the parties establishing working relationships are more flexible than

221
PART 3: Where?

tra d i ti on a l m a ster/serva n t con tra cti n g ; a n d th e process of th e rel a ti on sh i p

d evel opm en t focu ses on ou tpu ts a n d ta rg ets ra th er th a n posi ti on i n g of
con tra cti n g l i a bi l i ti es.

Th e pri n ci pa l d ri ver beh i n d m ost a l l i a n ce a pproa ch es i s i n n ova ti on ,

beca u se th e ben efi t of extern a l sti m u l u s i s th a t th e tra d i ti on a l con stra i n ts
of ‘th e wa y we d o i t a rou n d h ere’ a re ch a l l en g ed by oth er org a n i za ti on s.
E xtern a l pa rtn ers ca n often bri n g i d ea s from oth er i n d u stri es, wh i ch ca n
be a d opted or a d a pted to stretch th e cu rren t bu si n ess profi l e a n d
offeri n g s. An oth er d ri ver i s th e focu s of th e cu stom er l ooki n g for
sol u ti on s to exi sti n g probl em s, or sea rch i n g for th e ca ta l yst to seek n ew
opportu n i ti es for th em sel ves. I n certa i n ca ses th e pu sh com es from a
n eed to m eet th e ch a l l en g e of com peti tor i n n ova ti on or si m pl y to
expa n d th e resou rces a n d kn owl ed g e a va i l a bl e to d evel op n ew prod u cts.

B y com bi n i n g th e ski l l s, kn owl ed g e a n d resou rces of d i spa ra te

org a n i za ti on s i t i s possi bl e to l ook beyon d wh a t we kn ow tod a y a n d
ch a l l en g e th e th i n ki n g of th e fu tu re, bri n g i n g i n n ova ti on to a si tu a ti on
th a t m a y occu r i n fu tu re. Al l i a n ces sh ou l d n ot si m pl y be focu sed on
expl oi ti n g sa l es of tra d i ti on a l prod u cts or even com bi n a ti on s of prod u cts.
M a rket focu s i s cl ea rl y a prereq u i si te bu t sh ort-term m a rket sh a re i s l i kel y
to be a sta rti n g poi n t for expl oi ti n g th e fu l l poten ti a l a n d rea pi n g th e
poten ti a l ben efi ts of a m ore col l a bora ti ve a pproa ch . Th e d a n g er i n
a d opti n g a n a l l i a n ce m od el th a t i s pu rel y sa l es-ori en ted i s th a t by i ts very
n a tu re i t h a s a l i m i ted l i fe cycl e a n d wi l l q u i ckl y m eet th e sa m e
d evel opm en t pressu res a s th e tra d i ti on a l bu si n ess m od el . U n d ersta n d i n g
th e d ri ver for a n a l l i a n ce i s a cru ci a l fa ctor i n th e process of m od el l i n g
th e ri g h t a pproa ch – or i n d eed , d eci d i n g i f a n a l l i a n ce i s th e correct pa th .
I t i s l i kel y th a t th e d ri vers for th e a l l i a n ce pa rtn ers (see Fi g u re 2 2 . 3 ) m a y
be d i fferen t, wh i ch i s n ot n ecessa ri l y a con stra i n t, provi d i n g th ese a re
fu l l y u n d erstood a n d ca tered for wi th i n th e stru ctu re th a t i s a d opted .

M a rket N ew
d em a n d m a rket

M a rket Prod u ct
protecti on d evel opm en t

Fi g ur e 22.3 – Al l i a n ce dr i ve rs

E s ta b l i s hing th e dr i ve rs f r o an a l l i a n ce

I n con si d eri n g a n a l l i a n ce a pproa ch , org a n i za ti on s m u st h a ve cl ea rl y

recon ci l ed wh y th ey a re a d opti n g su ch m od el s a n d q u esti on wh eth er
th ey cou l d a ch i eve th e sa m e resu l ts wi th ou t crea ti n g a n a l l i a n ce. Th ere
n eed to be d efi n ed obj ecti ves i n l i n e wi th th e overa l l bu si n ess d ri vers;

222
 Chapter 22 – Alliance modelling

th ese m u st be su pported by th e corpora te bu si n ess pl a n , wi th a focu s on

wh i ch sector of th e bu si n ess wi l l d epl oy th e a l l i a n ce, or wh eth er i t i s to
be a com pa n y-wi d e prog ra m m e for a speci fi c prod u ct or servi ce offeri n g
wi th a cl ea rl y d efi n ed retu rn on i n vestm en t.

Pe ra Training – ca s e s tud y

At th e ti m e Pera Tra i n i n g wa s con si d eri n g form a l l y i m pl em en ti n g

B S 1 1 000 i n to ou r bu si n ess we were presen ted wi th a n opportu n i ty
to work wi th a prem i er m a rq u e a u tom oti ve m a n u fa ctu rer wh o
req u i red u p to 1 , 5 00 n ew sta ff to be recru i ted a n d tra i n ed a s
I n term ed i a te Appren ti cesh i ps i n B u si n ess I m provem en t Tech n i q u es.
Ti m esca l es m ea n t th a t th e on l y effecti ve wa y to d el i ver a g a i n st th i s
pa rti cu l a r cl i en t’s n eed s wou l d be to col l a bora te. So we took th e
opportu n i ty to i m pl em en t a n d g a i n B S 1 1 000 certi fi ca ti on d u ri n g th e
fi rst h a l f of 2 01 1 .

Pera Tra i n i n g l ed a con sorti u m wi th TR 2 000 (g ood a ppren ti cesh i p

tra ck record ) a n d I n d u stry Foru m (pa rt of th e Soci ety of M otor
M a n u fa ctu rers a n d Tra d ers – SM M T) . Th e com bi n ed resou rces of th e
th ree bu si n esses en a bl ed th e l a rg e prog ra m m e to be d el i vered . B y
u si n g th e ei g h t-sta g e a pproa ch of B S 1 1 000 we opti m i zed th e
worki n g rel a ti on sh i p. Reg u l a r con sorti u m m eeti n g s cou pl ed wi th
a ppropri a te u pd a tes to th e ri sk reg i ster g a ve a fra m ework for
su ccessfu l d el i very of th e prog ra m m e. B y th e n a tu re of th e d el i very,
prod u cti vi ty i m provem en t va l u e crea ti on h a s been a foca l poi n t a n d
h a s yi el d ed a h i g h l evel of cu stom er sa ti sfa cti on . Al so a n i m porta n t
step wa s th e a rti cu l a ti on of a n exi t stra teg y for th e pa rtn ers. Th i s
m a n i fested i tsel f a s a tra n spa ren t revi ew of fu tu re opportu n i ti es for
th e pa rtn ers to work tog eth er.

Fi n a l l y, th e ou tpu ts from th e con sorti u m m eeti n g s a n d ri sk reg i ster

h a ve been i n corpora ted i n to th e sen i or m a n a g em en t revi ews wi th i n
Pera Tra i n i n g . H en ce th e ou tpu ts from th i s l a rg e prog ra m m e a t a key
stra teg i c cu stom er a re d i sti l l ed i n to i n form a ti on th a t i s u sed a t th e
h i g h est l evel of d eci si on m a ki n g wi th i n Pera Tra i n i n g .

An n e-M a ri e Sm i th
M a rketi n g D i rector, Pera Tra i n i n g

The cus tome r p e rsp ective

Wh en d evel opi n g a l tern a ti ve a pproa ch es wi th a l l i a n ces, org a n i za ti on s
n eed to ta ke fu l l a ccou n t of th e h ol i sti c bu si n ess en vi ron m en t. M a n y
i n n ova ti on s or i n ven ti on s d o n ot m a ke i t to m a rket beca u se th e con cept
m a y be bri l l i a n t bu t th e cu stom er va l u e h a d n ot been va l i d a ted . Th ere
a re th ree ba si c wa ys to ch a n g e th e bu si n ess profi l e: re-en g i n eer th e
bu si n ess, ch a n g e th e cu stom er’s percepti on of va l u e or fi n d n ew

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PART 3: Where?

cu s to m e rs . In e a ch ca s e i t i s th e va l u e to th e c u s to m e r, n o t th e i d ea , th a t

wi l l d ri ve i t fo rwa rd . E s ta b l i s h i n g cu s to m e r va l u e i s n o t s i m p l y a b o u t co s t

re d u cti o n ; i t h a s to be fo cu s e d on th e m a rke t d ri ve rs , fo r wh i l e co s t i s

n e ve r fa r fro m th e cu s t o m e r’s a g e n d a i t m a y n o t a l wa ys b e th e p ri m a ry

co n ce rn ; so d e ve l o p i n g a p ro fi l e o f th e cu s to m e r’s n e e d s i s i m p o rt a n t , to

fo cu s wh e re b e s t va l u e ca n be cre a te d and a l te rn a ti ve s e xp l o i te d .

Building an a l l i a n ce p ro p o s i t i o n m e a n s e s ta b l i s h i n g th e ri g h t co m b i n a ti o n

o f p a rtn e rs t o d e l i ve r th e p ro m i s e . H o w wi l l th e cu s to m e r b e n e fi t o r wa s

th e co n ce p t s u g g e s te d b y th e m ? D o e s th e a l l i a n ce a d d re s s a cu rre n t n e e d

o r i s i t i n te n d e d to p ro vi d e e xt e n d e d o p p o rt u n i ty? I s th e cu s to m e r

a l re a d y e n g a g e d wi th o th e rs wh o p ro vi d e p ro d u cts o r s e rvi ce s th ro u g h

a l l i a n ce s ? I t i s i m p o rta n t to co n s i d e r th e cu s t o m e r’s p ri n ci p a l ri s ks i n an

a l l i a n ce p ro p o s i ti o n . Th e ke y to t h i s wi l l l i ke l y b e vu l n e ra b i l i ty fro m a

b re a kd o wn in th e a l l i a n ce , wh i ch i s wh e re a va l i d a te d co l l a b o ra ti ve

a p p ro a ch th ro u g h BS 1 1 000 ca n o ffs e t co n c e rn s .

E s tabli s hing the val u e pro p o s ition

I n n o va ti ve th i n ki n g i s o fte n co n s tra i n e d b y a wa re n e s s o f e xi s t i n g

l i m i ta ti o n s , p a rt i cu l a rl y wi th i n o rg a n i z a ti o n s ; o fte n n e w i d e a s a re n ot

p u rs u e d b e ca u s e of a kn o wn l a ck o f re s o u rce s o r p e rce i ve d l a ck o f

m a n a g e m e n t s u p p o rt. Th e p o te n ti a l wi th i n th e co n ce p t o f a l l i a n ce s i s

t h a t fo r t h e ri g h t i d e a th e re a re no re s o u rce o r s ki l l l i m i t a ti o n s , s i n ce

l i n ki n g wi th th e a p p ro p ri a te p a rtn e rs wi l l m ea n th a t a d d i ti o n a l a ttri b u t e s

ca n be i n co rp o ra t e d – p ro vi d i n g t h e re is a m u tu a l l y b e n e fi ci a l co m m e rci a l

d ea l to be m a d e.

Va l u e cre a ti o n i s a b o u t i n n o va ti o n and re a l i z a t i o n o f wh a t m a y h a ve

been kn o wn by a l l , b u t n o t re co g n i z e d b e ca u s e o f o rg a n i z a ti o n a l

b a rri e rs . Th i s p ro ce s s o f s e e ki n g o u t co m p e ti ti ve ed g e ca n be th ro u g h

co l l a b o ra ti o n and i d e n ti fyi n g a va l u e p ro p o s i ti o n th a t h a s a unique

sel l i n g p o i n t b a se d on b e n e fi ts – fo r e xa m p l e , co s t, ti m e , p ro ce s s ,

o p ti m i z e d re s o u rc e s , te ch n o l o g y o r p e rfo rm a n ce . Th e g re a te s t

o p p o rtu n i ty t h a t ca n be d e ri ve d fro m th e i n te g ra te d o rg a n i z a t i o n is in

th e a re a o f va l u e e n g i n e e ri n g . In m a n y o rg a n i z a t i o n s tru e o p ti m i z a ti o n is

sel d om a ch i e ve d . Th i s m a y b e due to th e s tru ctu re and s tyl e o f th e

o p e ra ti o n , b e ca u s e o f th e s p e ci a l i z e d n a tu re o f i n d i vi d u a l p ro d u ct i o n

u n i ts, o r wo rs e – th e i s o l a ti o n o f e xte rn a l s p e ci a l i z e d p ro vi d e rs . Th i s l i m i ts

th e s co p e fo r e va l u a t i n g th e o ve ra l l p ro ce s s , wh e re p re d e fi n i ti o n of

re q u i re m e n ts s e ts t h e tre n d l on g b e fo re th e p ra cti t i o n e rs g e t i n vo l ve d .

Ta rgeting the alliance

Th e a p p l i ca ti o n of a n a l l i a n ce ca n be fa r- re a ch i n g in b o th th e p ri va te and

p u b l i c s e cto rs , a s we l l a s wh e re th e s e cro s s o ve r. Al l i a n ce s m a y co ve r a

b ro a d ra n g e o f n e two rks , b o th i n te rn a l and e xte rn a l . I t i s cru ci a l to

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Fi g u re 2 2 . 4 – I n n o va ti o n d ri ve rs

u n d ersta n d th e d yn a m i cs of th ese rel a ti on sh i ps a n d to con si d er sh ort-,

m ed i u m - a n d l on g -term perspecti ves by pl a n n i n g th e i m m ed i a te g oa l s –
bu t a l so d evel opi n g th e a pproa ch for fu tu re obj ecti ves (see Fi g u re 2 2 . 4) .
I t i s eq u a l l y i m porta n t to con si d er th e i n tern a l n etworks th a t m a y be
i n vol ved , pa rti cu l a rl y wh en con si d eri n g a l l i a n ces wi th g l oba l cu stom ers or
pa rtn ers, wh ere l oca l i ssu es m a y becom e a fa ctor i n crea ti n g su ccess.

B u s i n e s s e n vi ro n m e n t

Th e bu si n ess worl d h a s a l wa ys a d a pted to th e d em a n d s of th e m a rket

a n d cu stom ers. Th e cu rren t d i versi ty of opportu n i ty a n d ri sk prom pts
org a n i za ti on s to l ook a t th e a l l i a n ce a pproa ch , pa rti cu l a rl y wh ere th e
tra d i ti on a l m erg er a n d a cq u i si ti on rou tes a re con stra i n ed . Th e vol a ti l i ty
a n d n eed for fl exi bi l i ty, tog eth er wi th a fa st respon se to ch a n g e, m ea n s
th a t cu stom ers wa n t th ei r provi d ers to be m ore l oca l i n rea l term s. Th ese
d em a n d s a n d ch a l l en g es ca n on l y be m et by a n etworked com m u n i ty.
Crea ti n g a n a l l i a n ce opera ti on ca n provi d e m a n y of th e a n swers to th ese
ever-i n crea si n g ch a l l en g es, a s i t a l l ows org a n i za ti on s to l i n k th ei r
stren g th s g l oba l l y wi th ou t th e en cu m bra n ces of h i g h l evel s of
i n vestm en t. Th ere ca n be a com bi n a ti on of g l oba l rea ch , cu l tu ra l
u n d ersta n d i n g a n d con n ecti on s wi th ou t h a vi n g to d evel op a wh ol l y
own ed en ti ty th a t m a y ta ke yea rs to d el i ver retu rn s. Th ere a re cl ea rl y
stra teg i c ben efi ts, bu t th ese m u st be ba l a n ced a g a i n st th e m a rket,
tog eth er wi th sh ort-term tra i n i n g a n d kn owl ed g e tra n sfer n eed s. I n
d evel opi n g a n a pproa ch i t i s cru ci a l to u n d ersta n d th e m a rketpl a ce

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wi th i n wh i ch th e a l l i a n ce wi l l opera te a n d th e m a rket g rowth poten ti a l ,

open i n g u p a d d i ti on a l m a rket opportu n i ti es or a d d ressi n g i d en ti fi ed g a ps
i n th e m a rket.

I n te r n a l ca p a bi l i ty

D evel opi n g a stra teg i c a l l i a n ce m u st ta ke a ccou n t of th e org a n i za ti on a l

stru ctu re th a t provi d es th e fra m ework for i n tera cti on . Th e con cept of th e
corpora te ‘si l o’ i s n ot a n ew on e bu t rem a i n s perh a ps th e bi g g est
obsta cl e to col l a bora ti on , i n n ova ti on a n d ch a n g e. I n tern a l processes m a y
su perfi ci a l l y con n ect d i vi si on s or fu n cti on a l g rou ps wi th i n a n
org a n i za ti on , bu t freq u en tl y th ese form a l i n tera cti on s con cea l con stra i n ts
to kn owl ed g e fl ow, wh ere i ssu es su ch a s perform a n ce m ea su rem en t,
i n cen ti ves a n d respon si bi l i ti es ca n restri ct th e free fl ow of
com m u n i ca ti on . Th ese con stra i n ts ca n be m ore d i ffi cu l t to cou n ter
i n tern a l l y th a n wi th extern a l opera ti on s, wh i ch h a ve cl a ri ty of focu s
wi th i n a col l a bora ti ve a rra n g em en t. An a l ysi n g th e n eed for cross-fl ows of
kn owl ed g e h el ps to i d en ti fy th e key ch a n g es a n d prog ra m m es th a t m a y
h a ve to be i n trod u ced , to en su re th a t kn owl ed g e tra n sfer a n d i n n ova ti on
i s em bed d ed i n th e opera ti on ra th er th a n forced th rou g h by ed i ct. I t i s
i m porta n t to recog n i ze th e poten ti a l for ‘si l os wi th i n si l os’; wh en
con si d eri n g th ese com pl i ca ti on s, i t i s cl ea r th a t wh en sepa ra te
org a n i za ti on s seek to d evel op a l l i a n ces th ese i n tern a l si l os m a y con stra i n
kn owl ed g e fl ows a cross org a n i za ti on a l bou n d a ri es, th u s a ffecti n g
i n teg ra ted processes a n d d a m a g i n g cu stom er con fi d en ce.

P oten ti a l p a r tn e rs (exi s ti n g o r n ew)

I t i s becom i n g m ore com m on to see com peti tors worki n g cl osel y tog eth er
i n speci fi c ven tu res. Col l a bora ti ve i n teg ra ti on h a s becom e a ch a l l en g e for
m ost bu si n ess opera ti on s, often l i n ki n g m u l ti pl e en ti ti es wi th i n th e va l u e
ch a i n ; i n m a n y ca ses th e process of i n teg ra ti n g i n tern a l l y ca n be even
m ore ch a l l en g i n g th a n wi th th e extern a l rel a ti on sh i ps. Th e a ppl i ca ti on of
col l a bora ti ve fra m eworks a cross th e va l u e ch a i n ca n h el p i n both
h ori zon ta l a n d verti ca l rel a ti on sh i ps to crea te va l u e. Con si d er wh a t th e
i d ea l pa rtn er l ooks l i ke to m a tch th e proposi ti on : ca n th ey be d ra wn
from exi sti n g rel a ti on sh i ps or sh ou l d n ew pa rtn ers be con si d ered ?

Ri s k m a n a g em en t

Th e a ppreci a ti on a n d u n d ersta n d i n g of ri sk (a n d th u s effecti ve ri sk

m a n a g em en t) i s som eth i n g th a t h a s to be a fu n d a m en ta l i n g red i en t i n
th e d evel opm en t of a n a l l i a n ce, a l on g wi th th e tra i n i n g a n d d epl oym en t
of a n a l l i a n ce tea m . Th e g rea ter th e d i sta n ce between tea m m em bers,
th e h a rd er i t i s to ca pi ta l i ze on th e n a tu ra l fl ow of i n form a ti on between

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pl a yers. Across th e offi ce m a n y probl em s g et sol ved or stra teg i es a re

evol ved wi th ou t form a l processes n eed i n g to be i n pl a ce; i n th e vi rtu a l
worl d th e tra d i ti on a l ri sks rem a i n bu t a re com pou n d ed by th e d i versi ty of
l oca ti on s, org a n i za ti on s a n d cu l tu res. I t m a y be th e a cti on s of a pa rtn er
th a t preci pi ta te n on -com pl i a n ce or expose l i a bi l i ti es. Th e crea ti on of j oi n t
ri sk m a n a g em en t tea m s (J RM Ts) wi th i n th e tea m i s cru ci a l , si n ce often
ri sk i s seen a s a si n g l e person ’s respon si bi l i ty a n d th u s d i l u tes th e focu s.
Wi th i n a n a l l i a n ce th a t i s g eog ra ph i ca l l y sepa ra ted th ere i s a n eed to
h a ve a ri sk cen tre to en su re exch a n g e of i n form a ti on to a i d th e overa l l
m a n a g em en t focu s.

Knowle d ge fus ion

O n e of th e key ben efi ts th a t com e from i n teg ra ti n g org a n i za ti on s i s
d eri ved from sh a ri n g kn owl ed g e th a t com bi n es th e a ttri bu tes a n d ski l l s
of th e pa rtn ers; bu t i t i s a l so th e m a i n a rea of con cern for th ose m ovi n g
i n to th i s a ren a . I n m a n y wa ys th e u n offi ci a l sh a ri n g of kn owl ed g e h a s
been ta ki n g pl a ce si n ce bu si n esses sta rted i n ter-tra d i n g or ski l l ed
person n el m oved between th e va ri ou s com pa n i es. Th ere i s m u ch d eba te
a rou n d th e wh ol e i ssu e of i n tel l ectu a l property, wh i ch i s often fou n d ed
on percepti on ra th er th a n rea l excl u si vi ty, a n d th e d a n g er of g i vi n g u p
th e ‘fa m i l y j ewel s’ i n fa vou r of sh ort-term g a i n . Wh i l e i t wou l d be wron g
to m i n i m i ze th e n eed to protect core kn owl ed g e, th ere sh ou l d be a
rea l i sti c perspecti ve wh en eva l u a ti n g th e poten ti a l ben efi ts. M ost
kn owl ed g e wi l l u l ti m a tel y ‘creep’ i n to th e pu bl i c d om a i n over ti m e,
ei th er th rou g h th e m obi l i ty of person n el or th rou g h reverse-en g i n eeri n g
of processes, so i t i s worth wh i l e u n d erta ki n g a rea l i ty ch eck before
m a ki n g secu ri ty a ‘sh ow-stopper’ i n a l tern a ti ve d evel opm en ts.

Co rp o rate s ocial re sp on s ibility

E very bu si n ess opera ti on h a s to recog n i ze th a t on e of th e m a j or
st
ch a l l en g es for th e 2 1 cen tu ry i s th e g rowi n g pressu re towa rd s m eeti n g
th e g oa l s of su sta i n a bi l i ty; th ere i s a l so th e i n crea si n g focu s on soci a l
respon si bi l i ty – h ow org a n i za ti on s n ot on l y m a n a g e a n d reg u l a te th ei r
own perform a n ce, bu t a l so th ei r i n terfa ces wi th oth er org a n i za ti on s. For
th e bu si n ess worl d th e com pl i ca ti on s of th ese m a n y-fa ceted a spi ra ti on s
crea te a m i n efi el d of pol i ti ca l pressu re a n d soci a l ri sk, exten d i n g beyon d
th e obvi ou s i ssu es of en vi ron m en ta l pol l u ti on a n d occa si on a l ba d
pu bl i ci ty. M ost org a n i za ti on s a re sen si ti ve to th ei r soci a l a n d
en vi ron m en ta l i m pa cts; i n teg ra ti on ca n a l l ow org a n i za ti on s to sh a re
i n form a ti on a n d opti m i ze processes to ca pi ta l i ze on ben efi ts a n d
con tri bu te to th e l on g -term en vi ron m en ta l ch a l l en g es. I f th ere i s a
corpora te CSR stra teg y i n pl a ce, i t sh ou l d be sh a red wi th pa rtn ers.

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M anagin g i n te g r a ti o n

For su ppl i ers, cu stom er rel a ti on sh i ps h a ve a tra d i n g va l u e a n d sh ou l d be

th e ba ckbon e of su sta i n a bl e bu si n ess. Rel a ti on sh i ps i n bu si n ess a re vi ta l
a n d , wh i l e n ot u su a l l y a n eg oti a bl e com m od i ty, th ey a re u l ti m a tel y m ore
i m porta n t th a n m a n y pu re tech n ol og i sts wou l d a ccept. Th e tru e n a tu re
of bu si n ess i s m ore a bou t th e i n teg ra ted n a tu re of d ea l i n g s u p a n d d own
th e va l u e ch a i n . Tech n ol og y m a y be th e ca ta l yst bu t i t i s on l y pa rt of th e
eq u a ti on (see Fi g u re 2 2 . 5 ) .

Fi g ur e 2 2 . 5 – Te ch n o l o g y ve rsus p eo p le

G l oba l tech n ol og y l i n ks a re n ow fea si bl e for a n y g rou p of com pa n i es,

l a rg e or sm a l l . M a n y i n tern a ti on a l org a n i za ti on s a l rea d y u se th i s con cept
i n tern a l l y to provi d e a vi rtu a l offi ce en vi ron m en t a cross fron ti ers. Th e
wi d er i m pl i ca ti on a n d poten ti a l i s for com pl em en ta ry org a n i za ti on s to
i n teg ra te th rou g h th e sa m e tech n ol og y; th i s h a s to be ba l a n ced a g a i n st
cl ea rl y d efi n ed rol es a n d respon si bi l i ti es for th e a l l i a n ce pa rtn ers,
recog n i zi n g n a ti on a l or cu l tu ra l d i fferen ces. To d ri ve th e ri g h t beh a vi ou rs
th ere sh ou l d be a l i g n m en t of pa ym en t pl a n s, i n cen ti ves a n d i n d i vi d u a l
rewa rd prog ra m m es, su pported by a g reed j oi n t m a n a g em en t a n d
reporti n g stru ctu res, a n d a g reed a pproa ch es to a ssessm en t of person n el
experi en ce a n d d evel opm en t n eed s.

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O r g a n i za ti o n a l a n d c u l t u r a l ch a l l e n g e s

Th e pa st si x d eca d es h a ve prod u ced a l tern a ti ve org a n i za ti on a l i n i ti a ti ves

a n d ea ch of th ese h a s brou g h t wi th i t ch a n g es i n corpora te stru ctu res. I f
th e con tri bu tors of resou rces to a l l i a n ces a ccept to som e exten t a d eg ree
of con trol l oss, th en d i fferen t form s of g overn a n ce a n d con trol ca n be
crea ted for wh a tever peri od i s n ecessa ry i n th e m a n n er th a t m ost su i ts
th e m a rket pressu res. To a ch i eve i n n ova ti ve sol u ti on s a n d recog n i zi n g
th ei r sh ort-term i n terd epen d en ce, org a n i za ti on s m a y form speci a l i st
g rou ps th a t a re sol el y d ri ven by th e m a rket obj ecti ves – wh i ch m a y
even tu a l l y en com pa ss th i s vi rtu a l con cept a s m a i n strea m , ei th er fu l l y or i n
pa rt. Th e vi rtu a l tea m ca n be stru ctu red wi th ou t crea ti n g th e n eed to
com pl etel y recon fi g u re th e cu rren t bu si n ess m od el . I t ca n h a ve i ts own
processes a n d ru l es a n d si m pl y h a s to com pl y wi th th e overa l l g overn a n ce
a g reed between th e pa rtn ers.

D e ve l o p i n g a n a l l i a n ce te a m

Th e rol e of l ea d ersh i p i s fa r m ore com pl ex tod a y. N ot on l y d oes i t h a ve to

m eet th e n orm a l d em a n d s of tea m bu i l d i n g a n d m oti va ti on ; i t h a s to be
a ch i eved a g a i n st th e va ri a bl e ba ckg rou n d of ti m e, power, d i sta n ce a n d
cu l tu ra l d i versi ty. Al l i a n ce tea m i n g wi l l n ot j u st h a ppen ; i t wi l l n eed
effecti ve l ea d ersh i p, execu ti ve su pport, i n n ova ti ve th i n ki n g a n d tra i n i n g
to expl oi t th e ski l l s a n d resou rces th a t wi l l u n d erpi n th e va l u e of th e
a l l i a n ce, tog eth er wi th a focu s on crea ti n g th e en vi ron m en t th a t a l l ows
th e rel a ti on sh i ps to fl ou ri sh – th a t wi l l be a core el em en t of su ccess. Th e
i d en ti ty of a n a l l i a n ce n eed s a bra n d ; th e key i n d i vi d u a l s i d en ti fi ed u n d er
a n a l l i a n ce boa rd a n d j oi n t m a n a g em en t tea m wi l l n eed to h a ve a g reed
reporti n g l i n es, su pported by perform a n ce a n d rel a ti on sh i p
m ea su rem en ts. I t i s eq u a l l y i m porta n t to h a ve th e ben efi ts of th e a l l i a n ce
com m u n i ca ted to th e org a n i za ti on s a t l a rg e.

Ri s k, re wa rd a n d i n ve s tm e n t

Th e B R I TE i d ea s a pproa ch (ben efi ts, rea l i sm , i n vestm en t, tra i n i n g a n d

econ om i cs) wa s i n trod u ced to en su re th a t a l l i a n ce g rou ps tem pered th ei r
i m a g i n a ti on by refl ecti n g th e rea l i ti es of th e bu si n ess worl d . I d ea s sh ou l d
be a l l owed to ru n wi l d , especi a l l y i n d evel opm en t worksh ops, si n ce
tom orrow’s profi ts com e from tod a y’s cra zy i d ea s. I t presen ts a
fra m ework a g a i n st wh i ch ea ch i n n ova ti ve th ou g h t ca n be ch ecked to
ra ti on a l i ze i ts va l u e a n d poten ti a l ea se of i m pl em en ta ti on . I t wi l l a l so
en su re th a t a s prog ress i s m a d e th e fou n d a ti on of a sol i d bu si n ess ca se
ca n be presen ted .

• B e n e fi t s sh ou l d be q u a n ti fi a bl e a n d m ea su ra bl e
• Re a l i s m en su res th ere i s a rea l i ty ch eck on both pra cti ca l i ty a n d ri sk
• I n ve s tm en t sh ou l d ou tl i n e i ssu es of ti m e, resou rces a n d m on ey

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• Training is an i m p o rta n t fa cto r th a t i s o fte n i g n o re d wh e n s u g g e s ti n g

ch a n g e

• Economics u n d e rp i n s e ve ry ch a l l e n g e and fi rs t a n a l ys i s s h o u l d

s u p p o rt va l i d a ti o n .

Exit s trategy
Th e re m u st be a ro b u s t p ro ce s s fo r d e ve l o p i n g a va l i d and e ffe cti ve

i n te g ra te d a l l i a n ce re l a ti o n s h i p , wh i ch h a s i ts fo u n d a ti o n in th e b u si n e ss

pl a n n i n g p ro ce s s o f th e p o te n ti a l p a rt n e rs . Th e a l l i a n ce d e ve l o p m e n t

b u i l d s th ro u g h th e e s ta b l i s h e d sta g e s o f b u si n e ss p l a n n i n g to e n s u re th a t

th e p ro p o s e d a p p ro a ch i s co m p a ti b l e wi th , and s u p p o rts , th e o ve ra l l aims

o f th e a l l i a n ce p a rt n e rs ri g h t th ro u g h to h o w th e y wi l l e ffe cti ve l y

d i se n g a g e .

Concl u s ion
Al l i a n ce b u s i n e s s m o d e l s m a y we l l open ch a n n e l s to e xte n d e d , fl e xi b l e

and n e two rke d va l u e ch a i n s , cre a ti n g co m p e t i ti ve va l u e p ro p o s i ti o n s t h a t

e xp a n d and co n tra ct to m e e t ch a n g i n g d em a n d s a n d s p e ci fi c cu s t o m e r

n e e d s. U n d e rp i n n i n g th e s e a l l i a n ce s wi l l be co m m e rci a l a rra n g e m e n ts

t h a t wi l l e xp l o i t th e j o i n t ca p a b i l i ti e s o f n e t wo rke d cl u s te rs . Al l i a n ce

e n te rp ri s e s n e e d to be fo u n d e d on th e co re p ri n ci p l e s o f B S 1 1 000 to

d e ve l o p a so u n d , s ta b l e and s u s ta i n a b l e m od el and wi l l d epen d on a

s o ci a l s tru ctu re th a t i s ve ry d i ffe re n t fro m th e tra d i ti o n a l b o u n d a ry- b a s e d

b u s i n e s s cu l t u re . I n te rd e p e n d e n ce n e e d s to be re co g n i z e d and e xp l o i te d ,

ra t h e r th a n p e rh a p s a fa cto r th a t m a n y o rg a n i z a ti o n s re l u cta n tl y

m a n a g e.

230
 Key messages
Th e su ccessfu l a d opti on of a l l i a n ces, pa rtn ersh i ps a n d con sorti a d epen d s on th e a bi l i ty of th e pa rti es to work i n a n
i n teg ra ted wa y th a t d el i vers con fi d en ce a n d perform a n ce to th e m a rket. Ta bl e 2 2 . 1 provi d es key m essa g es a bou t a l l i a n ces,
pa rtn ersh i ps a n d con sorti a .

Ta b l e 2 2 . 1 – Ke y m e ss a g e s fo r a l l i a n ce s , p a rtn e rs h i ps an d co n s o rti a

B S 1 1 0 0 0 a l l i a n ce s , p a rtn e rs h i ps an d co n s o rti a

Fo c us p o i n t Ra ti o n a l e

1 r
Al te n a ti ve b us i n e ss mo d el s Col l a bora ti ve a pproa ch es broa d en th e ca pa bi l i ty of org a n i za ti on s to respon d
to (pu l l ) or propose (pu sh ) m ore com pl ex proposi ti on s to m eet th e d em a n d s of
th e m a rket or speci fi c cu stom er ch a l l en g es

2 Pa rtn e r s e l e cti o n Ch oosi n g th e a ppropri a te col l a bora ti ve pa rtn er ca n freq u en tl y i g n ore th e

Chapter 22 – Alliance modelling

cu l tu re th a t wi l l be a cru ci a l i n g red i en t for su ccess; ba si n g sel ecti on sol el y on
tech n i ca l a n d fi n a n ci a l stren g th s ra i ses i ssu es of wh eth er th e pa rtn ers ca n
effecti vel y opera te a s on e en ti ty

3 B us i n e ss ca s e d e ve l o p m e n t G a i n i n g su pport for a n i n teg ra ted sol u ti on a g a i n st a m ore tra d i ti on a l

opera ti n g m od el ca n i n crea se i n tern a l con stra i n ts wi th i n ea ch pa rtn er’s h om e
org a n i za ti on

4 C us to m e r co n fi d e n ce Wh ere a n a l l i a n ce m od el i s bei n g offered , cu stom er con fi d en ce th a t

col l a bora ti on i s i n teg ra ted a n d robu st i s cru ci a l
231
232

PART 3: Where?
5 I nteg ation
r E ffe cti ve g o ve rn a n ce is a c ru ci a l re q u i re m e n t wh e n co n s i d e ri n g an a l l i a n ce

p ro p o s i ti o n to e n s u re j oi n t m a n a g em en t a n d d e l i ve ry t h ro u g h co m b i n e d

p ro ce s s e s a n d s ys te m s

6 Re o ce o timization
s ur p Wh e re m u l ti p l e p a rtn e rs a re i n vo l ve d i t i s e s s e n ti a l to e n s u re th a t re s o u rce s ,

ro l e s a n d re s p o n s i b i l i ti e s a re e ffe cti ve l y d e fi n e d and a l l o ca te d to cre a te th e

m o s t e ffi ci e n t o p e ra t i n g m od el

7 Ri k management
s Th e a d o pti o n o f a l te rn a ti ve b u s i n e s s m o d e l s i n tro d u ce s th e p e rce p ti o n o f ri s k

fo r a cu s to m e r a n d p o te n ti a l i n te rn a l ri s ks fo r th e p a rti e s

8 Sp ee to ma ket
d r C o m p l e x re l a ti o n s h i p s ca n ta ke ti m e to d e ve l o p ; th ro u g h BS 1 1 000

o rg a n i z a ti o n s h a ve th e o p p o rt u n i ty to a d opt a co m m o n u n d e rs ta n d i n g and

m o ve m o re q u i ckl y to o p ti m i z e d i m p l e m e n ta ti o n

9 I nte e en ency
rd p d I n t e g ra t e d m o d e l s cre a te a high d e g re e o f i n te rd e p e n d e n cy, wh i ch n e e d s to be

fu l l y u n d e rs to o d and m a n a g ed e ffe cti ve l y th ro u g h a m u t u a l l y re s p o n s i b l e

a p p ro a ch th a t h a rn e s s e s j o i n t ca p a b i l i ty a n d o wn e rs h i p

1 0 P e o mance
rf r In a n y b u s i n e s s ve n tu re d e l i ve ri n g th e re q u i re d o u t co m e s i s cru ci a l ; b u t th e

ve n tu re ca n o ft e n be d a m a g ed b y p ro t e cti o n i s m and bl a m e cu l tu re , wh i ch

d i ve rts re s o u rce s . A ro b u s t co l l a b o ra ti ve a p p ro a ch e n s u re s t h a t tra n s p a re n cy

and j o i n t re s p o n s i b i l i ty a re e s ta b l i s h e d
Cha p te r 23 – Collabo rative maturity

H o w we se e o u r o wn o rg a n i z a ti o n and h o w o th e rs s e e i t ca n

be ve ry d i ffe re n t, wh i ch ca n s i g n i fi ca n tl y i n fl u e n ce th e

re s p o n s e s we g e n e ra te o r g e t b a ck. C o l l a b o ra ti ve m a t u ri ty i s

th e fo cu s o f th i s ch a p te r. Th e i m p o rta n ce o f u n d e rs t a n d i n g

b o th th e i n te rn a l m a tu ri ty a n d th e p ro j e cte d p ro fi l e fo r

co l l a b o ra ti o n n e e d s to be s e ri o u s l y co n s i d e re d , to e n s u re th a t

wh e n tra n s m i tti n g a co l l a b o ra t i ve m e ssa g e i t wi l l cre a t e a

re a cti o n b a se d on yo u r p ro fi l e in th e m a rke t.

F o r a n y o rg a n i z a t i o n to be s u cc e s s fu l i t m u s t fi rs t u n d e rs ta n d i ts o wn

re q u i re m e n ts a n d ca p a b i l i ti e s b e fo re tryi n g to d e ve l o p th e m wi th an

e xte rn a l o rg a n i z a ti o n . In m o st ca se s, th e fa i l u re o f e xte rn a l re l a t i o n s h i p s

ca n b e d i re ctl y ro o te d in a fa i l u re to u n d e rs t a n d o r d e ve l o p an i n te rn a l

ro u te m a p. Th i s l a ck o f cl a ri t y l e a d s to co n fu s i o n and m i s d i re ct i o n , wh i ch

in tu rn wi l l re s u l t i n th e fa i l u re o f th o s e o u ts i d e th e o rg a n i z a ti o n to

a p p re ci a t e th e i m p l i ca ti o n s o f th e i r o wn a cti o n s . In a co l l a b o ra t i ve

re l a ti o n s h i p th e b e n e fi ts a ri s e fro m e xp l o i t i n g th e i n t e rfa ce s b e t we e n

o rg a n i z a ti o n s a n d th e a b i l i ty o f d i s p a ra t e g ro u p s to fo cu s o n co m m o n

o b j e cti ve s a n d i m pl em en t a j o i n t p ro g ra m m e .

Th e co n ce p t o f p a rt n e ri n g and co l l a b o ra ti o n h a s re a ch e d a l e ve l of

m a t u ri ty wi t h i n m a n y o rg a n i z a ti o n s i n th e b u s i n e s s co m m u n i ty, to g e th e r

wi th th e re co g n i ti o n th a t re l a t i o n s h i p m a n a g e m e n t fo rm s a cru ci a l p a rt

o f th e b u s i n e s s n e t wo rk. H o we ve r, th e a d o p ti o n o f co l l a b o ra t i o n ca n be

co n s tra i n e d by a n u m b e r o f fa cto rs th a t cre a t e o b s ta cl e s to

i m p l e m e n ta t i o n . Th i s s i tu a ti o n i s o b s e rve d b o th in th e pu bl i c a n d p ri va te

s e ct o rs a n d a ri s e s t h ro u g h a n u m b e r o f co m m o n p a ra m e te rs , s u ch as

tra d i ti o n a l th i n ki n g and p ro ce s s e s , l e ve l s o f u n d e rs ta n d i n g and

e xp e ri e n ce , l eg a l fra m e wo rks , a cco u n t i n g and a u d i ti n g co n ce rn s a n d

re g u l a ti o n .

C o l l a b o ra t i o n b e twe e n o rg a n i z a ti o n s p ro vi d e s a va l u a b l e e n vi ro n m e n t to

e vo l ve fro m t o d a y’s c o m m e rci a l n eed s i n re s p o n s e to th e fu tu re l i ke l y

i m p a cts. In th i s e n vi ro n m e n t th e d e ve l o p m e n t o f a m o re ta n g i b l e

b e n ch m a rk p l a t fo rm fo r d e ve l o p m e n t o f co l l a b o ra ti ve i n i ti a t i ve s s h o u l d

be a cru ci a l p a rt o f a n y l o n g - te rm s tra te g y. Th e a p p l i ca ti o n of a m a t u ri ty

a s s e s s m e n t wi l l p ro vi d e a b a se l i n e and co n s i s t e n t b e n ch m a rk to

233
PART 3: Where?

u n d e rs t a n d b o th th e i n te rn a l d e ve l o p m e n t n e e d s a n d th e p ro fi l e bei n g

p ro j e cte d to wa rd s p o te n t i a l p a rtn e rs – wh e th e r cu s to m e rs , s u p p l i e rs o r

a l l i a n ce p a rtn e rs .

BT G lobal S e rvice s – ca s e s tud y

Th e £ m u l ti m i l l i o n co l l a b o ra ti ve p a rtn e rs h i p b e twe e n th e C i ty o f

E d i n b u rg h C o u n ci l and B T beg a n in 2 001 wh e n B T b e ca m e th e

Co u n ci l ’s s tra te g i c p a rt n e r a n d s u p p l i e r o f I CT s e rvi ce s . In 2 008 th e

co n tra ct, i n i t i a l l y fo r 1 0 ye a rs , wa s e xt e n d e d fo r a fu rth e r 5 ye a rs

u n ti l 2 01 6.

Wi th co s t s a vi n g s a n d e ffi ci e n ci e s a t th e to p o f th e a g en d a , th e C i ty

o f E d i n b u rg h Co u n ci l wa s co n s i d e ri n g o u ts o u rci n g m o re o f i ts

s e rvi ce s . H o we ve r, due to i ts l o n g - s ta n d i n g p a rtn e rs h i p wi th B T, th e

Co u n ci l re co g n i z e d th a t th e a d o p ti o n of a re co g n i z e d i n d u s t ry

s ta n d a rd fo r co l l a b o ra ti ve wo rki n g wo u l d b e n e fi t b o th p a rt i e s . Th e

e n d o rse m e n t wo u l d a l l o w B T to d e m o n s tra te to o th e r cu s t o m e rs

b o th i ts co m m i tm e n t t o p a rtn e rs h i p s a n d i ts s ta n d i n g in th e

m a rke tp l a c e , and th e C i ty o f E d i n b u rg h C o u n ci l wo u l d be a bl e to

bu i l d u pon an e xi s t i n g and ro b u s t I CT p l a tfo rm .

‘ O u r s tra te g y fo cu s e s o n t h re e ke y a re a s – cu s to m e r s e rvi ce d e l i ve ry,

co s t t ra n s fo rm a ti o n and i n ve s ti n g fo r th e fu t u re . Th e s e th re e a re a s

a re th e bu i l d i n g b l o cks fo r m a ki n g BT a b e tte r b u s i n e s s . Th e b e tte r

we s e rve o u r cu s to m e rs , th e l e s s ti m e and m o n e y we sp e n d on fi xi n g

fa u l ts a n d b y tra n s fo rm i n g o u r co s ts we cre a te n e w o p p o rtu n i ti e s fo r

i n ve s tm e n t i n o u r fu tu re . ’ To a ch i e ve th i s B T h a s s u cce s s fu l l y

d e m o n s t ra te d i t m e e t s b e s t p ra cti ce in t e rm s o f co l l a b o ra t i ve b u si n e ss

re l a t i o n s h i p s , fo l l o wi n g ri g o ro u s a s s e s s m e n t o f i ts 1 1 - ye a r I C T

p a rtn e rs h i p ; and i t wa s th e fi rs t I C T co m p a n y to gain ce rti fi ca t i o n to

BS 1 1 000. I t i s a l so th e fi rs t t i m e th e s ta n d a rd h a s been a wa rd e d to a

l o ca l a u t h o ri ty p a rt n e rs h i p .

Th e co l l a b o ra ti ve wo rk s ta rt e d in 2 006, wh i ch d e t e rm i n e d h o w we l l

th e p a rti e s a re a l i g n ed a cro s s a s p e ct ru m o f i ssu e s. Wi th m o s t o f th e

o p e ra ti o n a l re q u i re m e n ts a l re a d y i n p l a ce , fro m th e fi rs t g a p a n a l ys i s

to re ce i vi n g th e ce rti fi ca te o n l y to o k a ro u n d fo u r m o n th s , th a n ks to

th e fo u n d a ti o n s th a t h a d been laid.

Th e S m a rt Ci ty Pa rtn e rs h i p p ro vi d e s a s p ri n g b o a rd fo r i n n o va ti o n and

n e w b u s i n e s s o p p o rtu n i t i e s a s we l l a s m o re e ffi ci e n t s e rvi c e s , wh i ch

s a ve BT and i ts p a rt n e rs ti m e and m o n e y. C o m p l yi n g wi th th e

s ta n d a rd h e l p s b o th BT and th e C o u n ci l in t e rm s o f cre d i b i l i ty a n d

b ra n d re p u ta t i o n , a s i t d e m o n s tra te s b e s t p ra c ti ce co l l a b o ra ti ve

wo rki n g . Co l l a b o ra ti ve wo rki n g wi l l en a bl e th e p a rtn e rs to i d e n ti fy

234
 Chapter 23 – Collaborative maturity

a n d m a n a g e j oi n t ri sks better a n d i m proved processes wi l l a i d th e

i n d u cti on of n ew sta ff on ei th er si d e of th e pa rtn ersh i p.

B ri d g et Ta yl or,
D i rector of Stra teg y a n d E n g a g em en t
B T G l oba l Servi ces

I t i s i m pera ti ve th a t org a n i za ti on s i n vest th e ti m e to em bed col l a bora ti ve

a pproa ch es i n th ei r bu si n ess processes a n d th e eth os of th e org a n i za ti on .
Th e i m pa cts on a n y bu si n ess rel a ti on sh i p exten d th rou g h ou t a n
org a n i za ti on , so i n eva l u a ti n g a poten ti a l pa rtn er or presen ti n g you r
org a n i za ti on a s on e th a t em bra ces col l a bora ti on i t i s i m porta n t to a ssess
a n d va l i d a te th e a pproa ch . Crea ti n g a n effecti ve stra teg y m u st be ba sed
on a fi rm fou n d a ti on of ca pa bi l i ti es a n d sou n d a ssessm en t of th e a ren a
th a t wi l l be en cou n tered . I m pl em en ti n g a repea ta bl e m a tu ri ty a ssessm en t
process wi l l provi d e a q u a n ti ta ti ve ph a sed revi ew, wi th i n wh i ch
org a n i za ti on s ca n eva l u a te a n d d evel op a system a ti c a pproa ch to
com pl em en ti n g th ei r ca pa bi l i ti es, a n d provi d e va l i d a ti on to prospecti ve
pa rtn ers. I t i s often d i ffi cu l t to a ssess th e u n d erl yi n g col l a bora ti ve cu l tu re
of org a n i za ti on s a n d to crea te a repea ta bl e m ea su re th a t ca n be
d epl oyed th rou g h ou t th e l i fe of a rel a ti on sh i p. Th e i m pl em en ta ti on of a n
exten d ed en terpri se i n trod u ces a n u m ber of a d d i ti on a l fa ctors to th e
wh ol e process of pa rtn er sel ecti on , ba sed on th e d eg ree of
i n terd epen d en ce. I n a col l a bora ti ve en vi ron m en t th e pa rtn er i s
i n teg ra ted i n to th e overa l l process a n d th erefore th e sel ecti on cri teri a
m u st be exten d ed to eva l u a te th e stren g th s a n d wea kn esses, a s wel l a s
th e ri sks th i s rel a ti on sh i p m a y crea te. B S 1 1 000-1 i n corpora tes a m a tu ri ty
m a tri x rel a ti ve to th e sta n d a rd , wh i ch i s fu rth er a m pl i fi ed i n B S 1 1 000-2
g u i d a n ce pu bl i sh ed i n 2 01 1 . Th ese a i m to a l l ow org a n i za ti on s to refl ect
on th ei r l evel of a l i g n m en t wi th th e sta n d a rd .

Matu rity a ssessment

M ost a ssessm en t processes for extern a l org a n i za ti on s a re g en era l l y
focu sed on th e a bi l i ty of m a i n ta i n i n g a d eg ree of a rm ’s-l en g th
con tra cti n g . I n a col l a bora ti ve rel a ti on sh i p th e pa rtn er m u st n ot on l y
m eet th e perform a n ce cri teri a ; th ey m u st a l so be a bl e to a d a pt to su i t
th e d em a n d s a n d stresses of bei n g a n i n teg ra l pa rt of th e bu si n ess
process. Th ere h a s to be a recog n i ti on th a t th e i n tern a l profi l e of th e
i n i ti a ti n g pa rtn er m u st i n teg ra te wi th th ei r pa rtn ers to su pport th e
col l a bora ti on ch a l l en g es. Th e a ttri bu tes of a n org a n i za ti on th a t a re
n orm a l l y eva l u a ted (su ch a s ca pa bi l i ty, resou rces, ski l l s a n d q u a l i ty
prog ra m m es) rem a i n a key el em en t of th e a ssessm en t, tog eth er wi th th e
com m erci a l con d i ti on s th a t form th e ba si cs of a con tra ct. H owever, th ese
i ssu es a re on l y th e sta rti n g poi n t from wh i ch to bu i l d u p a profi l e th a t
ca n be ben ch m a rked a g a i n st a m ore i n teg ra ted rel a ti on sh i p.
O rg a n i za ti on s m a y h a ve th e a ttri bu tes to d el i ver a sou n d proposi ti on ,

235
PART 3: Where?

a n d th ey m a y wel l h a ve esta bl i sh ed a perform a n ce record th a t su pports

th ei r a bi l i ty to m eet th e req u i red perform a n ce. O ften , h owever, th ey
h a ve n ot prog ressed i n d evel opi n g th e a ppropri a te cu l tu re th a t wou l d
en a bl e th em to fi t i n to th e bu si n ess process of a n oth er org a n i za ti on . Th e
a bi l i ty to a d a pt a n d presen t a fl exi bl e profi l e i s cru ci a l wh en con si d eri n g
bri n g i n g th em i n to d i rect con ta ct wi th i n tern a l or extern a l cu stom ers.

Th e m ore su bj ecti ve eva l u a ti on rests on tryi n g to i d en ti fy th e a tti tu d e of

th e pa rtn er. Th i s d oes n ot m ea n th e corpora te i m a g e – i t m ea n s
u n d ersta n d i n g th ei r i n tern a l cu l tu re. I n m a n y ca ses th e ch oi ce m a y be
d i cta ted by h i stori ca l experi en ce, con fl i cts wi th com peti tor prog ra m m es
or speci a l i zed kn owl ed g e. Th e fi rst ven tu res i n to th e col l a bora ti ve
a pproa ch m a y be bu i l t a rou n d org a n i za ti on s th a t a l rea d y h a ve a
l on g -term rel a ti on sh i p i n pl a ce. Th e d a n g er wi th th i s i s th a t pa st pra cti ce
rol l s over i n to th e n ew rel a ti on sh i p, wi th ou t a d d i n g va l u e or va l i d a ti n g
th e com peti ti ve respon si ven ess of th e poten ti a l pa rtn er.

A m a j or fa ctor i n th e a n a l ysi s of th e eth os of org a n i za ti on s i s to en su re

th a t th ey h a ve th e poten ti a l to bu i l d processes a cross th e corpora te
d i vi d es; th ese key a ttri bu tes m u st form pa rt of th e stra teg i c profi l e th a t i s
d evel oped a n d m a pped a g a i n st prospecti ve pa rtn ers. Th e a i m of
a d opti n g a m a tu ri ty a ssessm en t i s to esta bl i sh a con si sten t, i d en ti fi a bl e
a n d m ea su ra bl e a pproa ch th a t recog n i zes th e ben efi ts of d evel opi n g
col l a bora ti ve rel a ti on sh i ps, wh i l e a ppreci a ti n g th a t every org a n i za ti on i s
u n i q u e, a n d i s on l y a pa rt of th e wi d er stra teg i c d ri vers for th ese
org a n i za ti on s. I t sh ou l d be ba sed on esta bl i sh i n g a ben ch m a rk of best
pra cti ce, wh i ch ca n be recog n i zed th rou g h ou t th e tra d i n g com m u n i ty,
wh eth er pu bl i c or pri va te, a n d wi l l provi d e va l u e to oversea s
org a n i za ti on s seeki n g to tra d e wi th or provi d e servi ces to org a n i za ti on s.
O u twa rd -l ooki n g org a n i za ti on s a re wi l l i n g to col l a bora te a n d wi l l be
proa cti vel y en g a g i n g cu stom ers, su ppl i ers a n d sta keh ol d ers, wh i l e
forwa rd -l ooki n g org a n i za ti on s wi l l be con sta n tl y ch a l l en g i n g th ei r
posi ti on a n d prod u cts to i m prove bu si n ess perform a n ce a n d wi l l seek
extern a l sti m u l u s.

Th e pri n ci pa l a i m of a n y a ssessm en t i s to provi d e a n effecti ve fra m ework.

Th e M AP (m a tu ri ty a ssessm en t prog ra m m e) a pproa ch (see Fi g u re 2 3 . 1 )
wa s d evel oped wi th th e a i m th a t i t wi l l com pl em en t th e exi sti n g
a cti vi ti es of org a n i za ti on (s) a n d th e a ppreci a ti on of th e a ppl i ca ti on to
i m prove m a rket profi l e. M AP provi d es a ben ch m a rk for a n y org a n i za ti on
th a t i s i n vol ved i n or seeki n g to d evel op a col l a bora ti ve rel a ti on sh i p, wi th
th e obj ecti ve of bu i l d i n g con fi d en ce a n d a com m on u n d ersta n d i n g of th e
pri n ci pl es. Th e tri pl e ‘A’ m od el provi d es a cl ea r i n d i ca ti on of a n
org a n i za ti on th a t h a s fu l l y i n teg ra ted col l a bora ti ve rel a ti on sh i p
a pproa ch es i n to i ts opera ti n g m od el .

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 Chapter 23 – Collaborative maturity

Att r u s
ib te Ab i l i ty Atti t ud e

Th e re i s cl e a r
O p e ra t i o n a l Th e re is a high
co rp o ra te
p ro ce s s e s a re we l l l e ve l o f e xp e ri e n ce
co m m i tm e n t a n d
d e fi n e d and at all l e ve l s
A l e a d e rs h i p th a t
i n t e g ra t e fo cu s e d on
ca s ca d e s
co l l a b o ra ti ve e ffe cti ve
th ro u g h o u t th e
a p p ro a ch e s co l l a b o ra ti o n
o p e ra ti o n s

Th e re a re Th e re i s e vi d e n ce
Th e re i s l i m i te d
i n d i vi d u a l s a t o f s u cce s s fu l
a p p l i ca ti o n of
va ri o u s l e ve l s t h a t i n d i vi d u a l
B s h a re d p ro ce s s e s
h a ve d e m o n s tra b l e co l l a b o ra ti ve
and p e rfo rm a n ce
s ki l l s i n p ro g ra m m e s i n
i n d i ca to rs
co l l a b o ra ti o n e ffe ct

Th e re is
Th e re is
Th e re a re ro b u s t a p p re ci a ti o n at
a p p re ci a ti o n of
i n t e rn a l p ro ce s s e s th e o p e ra ti n g
C co l l a b o ra t i ve
and p e rfo rm a n ce l e ve l o f th e va l u e
a p p ro a c h e s b u t a
i n d i ca to rs o f e ffe ct i ve
l a ck o f s ki l l s
re l a t i o n s h i p s

O n l y o p e ra t e s a

O p e ra te s wi t h a No a p p re ci a ti o n of ro b u s t a n d

tra d i ti o n a l a p ra cti ca l e ffe cti ve

D co n tra ct a n d a p p ro a ch to th e a rm ’ s - l e n g th

p ro ce d u ra l b a se d va l u e of co n t ra cti n g

a p p ro a ch re l a t i o n s h i p s a p p ro a ch

Fi g ur e 23.1 – M at ur i ty a ss ss
e m en t

Th e p ro fi l e s i n cl u d e d a t th e en d o f th i s ch a p te r ca p tu re th e ke y e l e m e n ts

of a co m p a n y’s ch a ra cte ri s t i cs th a t wo u l d re fl e c t o rg a n i z a ti o n s th a t h a ve

co l l a b o ra ti o n em bed d ed in th e cu l t u re o f t h e i r o p e ra ti o n s . Th e m a tu ri ty

a s s e s s m e n t a p p ro a ch p ro vi d e s a b a s i s fo r h i g h l i g h t i n g th e u n d e rl yi n g

e th o s o f a n o rg a n i z a t i o n and i ts wi l l i n g n e s s t o wo rk co l l a b o ra ti ve l y. In

d e ve l o p i n g e i th e r i n te rn a l co l l a b o ra t i ve ca p a b i l i t y o r a s s e s s i n g p a rt n e rs ’

m a tu ri ty, i t i s n e ce s s a ry to e va l u a te th e o p e ra ti o n a l p l a tfo rm , wh i ch ca n

be p a rt o f a n i m p l e m e n ta ti o n o r s e l e ct i o n p ro ce s s .

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PART 3: Where?

Att i br u te s r
(th e o g a n i za ti on ’ s o p e ra ti on a l p l a tfo rm )
B ri n g i n g two o r m o re o rg a n i z a ti o n s to g e th e r re q u i re s th a t th e y h a ve

e sta b l i sh e d p ro ce s s e s u n d e r wh i ch th e y ca n d e ve l o p and i n te g ra t e th e i r

a p p ro a ch . U n l e s s co l l a b o ra t i ve a p p ro a ch e s a re i n te g ra te d i n to th e

o rg a n i z a ti o n ’s b u s i n e s s p l a n s a n d o b j e cti ve s th e y wi l l be c o n s t ra i n e d by

i n te rn a l b a rri e rs . Th e main a re a s o f a tt ri b u te s th a t n e e d to be in p l a ce

a re a s fo l l o ws .

• R e co g n i ti o n o f cu s to m e r n e e d s , re q u i re m e n t s a n d co n ce rn s : it is

cru ci a l to e n s u re th a t p a rtn e rs u n d e rs ta n d th e co m m o n d ri ve rs .

• S u p p l y ch a i n m a n a g e m e n t: th i s i s a cru ci a l a s p e ct o f b u s i n e s s

p e rfo rm a n ce and an a re a th a t ca n be j o i n tl y e xp l o i te d to e n h a n ce

p e rfo rm a n ce . C o l l a b o ra t i ve wo rki n g re q u i re s n o t o n l y i n te rn a l

i n te g ra ti o n of pl a n n i n g , b u t a l so th e a b i l i t y to bl en d pl a n n i n g

re q u i re m e n ts a cro s s o rg a n i z a ti o n a l b o u n d a ri e s . I n te rd e p e n d e n ce p u ts

co l l a b o ra ti ve p a rtn e rs a t ri s k i f t h e re i s n ot a co m m o n fo cu s o n

d e l i ve ri n g q u a l i ty; s u ch p ro g ra m m e s a l s o p ro vi d e a s s u ra n ce th a t

i n te rn a l p ro ce s s e s a re ri g o ro u s l y fo l l o we d .

• Pe o p l e d e ve l o p m e n t: th e c h a l l e n g e s o f co l l a b o ra ti ve wo rki n g a re

m a n y, b u t th e p ri m e ca u s e o f fa i l u re wi l l be d o wn to peopl e.

O rg a n i z a ti o n s th a t fo cu s o n th e s ki l l s a n d ca p a b i l i ti e s o f t h e s ta ff wi l l

h a ve s ki l l s d e ve l o p m e n t p ro g ra m m e s i n p l a ce . As co l l a b o ra ti ve

wo rki n g i s i n tro d u ce d , i t wi l l p ro b a b l y re s u l t i n som e ch a n g e s o f ro l e ,

so i t i s i m p o rta n t th a t o rg a n i z a ti o n s h a ve a cl e a r p e rs p e ct i ve o f th e i r

s ta rti n g po i n t.

• R i s k m a n a g e m e n t: th i s i s b o t h an o p p o rtu n i ty a n d a ch a l l e n g e fo r

co l l a b o ra ti ve wo rki n g ; th u s a n o rg a n i z a ti o n a l fo cu s o n ri s k i s cru ci a l .

I n tro d u ci n g co l l a b o ra ti ve a p p ro a ch e s re q u i re s o rg a n i z a ti o n s to

u n d e rs ta n d th e d yn a m i cs – b o th cu l tu ra l and re g u l a to ry – o f th e

m a rke ts wi th i n wh i ch t h e y o p e ra t e .

Abi l i ti e s r
(th e o g a n i za ti on ’ s ca p a bi l i ty an d p r
ex e i en ce i n
r
col l a bo a ti on )

C o l l a b o ra t i ve wo rki n g ca n ch a l l e n g e m a n y o f th e e s ta b l i s h e d wo rki n g

p ra ct i ce s a n d th u s n e e d to be ro b u s tl y s u p p o rte d fro m th e e xe cu t i ve

l e ve l . Th e main a re a s re l a ti n g to a b i l i ti e s a re a s fo l l o ws .

• C o m m u n i ca t i o n : ch a n g i n g th e wa y o rg a n i z a ti o n s o p e ra te ca n be

d i s ru p ti ve , and th u s i t i s i m p o rta n t t h a t th o s e d i re ctl y o r i n d i re ctl y

i n vo l ve d a re i n fo rm e d o f th e va l u e o f co l l a b o ra ti o n th ro u g h e ffe cti ve

i n te rn a l c o m m u n i ca ti o n . C u s to m e rs wi l l be th e re ci p i e n ts o f

co l l a b o ra ti ve p ro g ra m m e s a n d i t i s i m p o rta n t t h a t o rg a n i z a ti o n s h a ve

e ffe cti ve i n te ra c ti o n to a rti cu l a te th e b e n e fi ts a n d o p p o rt u n i ti e s .

• S ki l l s d e ve l o p m e n t: th i s i s cru ci a l wh e n i m p l e m e n ti n g any

o rg a n i z a ti o n a l ch a n g e and o rg a n i z a ti o n s t h a t h a ve ro b u s t a s s e s s m e n t

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 Chapter 23 – Collaborative maturity

and tra i n i n g m o d e l s re fl e ct a s t ro n g fo cu s o n s ki l l s , ca p a b i l i t i e s a n d

b e h a vi o u rs . H o w o rg a n i z a t i o n s tre a t th e i r s u p p l i e rs i s a s tro n g

i n d i ca t o r o f th e n a tu re and cu l tu re o f th e o p e ra ti o n s .

• C o n ti n u o u s i m p ro ve m e n t: co l l a b o ra t i ve wo rki n g m u st b e fo cu s e d on

adding va l u e and o rg a n i z a ti o n s th a t p ro m o te c o n ti n u o u s

i m p ro ve m e n t re fl e ct a ca p a b i l i t y to a d o p t ch a n g e m o re re a d i l y.

• Kn o wl e d g e s h a ri n g : co l l a b o ra ti ve wo rki n g i s ba sed on s h a ri n g

kn o wl e d g e and i n fo rm a t i o n . O rg a n i z a ti o n s th a t a re i n su l a r i n th e i r

a p p ro a ch to e xte rn a l b o d i e s wi l l te n d to be re l u cta n t t o e m b ra ce th e

b e n e fi ts o f a l te rn a ti ve b u si n e ss m o d e l s. I n te g ra te d b u si n e ss m o d e l s

wi l l i n e vi ta b l y l e a d to o p e ra ti o n a l ch a n g e s o f p ro ce s s e s , ro l e s a n d

re s p o n s i b i l i t i e s ; th o s e o rg a n i z a t i o n s th a t a re h e s i ta n t to ch a n g e wi l l

be h a rd to i n t e g ra te .

• B e h a vi o u rs : th e s e a re a ke y a s p e ct o f co l l a b o ra t i ve p ro g ra m m e s a n d

managing re l a t i o n s h i p s i s o fte n i g n o re d ; th o se th a t re co g n i z e th e

b e n e fi ts a re a h ea d o f th e cu rve .

Atti t ud e r
(th e o g a n i za ti on ’ s eth o s an d cu l ture)
C o l l a b o ra ti ve wo rki n g cre a te s i n te rd e p e n d e n ce and th u s t h o s e th a t

p a rti c i p a te n eed to h a ve a cl e a r fo cu s o n th e i r o wn vi s i o n s a n d va l u e s i n

s e l e ct i n g p a rtn e rs . Th e ke y a re a s a ro u n d a tti tu d e a re a s fo l l o ws .

• Ch a l l en g i n g th e s ta tu s q u o : co l l a b o ra ti ve wo rki n g wi l l ch a l l e n g e th e

s ta tu s q u o in m a n y o rg a n i z a ti o n s a n d m a n a g e m e n t n e e d s to be

a cce s s i b l e to th o s e wh o n eed co a ch i n g and m e n t o ri n g . O rg a n i z a ti o n s

th a t a re a cti ve l y a wa re o f t h e i r i m p a ct o n th e wo rl d a ro u n d th e m

wi l l b y n a tu re be o u twa rd - l o o ki n g and th u s re ce p ti ve to wo rki n g

co l l a b o ra ti ve l y.

• Ta rg e ti n g re s o u rce s fo r m a xi m u m va l u e : u n d e rs ta n d i n g th e o p ti m u m

fo cu s fo r th e b u s i n e s s a l l o ws o rg a n i z a t i o n s to t a rg e t re s o u rce s

to wa rd s th o s e o p e ra ti o n s t h a t d e l i ve r m a xi m u m va l u e .

• C o m m u n i ca ti n g wi th s ta ke h o l d e rs : o rg a n i z a ti o n s th a t a cti ve l y e n g a g e

th e i r s ta ke h o l d e rs h a ve th e co n fi d e n ce to co m m u n i ca te e ffe cti ve l y

and open l y a n d wi l l th u s fi n d co l l a b o ra ti ve e n g a g e m e n t m o re

co m fo rta b l e .

• F u tu re va l u e cre a ti o n : th i s s h o u l d a l wa ys b e th e d ri ve r fo r a n y

re l a t i o n s h i p and th o s e o rg a n i z a t i o n s th a t p ro m o t e co n t i n u o u s

i n n o va ti o n wi l l be b ro a d l y o p e n to wo rki n g co l l a b o ra t i ve l y.

• Va l u e ch a i n : i n te g ra t i o n th ro u g h co l l a b o ra ti o n h a s to be fo cu s e d on

m u tu a l b e n e fi t a n d o p ti m i z a ti o n o f re s o u rce s ; th e re fo re a re co g n i z e d

a p p ro a ch to va l u e ch a i n p ri n ci p l e s re fl e cts a n o rg a n i z a ti o n th a t

u n d e rs ta n d s th e co re b e n e fi t o f co l l a b o ra ti ve wo rki n g .

239
PART 3: Where?

Concl us ion
Col l a bora ti on m a y n ot be n ew, bu t th e h i stori ca l a pproa ch es h a ve
freq u en tl y fa i l ed to recog n i ze th a t th e com pl ex rel a ti on sh i ps between
org a n i za ti on s a n d th ei r peopl e sel d om h a ppen by a bsorpti on a l on e.
B u i l d i n g th e i n tern a l pl a tform s th a t wi l l su pport su ccess a n d d ri ve
th rou g h th e org a n i za ti on a l ch a n g es, i t m a y be n ecessa ry to esta bl i sh th e
l evel of m a tu ri ty th a t exi sts a n d th en m on i tor th i s to g a u g e th e l evel of
i m provem en t req u i red . Wh en eva l u a ti n g a n d sel ecti n g th e ri g h t pa rtn ers
to work i n th e col l a bora ti ve prog ra m m e, th e sa m e d eg ree of ri g ou r i s
req u i red both i n i ti a l l y a n d over ti m e to en su re th e bl en d i n g of
org a n i za ti on s, resou rces a n d ca pa bi l i ty to d el i ver su ccess. Th e M AP m od el
a n d th e M a tu ri ty M a tri x provi d e a ba si s th a t ca n be u sed i n th ese
si tu a ti on s, to g a u g e th e u n d erl yi n g eth os of org a n i za ti on s a n d th ei r
i n teg ra ti on of th e l i fe cycl e m od el , to i m prove perform a n ce a n d (wh ere
a ppropri a te) h el p to focu s i m pl em en ta ti on of B S 1 1 000. Wh ere
org a n i za ti on s a re worki n g tog eth er, th ese sa m e m od el s ca n becom e
eq u a l l y u sefu l for m ea su ri n g on g oi n g j oi n t d evel opm en t.

2 40
 Ta b l e 2 3 . 1 – MA P qu s
e ti o n s

Crea ti n g a col l a bora ti ve profi l e

1 . M a rk ea ch el em en t A (h i g h ) – D (l ow) ba sed on you r org a n i za ti on ’s a pproa ch a n d effecti ven ess

2 . Ag a i n st ea ch of th e th ree a spects Attri bu tes/Abi l i ty/Atti tu d e tota l th e n u m ber A’s, B ’s, C’s a n d D ’s
3 . Ta ki n g th e h i g h est n u m ber i n ea ch ca se i n sert th e a ppropri a te l etter i n th e box bel ow (n ote i f eq u a l u se l ower l etter)

ATTRI B U TE S AB I LI TY ATTI TU D E

E sta bl i sh ed bu si n ess E ffecti ve a n d open Corpora te vi si on s a n d

A B C D A B C D A B C D
processes i n pl a ce l ea d ersh i p va l u es pu bl i cl y vi si bl e

B u si n ess pl a n
Robu st a n d effecti ve

Chapter 23 – Collaborative maturity

i n cl u d es O pen a n d vi si bl e
A B C D i n tern a l A B C D A B C D
col l a bora ti ve m a n a g em en t
com m u n i ca ti on
a pproa ch es

Cu stom er E ffecti ve cu stom er

Corpora te stra teg y
m a n a g em en t A B C D rel a ti on sh i ps’ A B C D A B C D
i n cl u d es col l a bora ti on
prog ra m m e i n pl a ce a pproa ch

Su ppl i er Stron g focu s on B u si n ess excel l en ce

m a n a g em en t A B C D i n tern a l tra i n i n g A B C D ben ch m a rki n g i n A B C D
prog ra m m e i n pl a ce n eed s opera ti on
2 41
2 42

PART 3: Where?
I n teg ra ted pl a n n i n g E ffecti ve su ppl i er D efi n ed su sta i n a bi l i ty
A B C D A B C D A B C D
process i n pl a ce rel a ti on sh i ps prog ra m m e i n pl a ce

I SO or eq u i va l en t O pera ti on a l
O pera ti on a l stra teg i c
q u a l i ty prog ra m m e A B C D pa rtn eri n g A B C D A B C D
a ccou n t m a n a g em en t
i n pl a ce prog ra m m es on g oi n g

Con ti n u ou s Stron g com m u n i ca ti on s

Key perform a n ce
A B C D i m provem en t A B C D wi th extern a l A B C D
i n d i ca tors i n pl a ce
prog ra m m es i n a cti on sta keh ol d ers

O n g oi n g reg u l a r
Sta ff tra i n i n g Com pl a i n t a n d d i spu te
A B C D extern a l i n terfa ce A B C D A B C D
prog ra m m e i n pl a ce m a n a g em en t process
a cti vi ti es

Ch a n g e m a n a g em en t Cu stom er pa rtn eri n g

Pa rtn eri n g
A B C D prog ra m m es i n A B C D prog ra m m e i n A B C D
prog ra m m e i n pl a ce
opera ti on opera ti on

Cl ea rl y d efi n ed rol es Rel a ti on sh i p Su ppl i er pa rtn eri n g

a n d respon si bi l i es i n A B C D m a n a g em en t tra i n i n g A B C D prog ra m m e i n A B C D

pl a ce i n effect opera ti on

I n tern a l /extern a l
Ri sk m a n a g em en t I n n ova ti on prog ra m m es
A B C D bu si n ess revi ew A B C D A B C D
prog ra m m e i n pl a ce i n opera ti on
prog ra m m es
 Sound market Clear focus on R&D
knowledge and A B C D and future product A B C D Value chain focus
across the organization A B C D
expertise delivery

Total Total Total

Attributes Ability Attitude

Current collaborative profile

Chapter 23 – Collaborative maturity

243
PART 3: Where?

244
Cha p te r 24 – M e rge rs an d acqu i s ition s

Mergers and acquisitions (M&A) are arguably the quickest ways

to grow a company; equally, however, they can also be a
high-risk strategy, as discussed in this chapter. Organizations
often neglect to consider the potential issues beyond financial
stability, technical acquisition or extended market reach. What
is apparent is that most mergers fail to deliver on their
promise. One of the major issues identified through research
into this area of business activity is the failure to recognize the
potential issues of bringing together two organizations with
incompatible cultures. In this context the integration is similar
to that of an external partnership and thus many (if not all) of
the aspects of BS 1 1 000 lend themselves to this environment.

There are a variety of reasons why organizations use acquisitions and

mergers to develop their operations, but strategic imperatives can often
cloud the issues and the challenges that may define the success or failure
of such ventures. Traditionally there will most likely be a significant effort
directed towards due diligence, which historically focuses on financial
aspects, validation of liabilities and assessments of goodwill. What is
commonly assumed (particularly in times of austerity) is that many
opportunities arise out of economic pressures – which may or may not be
good value. In developing M&A strategies it is clearly important to
understand the drivers, then structure the approach accordingly.
Experience, however, does point to a key aspect of success being the
integration of organizations that may previously have even been
competitors. In this chapter the author would specifically like to
acknowledge the research work done by Rachel Kessler, Mergers a n d
1 5 there are many works in
A cquisitio n s: a study o n co lla b o ra tive wo rkin g;

this area, but this study was specifically developed around BS 1 1 000
concepts.
The prospect of acquisition can be outwardly very attractive; subject to
the commercial investment model, the capturing of assets, resources and
markets creates the possibility of immediate growth and market
collateral. However, in most cases it is associated with a high degree of
risk relating to the parties’ ability to harness these benefits and
15 A paper prepared for the Institute for Collaborative Working (ICW) March 201 1 :
www.instituteforcollaborativeworking.com/intern_reports.html

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PART 3: Where?

harmonize the operating models to capitalize on the potential. It has

frequently been seen that the financial markets offer their own opinions
and valuations on the potential M&A propositions, which often present a
significantly different perspective from those that internally drove the
strategy forward. An option which is less frequently used as a precursor
to the full acquisition or merger direction would be the adoption of an
interim model based on developing collaborative models. These
alternative business models have the potential to deliver many (if not all)
of the benefits of linking two organizations – but with a less risky
investment strategy.
Generally the term ‘acquisition’ can be applied to those transactions
where primarily one party is seeking to acquire the assets of another, for
strategic or market development objectives – a ‘takeover’. An example
could be the move by Kraft to acquire Cadbury to break in to the UK
chocolate market. In most cases these will be seen as hostile takeovers,
where the prime mover is principally interested in assets rather than
synergies. Mergers, on the other hand, can be about vertically absorbing
capabilities into another organization or a mutual merging of two
organizations to develop and enhance market position, which will be
beneficial to both parties by exploiting synergies. These would typically
be in related industries or manufacturing fields where assets can be
jointly harnessed. For example, in the 1 999 merger of Glaxo Wellcome
and SmithKline Beecham, both companies ceased to exist when they
merged, and a new company, GlaxoSmithKline, was created. There is also
another option: this is the acquisition of consumer networks which can
be exploited by parallel selling – for example, the UK telecommunications
providers T-Mobile and Orange merged to share their network.
In each case there is one factor that is common: this is the ability of the
organizations to create an effective integration of assets, resources,
people and culture. One of the most classic examples in recent times was
the merger between Time Warner and AOL which was heralded as
perhaps the most significant merger of the 20th century. Both
organizations were extremely successful; it was positioned as a merger of
equals. Given the media reach and internet coverage, the combined
organizations were potentially seen as outstanding. There were, without
doubt, some strong egos involved; this may have been the first sign that
merging could have its difficulties. There were also significantly differing
views, both internally and externally, on the nature and culture of the
two organizations – AOL being entrepreneurial, West Coast and less
sophisticated than Time Warner, which was established East Coast and
intellectual. The pressures of these conflicts eventually led to the reversal
of the merger and significant financial losses all round.
The message is clear: what perhaps looked like a good and sound
financial proposition imploded, not because of the market, but because
of the inherent internal stresses that the diverse cultures and egos

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created. If we look to an alternative value position, then combined

capability between these two giants could have been forged through
collaboration and partnership. In this model the appropriate synergies
could have been harnessed and integration would have been on an ‘as
required’ and structured basis, rather than a full-blown merger. Individual
identities could have been maintained while exploiting resources, skills
and market reach as appropriate. External pressures would have been
reduced, further enabling the organizations to progressively develop
cross-capability. This case is certainly one of the most high profile, but
does highlight the potential dangers of mergers; it suggests that broader
consideration is given to downstream integration before taking these
major steps.

D r i ve rs
The reasons for approaching M&A are many. Like any relationship
development, they need to be fully understood and assessed before
setting objectives, which may cloud decision making – even at the highest
levels of organizations. Where public companies are concerned, they
cannot simply decide to announce a hostile takeover or propose a merger
without invoking a considerable amount of regulatory compliance,
impacts of customer confidence and (for that matter) the performance
impacts and implications of talent loss. So, understanding the rationale
and setting the parameters are crucial. Examples of these drivers are
shown in Table 24.1 .
r rs f r r rs d qu s
Ta b l e 2 4. 1 – D i ve o sme ge an ac i i ti o n

Gr o wth Pr duo ct D i ve rs f
i i ca ti o n

d p
e ve l o m en t

Market share Technology Customer

Market reach acquisition exploitation
Economies of scale Joint new product Parallel marketing
Asset optimization R&D Cross-fertilization
Resource reduction IPR of ideas
Customer access Skills and Service support
Increased capability experience Parallel capabilities
Product
harmonization
Integrated solutions
Competition
dilution
What is interesting is that, when considered outside scenarios of
corporate ego, most (if not all) of these objectives can be achieved
through an appropriate collaborative relationship without the complex

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legal and regulatory minefield of M&A. This might be without the full
realization of commercial benefits, but certainly there would be a high
degree of value and substantially less risk. However, whatever the option
of collaborative models, the strategy to be deployed must be clearly
focused on the key outcomes. For example, where the driver is capture of
assets, then acquisition is the most likely course where the resources are
less of a consideration. But where resources are a key consideration, then
an effective merger that retains those capabilities is more appropriate. In
all cases, the implications of any action that is initiated must also be
considerations in the likely success of the merger – recognizing that in
numerous studies such success is reported to be perhaps as low as 20 per
cent.

Bene fits
The benefits of merging any two organizations can be equally varied and
will reflect the strategic drivers, if executed effectively. In today’s market,
economies of scale and cost reduction are likely to be major
considerations. Acquiring skilled resources that are already in place can
provide a rapid growth in capability and reach. Similarly, the combining
of buying power and harmonization of sourcing can be an early win.
Reductions in resources can be beneficial, but this generally takes time to
implement and can on occasions be fraught with obstacles. However,
experience would also suggest that identifying and gaining practical
access to these potential savings can be very much dependent on the
willingness of those within the organization to share information. Clearly,
ownership and direction can be established; but, depending on the
nature of the approach, it may take time to harmonize and realize these
benefits. The more acrimonious the venture, the more time needs to be
allowed to harness the potential.
Clearly, the biggest value within any organization is its human resources,
skills, knowledge and capability. The potential benefits or perceived risk
at an individual level can be a major factor in the success of any merger.
There is seldom a merger of equals, even when corporately declared;
there is likely to be one party more dominant than the other. This creates
the perception of biases being developed and the potential for key
players to seek safer ground. Access into new markets can open up
significant growth potential; but again, since these markets may have
been developed over time, there will be valuable relationships and
reputations established that will need to be refocused to a greater or
lesser degree. It can be particularly difficult when the merger involves
previous competitors. Old loyalties can be a key factor that governs early
returns. The benefits from technology harmonization, integration and
future development may be vast, but amortizing these will take time.

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Where the driver is purely acquisition, this may be less time-consuming –

but it does depend on the ability to acclimatize and integrate these
technologies. This is often implemented by personnel who do not see or
share the bigger picture or who fear for their own long-term stability.
Asset-stripping may be seen as a short-term benefit from M&A, but
frequently these strategies falter when it comes to dismantling
operations where individuals have a personal vested interest. This is
particularly true in western industrial areas where social, legal and
regulatory controls can introduce a wide range of obstacles.

Ri s k
When a merger strategy is being initiated there will be consideration
about the risks involved. This tends be on two levels: firstly, the risks
associated with declaring intent, and then the implications of establishing
a market position. Acquisitions and mergers can be costly, not just in
terms of the purchase price, but also in consideration of the market
perceptions of investors, regulators, customer confidence and personnel,
all of which can (and probably will) have an impact on current
performance. The longer the acquisition battle (if there is one), the more
difficult the value proposition is to sustain. Time, therefore, is the key to
successful merger strategies, but this also has to pre-empt the
stakeholder implications. Perhaps the biggest risk comes from uncertainty
at the trading level, where customers become unsettled by the impacts of
transition – and perhaps even more, that key personnel seek to protect
their own positions by ‘jumping ship’ for a more stable option. While it
may be externally possible to validate technology benefits and take a
commercial perspective on visible assets such as property and equipment,
it is less easy to fully appreciate the complexities of personnel assets. Key
designers and executives may be visible, but in many organizations the
full dependence on key personnel at many levels may be shielded by the
outward perception of an organization. Many will be familiar with the
sub-strata within organizations that compensate for operational
weaknesses. Lose these and the operational machine starts to creak.
Tangible assets can be relocated or sold off, as can non-core parts of the
business. People, on the other hand, can be a significant dilemma.
Rationalization of two businesses is never a comfortable environment.
The vulnerability of assets is frequently not their market value but their
performance, which can decline rapidly in the face of change. Thus the
planning and due diligence processes need to look beyond the obvious
appraisals and seek to prioritize the post-merger plans. Too often the
premise for a merger is supported by offloading non-key assets; but the
post-merger activity is centred on optimizing the key assets, leaving the
rest to progressively be dispersed – which is most likely to lead to a
reduced asset value. What is clear is that in the merger and acquisition
arena, relationships on all levels become a crucial ingredient for success.

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Not the least of these is the potential blending of organizations, where

retaining key capabilities and targeting jointly towards new or expanded
markets is a key success factor.

C lt e
u ur s

This raises the question of evaluating the cultures of organizations and

the potential to integrate these into a newly defined composite
operational model. As was highlighted earlier in the Time Warner–AOL
case, to most onlookers the dangers were obvious and many people
questioned the validity of the merger. The business strategy may have
been strong, and certainly the financial potential was significant, but its
realization was in question from the outset. Where organizations seek to
harness the human assets of another, then the ability of those
organizations to blend together becomes a critical success factor.
Experience in the development of alliances, collaborations and
partnerships has exposed this over a number of years. Too often the
concept of partnership is driven by senior individuals, and the approach is
activated or imposed without considering how it will work in practice.
This is clearly one aspect of M&A where the nature of relationships,
spurred on by the culture of the organizations, is crucial to delivering the
benefits.
Identification of the cultural fit should be high on the due diligence
agenda; in some cases it may be a pointer towards the type of operating
model to be adopted after the merger. For example, if we look in
retrospect at the Time Warner–AOL case, if the cultural misfit had been
fully recognized and the financial benefits remained robust, then the
adoption of more segmented or arm’s-length integration could have
survived the in-fighting that was in part the cause of its demise. The
question of culture, as outlined in earlier chapters, is complex; where the
merger of multinational organizations is being considered it cannot be
ignored. Some readers will have experienced what may be referred to as
a ‘perennial culture’, where despite the passage of time traditional
loyalties and operating approaches remain, regardless of the
implementation of new names, systems and processes. The persisting
culture and identification remains an underlying thread that can survive
even multiple mergers and takeovers. Where this is related to
semi-autonomous operating units it may be less debilitating, but in the
case of acquisitions where integration is a key to success it can easily
become a cause of failure.

Integ ation
r

The reputation of one company, as seen by those being acquired, can set
in motion a wave of negativity that may take years to overcome. In

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earlier chapters the issue of integration has been explored; where this is
being managed within semi-independent but formal collaborative
models, between willing parties, it can be managed. In the case of
mergers, the aim must surely be to bring together the best of each to
build a more sustainable and effective business operation. Traditionally
within the world of mergers the focus has been to urgently address the
outward profile of the newly combined company. This makes sense in
terms of customer retention; establishing new names over the door,
high-profile marketing and public relations activity help to provide
short-term confidence. Internally, however, a new name on their overalls
is seldom going to create the new loyalties required to exploit the
expanded potential. In some cases these public demonstrations of unity
only compound the issue. In Chapter 3 the concept of osmosis and
process addressed the need to look at both people and process; and
Chapter 4 focused on the nature of culture. For integration to be
successful, organizations need to clearly define the new world and relate
this to the individuals involved. There will need to be persuasive
communications about the rationale, objectives and values that a merger
can bring and how these will affect those involved; this is because the
less people know, experience suggests, the more they will invent –
generally negatively, which in turn will be reflected in their performance.

Cu s tome rs
The issue of customer confidence has already been raised but it is worth
considering how any merger will be viewed externally. The financial
markets may offer their views, but at the end of the day the value
proposition depends on acceptance by customers and the realization of
value through the combined entity. From experience, that in turn will
depend not on publicity, but on the daily interfaces and performance of
the newly formed organizations – the people who are the touch-point
for customers and the outward reflection of internal capability.

Concl u s ion
There may be many valid reasons for M&A, but statistically most are
deemed failures. It is clear that relationships with all the stakeholders are
a key ingredient in success. It is also clear that for many people the
importance of the relationships is subsumed by financial models; the
relationships’ factor is seldom high on the agenda. It prompts the first
question, which is: ‘Before launching a merger, should organizations
consider the benefits of developing a collaborative partnership to deliver
the desired objectives and drivers?’ These alternative business models can
be less costly to create or unravel, if necessary, and they are perhaps less
prone to creating the relationship tensions that can undermine even the
most viable of merger strategies.

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PART 3: Where?

If M&A remain the most obvious way forward, then organizations need
to consider a more robust approach to understanding the cultures of the
entities involved and adopting a structured framework that can more
effectively support the integration and focus for the future. It was this
concept that prompted the review of mergers against the framework of
BS 1 1 000. In doing so, perhaps some mergers would not progress, as
success would be doubtful; some may decide to adopt alternative
collaborative business models – and those that did so would find it easier
to target strategies using best practice relationship management
approaches.

252

Key messages
Table 24.2 provides some key messages for consideration when
contemplating M&A.
Ta b l e 2 4. 2 – Ke y m e s s a g e s a b o u t m e rg e rs a n d
B S 1 1 0 0 0 m e rg e rs a n d
Fo cu s p o i n t
Bu si n ess
o b j e cti ve s
Ta rg e t e va l u a ti o n
Cu l tu ra l
i n te g ra ti o n
J oi n t bu si n ess
pl a n n i n g
I m p l e m e n ta ti o n
Chapter 24 – Mergers and acquisitions
a cq u i s i ti o n s
a cq u i s i ti o n s
Ra ti o n a l e
Understanding the business objectives when
developing an M&A approach is crucial.
Collaborative approaches broaden the capability
of organizations to respond to (pull) or propose
(push) more complex propositions to meet the
demands of the market or specific customer
challenges, without the need to take a high-risk
strategy of M&A
Evaluating a target for M&A can frequently
ignore the culture that will be a crucial
ingredient for success. Basing selection solely on
technical and financial strengths raises issues of
whether the target organization can be
effectively integrated as one entity
The established culture of any organization can
create significant constraints to the effective
integration of an M&A target. In many respects
this challenge is comparable with building a
collaborative alliance; it can be equally applied
to the blending of disparate organizations
Effective governance is a crucial requirement
when considering an M&A proposition, to ensure
joint management and delivery through
combined processes and systems. It is equally
important to ensure transparency and joint
ownership in future
Integrating two organizations creates
interdependency and uncertainty, which needs to
be fully understood and managed effectively to
develop a mutually responsible approach that
harnesses capability and ownership jointly
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PART 3: Where?

C tome
us r BS 1 1 000 provides an independently validated
con i ence
f d approach which can be used to clearly
benchmark the collaborative culture being
deployed, providing added confidence for the
customer through the transition
I nnovation Sharing knowledge and capability allows
organizations to harness value across the
relationship and potentially extend the
contribution to overall success
Re o ce
s ur Many M&A programmes result in confusion,
o timization
p concern and often resource rationalization,
which will affect effectiveness and performance.
Establishing clarity of objectives, joint
management and defined roles and
responsibilities provides transparency through
change programmes
Ri k management
s Adoption of BS 1 1 000 complements programmes
to ensure there is a focus on people and cultures,
to enhance integration building and sustaining
relationships – both internal and external
P e o mance
rf r In any M&A process delivering the required
outcomes is crucial. It can often be damaged by
protectionism and blame culture, which diverts
resources. A robust collaborative approach
ensures that transparency and joint responsibility
are established

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Cha p te r 25 – S ME collabo rative cl us te rs

In th i s ch a p te r we fo cu s o n th e p o te n ti a l b e n e fi ts fo r S M E s .

Co l l a b o ra ti ve wo rki n g i s o ft e n vi e we d a s th e p re ro g a ti ve of

l a rg e o rg a n i z a ti o n s ; h o we ve r, th e co n ce p ts o f co l l a b o ra ti ve

cl u s te rs ca n be e q u a l l y d e p l o ye d as a m e ch a n i s m fo r i n cre a s i n g

th e p ote n ti a l o p p o rtu n i t i e s fo r S M E s . Th i s ch a p t e r e xp l o re s th e

i n te g ra ti o n o f b u s i n e s s e s i n to vi rtu a l n e two rks , ch a l l e n g i n g

m a n y o f to d a y’s co n ce p t s , co n s i d e ri n g n e ce s s a ry cu l t u re ch a n g e

and ri s ks th a t m a y e xi s t a g a i n s t a b a ckg ro u n d o f a cce l e ra ti n g

ch a n g e .

E n h a n ci n g th e ro l e o f S M E s th ro u g h co l l a b o ra ti ve cl u s t e rs o p e n s th e

d e b a te fo r o rg a n i z a ti o n s l a rg e and sm a l l to co n s i d e r th e o p p o rtu n i t i e s

and b e n e fi ts th a t m a y b e e xp l o i te d to cre a t e co m p e ti t i ve a d va n ta g e . In

b u s i n e ss , b o u n d a ri e s a re cre a te d to manage ri s k a n d ri n g - fe n ce fi n a n ci a l

e xp o s u re . Li n ki n g peopl e a s we l l a s s ys t e m s , ‘ fo l l o w th e su n ’ wo rki n g is

n ow a re a l i ty. B u t s o ci a l and p o l i ti ca l o b s ta cl e s h a ve sti l l to be m a n a g ed

in th e n e w b o rd e rl e s s b u s i n e s s co m m u n i t y; in e xp l o i t i n g th e p o te n ti a l of

a fro n t i e r- fre e tra d i n g e n vi ro n m e n t, e xi s ti n g t h i n ki n g and re l a t i o n s h i p s

wi l l co m e u n d e r p re s s u re .

In th e co n s tru cti o n i n d u s try, p ro j e ct s a re fre q u e n t l y e xe cu te d b y g ro u p s

o f i n d e p e n d e n t s p e ci a l i s ts , b ro u g h t to g e t h e r i n d i ffe re n t co n fi g u ra ti o n s

d epen d i n g on th e ta s k b y t h e i r l o ca l n e two rk. B a se d on th e cu s to m e r’s

i n i ti a l co n ta ct, d i ffe re n t m e m b e rs o f th e n e two rk m a y l e a d on d i ffe re n t

p ro j e ct s. Th i s s i m p l e m od el o f cre a ti n g n e t wo rks o f s m a l l e r co m p a n i e s

e n a b l e s i n n o va t i ve va l u e p ro p o s i ti o n s to be cre a t e d th a t i n d i vi d u a l l y th e y

co u l d n o t s u p p o rt; i t a l so ch a l l e n g e s l a rg e r o rg a n i z a t i o n s , wh i ch h a ve to

ca rry m o re co m p l e x i n fra s tru ct u re s . In th i s m o d e l i n te rd e p e n d e n cy i s b y

d e si g n , n o t fo rce d u pon th e p a rti ci p a n ts , and so o p e ra te s wi t h re d u ce d

co n fl i ct. Th e a d d ed b e n e fi t i s t h a t a s t e a m s wo rk to g e th e r th e y m u tu a l l y

s u p p o rt e a ch o th e r a n d g e n e ra l l y i m p ro ve p e rfo rm a n ce o ve r ti m e

b e ca u s e o f th e i r cl o s e a s s o ci a ti o n . In th e co rp o ra te wo rl d

i n t e rd e p e n d e n ce u s u a l l y e vo l ve s a s a re s u l t o f p ro g re s s i ve s tra te g i e s a n d

th e re fo re fu n cti o n s wi th a l o t o f i n te rn a l s t re s s . Th i s p ro p o s i ti o n i s n ot

a b o u t wh a t i n d i vi d u a l o rg a n i z a ti o n s ca n d o, b u t wh a t g ro u p s c a n d e l i ve r

to g e th e r. I t i s n ot a q u e sti o n o f p ro vi d i n g th e l o we s t p ri ce bu t of

ta rg e t i n g to ta l co s t. Tra d i ti o n a l s u p p l y ch a i n s h a ve a l l o we d th e cu s to m e r

to manage t h e i r ri s ks i n i so l a ti o n , wh e re a s t h i s m o d e l s p re a d s t h e s e ri s ks

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PART 3: Where?

– bu t a l so d em a n d s th a t th e cu stom er sh a res som e of th e pa rtn ers’ ri sks,

i n cl u d i n g th e percei ved fi n a n ci a l sta bi l i ty of th e g rou p.

Changing d ynamics
A fra m ework of rel a ti on sh i ps wi l l a l rea d y exi st for m ost com pa n i es, bei n g
th e bu si n ess n etwork wi th i n wh i ch th ey opera te. I t i s a n ea sy step for a
g rou p of i n d epen d en t com pa n i es to expa n d i ts a rea of i n fl u en ce by
si m pl y sh a ri n g d a ta a n d i n form a ti on on cu stom ers. I f 1 0 com pa n i es ea ch
h a ve 1 00 cu stom ers, of wh i ch 5 0 per cen t cou l d u se th e servi ces of th e
oth er com pa n i es (bu t d o n ot d o so) th en ea ch cou l d expa n d i ts poten ti a l
cu stom er ba se to 5 00 i f a l l sh a re th ei r i n form a ti on . Com peti ti ve ed g e
req u i res a l evel of i n n ova ti on a n d a d a pta bi l i ty su ch a s h a s n ot been seen
before. Th i s i s n ot to su g g est th a t th ese n ew m od el s a re excl u si ve; a s we
h a ve seen , m a n y th a t tri ed to i g n ore th e ba si c ru l es of bu si n ess fa i l ed .
H owever, th ere i s certa i n l y a tren d th a t recog n i zes a n a l tern a ti ve.

N ot every i d ea or i n n ova ti on resu l ts from a fl a sh of i n spi ra ti on .

I n n ova ti on s m a y j u st be th e rea l i g n m en t of ol d a n d forg otten pra cti ces,
l i ke a twi st of a ka l ei d oscope, revea l i n g a n ew pa ttern . M a n y fa d s h a ve
been h era l d ed a s th e bu si n ess th i n ki n g of th e fu tu re. Th e better of th ese
often em bod y tra d i ti on a l va l u es a n d com m on sen se, a l bei t wi th n ew
bu zzword s. Th ese reva l i d a ti on s m a y be va l u a bl e, n on eth el ess, by
ch a l l en g i n g th e sta tu s q u o a n d provi d i n g a ben ch m a rk for th e n ext few
yea rs. D evel opi n g n ovel a pproa ch es i n th e con text of com pl em en ta ry
cl u sters, wh i ch propose th e i n corpora ti on of extern a l pa rtn ers, n eed s to
ta ke fu l l a ccou n t of th e h ol i sti c bu si n ess en vi ron m en t. Vi rtu a l
org a n i za ti on s a re n ot i n ven ti on bu t i n n ova ti on , wh i ch i n som e ca ses m a y
cu t th rou g h tra d i ti on a l th i n ki n g on th e cu stom er si d e; so d evel opi n g a
con cept h a s to be focu sed fi rst a n d forem ost on th e cu stom er n eed . Th e
i n crea si n g focu s on soci a l respon si bi l i ty h a s ra i sed th e profi l e of h ow
org a n i za ti on s m a n a g e a n d reg u l a te th ei r own perform a n ce a n d a l so th ei r
i n terfa ces wi th oth er org a n i za ti on s. Su sta i n a bi l i ty i s a tri pl e pl a tform ,
wh i ch l ooks a t econ om i c d evel opm en t wi th i n th e th ree-d i m en si on a l
perspecti ves of fi n a n ci a l , soci a l a n d en vi ron m en ta l i m pa ct, g i vi n g sou n d
rea son s to con si d er th e ben efi ts of prom oti n g cl u sters of sm a l l er
com pa n i es.

Develo p ing cl us te rs
SM E com m u n i ti es n a ti on a l l y a re l i kel y to be focu sed cl osel y on i n d i vi d u a l
i n d u stri a l sectors, ta ckl i n g th e n orm a l bu si n ess con stra i n ts wi th l i m i ted
resou rces to con si d er wi d er expl oi ta ti on . Th i s ti er of th e i n d u stri a l ba se
d oes, h owever, con ta i n a si g n i fi ca n t proporti on of th e wea l th , ba sed on
con tri bu ti on to g ross d om esti c prod u ct (G D P) , em pl oym en t g rowth a n d
i n n ova ti on . Th e d evel opm en t of a focu s th a t a ssi sts i n stretch i n g th e

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rea ch of th ese org a n i za ti on s wi l l su pport th e fu tu re posi ti on a g a i n st a

ba ckg rou n d of i n crea si n g com peti ti ven ess i n th e g l oba l a ren a , a s wel l a s
th e i n wa rd fl ow of prod u cts a n d servi ces from oversea s. Th e con cept
seeks to ca pi ta l i ze on th e d i verse ski l l s, kn owl ed g e a n d resou rces wi th i n
th e SM E bu si n ess com m u n i ty by crea ti n g focu s a n d kn owl ed g ea bl e
su pport a n d i s ba sed on tra d i ti on a l th i n ki n g a n d pra cti ce th a t h a s been
pa rt of l oca l bu si n ess com m u n i ty th i n ki n g for cen tu ri es. I t ta kes th e i d ea l s
of th e pa rti sa n tra d i n g n etwork a n d l ooks to expl oi t m od ern tech n ol og y
a n d bu si n ess a pproa ch es th rou g h th e su pport of key org a n i za ti on s, both
g overn m en ta l a n d n on -g overn m en ta l org a n i za ti on s (N G O s) .

The eme rgence o f an i d ea

Th e cl u ster proposi ti on h a s m ore ‘tra d i ti on a l ’ bu si n ess fou n d a ti on s th a n
m ost cu rren t bu si n ess m od el s. Th e h orse-d ra wn ca rt wa s th e pri n ci pa l
m eth od of tra n sport u n ti l th e com i n g of th e i n tern a l com bu sti on en g i n e.
I t sti l l i s i n m a n y pa rts of th e worl d . Th e wh eel wri g h t, bl a cksm i th a n d
ca rpen ter com bi n ed th ei r respecti ve ski l l s to m eet th ei r cu stom ers’
req u i rem en ts. Th e even tu a l sa l e a n d th e repu ta ti on of ea ch were
i n terd epen d en t: i f th e ca rt broke a l l wou l d sh a re th e cri ti ci sm . B y l i n ki n g
speci a l i sts tog eth er a n i n fi n i te n u m ber of vi rtu a l en terpri ses ca n be
crea ted wi th g rea tl y red u ced i n vestm en t a n d th u s i m proved va l u e to th e
cu stom er.

Partners are independent players

I t i s a com m on experi en ce i n l a rg e fi rm s to fi n d th a t th e d i fferen t
d i vi si on s com pete wi th ea ch oth er a l th ou g h , a s pa rts of on e
org a n i za ti on , th ey a re tota l l y i n terd epen d en t. Th i s com peti ti on m a y be
between fu n cti on s or prod u ct tea m s. I n a cl u ster n on -com peti ti ve
i n d epen d en ce a l l ows th e efforts of a l l to be cen tred on th e bu si n ess
obj ecti ve.

Each is a specialist in their field

I n m a n y org a n i za ti on s effort i s wa sted i n con fl i ct between speci a l i sts a n d
oth ers, to prove su peri ori ty or i m prove posi ti on . B u i l d i n g a n etwork th a t
recog n i zes ea ch pl a yer’s pa rti cu l a r ski l l a n d con tri bu ti on s red u ces overl a ps
a n d a i d s i n terfa ci n g between th e com pon en ts.

Skills configured to requirements

O ften th e ski l l ba se of esta bl i sh ed org a n i za ti on s i s ei th er over-popu l a ted
or d efi ci en t i n certa i n a spects of th ei r cu rren t bu si n ess n eed . Th e cl u ster

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e n a b l e s s ki l l s a n d a re s o u rce p ro fi l e to be e sta b l i sh e d fo r i n d i vi d u a l

p ro j e c ts o n an a s-n e e d e d b a s i s – a l l o wi n g m o re fo cu s a n d re d u ce d

o ve rh e a d s .

Revenue sharing proportional to input

A fu n d a m e n ta l o f th e a p p ro a ch i s th a t re tu rn s a re ba sed p ro p o rti o n a l l y

on th e i n ve s tm e n t p ro fi l e o f e a ch p l a ye r.

Minimal hierarchy
G e n e ra l l y th e bi g g er a n o rg a n i z a ti o n , th e g re a te r th e m a n a g e m e n t e ffo rt

n eed ed to co o rd i n a te a ct i vi ti e s e ffe ct i ve l y. Co m m u n i ca ti o n s ca n be

co m p l e x a n d ti m e - co n s u m i n g , wi th an i m p a ct o n th e p ro fi t a b i l i ty o f a n y

ve n tu re . A n e two rk o f i n d e p e n d e n t p a rtn e rs p ro vi d e s c l e a r d i vi s i o n s o f

re s p o n s i b i l i ty a n d s i m p l i fi e d ch a n n e l s o f i n fo rm a ti o n fl o w. Th i s e n s u re s

t h a t th e b u s i n e s s o b j e cti ve i s ke p t i n fo cu s .

Shared risk
Al l b u s i n e s s e s m u s t i d e n ti fy a n d manage ri s k. I t i s i m p o rta n t i n a

n e two rke d e n vi ro n m e n t to e n s u re th a t ri s k i s a d d re s s e d and th e o ve ra l l

p o s i ti o n o f th e g ro u p p ro te ct e d . O wn e rs h i p o f ri s k m u s t b e cl e a r wi th o u t

e va s i o n o f re s p o n s i b i l i ty.

Focus on customer satisfaction

Th e co re of a l l b u s i n e s s a cti vi ty i s to a tt ra ct cu s t o m e rs a n d th e n ke e p

th e m . In a n e two rke d e n vi ro n m e n t i t i s i n th e i n te re s ts o f a l l p a rtn e rs to

m a i n ta i n a tru e cu s t o m e r fo cu s .

Revol u tion o r evol u tion

Th e a ve ra g e cu s to m e r’s p e rce p ti o n , fo r e xa m p l e o f th e ‘ n a ti o n a l i ty’ of

m o s t m o to r ca rs , i s n o w e ffe cti ve l y a fi cti o n , b a se d on th e m a n u fa ct u re r’s

name and h e ri ta g e . B ra n d h a s o ve rta ke n o ri g i n . Th e ol d s u p p l y n e t wo rks

h a ve been a ba n d on ed and l o ca l p ro d u ce r n e t wo rks a t e ve ry l e ve l h a ve

been fo rce d to m e rg e o r cl o s e . As q u a l i t y d e m a n d s i n cre a s e and p ri ce

l e ve l s d e cl i n e , th e p a ce of g l oba l e xp l o i ta ti o n i n cre a s e s . Al th o u g h th i s

n a tu ra l e vo l u ti o n i s n o t n e w, th e i n cre a s e d sp e e d a t wh i ch o rg a n i z a ti o n s

a re fo rce d to re s tru ctu re and a d j u s t t h e i r n e two rks i s a n e w th i n g . In th i s

e n vi ro n m e n t e s ta b l i s h e d tra d i n g p ra ct i ce s a n d re l a ti o n s h i p s a re b ro ke n

d o wn , open i n g th e wa y fo r m o re fl e xi b l e a d a p t a ti o n s . Th i s p re s s u re

a ffe cts S M E s m o re th a n m u l t i n a ti o n a l s , wh i ch ca n s p re a d th e ri s k. Som e

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l a rg e fi rm s h a ve tri ed to su pport th ei r exi sti n g su ppl i ers by h el pi n g th em

to expl oi t l ow-cost a d va n ta g es wh i l e m a i n ta i n i n g th e com fort zon e of
l on g -term rel a ti on sh i ps. I n th e l on g er term both sm a l l a n d l a rg e
com pa n i es wi l l h a ve to esta bl i sh n ew stra teg i es for su sta i n a bi l i ty. Th e
ch a l l en g e n ow i s to d evel op n ew i n i ti a ti ves a n d fl exi bl e bu si n ess m od el s
th a t h a rn ess th e opportu n i ti es presen ted by g l oba l i za ti on , wh i l e bei n g
a wa re of th e pi tfa l l s th a t i t m a y presen t.

Relation s hi ps
Rel a ti on sh i ps i n bu si n ess a re vi ta l a n d , wh i l e n ot u su a l l y n eg oti a bl e, th ey
a re u l ti m a tel y m ore i m porta n t th a n m a n y tech n ol og i sts wou l d
a ckn owl ed g e i n ou r wi red worl d . A col l a bora ti ve m od el i s em erg i n g n ow
th a t m a kes better sen se for th e l on g -term fu tu re of e-bu si n ess. B ecom i n g
a n exten d ed com m u n i ca ti on s m ed i u m , th e i n tern et porta l sti l l h a n d l es
tra n sa cti on -ba sed com m erce, bu t a l so provi d es a m ore fl exi bl e e-pl a tform
for tra d i ti on a l , bu t wi red , tra d e. So ‘we h a ve th e tech n ol og y’; crea ti n g
vi rtu a l n etworks of d i fferen t org a n i za ti on s i s n o m ore com pl ex th a n
crea ti n g a n i n tern a l I T n etwork. Th e on l i n e com m u n i ti es form ed a re
d i rect d escen d en ts of th ose th a t h a ve exi sted si n ce tra d i n g beg a n . B u t
n ow th e a u tom a ted tra n sfer of d a ta between com pa n i es i s wi th i n th e
rea ch of every com pa n y wi th a n i n tern et l i n k, en a bl i n g a l l to expl oi t th e
fu l l ben efi ts of bu si n ess n etworks.

Netwo rking in b us ine ss

Th e i d ea of col l a bora ti ve cl u sters i s d ri ven by pressu re on th e
m a rketpl a ce, so con si d eri n g a l tern a ti ve stra teg i es to bu i l d a m ore fl exi bl e
fu tu re i s d i rectl y rel a ted to g rowth . As bi g g er org a n i za ti on s l ooked to
i m prove th ei r posi ti on by ou tsou rci n g n on -core a cti vi ti es or con sol i d a ti n g
(som eti m es g l oba l l y) th ei r bu yi n g power. Th e effect i s to red u ce th e
poten ti a l for th ei r l oca l i zed n etworks. H owever, i f th ese i n d epen d en t
l oca l com pa n i es cou l d opera te wi th i n som e form of n etwork, wh i ch
a i m ed to d evel op ben efi ts or open i n g s for i ts pa rtn ers, th en n ew
poten ti a l cou l d be crea ted . Th e d ri ver h a s to be th e cu stom er, si n ce
bu si n ess exi sts to serve th ei r n eed s or percei ved ben efi t. I n th e tra d i ti on a l
m od el th e cu stom er col l ects a portfol i o of su ppl i ers a n d servi ce provi d ers;
ea ch i s i n d epen d en t a n d i n m ost ca ses i s u n a wa re of th e oth ers’ rol e or
a cti vi ti es. As th ese su ppl i ers l ose ou t to th e pressu res of ra ti on a l i za ti on
a n d con sol i d a ti on th ey h a ve to fi n d n ew wa ys of m a i n ta i n i n g th ei r
bu si n ess ca pi ta l a n d posi ti on . I f th ey ca n provi d e a wi d er ra n g e of
servi ces or crea te n ew a l tern a ti ves to m eet th e cu stom er’s n eed , th en
th ey ca n re-esta bl i sh th ei r posi ti on . Th u s th ey l ook to rei n ven t
th em sel ves, bu t a re often h a m pered by th ei r exi sti n g cost a n d
kn owl ed g e. Th e a l tern a ti ve i s to l ook for pa rtn ers wh o h a ve

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su ppl em en ta ry ski l l s or servi ces (see Fi g u re 2 5 . 1 ) . I n si m pl i sti c term s th e

m a n u fa ctu rer, i n sta l l er or m a i n ta i n er cou l d ta ke on a l a rg er porti on of
th e cu stom er’s n eed s.

Fi g u re 25. 1 – Cl u s te rs

A com posi te ca pa bi l i ty i n trod u ces th e d i m en si on th a t ea ch su ppl i er h a s

i ts own cu stom er ba se, so th e com pou n d proposi ti on ca n be exten d ed to
m eet th e n eed s of m u l ti pl e cu stom ers. Th e cl u ster i s n ot si m pl y
re-esta bl i sh i n g a n exi sti n g bu si n ess rel a ti on sh i p; i t i s poten ti a l l y open i n g
u p n ew on es. Th e g rea ter th e n u m ber of a ttri bu tes or servi ces th e cl u ster
ca n offer, th e wi d er th e opportu n i ti es. Th e a pproa ch crea tes th e cri ti ca l
m a ss th a t en a bl es th em to su rvi ve, a n d a t th e sa m e ti m e a l l ows th em to
com pete wi th l a rg er org a n i za ti on s (see Fi g u re 2 5 . 2 ) .

Rel a ti on sh i ps a n d tru st wi l l pl a y a m a j or rol e i n th e bu i l d i n g of th ese

cl u sters, n ot on l y i n term s of th e i n d i vi d u a l su ppl i ers, bu t a l so – m ore
i m porta n tl y – from th e cu stom er perspecti ve. Th e cl u ster h a s to be
cred i bl e. Th e prog ressi on of th i s d evel opm en t i s th e wi d er g l oba l
i m pl i ca ti on s: i f a cl u ster ca n be su ccessfu l i n on e a ren a , th en wh y n ot i n
oth ers? Th i s i s a ch a l l en g e, si n ce n ot a l l th e pl a yers wi l l be a bl e to
con tri bu te i n every ca se. For exa m pl e, l oca l m a n u fa ctu re m a y be a
n ecessa ry com peti ti ve a d d i ti on . Th i s m a y crea te ten si on , bu t a l so cou l d
l ea d to a n ew l evel of th i n ki n g wh ere prod u ct kn owl ed g e i s sh a red a n d
l ow cost su ppl y i s pu l l ed ba ck th rou g h to th e ori g i n a l m a rket. H owever,
th ese cl u sters m u st recog n i ze th e tra d i ti on a l d ri ver for a n y bu si n ess

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Fi g u re 2 5 . 2 – Cl u s te r p o we r

ve n tu re – th a t o f m e e ti n g th e cu s t o m e rs ’ e xp e c ta ti o n s . P ri ce wi l l a l wa ys

re m a i n a s i g n i fi ca n t fa cto r, b u t m a n y o th e r fa ct o rs wi l l be p a rt o f th e

s e l e ct i o n cri te ri a ; i t wi l l be s a ti s fyi n g th e se e l e m e n ts th a t wi l l u n d e rp i n

th e vi a b i l i ty o f a n y vi rt u a l p ro p o s i ti o n .

As p e cts o f co l l a b o ra ti o n

On e o f th e o b s ta cl e s i n p ro m o t i n g th e cl u s te r i s th e a s s u m p ti o n th a t i t

sh o u l d co ve r a l l t ra d i n g re l a ti o n s h i p s . If a p a rt n e rs h i p ca n n o t a d d va l u e ,

wh y i n ve s t fo r n o re tu rn ? Tra d i ti o n a l tra d i n g m eth o d s a n d a p p ro a ch e s fi t

m o s t b u s i n e s s ca s e s . Th e m o re i n t e g ra te d th e tra d i n g re l a t i o n s h i p , th e

h i g h e r th e i n te rd e p e n d e n ce ; th u s i m p ro vi n g th e a p p ro a ch m a ke s s e n s e .

Th i s i s o n e o f th e co re p ri n ci p l e s e s ta b l i s h e d wi th i n BS 1 1 000. Wh e re

th e re is a cl o s e i n te ra cti o n b e t we e n two o r m o re t ra d i n g p a rtn e rs , th e n

th e o p p o rt u n i ty to i m p ro ve th e b u s i n e s s p ro ce s s s h o u l d be e xp l o i te d . Th e

sa m e i ssu e s a n d d ri ve rs n e e d to be a d d re s s e d h o ri z o n ta l l y a n d ve rt i ca l l y

to b re a k d o wn tra d i ti o n a l i n d e p e n d e n t t h i n ki n g .

I n n o va ti o n i n fra s tru ctu re

Th e gap b e t we e n cre a ti n g a b u s i n e s s co n ce p t a n d seei n g i t a d o p te d in

th e m a rke t p l a ce i s wi d e . Th e i d ea s m a y be so u n d and th e p o te n ti a l

re co g n i z e d b u t i n d u s try, fi n a n ci a l and re g u l a to ry i n fra s t ru ctu re m a y be

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PART 3: Where?

l a g g i n g som e wa y beh i n d . The Midas proposition 16

wa s con cei ved to fi n d
wa ys of su pporti n g or prom oti n g th e SM E s. Wh i l e, h owever, th ere m a y
be a d esi re to h el p th ere a re m a n y pra cti ca l h u rd l es to be overcom e. Th e
fi rst i s cu stom er a ccepta n ce, wh i ch wi l l on l y sta rt on ce th ere i s a va l u e
proposi ti on for th em to con si d er. M a n y org a n i za ti on s express
com m i tm en t to l oca l com m u n i ti es a n d often (even i n a g l oba l
en vi ron m en t) wi l l crea te m od el s th a t su pport th e d evel opm en t of l oca l
i n d u stry; bu t by exten d i n g th i s opportu n i ty to cl u sters th e seed s a re sown
for wi d er d epl oym en t a n d expl oi ta ti on by th ose sa m e org a n i za ti on s.

Concl us ion
I n n ova ti on i s often sti fl ed n ot by con cepts bu t by th e n eg a ti vi ty a n d
tra d i ti on a l i st vi ews h el d by th ose perform i n g th e eva l u a ti on . Th e
em erg en ce of th e i n tern et or wi red worl d h a s brou g h t to th e fore th e
vi rtu a l com pa n y a n d l ooks to be setti n g th e con cept fi rm l y i n th e
bu si n ess voca bu l a ry. I t wa s Professor G a rel l i of La u sa n n e U n i versi ty wh o
su g g ested th a t fu tu re bu si n ess wou l d be a bou t a ccess to a ssets – n ot
own ersh i p – th a t wou l d d ri ve fu tu re bu si n ess m od el s.

Th e profi l e of com pa n i es a n d org a n i za ti on s opera ti n g tod a y ra n g es from

d i vi si on s of m u l ti n a ti on a l s, th rou g h m a j or reg i on a l bu si n esses to
exten si ve SM E com m u n i ti es. Th i s en vi ron m en t provi d es a com preh en si ve,
cu l tu ra l l y d i verse a n d a d a pta bl e ski l l ba se. Th e ch a l l en g e i n m ost ca ses i s
th a t g l oba l com peti ti on a n d econ om i es of sca l e crea te a bu si n ess
en vi ron m en t wh ere freq u en tl y opportu n i ti es m a y be l ost th rou g h
l i m i ta ti on s of resou rces, ca pa bi l i ti es a n d sca l e. Th e ch a l l en g e for th e
bu si n ess com m u n i ty tod a y i s to en su re th a t su i ta bl e ca pa bi l i ti es a re
g rown wi th i n th ei r org a n i za ti on s to recog n i ze, d evel op a n d expl oi t th e
poten ti a l th a t cl ea rl y exi sts. Th e fu tu re offers exci ti n g prospects for th ose
wi th th e vi si on to crea te th e fu tu re, i n stea d of tryi n g to pred i ct i t.

16
The Midas Proposition i s a report pu b l i sh ed b y I n sti tu te fo r Col l a bora ti ve Worki n g wh i ch

d evel op s th e cl u steri n g a pproa ch a s th e bu si n ess m od el of th e fu tu re. I n p a rti cu l a r, i t

fo cu ses on th e po ten ti a l ben efi ts for sm a l l er o rg a n i za ti on s d evel opi n g a pp ro a ch es to

en h a n ce fu tu re opp ortu n i ti es.

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Cha p te r 26 – Collabo rating fo r su s tainability

I t i s cl ea r th a t i n tod a y’s bu si n ess en vi ron m en t th e con fl i ct

between econ om i c pressu re a n d th e d em a n d for
forwa rd -th i n ki n g bu si n ess stra teg i es to a d d ress en vi ron m en ta l
a n d soci a l respon si bi l i ty i s ch a l l en g i n g . Th i s ch a pter a i m s to
expl ore th e rol e of col l a bora ti on i n bu i l d i n g profi ta bl e
col l a bora ti ve bu si n ess wh i l e su pporti n g su sta i n a bl e stra teg i es.

Corpora te soci a l respon si bi l i ty (CSR) i s n ot a bou t tra n sferri n g

respon si bi l i ty a n d ri sk; i t sh ou l d be focu sed on opti m i za ti on to ba l a n ce
profi ta bi l i ty a n d ou tcom es a cross th e va l u e ch a i n . Th e ch a l l en g e i s th e
pol a ri za ti on between th e ‘g reen ’ a g en d a a n d th e rol e of i n d u stry i n
d evel opi n g a col l a bora ti ve a pproa ch to i n teg ra ti n g su sta i n a bl e obj ecti ves
wi th i n profi ta bl e bu si n ess. Wh en th e su bj ect of CSR i s ra i sed a n y
d i scu ssi on q u i ckl y d evol ves i n to a n u m ber of th em es su ch a s fi n a n ci a l
propri ety, eth i ca l tra d i n g a n d h u m a n ri g h ts. Su sta i n a bi l i ty, on th e oth er
h a n d , wi l l q u i ckl y tu rn towa rd s en vi ron m en ta l i m pa cts a n d g l oba l
wa rm i n g . M ore recen tl y th ere h a s been th e em erg en ce of CR (corpora te
respon si bi l i ty) d roppi n g th e soci a l a spect speci fi ca l l y i n a n a ttem pt to
provi d e a m ore wi d e-ra n g i n g a g en d a , a d d i n g to th e con fu si on a s to wh a t
sh ou l d be con si d ered by bu si n esses. Perh a ps we sh ou l d si m pl y red efi n e
CSR a s ‘corpora te su sta i n a bl e respon si bi l i ty’ a n d expa n d th e bri ef: for a
bu si n ess to prosper, i t h a s to be su sta i n a bl e a n d th u s m u st con si d er i tsel f
pa rt of th e wi d er su sta i n a bl e ecosystem . Th e overri d i n g a cron ym i s l ess
i m porta n t th a n th e con cepts beh i n d i t; th e key to su ccess i s a bou t
expl oi ti n g th e opportu n i ti es of su sta i n a bi l i ty, ra th er th a n si m pl y focu si n g
on th e bu si n ess ri sk.

Su sta i n a bi l i ty i s i n crea si n g l y a n i m porta n t a g en d a i tem for execu ti ve

boa rd s a n d on e th a t i s exceed i n g l y com pl ex to m a n a g e a cross a wi d e
spectru m of sta keh ol d ers. As wi th a n y l on g -term stra teg i c pl a n ,
col l a bora ti on i s a cru ci a l i n g red i en t for org a n i za ti on s to con si d er i n th ei r
i n teg ra ti on wi th i n th e g l oba l m a rket. Th i s i s n ot si m pl y to rea ct to th e
i m pl i ca ti on s of pu bl i c opi n i on on i ssu es of th i rd worl d expl oi ta ti on ; i t i s
a l so a bou t th e d evel opm en t of su sta i n a bl e bu si n ess proposi ti on s. Th ere i s
a d i ffi cu l t ba l a n ce between th e corpora te d ri vers of com peti ti ven ess a n d
sh a reh ol d er va l u e a n d th e pra cti ca l i m pl i ca ti on s of i g n ori n g th e
su sta i n a bi l i ty i m pl i ca ti on s of i n vesti n g i n oversea s opera ti on s (ei th er
d i rectl y or i n d i rectl y) tog eth er wi th th e pressu res of ba l a n ci n g th e
d em a n d s of reg u l a tors, cu stom ers, con su m ers a n d pressu re g rou ps.

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PART 3: Where?

B u i l d i n g effecti ve bu si n ess rel a ti on sh i ps i s a cru ci a l fa ctor i n expl oi ti n g

th e poten ti a l of exten d ed va l u e ch a i n s a n d a l tern a ti ve bu si n ess m od el s,
bu t a l so i n evol vi n g d evel opm en t prog ra m m es th a t su pport th e
l on g -term su sta i n a bl e obj ecti ves. Col l a bora ti ve a pproa ch es ca n provi d e a
pl a tform on wh i ch to crea te i n n ova ti ve sol u ti on s wi th i n a bu si n ess
en vi ron m en t th a t ca n d el i ver com peti ti ve a d va n ta g e, wh i l e a l l owi n g
org a n i za ti on s to j oi n tl y a d d ress th e su sta i n a bl e a g en d a to th ei r
l on g er-term com m erci a l ben efi t a l on g si d e th e wi d er su sta i n a bi l i ty i ssu es.

As th e bu si n ess l a n d sca pe becom es m ore com pl ex a n d ch a l l en g i n g , th e

rel a ti on sh i ps between org a n i za ti on s a l so ta ke on n ew a n d va ri ed
con fi g u ra ti on s. I t i s g en era l l y a ccepted th a t for m ost org a n i za ti on s th ey
a re both cu stom er a n d su ppl i er i n rel a ti on to d i fferen t a spects of th e
va l u e ch a i n ; bu t often org a n i za ti on s m i ss opportu n i ti es. As th e m a rket
profi l e ch a n g es, so th e com pl exi ty of th ese rel a ti on sh i ps i n crea ses. Th e
pressu re to i m prove com peti ti ve ed g e a n d d evel op a l tern a ti ve
va l u e-ba sed sol u ti on s h a s i n trod u ced a g rea ter n eed to en su re th a t
org a n i za ti on s ca n work i n a n i n teg ra ted wa y to m a xi m i ze poten ti a l
ben efi ts. Th e su sta i n a bi l i ty i ssu e h a s becom e very com pl ex, em bra ci n g
corpora te g overn a n ce, eth i ca l tra d i n g , h u m a n ri g h ts, en vi ron m en ta l
i m pa ct, reg u l a ti on a n d so on . At th e sa m e ti m e, th e pressu re to i m prove
m a rg i n s, red u ce costs, i n crea se ou tsou rci n g a n d th e l i ke crea tes con fl i cts
i n m eeti n g th e su sta i n a bi l i ty a g en d a (see Fi g u re 2 6. 1 ) .

Fi g ure 26. 1 – Sus ta i n a b i l i ty im p a cts

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Th e pa ra d ox i s th a t m a n y of th e i ssu es a ssoci a ted wi th th e su sta i n a bi l i ty

a g en d a a re th e i n g red i en ts th a t fa ci l i ta te a ch i evi n g com peti ti ve g oa l s
a n d a re th e essen ce of m a rket econ om i cs. Low wa g es, ba si c worki n g
con d i ti on s, resou rce expl oi ta ti on , red u ced reg u l a tory d em a n d s, l a ck of
pol l u ti on con trol – a l l of th ese th i n g s con tri bu te to a g g ra va ti n g th e
si tu a ti on . Th ere i s g rowi n g evi d en ce of cu stom er pressu re (a n d m ore
recen tl y con su m er pressu re) , bu t i s th i s su perfi ci a l a n d vu l n era bl e to th e
‘feel g ood fa ctor’ a n d th e i m pa cts of a n econ om i c sl owd own , wh i ch
i n crea ses th e focu s on costs/pri ce? I n m a n y org a n i za ti on s th ere i s
pa ra n oi a a bou t m a n a g i n g th e ri sks of expl oi ti n g th e g l oba l m a rket, n ot
th e l ea st of wh i ch i s repu ta ti on ri sks. Th i s pu ts i n crea sed pressu re on
bu si n ess l ea d ers a n d th ei r opera ti on s i n m eeti n g obj ecti ves th a t a re
freq u en tl y d i a m etri ca l l y opposed . I t i s n ot d i ssi m i l a r to th e ch a l l en g e
cl oser to h om e – to su pport th e SM E a n d ‘d i versi ty’ bu si n esses a s a key
pa rt of th e econ om i c stru ctu re a n d g rowth , wh i l e d em a n d i n g econ om i es
of sca l e th a t freq u en tl y excl u d e th ose com m u n i ti es. Setti n g ru l es a n d
eth i ca l pol i ci es th a t a re perh a ps cou n ter to th e bu si n ess g oa l s a n d
i n cen ti ves i s n ot i n i tsel f su sta i n a bl e. Th e probl em i n m a n y ca ses a ppea rs
to be th a t org a n i za ti on s d o n ot h a ve a cl ea r perspecti ve on CSR a n d
su sta i n a bi l i ty a n d th e com pl exi ty of th e rel a ti on sh i ps th a t i t covers.

Pro fit an d C S R
As org a n i za ti on s pu t m ore a n d m ore of th ei r opera ti on s ou t i n to th e
va l u e ch a i n a n d h a rn ess a l tern a ti ve bu si n ess m od el s, th e ri sk i n crea ses. I f
th ere i s rea l l y to be a su sta i n a bi l i ty eth os, th i s h a s to com e from a m ore
i n teg ra ted corpora te prog ra m m e to ba l a n ce th e i ssu es. D evel opi n g th e
th em e th a t su sta i n a bl e CSR i s a rea l com m erci a l opportu n i ty a n d n ot
si m pl y a bou t ri sk m i ti g a ti on , a proa cti ve a pproa ch to col l a bora ti n g for
su sta i n a bi l i ty th a t i s focu sed on l i n ki n g CSR to com m erci a l ben efi t sh ou l d
l ook beyon d th e ri sks a n d sta rt to a ssess th e va l u e crea ti on th a t ca n
en h a n ce profi ta bi l i ty. Th i s wou l d m ea n em bed d i n g th e con cepts i n to
opera ti on a l a cti vi ti es a n d d ri vi n g a col l a bora ti ve su sta i n a bi l i ty cu l tu re
th a t con tri bu tes to th e bottom l i n e by l ooki n g for va l u e crea ti on , ra th er
th a n si m pl y cou n ti n g th e cost of ri sk m a n a g em en t.

Perh a ps th e bi g g est con stra i n t h a s been a preva i l i n g vi ew th a t CSR a n d

su sta i n a bi l i ty i s a bou t d oi n g th e ‘ri g h t th i n g ’, wh i ch i s wh a t m a n y cri ti cs
of th e bu si n ess com m u n i ty wou l d sa y. Wh i l e i n d u stry sh ou l d i n d eed be
respon si bl e i n th e broa d er sen se, i ts pri m a ry respon si bi l i ty i s to d el i ver
va l u e to i ts i n vestors. Th ere a re m a n y peopl e wh o ch a l l en g e th e ri g h t of
bu si n ess to m a ke a profi t a n d prom ote th e con cept th a t i n stri vi n g to d o
so i n d u stry i s tota l l y u n tru stworth y a n d d evoi d of a n y i n terest i n
su sta i n a bi l i ty. I t wou l d be fool i sh to i g n ore th e fa ct th a t som e
h i g h -profi l e org a n i za ti on s h a ve seri ou sl y d a m a g ed th e i m a g e of th e
bu si n ess com m u n i ty bu t th i s sh ou l d n ot d i stra ct u s from th e poi n t th a t
th ose i n i n d u stry a re sta keh ol d ers th em sel ves i n th e com m u n i ty a t l a rg e.

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PART 3: Where?

• Withou t
Withou t
crea ti n g wea l th th ere i s n o i n vestm en t.
•
Withou t
i n vestm en t th ere i s n o d evel opm en t.
•
Withou t
d evel opm en t th ere i s n o su sta i n a bi l i ty.
•
Withou t
su sta i n a bi l i ty th ere i s n o fu tu re.
• col l a bora ti on th ere i s n o possi bi l i ty to a d va n ce.

Wea l th crea ti on i s a bou t d el i veri n g a retu rn on i n vestm en t th a t ca n be

rei n vested a n d ca n sti m u l a te econ om i c g rowth to th e ben efi t of a l l . Th i s
ca n be a d i vi d en d for sh a reh ol d ers of m u l ti n a ti on a l s or a weekl y wa g e
for workers i n th e d evel opi n g worl d . Profi t i s n ot a ba d th i n g i n i tsel f,
bu t h ow i t i s g en era ted ca n be; a n d i t i s th i s con cern th a t h a s d ri ven th e
CSR a g en d a forwa rd , ra i si n g a broa d spectru m of su sta i n a bi l i ty i ssu es.
Th e pressu re on i n d u stry a n d th e bu si n ess com m u n i ty h a s d ri ven (i n m a n y
ca ses) a cu l tu re of m i n i m a l com pl i a n ce, d oi n g on l y wh a t i s n ecessa ry to
keep a h ea d of th e reg u l a tors a n d i n vesti n g i n m ed i a prog ra m m es to
protect a su sta i n a bl e i m a g e. Th e probl em i s th a t th i s cu l tu re of
com pl i a n ce i s freq u en tl y n ot rea l l y a d d ressi n g th e key i ssu es a n d i s
d ri vi n g a g u l f between th e sta keh ol d ers. Reg u l a ti on i s a l wa ys l i kel y to be
si g n i fi ca n tl y beh i n d even ts; su perfi ci a l prog ra m m es focu sed on pu bl i c
opi n i on wi l l u su a l l y be seen th rou g h a n d th u s d a m a g e th e i m a g e of
bu si n ess fu rth er.

Su sta i n a bi l i ty i s a n i ssu e a n d a ri sk for a l l sta keh ol d ers i n on e form or

a n oth er, wh i ch i n fl u en ces h ow we beh a ve a s i n d i vi d u a l s, g rou ps or
org a n i za ti on s. I t a ffects th e th i n ki n g beh i n d th e wa y we i n vest a n d tra d e
ei th er a s cu stom ers, su ppl i ers or con su m ers; ba sed on cu rren t tren d s i t
wi l l be fa r m ore of a m a rketi n g a n d sa l es fa ctor i n th e fu tu re.
Su sta i n a bi l i ty i s i n crea si n g l y a n i m porta n t con si d era ti on for i n vestors too
– th ere i s n ow th e D ow J on es Su sta i n a bi l i ty I n d ex, for exa m pl e. I t i s a
h i g h l y vol a ti l e topi c, wh i ch m a kes i t cru ci a l th a t org a n i za ti on s h a ve a
cl ea rl y d efi n ed a n d su pporta bl e stra teg y a n d pol i cy i n pl a ce th a t refl ects
th ei r speci fi c opera ti n g m od el . Th e ch a l l en g e i s th a t a t every l evel we a re
d i fferen t a n d h a ve to m a ke ch oi ces, wh eth er a s i n d i vi d u a l s or
org a n i za ti on s. For th e prog ressi ve com pa n y, CSR i s n o l on g er a q u esti on
of si m pl e com pl i a n ce; i t d efi n es th e m a n d a te for org a n i za ti on s to
opera te a n d th ei r l i cen ce from th e m a rketpl a ce/cu stom er to tra d e.
M eeti n g reg u l a tory d em a n d s i s on l y a pa rt of th e eq u a ti on ; reg u l a ti on i s
i tsel f becom i n g m ore a n d m ore com pl ex. Th ere i s a m u l ti tu d e of a spects
th a t org a n i za ti on s n eed to con si d er i n d evel opi n g a su sta i n a bi l i ty
stra teg y a n d bu i l d i n g a proa cti ve a pproa ch .

Su sta i n a bi l i ty sh ou l d n ot be vi ewed a s a n eg a ti ve th i n g ; i t h a s m a n y
a ttri bu tes th a t ca n , i f m a n a g ed effecti vel y, con tri bu te to opera ti on a l
excel l en ce a n d profi ta bi l i ty. G i ven a posi ti ve com m i tm en t, wh i ch ca n be
tra n sl a ted i n to process a n d peopl e d evel opm en t, th e obj ecti ves of
bu si n ess su sta i n a bi l i ty ca n esta bl i sh m a rket d i fferen ti a ti on . Pu t si m pl y, i f
you red u ce wa ste, opti m i ze en erg y con su m pti on , ra ti on a l i ze tra n sport,
pa cka g i n g a n d th e l i ke you sa ve m on ey. Wh en you i m prove worki n g

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co n d i ti o n s yo u i n cre a s e p ro d u cti vi ty a n d q u a l i ty. B y re cycl i n g yo u

m a xi m i z e th e va l u e o f ra w m a te ri a l s . Th ro u g h i n ve s tm e n t i n e d u ca ti o n ,

tra i n i n g and s o ci o - e co n o m i c d e ve l o p m e n t yo u p ro vi d e a sta b l e b u si n e ss

p l a tfo rm fo r g ro wth . Th ro u g h e ffe ct i ve g o ve rn a n ce and e th i ca l b e h a vi o u r

yo u i n cre a s e th e tru s t a n d co n fi d e n ce o f s t a ke h o l d e rs , and as a re s u l t yo u

re d u ce co s ts a n d e n h a n ce yo u r s u s t a i n a b i l i ty p ro fi l e .

F o r co m p a n i e s to ta ke a p ro a c ti ve a p p ro a ch to s u s ta i n a b i l i t y th e y m u s t

b a l a n ce e co n o m i cs wi t h th e i r b ro a d e r s u s ta i n a b l e re s p o n s i b i l i ty, s i n ce

th e y m u s t m a i n t a i n p ro fi ta b i l i ty i n o rd e r t o co n t ri b u te . D e ve l o p i n g a

m e a n i n g fu l s tra te g y re q u i re s a fo cu s o n th e i s s u e s th a t a re s p e ci fi c to

e a ch o rg a n i z a ti o n ’s b u s i n e s s o p e ra ti o n . Th e e m e rg i n g b u si n e ss m o d e l s

and n e t wo rks a re th e sh a p e o f th e fu tu re ; s u s ta i n a b i l i ty i s n o l on g er a n

i ssu e fo r co m p a n i e s i n d e p e n d e n tl y – th e y m u s t co l l a b o ra te .

Wh i l e th e b u s i n e s s e n vi ro n m e n t co m e s u n d e r co n t i n u o u s a n d g ro wi n g

co m p e ti t i ve p re s s u re , th e m a n n er i n wh i ch b u s i n e s s co n d u cts i t s e l f m a y

h a ve s i g n i fi ca n t i m p a cts o n th e u l t i m a te p e rce p t i o n s o f th e m a rke tp l a ce ;

i t i s se l d o m a l e ve l p l a yi n g fi e l d . I t i s o fte n e a s y fo r th o s e o u ts i d e th e

a cti ve b u s i n e s s a re n a to d em a n d s ta n d a rd s o f p ra cti ce th a t a re in d i re ct

co n fl i ct wi th th e re a l i ti e s o f th e l o ca l cu l tu re s a n d d i ve rs i ty. Th e s e va ri e d

co n s i d e ra ti o n s m u s t b e p a rt o f th e b u si n e ss p l a n n i n g p ro fi l e and n eed to

be a d d re s s e d wh e n co n s i d e ri n g i n te g ra te d p a rt n e rs h i p s . Wh e n

d e ve l o p i n g tra d i n g a rra n g e m e n ts , wh e t h e r i n th e l o ca l b u si n e ss

l a n d s ca p e or i n th e wi d e r g l o b a l co n t e xts , th e re a re m a n y fa ct o rs th a t

re a ch b e yo n d th e tra d i t i o n a l t ra d i n g re l a ti o n s h i p s . Th e h i g h e r th e d e g re e

o f i n t e rd e p e n d e n c e , th e g re a te r i s t h e o p p o rtu n i ty fo r m a n y o f th e s e ke y

i s s u e s to be o ve rl o o ke d in th e s h o rt - te rm d ri ve fo r co m m e rci a l

a d va n ta g e . S u s ta i n a b i l i ty s h o u l d be seen as a fo cu s to cre a t e m o re

e ffe ct i ve and e ffi ci e n t b u s i n e s s o p e ra t i o n s t h a t ca n a d a p t to th e m a rke t

fo r b o th ro b u s t co m m e rci a l s u s ta i n a b i l i ty, a s we l l a s m e e ti n g th e fu tu re

wi th th e l o n g - te rm p ro g ra m m e s th a t we n eed to b e n e fi t th e wi d e r

s o ci e t y.

The ‘g reen’ agen d a

Th e ke y ch a l l e n g e i s n o t o u r re s p o n s e to i n d i vi d u a l i s s u e s s u ch a s g l oba l

wa rm i n g , b u t h o w to ta ke a m o re h o l i s ti c vi e w. F o r e xa m p l e , on e

re s p o n s e to p re s s u re on th e ca rb o n fo o tp ri n t i s fo r u s to m o ve to wa rd s

h yb ri d ca rs th a t o ffe r l o w e m i s s i o n s b u t m a y h a ve s i g n i fi ca n t i m p a cts

d o wn s tre a m th a t h a d n ot been co n s i d e re d . At th e sa m e ti m e , th e fo cu s

on b i o fu e l s h a s a l re a d y a ffe cte d th e fo o d s u p p l y ch a i n and m a y o ve r ti m e

ca u s e m o re of a ch a l l e n g e th a n b e n e fi t, i f n o t co rre ct e d . As o rg a n i z a ti o n s

s e e k to m a ke a p u b l i c s ta n d on on e i n i ti a t i ve t h e y p o te n ti a l l y e xp o s e

th e m s e l ve s to o t h e r ch a l l e n g e s th ro u g h o u t th e i r o p e ra ti o n s . E ve ry

o rg a n i z a ti o n i s d i ffe re n t a n d h a s va ryi n g e co n o m i c, s o ci a l and

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PART 3: Where?

en vi ron m en ta l i m pa cts. As we focu s on ca rbon footpri n ts, perh a ps we a re

m i ssi n g th e bi g g er pi ctu re a n d i n som e wa ys crea ti n g g rea ter th rea ts.

Su ppl y ch a i n i n teg ra ti on h a s a si g n i fi ca n t rol e to pl a y i n th i s a ren a . H ow,

wh a t a n d wh ere we bu y ca n m a ke a d i fferen ce; bu t we n eed to a voi d
th e h ype a n d focu s on wh a t i s ri g h t for th e org a n i za ti on – th a t i s wh a t i s
i m porta n t, n ot th e cu rren t h ea d l i n e-g ra bbi n g m essa g es. Su sta i n a bl e
bu si n ess, n ot g reen , sh ou l d be th e ba ckd rop to a l l a cti vi ti es th a t a re
l i n ked d i rectl y to th e bu si n ess g oa l s of th e org a n i za ti on i t serves, a n d
ti ed to effecti ve bu si n ess perform a n ce to en su re th a t th ey a re
su sta i n a bl e. Th ere i s n o d ou bt th a t som e com pa n i es a re l ea d i n g th e wa y,
su ch a s AM E C, J oh n Lewi s a n d Ska n ska ; th ey a re bu i l d i n g bu si n ess g oa l s
th a t su pport both th e com m erci a l i n terests of th ei r sta keh ol d ers a n d
con tri bu ti n g to th e bi g g er pi ctu re. I f we a re to a ch i eve th e ch a n g es
n eed ed , th en we m u st crea te com m erci a l d ri vers for su sta i n a bi l i ty a n d
i n teg ra te th em i n th e bu si n ess opera ti on s – wh i ch m ea n s th ere h a s to be
g rea ter col l a bora ti on .

Con fi d ence an d trus t

Th e bu si n ess i ssu es a ssoci a ted wi th su sta i n a bi l i ty a re fu n d a m en ta l l y a
q u esti on of esta bl i sh i n g tru st a n d con fi d en ce wi th th e sta keh ol d ers.
Th ere i s n o d ou bt th a t m a n y of th e h i g h -profi l e ca ses of recen t yea rs
h a ve seri ou sl y d a m a g ed th e percepti on of th e bu si n ess com m u n i ty a n d
i n d u stry a t l a rg e. Rog u e a cti vi ti es of m a j or corpora ti on s h a ve d on e l i ttl e
to con vi n ce sta keh ol d ers th a t i n d u stry ca n be tru sted . I n th i s en vi ron m en t
a n y a cti vi ty th a t i s focu sed on m a i n ta i n i n g profi ta bi l i ty i s freq u en tl y m et
wi th su spi ci on . As we m ove to th e com pl ex i n tera cti on s of col l a bora ti n g
for su sta i n a bi l i ty th e probl em i s th a t a s bu si n ess seeks to fi n d
opportu n i ti es for tra d e, a ven u es to expl oi t com peti ti ve ed g e or si m pl y to
con stra i n costs, th e n eed for tru st h a s g rown .

Th e em erg i n g a l tern a ti ve bu si n ess m od el s of tod a y, h owever, a re ca u si n g

a reth i n k a bou t th i s cen tra l com m a n d -a n d -con trol m od el . Th e i n vestm en t
ch a l l en g e a n d d i versi ty of th e m a rketpl a ce i s crea ti n g a n en vi ron m en t
wh ere bu si n ess proposi ti on s a re m ore l i kel y to be ba sed on th e
d evel opm en t of a l l i a n ces a n d n etworks of com pa n i es bei n g l i n ked
tog eth er to form tem pora ry org a n i za ti on s, to expl oi t a pa rti cu l a r
proposi ti on or m eet a d em a n d . Th i s i s ca u si n g resu rg en ce i n th i n ki n g th a t
i s beg i n n i n g to reva l u e th e tra d i ti on a l i m porta n ce of rel a ti on sh i ps a s a
key i n g red i en t of su ccess a n d a cru ci a l fa ctor i n ri sk m a n a g em en t a n d
m i ti g a ti on , wh i ch exten d s to th e su sta i n a bi l i ty a ren a . Th e report
‘Corpora te Soci a l Respon si bi l i ty Com m u n i ca ti on s’ 1 7 pu bl i sh ed by th e
g l oba l pu bl i c rel a ti on s com pa n y E d el m a n (a l on g wi th N et I m pa ct a n d
oth ers) i d en ti fi ed a cross 3 , 1 00 bu si n ess execu ti ves th a t th e key to

17
D o wn l o a d a bl e a s a PD F from th i s websi te:

www. bcccc. n et/_u pl oa d s/d o cu m en ts/l i ve/E d el m a n CSR08. pd f

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effecti ve CSR com m u n i ca ti on s wa s tra n spa ren cy, wh i ch stron g l y i n fl u en ces

sta keh ol d er en g a g em en t a n d th e bottom l i n e.

E co-e ff i ci en cy

Th e wi d er i m pl i ca ti on s of d evel opi n g su sta i n a bl e bu si n ess m od el s, wi th i n

th e con text of exten d ed va l u e ch a i n s, ru n i n pa ra l l el wi th extern a l
pressu res on bu si n ess stra teg y.

Lon g -term stra teg i c i n i ti a ti ves for org a n i za ti on s sh ou l d con si d er th e

i n teg ra ti on of su ppl y ch a i n s a n d ou tsou rci n g opera ti on s wi th i n th i s a ren a
of g l oba l ch a n g e. Th i s i s n ot si m pl y to rea ct to th e i m pl i ca ti on s of pu bl i c
opi n i on on i ssu es of th i rd worl d expl oi ta ti on , bu t i n th e d evel opm en t of
su sta i n a bl e bu si n ess proposi ti on s.

E very ch a n g e i n d i recti on or d em a n d pl a ces even g rea ter pressu re on th e

bu si n ess pl a n n i n g process, to m eet th e con fl i cti n g d em a n d s of
sh a reh ol d ers i n th ei r q u est for retu rn on i n vestm en t. Th ere i s a l so th e
pressu re of th e cu stom er’s i n crea si n g d em a n d s for g rea ter i n n ova ti on ,
a g a i n st a ba ckg rou n d of l ower pri ces refl ecti ve of a g l oba l m a rketpl a ce.
Wh i l e th e pol i ti ca l a n d en vi ron m en ta l i sts’ a g en d a g rows i n stren g th , th e
pressu res from th e m a rket to d el i ver ever m ore com peti ti ve prod u cts
m ea n s exten d i n g th e bu si n ess en terpri se to sa ti sfy th e d em a n d . Th e
d evel opm en t of su sta i n a bl e prog ra m m es req u i res th e i n teg ra ti on of
m u l ti pl e bu si n ess rel a ti on sh i ps focu sed on bu i l d i n g l on g -term opera ti on s.
Th ese m u st recog n i ze th e g l oba l i m pl i ca ti on s a n d th e fu rth eri n g of l oca l
a g en d a s th a t su pport g rowi n g econ om i es a n d a d d va l u e to a n
org a n i za ti on ’s bu si n ess profi l e. Su sta i n a bi l i ty sh ou l d crea te m ore effecti ve
a n d effi ci en t bu si n ess opera ti on s a n d eco-effi ci en cy by expl oi ti n g th e
poten ti a l ben efi ts from cost sa vi n g s a n d pa ssi n g th ese to th e bottom l i n e,
wh i l e si m u l ta n eou sl y con tri bu ti n g to th e l on g -term su sta i n a bl e retu rn s
(see fi g u re 2 6. 2 ) .

Col l a bora ti on i s pri m a ri l y a bou t i m provi n g a n d i n teg ra ti n g bu si n ess

rel a ti on sh i ps th rou g h i n n ova ti ve col l a bora ti on a n d en h a n ci n g
com peti ti ve tota l sol u ti on s. Th e spi n -off from th ese pa rtn eri n g a cti vi ti es
h a s a d i rect i m pa ct i n a rea s of effi ci en cy i m provem en t, wh i ch i n cl u d e
su bj ects su ch a s wa ste, en erg y etc.

I n fa ct, su sta i n a bi l i ty, soci a l respon si bi l i ty a n d profi ta bi l i ty a re l i n ked bu t

a l so com pl em en ta ry. I n term s of su sta i n a bi l i ty, th e d efi n i ti on of ‘va l u e’
m a y be vi ewed a s bei n g l ess com m erci a l ; bu t i n rea l i ty i f bu si n ess i s to
prosper i tsel f a n d h el p d evel opi n g a rea s, th en com m erci a l con cern s,
m a rket d em a n d s a n d profi ta bi l i ty h a ve to be vi ewed a s i n terd epen d en t.
Wh a tever th e a i m s of th e bu si n ess or soci a l pa rtn ersh i ps, th e va l u e
crea ti on process sti l l n eed s to a d d ress th e fu n d a m en ta l fa cets of th e
opera ti on s. E co-effi ci en cy h i g h l i g h ts th e poten ti a l to m ove th e
i n teg ra ti on process beyon d a n i n i ti a l on e-on -on e pa rtn ersh i p a n d seeks

2 69
PART 3: Where?

Fi g ure 2 6. 2 – E co-e ffi ci en cy

to m o ve th e p ro fi l e i n to a cu s t o m e r- fo cu s e d a p p ro a ch , e ve n

i n co rp o ra t i n g th e cu s to m e r i n th e d e l i ve ry p ro ce s s . Tru e s u s ta i n a b i l i t y ca n

on l y be a ch i e ve d wi th i n a h o l i s ti c t ra d i n g e n vi ro n m e n t, wh i ch wi l l be

l i ke l y to t a ke ti m e to d e ve l o p . In th e m e a n ti m e th e b e n e fi t s o f cl o s e r

wo rki n g re l a t i o n s h i p s ca n be e xp l o i te d to co m m e rci a l a d va n ta g e wh i l e

s u p p o rti n g th e wi d e r p ri n ci p l e s .

Sus ta i n a bi l i ty s tra teg y

Th e ke y to s tra te g y a n d p o l i cy d e ve l o p m e n t s h o u l d p ro vi d e a p l a tfo rm on

wh i ch co rp o ra te b o a rd s , e xe cu t i ve m a n a g em en t a n d o p e ra ti o n a l

p e rs o n n e l ca n e va l u a te s u s ta i n a b i l i ty i n th e co n te xt o f th e i r b u s i n e s s . Th i s

ca n th e n be t ra n s l a t e d i n to p ro ce s s d e ve l o p m e n t , i m p l e m e n t a ti o n ,

e d u ca ti o n and re p o rti n g a p p ro a ch e s t h a t d e l i ve r co m p l i a n ce and a

b ro a d e r p e rs p e cti ve on b e n e fi t s ; m o re i m p o rta n tl y, th e y d e m o n s t ra te

h o w th e p ri m a ry o b j e cti ve s o f we a l th cre a ti o n o p p o rtu n i ti e s ca n be

e va l u a t e d to em bed b ro a d e r th i n ki n g wi t h i n o rg a n i z a ti o n s a n d p ro vi d e a

va l u a b l e b a ckd ro p to s u s ta i n a b i l i ty. E m bed d i n g th e ri g h t s tra te g y i s a

cru ci a l p a rt o f a n y b u s i n e s s d e ve l o p m e n t; b u t wh e n i t co m e s to

s u s ta i n a b i l i ty i t i s o fte n d e l e g a te d o u ts i d e th e o p e ra ti o n a l te a m s a n d

fo cu s e d on i s s u e s o f co m p l i a n ce . Th e re a l i ty i s th a t m a n y o f th e a s p e ct s

o f s u s ta i n a b i l i t y a re cri t i ca l to b u s i n e s s s ta b i l i ty; b u t a l so , i f h a n d l ed

co rre ctl y, t h e y ca n e n h a n ce p o te n ti a l p ro fi ts . H o we ve r, fo r t h i s t o be

a ch i e ve d th e s tra te g y h a s to be fu l l y i n te g ra te d and e ffe cti ve l y d e p l o ye d

t h ro u g h p o l i cy, p ro ce d u re s a n d t ra i n i n g . Th i s co n s t ra i n e d vi e w i s o n e th a t

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i s p ro g re s s i ve l y ch a n g i n g a s th e re co g n i ti o n o f fo rwa rd - l o o ki n g

co m p a n i e s b e co m e s a fe a tu re o f th e m a rke tp l a ce .

S ta ke h o l d e r i n cl us i o n
F o r a n y o rg a n i z a ti o n to o p e ra te e ffe cti ve l y i t n e e d s t o e n s u re th a t i ts

s ta ke h o l d e rs a re in tu n e wi th th e b u s i n e s s o b j e cti ve s o u tl i n e d b e l o w.

Governance
In re ce n t ye a rs th e fa i l u re o f m a n y h i g h - p ro fi l e co rp o ra ti o n s h a s

d a m a g ed th e re p u ta ti o n o f th e b u s i n e s s co m m u n i ty i n g e n e ra l , wh i ch in

tu rn h a s re s u l te d in m o re and m o re re g u l a to ry re q u i re m e n ts b e i n g

i m p o se d . Sou n d g o ve rn a n ce i s cru ci a l in all re s p e cts , fro m l eg a l

co m p l i a n ce to i n ve s t m e n t co n fi d e n ce .

Environment
G l oba l wa rm i n g h a s h e i g h te n e d th e fo c u s o n th e e n vi ro n m e n ta l i m p a ct

to th e e xt e n t th a t m a n y g o ve rn m e n ts a re s e tti n g s i g n i fi ca n t t a rg e t s fo r

m a n y a s p e cts ; and p u b l i c a wa re n e s s a n d co n ce rn i s g ro wi n g , fo rci n g

co rp o ra te re s p o n s i b i l i ty a n d p e rfo rm a n ce .

Natural resources
Th e co n s u m p t i o n o f re s o u rc e s i s a l re a d y o u t s tri p p i n g a va i l a b i l i ty a n d th e

q u e s t fo r n e w s o u rce s i s cre a ti n g p re s s u re s o n th e a b i l i ty o f o rg a n i z a ti o n s

to g ro w a n d d e ve l o p .

Human resources
A m a j o r co n s t i tu e n t a n d cri ti ca l s u cce s s fa cto r o f a n y b u s i n e s s i s i ts l a b o u r

fo rce , wh e th e r t h i s i s d i re ctl y e m p l o ye d or en g a g ed th ro u g h p a rt n e rs a n d

s u p p l i e rs . Th e i r b e h a vi o u rs , a p p ro a ch e s a n d co m m i t m e n t to th e o ve ra l l

vi s i o n and va l u e s a re cru ci a l fo r s u cce s s . I t i s a l so an a re a o f C S R wh e re

u n fa i r p ra cti ce s i n l a b o u r e xp l o i ta t i o n m a y b e co m e a s i g n i fi ca n t

re p u ta ti o n a l ri s k.

Ethical trade
Tru s t a n d co n fi d e n ce a re ke y co n s ti tu e n ts o f a n y b u s i n e s s re l a ti o n s h i p ;

th e y s i g n i fi ca n t l y i n fl u e n ce th e wa y a n o rg a n i z a ti o n i s vi e we d

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PART 3: Where?

t h ro u g h o u t th e s ta ke h o l d e r co m m u n i ty. A n u m b e r o f h i g h - p ro fi l e ca s e s

h a ve s e ri o u s l y a ffe ct e d th e s e ca ta l ys ts fo r s u cc e s s .

Economic and social development

Tra d e i s a t th e co re o f e ve ry co m m u n i ty; th u s t h e i m p a ct o f b u s i n e s s i s

cru ci a l to b oth e co n o m i c a n d s o ci a l d e ve l o p m e n t, wh i c h in tu rn is a

co rn e rs to n e o f s u s ta i n a b i l i ty.

Operations
Th e g l o b a l i z a ti o n o f b u si n e ss a n d th e i n cre a s i n g tre n d to wa rd s

o u ts o u rci n g , a l l i a n ce s a n d co l l a b o ra ti ve p a rtn e rs h i p s cre a te s a wi d e

d i m en si on fo r th e o p e ra ti o n s o f to d a y’s b u s i n e s s ; th i s m e a n s th a t th e

s u s ta i n a b i l i ty a g e n d a re q u i re s i n t e g ra ti o n a t e ve ry l e ve l .

Globalization
Th e re ca n be fe w, i f a n y, b u s i n e s s o p e ra t i o n s th a t a re n o t d i re ctl y o r

i n d i re ctl y a ffe cte d b y g l o b a l i z a ti o n , wh i ch i n tro d u ce s th e i m p l i ca ti o n s fo r

s u s ta i n a b i l i ty to e ve ry o p e ra ti o n .

Sustainable development
B u s i n e s s i s n o t u s u a l l y fo u n d e d on a s h o rt l i fe cycl e , th o u g h i s fre q u e n tl y

d ri ve n b y s h o rt- t e rm t a rg e ts . S u s ta i n a b i l i t y i s fo cu s e d on th e l on g t e rm ,

b u t cl e a rl y m u s t p ro vi d e i n te rm e d i a te re tu rn s t o s u rvi ve ; b a l a n ci n g th e se

i s th e ch a l l e n g e fo r th e b u s i n e s s co m m u n i ty a n d en g a g i n g th e

s ta ke h o l d e rs i s cru ci a l .

Concl us ion
Th e e xp l o i ta ti o n o f co l l a b o ra t i ve re l a ti o n s h i p s , wh i l e p ro vi d i n g th e b a si s

fo r i m p ro vi n g co m p e t i ti ve n e s s a n d m e e ti n g s u s ta i n a b l e ta rg e ts , n eed s a

cl e a r co rp o ra te a g en d a th a t i s a d o p te d by a l l p a rt i ci p a t i n g o rg a n i z a ti o n s

to e n s u re a u n i fo rm a p p ro a ch . Th e e ffe cti ve i m p l e m e n t a ti o n of

co l l a b o ra ti ve ve n t u re s m u s t b e b a se d on th e e sta b l i sh m e n t o f a ro b u s t

m a n d a te fro m b o a rd l e ve l ; th e i m p e ra ti ve i n cre a s e s wh e re th i s

re l a ti o n s h i p th e n s e e ks t o ta ke a ro b u s t p o s i ti o n on th e o rg a n i z a ti o n ’s

s u s ta i n a b i l i ty i s s u e s d o wn th ro u g h th e va l u e ch a i n . Th i s i s b e ca u s e many

a s p e cts o f t h e o ve ra l l p ro g ra m m e m a y h a ve a d i re ct i m p a ct o n

i n ve s tm e n t re tu rn s .

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C re a ti n g a s u s ta i n a b l e s tra t e g y m u s t b e a p p ro a ch e d in a h o l i s t i c m a n n e r.

Th e tra d i t i o n a l l i n ka g e s b e twe e n o rg a n i z a ti o n s m a y we l l be e s ta b l i s h e d

th ro u g h a rm ’ s - l e n g th co n tra cti n g p o s i ti o n s , b u t th e i m p l i ca ti o n s o f t h e

e ffe ct s o f fa i l i n g to re co g n i z e th e p ote n ti a l re a cti o n s to su sta i n a b l e i ssu e s

ca n fl o w th ro u g h th e tra d i n g re l a ti o n s h i p . C o l l a b o ra ti ve b u si n e ss m o d e l s

a l l o w th e p a rt i e s to e va l u a te all a s p e cts o f th e b u s i n e s s d e l i ve ry p ro ce s s

and i n co rp o ra te th e n eed s a n d d ri ve rs fo r e a ch , wh i l e fi n d i n g

o p p o rtu n i t i e s to re d u ce co s ts a n d wa s te as a b y- p ro d u ct o f co n t i n u o u s

i m p ro ve m e n t.

S u s ta i n a b i l i t y i s a s u b j e ct th a t a t a n i n d i vi d u a l l e ve l e i th e r i n s p i re s p e o p l e

to be ve ry p ro a ct i ve o r p ro d u ce s a p a t h y, in te rm s o f i t b e i n g so m e o n e

e l s e ’s p ro b l e m . In a co l l a b o ra ti ve cu l t u re on e o f th e ke y i n g re d i e n ts to

s u cce s s co m e s fro m th e j o i n t co m m i tm e n t to a s e t o f co m m o n g oa l s a n d

o b j e cti ve s , b u t o fte n th e p o te n ti a l co m m e rci a l b e n e fi ts o f a d o p ti n g a

s u s ta i n a b l e a p p ro a ch a re i g n o re d in fa vo u r o f s h o rt - ra n g e p ro fi t s . Al l

re l a t i o n s h i p s a re fo u n d e d on p e rs o n a l i n te ra ct i o n and th u s i t i s i m p o rta n t

th a t i n d e ve l o p i n g a b u s i n e s s p a rtn e ri n g s tru ctu re th e o b j e cti ve s a n d

re wa rd s fo r a l l p l a ye rs m u s t b e c o n s i s te n t wi t h th e o ve ra l l o b j e cti ve s .

Th e s e m u st b e d e ve l o p e d and d e p l o ye d to e n s u re th a t a l l th o s e i n vo l ve d

in th e b u s i n e s s p ro ce s s a p p re ci a te th e i r i n d i vi d u a l and j o i n t co n t ri b u ti o n s

to s u s t a i n a b i l i ty. Th e fu tu re h o l d s i n cre a s i n g ch a l l e n g e s , so o rg a n i z a ti o n s

m u s t co n s i d e r i n th e i r l o n g - te rm s tra te g i e s h o w th e y wi l l m e e t th e

ca l l e n g e s wh i l e m a i n ta i n i n g th e b u si n e ss’ p u b l i c p ro fi l e s a n d p ro fi ta b i l i ty.

Al l l e ve l s o f t h e va l u e ch a i n m u st b e i n te g ra te d to a ch i e ve o ve ra l l s u cce s s ,

b u t th o s e wh o t a ke th e l ea d in th e i n te g ra ti o n p ro ce s s wi l l be m o s t l i ke l y

to ta ke a s i g n i fi ca n t l e a d in bu i l d i n g s u s ta i n a b l e a l te rn a ti ve b u si n e ss

m o d e l s.

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PART 3: Where?

Checklist
Ta bl e 2 6. 1 provi d es a m a tri x th a t ca n be u sed a s a sta rti n g poi n t to
d evel op a col l a bora ti ve a pproa ch to su sta i n a bi l i ty.

Ta bl e 2 6. 1 – E l em en t s o f sus ta i n a bi l i ty s tra teg y

S ta keh ol d e r G ove r n - r
E n vi on - N a t ur a l Hu m a n
us i on
i n cl a n ce m en t re s o urce s re s o urce s

Cu stom ers Vi si on a n d G reen h ou se E n erg y Worki n g

va l u es g a ses (G H G ) con d i ti on s

Sh a reh ol d - N a ti on a l Pol l u ti on Fossi l fu el Fa i r pa y

ers a n d sta n d a rd s
i n vestors

Reg u l a tors Leg a l Wa ste Ren ewa bl e Soci a l

com pl i a n ce m a n a g e- sou rci n g wel fa re
m en t

E m pl oyees Reg u l a tory Con ta m i n a - M i n era l s Equal

req u i re- ti on expl oi ta ti on opportu n i -
m en ts ti es

Con su m ers Ri sk Pa cka g i n g Wa ter D i scri m i n a -

m a n a g e- con serva - ti on
m en t ti on

Su ppl i ers B ra n d Tra n sport Recycl i n g Human

m a n a g e- ri g h ts
m en t

Pa rtn ers Cod es of Com m u n i ty Resou rce I n cen ti ves

pra cti ce i m pa cts stewa rd sh i p

N G Os Tra n spa r- Recl a m a - M a n a g ed Work–l i fe

en cy ti on q u ota s ba l a n ce

G en era l Accou n t- Ca rbon E col og i ca l Cu l tu ra l

pu bl i c a n d a bi l i ty footpri n t ba l a n ce d i versi ty
m ed i a

I n d u stry I n d u stry I n fra stru c- Prod u ct H ea l th a n d

a ssoci a ti on s sta n d a rd s tu re d i sposa l sa fety
i m pa cts

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 Chapter 26 – Collaborating for sustainability

E th i ca l E con om i c O p e ra ti on s G l oba l i za - Sus ta i n a bl e

r de
t a an d s oci a l ti on d evel o p -
d evel o p - m en t

m en t

Fa i r tra d e E co n om i ca l Pro fi ta bi l i ty N a ti on a l I n n ova ti o n

g ro wth reg u l a ti o n

E xp l oi ta ti o n So ci a l Pro d u cti vi ty Cu l tu ra l M a teri a l

i m pa ct i n teg ra ti o n a l tern a ti ves

B ri b ery E d u ca ti o n Q u a l i ty Su p p l y Su sta i n a b l e

ch a i n tech n o l og y

secu ri ty

Co rru p ti on H u m a n i ta r- Ch a n g e M a rket Fu tu re

ian aid m a n a g e- d evel o p - prosperi ty

m en t m en t

I n d u ce- Su sta i n a b l e Con ti n u o u s Po l i ti ca l I n d u cti o n

m en ts g ro wth i m prove- p ro fi l e and

m en t tra i n i n g

M a rket So ci a l Pro d u ct So ci a l Pro cess

d o m i n a n ce i n vestm en t p erfo r- ch a l l en g es i n teg ra ti o n

m a n ce

Ca rtel s Po verty Retu rn o n Cu sto m a n d Pro d u ct

red u cti o n i n vestm en t p ra cti ce op ti m i za -

ti o n

Sm a l l So ci a l Ski l l s Cu l tu ra l Log i sti cs

b u si n ess wel fa re d evel o p - co n fl i cts

su p p o rt m en t

Rel i g i o u s Com m u n i ty I n d u stry B o yco tts Foo d

va l u es d evel o p - b en ch m a rk- ou tp u t

m en t ing m a n a g e-

m en t

O rg a n i za - H ea l th ca re Kn o wl ed g e I n teg ra ti o n M ea su ra b l e

ti o n a l p ro vi si o n m a n a g e- rep orti n g

b eh a vi o u rs m en t

275
Cha p te r 27 – Thi rd s ecto r

In th e co n te xt o f co l l a b o ra t i ve wo rki n g , th i s ch a p te r co n s i d e rs

th e vo l u n ta ry s e cto r wh i ch h a s fo r d e ca d e s p ro vi d e d a va l u a b l e

co n tri b u ti o n to s o ci e ty i n te rm s o f s o ci a l d e ve l o p m e n t. Th e re

a re m a n y t h o u s a n d s o f ch a ri ty o p e ra ti o n s wo rki n g in a l m o st

e ve ry a re a o f s o ci e t y. In re ce n t ye a rs t h i s va s t re s o u rce has

b e co m e an i n te g ra l p a rt o f fu tu re th i n ki n g . Wh a t b e co m e s

a p p a re n t i s th a t to e n h a n ce th e i r i n vo l ve m e n t th e y n e e d to

align h o ri z o n ta l l y wi t h o t h e r ch a ri t i e s , g o ve rn m e n t b o d i e s a n d

wi t h i n d u s try. Th i s ra i s e s t h e vi s t a o f two o r m o re ve ry d i ffe re n t

cu l tu re s a n d th e s tru ctu re s th a t wi l l be n eed ed to d e ve l o p a

ro b u s t re l a t i o n s h i p t h a t s u p p o rt s th e o ve ra l l o b j e cti ve s .

BS 1 1 000 p ro vi d e s t h e p l a tfo rm on wh i ch th e se s o m e ti m e s

d i ffi cu l t re l a t i o n s h i p s ca n be fo rm e d a g a i n s t th e b a ckg ro u n d of

a co m m o n s tru ct u re .

Th e re a re te n s o f th o u s a n d s o f vo l u n ta ry o rg a n i z a t i o n s a cro s s th e wo rl d ,

ra n g i n g fro m h i g h - p ro fi l e i n te rn a ti o n a l l y re co g n i z e d n a m e s to sm a l l l o ca l

ch a ri ti e s . E a ch p ro vi d e s a va l u a b l e s e rvi ce to th e i r re l a ti ve co m m u n i ti e s

and s p e ci a l i s t a re a s . Th e l a rg e s t o f th e s e , wh i l e th e y a re ch a ri t i e s , ca n

ra n k a l o n g s i d e m a j o r co rp o ra ti o n s i n te rm s o f th e i r o p e ra t i n g re ve n u e s

and h a ve s o p h i s ti ca te d b u si n e ss m o d e l s. Th e s m a l l e r o n e s ca n be eq u a l l y

co m p e te n t b u t a re o fte n m u ch l e s s s tru ctu re d in o p e ra ti o n a l te rm s . In

th i s ch a p te r a c kn o wl e d g e m e n t i s m a d e o f th e p a p e r p ro d u ce d by

D o u g l a s R o wl e s i n J u l y 2 01 1 BS 1 1 000 and the Third Sector ,

1 8
wh i ch

fo cu s e s o n i m p ro vi n g d e l i ve ry o f t h e wo rk p ro g ra m m e in co n j u n cti o n

wi t h p ri va te fi rm s .

I t i s i n te re s ti n g to n o te , b a se d on a n e cd o ta l e vi d e n ce , th e d e g re e to

wh i ch th e se o rg a n i z a ti o n s i n te rfa ce wi th th e p u b l i c, wi th i n d u s t ry a n d to

so m e e xte n t wi t h g o ve rn m e n ts . Ce rt a i n l y th o s e wo rki n g in e m e rg e n cy

e n vi ro n m e n ts h a ve m o re th a n o n ce d e m o n s tra te d th e e s s e n ti a l ro l e th e y

ca n p l a y. In m a n y ca s e s , we re i t n o t fo r th e s e o rg a n i z a ti o n s a n d th e i r

sp e e d o f re s p o n s e , m a n y d i s a s te r s i tu a ti o n s co u l d be fa r wo rs e . O th e rs

wo rk l e s s p u b l i cl y b u t co n tri b u te e xte n s i ve l y to s u p p o rt s o ci e ty. I t i s a l so

a p p a re n t th a t, d ri ve n b y t h e i r p a rti cu l a r a g e n d a s , th e s e o rg a n i z a t i o n s ca n

1 8
Th i s p a p e r fo r I C W ca n be d o wn l o a d e d a t:

www. i n st i t u t e fo rco l l a b o ra ti ve wo rki n g . co m /i n t e rn _re p o rt s . h t m l

277
PART 3: Where?

be h i g h l y co l l a b o ra t i ve , s u ch a s on th e g ro u n d in a d i s a s te r a re a , b u t a l so

ve ry co m p e ti t i ve wh e n s e e ki n g to bu i l d th e i r m e m b e rs h i p and s e cu re

d o n a ti o n s .

S i m i l a rl y, th e d e g re e to wh i ch vo l u n ta ry o rg a n i z a t i o n s wo rk wi th i n d u s try

o r g o ve rn m e n ts ca n be va ri a b l e ; in som e ca s e s th e y wo rk wi th th e s e

bod i es a n d s h a re co m m o n g o a l s, wh i l e in o th e rs t h e fo cu s i s o fte n se e n

a s a tta cki n g i n d u s try a s a wa y o f p ro m o ti n g and gaining p u b l i ci t y fo r

t h e i r ca u s e . Th i s co n t ra d i cti o n i s on e th a t crys ta l l i z e s e ve ryo n e ’s

p e rs p e ct i ve . Th i s i s n o t to s u g g e s t t h a t th e y d o n o t h a ve a s tro n g

m e ssa g e to p ro j e ct a s s p e ci a l i s t s i n th e i r fi e l d s , bu t i t d oes pose th e

q u e s ti o n a s to wh e th e r a m o re co l l a b o ra t i ve a p p ro a ch co u l d be m o re

b e n e fi ci a l all ro u n d .

F ro m an i n d u s try p e rs p e cti ve , th e o b vi o u s b e n e fi ts o f a l i g n i n g wi t h

ch a ri ta b l e ve n t u re s a re th e ro u te s t o en g a g e wi th th e wi d e r s o ci a l

co m m u n i ty; i t sh o u l d be e q u a l l y re co g n i z e d th a t b y a s s o ci a ti o n th i s h e l p s

to p ro m o t e th e i r b ra n d s a n d p ro d u cts . F o r ch a ri t i e s , wh i l e t h e re m a y be

s h o rt - te rm b e n e fi ts i n ch a l l e n g i n g i n d u s try th ro u g h th e p re s s , wo rki n g

wi th i n d u s t ry co u l d en a bl e a m o re i n te g ra te d a p p ro a ch to fu rt h e r th e

a i m s of b oth , a ckn o wl e d g i n g t h a t th e fo cu s o n co rp o ra te re s p o n s i b i l i t y

and s o ci a l i m p a cts i s a cl e a r g o a l fo r m o s t i n d u s try l e a d e rs to d a y. It has

o ft e n been a vi e w th a t t h e co m b i n a ti o n o f th e e xp e rti s e and ca p a b i l i ty

o f th e vo l u n ta ry s e rvi ce s co u l d be ve ry e ffe ct i ve in e n h a n ci n g i n d u s t ry

d e ve l o p m e n ts to m u tu a l b e n e fi t.

In a m o re p ra cti ca l co n te xt, th e n eed fo r co l l a b o ra ti o n b e t we e n vo l u n ta ry

o rg a n i z a t i o n s ca n be a ca ta l ys t fo r m o re fo cu s e d s u p p o rt t o th o s e in

n eed . F o r e xa m p l e , in d i s cu s s i o n s wi th Guide D o g s fo r th e Blind, th e

ch a ri ty’s a i m i s to b ro a d e n th e s e rvi c e o ffe ri n g to bl i n d and p a rt i a l l y

s i g h te d peopl e b y l i n ki n g wi th o th e r o rg a n i z a t i o n s i n th e fi e l d . On an

i n d u s t ry fro n t, cl e a rl y co l l a b o ra ti o n ra th e r t h a n co n fl i ct p ro vi d e s t h e

o p p o rtu n i ty t o s h a re kn o wl e d g e ; in som e ca s e s i n d u s try c o u l d p ro vi d e

m o re p ra cti ca l s u p p o rt ra th e r th a n s i m p l y d o n a ti n g . Th e d e ve l o p m e n t o f

th e th i rd s e cto r b y g o ve rn m e n t b ri n g s co l l a b o ra t i o n to th e fo re , wh e re

p o te n ti a l l y vo l u n ta ry o rg a n i z a t i o n s , i n d u s try a n d g o ve rn m e n t

d e p a rtm e n ts wo rk to g e t h e r to d e l i ve r s e rvi ce s .

C u l ture s , g oa l s an d o b j e cti ve s
Th e ch a l l e n g e in th e se co l l a b o ra t i ve m o d e l s i s th e p o te n ti a l m i sa l i g n m e n t

t h a t co m e s fro m th e d i ffe re n t b a ckg ro u n d s , cu l tu re s a n d d ri ve rs o f e a ch

o rg a n i z a ti o n . We m i g h t co n s i d e r th i s to be o ve r- co m p l i ca ti o n , bu t

e xp e ri e n ce s u g g e s t s t h a t th e s e b a ckg ro u n d i n fl u e n ce s wi l l s i g n i fi ca n tl y

a ffe ct t h e wa y e a ch g ro u p and th e i n d i vi d u a l s i n vo l ve d b e h a ve . To fo cu s

th e se a s p e cts , co n s i d e r Ta b l e 27.1 .

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Ta b l e 2 7 . 1 – B a ckg r u d
o n in fu
l e n ce s f o th e d ff r
i e en t s e cto rs

O r g a n i z a ti o n C u ur
lt e D r i ve rs O b j e cti ve s

Vo l u n ta ry P ri n ci p a l l y n o t C l e a rl y fo cu s e d To i m p ro ve or

s e cto r fo cu s e d on on th e vi s i o n s s u p p o rt th e

co m m e rci a l and va l u e s o f ta rg e t

o u tco m e s a n d th e co m m u n i t i e s

mainly o rg a n i z a ti o n and o ve ra l l

re s o u rce d by wi th s p e ci fi c a i m s o f th e

fre e l y g i ve n a re a o f i n te re s t o rg a n i z a ti o n

ti m e and and d ri ve n

e ffo rt. O ft e n l a rg e l y b y t h e

we a k i n te rm s p a ssi o n of i ts

o f o p e ra ti n g m e m b e rs a n d

s t ru ctu re s d o n o rs

I n d u s t ry s e ct o r G e n e ra l l y C o m m e rci a l P ro fi ta b i l i ty

h i g h l y fo cu s e d o u tp u t s to and g ro wth

and s tru ct u re d d e l i ve r va l u e wh i l e

a ro u n d fo r i ts p ro te cti n g or

co m m e rci a l s h a re h o l d e rs e n h a n ci n g

p e rfo rm a n ce , wi th i n a b ra n d and

b ra n d and re g u l a te d re p u ta ti o n

s t a ke h o l d e rs g o ve rn a n ce

m od el

P u b l i c s e ct o r S tru ct u re d and P o l i ti ca l l y S e rvi ce d e l i ve ry

re g u l a t e d re s p o n s i ve and wi th i n b u d g e ts

e n vi ro n m e n t fo cu s e d on and p o l i t i ca l

th a t i s a cco u n t a b i l i ty, a g en d a s

re s p o n s i ve g e n e ra l l y

p a rti cu l a rl y to wi th i n highly

s o ci a l ca re fo cu s e d

m e d i a - s e n s i t i ve

o p e ra ti o n s

Wh i l e so m e peopl e m a y ch a l l e n g e th e se s i m p l i fi e d ch a ra ct e ri s ti cs , th e y d o

h i g h l i g h t th e p ote n ti a l fo r c o n fl i ct wh e n co n s i d e ri n g a n y bl en d i n g of

ca p a b i l i ty a n d re s o u rce s . Th i s i s n o t t o s u g g e s t th a t t h e y d o n o t e a ch

h a ve a co m m i tm e n t to th e d e s i re s o u tco m e s , b u t o rg a n i ca l l y th e y h a ve

d i ffe re n t ro u te s a n d m e a s u re s o f s u cce s s . As o u tl i n e d e a rl i e r, e ve n wi th i n

th e vo l u n ta ry s e cto r t h e re m a y be s co p e fo r co n fl i ct wh e n two o r m o re

o rg a n i z a ti o n s n e e d to o p e ra t e in cl o s e p ro xi m i ty. Ye t wh e n th e re is a

cri s i s a n d th e p re s s u re i s on i t i s s o m e ti m e s d i ffi cu l t to d i sti n g u i sh wh o

wo rks fo r wh i ch ch a ri t y.

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PART 3: Where?

Commi ss ioning s e rvice s

Wh en con si d eri n g wh a t m i g h t be seen a s bl en d ed servi ces, th e i m pa cts of
n ot a d d ressi n g th e fu n d a m en ta l d i fferen ces a n d ba ckg rou n d of ea ch
pa rty ca n be a si g n i fi ca n t ri sk; so stru ctu red a pproa ch es to col l a bora ti on
m i g h t provi d e th e ca ta l yst for su ccess. Th e ea rl y si g n s of th i s ten si on
com e wh en g overn m en ts or i n tern a ti on a l org a n i za ti on s seek to h a rn ess
th e va l u e a n d ca pa bi l i ty of th e vol u n ta ry sector to d el i ver wh a t m a y
previ ou sl y h a ve been pu bl i c sector servi ces, or to col l ecti vel y h a rn ess a n d
coord i n a te on -th e-g rou n d su pport.

M obi l i zi n g th e th i rd sector h a s l on g been (for exa m pl e) a d esi re of th e

U K g overn m en t, si n ce i t h a s va st resou rces a n d a ski l l ba se th a t i s d i ffi cu l t
for th e pu bl i c sector to su pport. Th e poten ti a l d own si d e of th i s i s th a t
m a n y org a n i za ti on s wi th a n i n -d epth kn owl ed g e of a speci fi c i ssu e m a y
n ot h a ve th e fi n a n ci a l resou rces or ba ckroom ca pa bi l i ty to u n d erta ke
con tra cti n g servi ces d i rectl y. Th e sol u ti on i s to en cou ra g e pa rtn eri n g
between i n d u stry (wh i ch h a s th e m a ch i n e) a n d th e vol u n ta ry sector
(wh i ch h a s th e resou rces a n d ski l l s) . I t i s ea sy to see on th e su rfa ce h ow
th i s a pproa ch m a y provi d e a m od el , bu t i t d oes n ot n ecessa ri l y a d d ress
th e m ore fu n d a m en ta l ch a l l en g e. O n th e on e h a n d , g overn m en t
org a n i za ti on s a re m ore a n d m ore focu sed on ‘pa ym en t by resu l ts’, wh i ch
i s a m od el th a t i n d u stry u n d ersta n d s a n d h a s th e ca pa ci ty to su pport. Th e
vol u n ta ry sector, on th e oth er h a n d , i s pred om i n a n tl y resou rced by
pa ssi on a te en th u si a sts wh o wa n t th e sa m e resu l ts bu t wh o a re n ot d ri ven
so m u ch by key perform a n ce i n d i ca tors a n d servi ce l evel a g reem en ts. I n a
soci a l en vi ron m en t th ei r m ea su re of su ccess i s th e fi n a l ou tcom e,
i rrespecti ve of ti m e a n d effort. So th e tra d i ti on a l stru ctu re ten d s to l ea d
to g overn m en t con tra cti n g wi th i n d u stry, wh o i n tu rn pa rtn er wi th th e
vol u n ta ry sector. I n d u stry i s d ri ven by perform a n ce, ti m i n g a n d cost –
wh i ch th en d ri ves th e vol u n teers to m eet d ea d l i n es a n d perform a n ce
ta rg ets.

Th u s th e seed s of ten si on a re ea si l y i d en ti fi ed . Th i s l i n ea r m od el of
com m i ssi on er to i n d u stry to l oca l d el i very pa rtn er h a s th e poten ti a l to
d i sen fra n ch i se th e fron t-l i n e resou rces a n d cou l d even tu a l l y u n d erm i n e
th e l on g er-term poten ti a l . A m ore ba l a n ced tri pa rti te col l a bora ti ve
m od el , ba sed a rou n d th e pri n ci pl es of B S 1 1 000, cou l d offer a n
a l tern a ti ve. I n th i s m od el a l l th ree org a n i za ti on s form a col l a bora ti ve
stru ctu re th a t recog n i zes th e d i fferi n g d ri vers a n d obj ecti ves wh i l e
crea ti n g a com posi te d el i very m od el .

Vol u n ta ry org a n i za ti on s a re pa ssi on a te a bou t d oi n g th ei r work bu t h a ve

to be rea l i sti c a bou t con tra cti n g rel a ti on sh i ps. Th e m ost d i ffi cu l t pa rt i s
esta bl i sh i n g a l evel of tru st between pri m e a n d su bcon tra cts so th a t th ey
ca n n eg oti a te freel y wi th ou t fea r of th a t tru st bei n g a bu sed . Th ere i s
cl ea r ben efi t i n esta bl i sh i n g a com m on a n d robu st col l a bora ti ve m od el
th a t su pports th e vi ews of ea ch pa rty, wh i ch to som e exten t l evel s th e

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 Chapter 27 – Third sector

pl a yi n g fi el d for a l l g rou ps – especi a l l y sm a l l er ch a ri ti es. As a n a ti on a l

sta n d a rd , th e pri n ci pl es a n d stru ctu re of B S 1 1 000 provi d e a n eu tra l
pl a tform for th ese d evel opm en ts.

Knowle d ge s ha ring
I n a broa d er con text th e su bj ect of sh a ri n g kn owl ed g e i s a key a spect of
u si n g th e vol u n ta ry sector to en h a n ce ou tcom es. As wi th a n y
col l a bora ti ve en vi ron m en t, th e poten ti a l to ben efi t from sh a red
kn owl ed g e i s si g n i fi ca n t, yet (a s wi th i n i n d u stry) th e rel u cta n ce to d o so
i s often d ri ven by l oca l i zed con cern s a n d a spi ra ti on s. For exa m pl e,
recen tl y a reta i l d o-i t-you rsel f (D I Y) ch a i n ’s overtu res to a m a j or
en vi ron m en ta l ch a ri ty were rej ected . Th e d evel opm en t of spon sorsh i p
prog ra m m es a n d q u est for d on a ti on s i s a freq u en t ba ttl efi el d between
ch a ri ti es, i n som e ca ses l ea d i n g (on e m i g h t su g g est) to d i sen fra n ch i si n g
th e pu bl i c. H owever, th ere i s th e i n spi ri n g exa m pl e set by M cM i l l a n , th e
U K ca n cer ch a ri ty. I f we con si d er th e stri d es ta ke by M cM i l l a n to n ot on l y
sh a re i ts kn owl ed g e bu t to em bed i ts work i n N a ti on a l H ea l th Servi ce
(N H S) prog ra m m es, th e com bi n ed d ri ve for g ood ca n n ot be i g n ored .

Re s o urce o p timization an d supp ly chain rationalization

We ca n a l so l ook to i n d u stry to see wh y a n d wh ere th ey col l a bora te to
exten d or sh a re resou rces for m u tu a l ben efi t, a n d won d er wh y th e th i rd
sector i s n ot h a rm on i zi n g ba ckroom su pport m ore wi d el y for m u tu a l
ben efi t. ‘Sh a red servi ces’ i n th e pu bl i c sector h a s been cl ea rl y i d en ti fi ed
a s a si g n i fi ca n t opportu n i ty; h owever, i n fa i rn ess, even h ere i t i s n ot
a l wa ys ea sy to d evel op a com m on u n d ersta n d i n g a n d l evel of tru st. I n
th e vol u n ta ry sector th ere m u st be a m pl e scope to ra ti on a l i ze su pport
servi ces wi th ou t i m pi n g i n g on th ei r pri m a ry obj ecti ves. Ta ken a sta g e
fu rth er, perh a ps th ere i s a l so a n opportu n i ty for i n d u stry org a n i za ti on s to
provi d e servi ces ra th er th a n si m pl y si g n i n g d on a ti on ch eq u es or rel ea si n g
sta ff for a few d a ys’ g ood work. I n a si m i l a r vei n , we h a ve a l rea d y
recog n i zed th e poten ti a l for su ppl y ch a i n opti m i za ti on between pa rtn ers;
so wh y n ot wi th i n th e th i rd sector th rou g h econ om i es of sca l e? Th e m ore
focu s th ere i s on red u ci n g overh ea d costs, th e m ore fu n d i n g th ere i s for
fron t-l i n e a cti vi ty. Th i s ca n be a s si m pl e a s offi ce con su m a bl es ri g h t
th rou g h to fl eet m a n a g em en t.

Concl us ion
Col l a bora ti on i s a powerfu l tool . I t i s n ot j u st for i n d u stry or g overn m en t;
i t h a s th e poten ti a l to bri n g va l u e to a l m ost a n y org a n i za ti on th a t n eed s
to h a rn ess rel a ti on sh i ps. Th e ch a l l en g e i s a l wa ys to h a ve a pl a tform on
wh i ch to i d en ti fy th e i n d i vi d u a l d ri vers a n d bu i l d a l evel of tru st th a t

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PART 3: Where?

wo rks to s u p p o rt m u tu a l b e n e fi t . Th e p ri m a ry co n s tra i n t i s th a t

o rg a n i z a ti o n s n e e d to open th e i r m i n d s a n d l o o k b e yo n d l o ca l i z e d

b o u n d a ri e s . Th e b e n e fi t o f B S 1 1 000, a s fo r i n d u s try a n d g o ve rn m e n t, is

t h a t b e s t p ra ct i ce and a s tru ctu re d a p p ro a ch a re em bed d ed in a n a ti o n a l

s ta n d a rd th a t i s a va i l a b l e to all and p ro vi d e s t h e fo u n d a ti o n to a l l ow

o rg a n i z a ti o n s o f a n y s i z e to cre a te ro b u s t co l l a b o ra ti ve a p p ro a ch e s .

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Cha p te r 28 – F u tu re o f collabo ration

H a vi n g l ooked very m u ch a t tod a y, i t i s worth l ooki n g a h ea d i n

th i s ch a pter to a fu tu re perspecti ve wh ere a l tern a ti ve bu si n ess
m od el s wi l l becom e a su bsta n ti a l a spect of th e bu si n ess
com m u n i ty. M a n y peopl e wou l d su g g est th a t th ese n etwork
m od el s wi l l i n ti m e becom e th e pred om i n a n t fra m ework for
bu si n ess, provi d i n g a m ore fl exi bl e a n d a g i l e a pproa ch to m eet
th e con verg en ce of i n d u stri es i n respon se to cu stom er
d em a n d s. At th e sa m e ti m e th e econ om i c pressu res on
org a n i za ti on s wi l l d ri ve m a n y org a n i za ti on s to recon si d er th ei r
i n vestm en t stra teg i es i n fa vou r of col l a bora ti on i n on e form or
a n oth er.

Wh a t becom es cl ea r from a wi d e ra n g e of fu tu ri st perspecti ves i s th a t th e

key word i n fu tu re i s i n terd epen d en ce . Th e spectre of th e ba n ki n g cri si s
i s j u st on e exa m pl e of h ow i n teg ra ted th e worl d h a s becom e. Th e
pressu res wi th i n th e E u ropea n U n i on (E U ) refl ect th e n eed to focu s on
m u tu a l l y a g reed sol u ti on s. Th e soci a l a n d com m erci a l i m pl i ca ti on s of th e
Ara b Spri n g sh owed h ow cou n tri es n eed to recog n i ze th e i m pl i ca ti on s of
th ei r a cti on s, both l oca l l y a n d g l oba l l y. E m erg i n g econ om i es both d ra w
from a n d i m pa ct on tra d i ti on a l tra d i n g m od el s.

Th e worl d i s ch a n g i n g , a n d a t a fa ster ra te th a n perh a ps ever cou l d h a ve

been en vi sa g ed . G l oba l i za ti on i s n o l on g er a n a spi ra ti on ; i t i s a fa ct of
l i fe. E con om i c pressu res a t a l l l evel s a re ch a l l en g i n g org a n i za ti on s l a rg e
a n d sm a l l to re-eva l u a te th ei r opera ti on s. E m erg i n g n a ti on s a re ch a n g i n g
th e fa ce of econ om i cs. Com m u n i ca ti on s tech n ol og y h a s con d en sed th e
m a rketpl a ce bu t i t h a s sti l l to con q u er th e cu l tu ra l d i vi d e. Th e n etworked
econ om y i s rewri ti n g tra d i ti on a l bu si n ess th i n ki n g of own ersh i p; i t i s
crea ti n g a l tern a ti ve bu si n ess m od el s ba sed on i n terd epen d en t a n d
com pl em en ta ry a l l i a n ces. Th e su ppl y ch a i n i s g i vi n g wa y to th e con cept
of a m ore h ol i sti c va l u e ch a i n . Com peti ti on i s g rowi n g , to refl ect th e
d em a n d s of a m ore i n form ed cu stom er. Con su m er ch oi ce i s sta rti n g to
i n fl u en ce th e wa y org a n i za ti on s beh a ve, both eth i ca l l y a n d i n term s of
su sta i n a bl e respon si bi l i ty. I n th i s tu rm oi l on e fa ctor rem a i n s con sta n t:
rel a ti on sh i ps a re a core i n g red i en t for su ccessfu l bu si n ess.

Looki n g to th e fu tu re, m a n a g ers wi l l work i n a n en vi ron m en t wh ere

cu l tu ra l u n d ersta n d i n g (corpora te a s wel l a s n a ti on a l ) , l a n g u a g e a n d
rel a ti on sh i p ski l l s wi l l be a s i m porta n t a s I T a n d tech n i ca l ski l l s a re tod a y.

2 83
PART 3: Where?

Co m p l e x co l l a b o ra t i o n and m a n a g em en t a t a d i s ta n ce wi l l be e s s e n ti a l

p a rts o f d a i l y l i fe . B u t wi l l we be p re p a re d ? Th e c o m p l e xi ty a n d vo l a ti l i t y

cre a te s a l a n d s ca p e th a t re q u i re s co n s t a n t fl e xi b i l i t y o f a p p ro a ch and

re s o u rce i n ve s tm e n t. C o l l a b o ra ti o n o r p a rtn e ri n g i s n ot a s o l u ti o n in

i ts e l f, b u t d o e s o ffe r a n a l te rn a ti ve p e rs p e cti ve th ro u g h i n te g ra te d

d e l i ve ry n e two rks . Th e s e n e two rks wi l l be l o ca l l y a n d g l o b a l l y o p ti m i z e d

b y fo cu s i n g on th e b o u n d a ri e s b e twe e n o rg a n i z a t i o n s , ba sed on wh a t

e a ch d oes best i n a co m p l e m e n t a ry p ro ce s s . To t a ke a d va n t a g e o f th i s

p o te n ti a l , we wi l l n eed to e va l u a te th e s tre n g th s a n d we a kn e s s e s o f o u r

o rg a n i z a ti o n ’s cu rre n t ca p a b i l i ty, th e n d e ve l o p a s t ra te g y to e n h a n ce

s ki l l s , p ro ce s s e s a n d o p e ra ti o n s . Th e i m p a ct s o n co m p e ti ti ve n e s s a n d

re p u t a ti o n fro m a s i g n i fi ca n t p ro p o rti o n o f b u s i n e s s p ro ce s s a cti vi ti e s wi l l

be o u ts i d e o u r d i re ct co n tro l , wh i ch ca n l e a ve e ve n th e m o s t p ro fe s s i o n a l

o f o rg a n i z a ti o n s wa n ti n g . To h a rn e s s t h i s a d d e d va l u e m e a n s ch a l l e n g i n g

th e tra d i ti o n a l th i n ki n g and g e tti n g ‘ o u ts i d e th e b o x’ . M a n a g em en t

p ro fe s s i o n a l s s h o u l d be l o o ki n g to th e fu tu re b u si n e ss m o d e l s a n d

d e ve l o p i n g p ro g ra m m e s t o s u p p o rt th e i r o rg a n i z a ti o n s . C o l l a b o ra ti o n

d oes n ot m ea n d i s re g a rd i n g tra d i t i o n a l va l u e s o r s ki l l s , bu t i t d oes

re q u i re l o o ki n g a t to d a y’s ch a l l e n g e s fro m a m o re co l l a b o ra ti ve

vi e wp o i n t a n d ca p t u ri n g a d d i ti o n b e n e fi ts .

Th e Future Connections re s e a rch u n d e rta ke n b y PS L a n d s u p p o rte d in

m a n y o th e r p u b l i c a t i o n s h i g h l i g h ts t h e g ro wth in a l l i a n ce s , p a rtn e rs h i p s ,

co n s o rt i a and co l l a b o ra ti ve p ro g ra m m e s . In th i s ch a n g i n g p a ra d i g m

BS 1 1 000 p ro vi d e s t h e b a s i s to s u p p o rt e a rl y a n d ro b u s t e n g a g e m e n t to

bu i l d m o re s u s ta i n a b l e re l a ti o n s h i p s . I t b ri n g s a p p ro a ch e s to g e th e r i n a

h o l i s t i c m a n n e r, b a se d on th e p ri n ci p l e th a t t h e m a n a g e m e n t o f e a ch

re l a t i o n s h i p is a p ro ce s s th a t ca n be a ppl i ed to all typ e s o f b u s i n e s s

p a rtn e rs h i p s to i m p ro ve e ffe ct i ve n e s s .

E a ch o rg a n i z a ti o n i s u n i q u e; th e i r l e ve l o f kn o wl e d g e wi l l va ry i n re l a ti o n

to th e i r l e ve l o f d e ve l o p m e n t a n d th e s e cto r o r a p p l i ca t i o n th e y a re

fo cu s e d to wa rd s . Th e ch a l l e n g e fo r m a n y o rg a n i z a t i o n s i s th a t th e y a re

ba sed on l o o ki n g o u t wa rd s b u t fre q u e n tl y fa i l to l o o k a t th e i r i n te rn a l

ca p a b i l i ty. Th e a d o p ti o n o f co l l a b o ra t i ve a p p ro a ch e s wi l l m ea n

i n te g ra ti n g i n te rn a l and e xte rn a l p ro ce s s e s a n d wi l l d epen d on th e

re a d i n e s s o f th e o rg a n i z a ti o n s to e m b ra ce th i s i n te g ra ti o n . In m a n y ca s e s

o rg a n i z a ti o n s m a y a l re a d y b e in a co l l a b o ra ti ve re l a ti o n s h i p o r h a ve

i d e n ti fi e d p o te n ti a l p a rtn e rs th ro u g h e xp e ri e n ce . H o we ve r, th e

p ro g re s s i o n i n to a m o re i n te g ra te d re l a ti o n s h i p ch a n g e s th e d yn a m i cs . In

th e ca s e o f o rg a n i z a ti o n s th a t a re a l re a d y wo rki n g to g e th e r, th e

re l a t i o n s h i p e n h a n ce m e n t p ro vi d e s a co m p a ri s o n o f th e p o s i ti o n i n g of

th e two o rg a n i z a t i o n s a n d a t m u l ti p l e l e ve l s .

At th e co re o f e ve ry re l a ti o n s h i p th e o b j e cti ve s m u s t b e cl e a rl y d e fi n e d .

Th e re wi l l a l wa ys b e th re e s e ts , th e j o i n t o b j e cti ve s a n d th o s e o f e a ch

p a rtn e r; s u cce s s fu l re l a ti o n s h i p s wi l l be th o s e wh e re th e p a rtn e rs

2 84
 Chapter 28 – Future of collaboration

re co g n i z e th e n eed to s u p p o rt e a ch o th e r’s o b j e cti ve s . Th e co l l a b o ra t i ve

a p p ro a ch i s fo cu s e d on cre a ti n g b e n e fi ts fo r th e o rg a n i z a t i o n s i n vo l ve d

and fo r th e cu s to m e rs th e y s e rve .

C o l l a b o ra t i ve re l a ti o n s h i p s h a ve s h o wn th a t th e y ca n re l e a s e p o te n ti a l

va l u e fro m wi th i n o rg a n i z a ti o n s . H o we ve r, th e s e p ro g ra m m e s d o re q u i re

i n ve s tm e n t a n d e ffo rt o u ts i d e th e n o rm a l b u s i n e s s i n te rfa ce s ; th u s i t i s

i m p o rta n t th a t o rg a n i z a ti o n s h a ve a cl e a r vi e w o f wh a t th e y co n s i d e r to

be th e va l u e th e y a re l o o ki n g fo r. D e fi n i n g va l u e wi l l be d i ffe re n t fo r

e a ch o rg a n i z a ti o n and m a y d i ffe r b e twe e n p a rtn e rs . Th e i m p o rt a n t

a s p e ct i s to e n s u re t h a t th e s e ca n be m a n a g ed si m u l ta n e o u sl y a n d a vo i d

co n fl i ct th a t m a y d i l u te th e fo cu s o n th e o u tco m e s .

Th e fo u n d a t i o n of a co l l a b o ra ti ve re l a ti o n s h i p i s th a t ri s k a n d re wa rd

m u s t b e s h a re d e q u i ta b l y b e twe e n th e p a rtn e rs . In d e ve l o p i n g va l u e

cre a t i o n a p p ro a ch e s th e p l a tfo rm o f ri s k p ro fi l i n g wi l l h el p to s ti m u l a te

i n n o va ti o n and b a l a n ce i n ve s tm e n t. Va l u e cre a ti o n co m e s fro m a s h a ri n g

o f kn o wl e d g e and kn o wl e d g e cre a ti o n p ro g ra m m e s wi l l u s u a l l y ru n in

p a ra l l e l wi th d ri vi n g i n n o va t i o n . Wh i l e th e re m a y be a re q u i re m e n t to

s t i m u l a te th e p ro ce s s , th e aim sh o u l d be to bu i l d a p ro ce s s a n d e t h o s i n to

th e a rra n g e m e n t th a t s e e ks to p ro m o te a co n ti n u o u s fo cu s o n

d e ve l o p i n g n e w va l u e fo r th e m u tu a l b e n e fi t o f th e p a rtn e rs .

Concl us ion
Th e aim o f th i s b o o k i s to d ra w to g e t h e r co n ce p t s a n d a p p ro a ch e s wi t h i n

th e fra m e wo rk o f B S 1 1 000 to g i ve re a d e rs a p e rs p e cti ve and o u tl i n e of

th e o p p o rt u n i ti e s a n d p o te n ti a l a p p l i ca ti o n s o f co l l a b o ra ti ve a p p ro a ch e s

to s u p p o rt th e i r n e e d s . I t i s h oped th a t th e a d vi ce and g u i d a n ce in th i s

b o o k wi l l h el p to p ro vi d e th e fo u n d a ti o n fo r fu tu re p ro g ra m m e s b y

bu i l d i n g co n fi d e n ce to e xp a n d th e d e g re e o f i n te ra cti o n wi th p a rtn e rs

and cre a te l o n g e r- te rm re l a t i o n s h i p s t h a t a re m u t u a l l y b e n e fi ci a l to m eet

st
th e ch a l l e n g e s o f th e 21 ce n tu ry.

2 85
Further information

Gibbs, Richard and Andrew Humphries (2009). Stra te g ic A llia n ce s a n d

Ma rke tin g Pa rtn e rsh ip s: Ga in in g Co m p e titive A dva n ta g e Th ro u gh

Co lla b o ra tio n a n d Pa rtn e rin g , London: Kogan Page.

Hansen, Morten T. (2009). Co lla b o ra tio n : Ho w L e a de rs A vo id th e Tra p s,

B u ild Co m m o n Gro u n d, a n d Re a p B ig R e su lts , MA: Harvard Business

School Press.
Hawkins, David E. (2006). Co rp o ra te So cia l R e sp o n sib ility: Ba la n cin g

To m o rro w’s Su sta in a b ility a n d To da y’s Pro fita b ility , London: Palgrave
Macmillan.
Hawkins, David E. (2006). Th e B e n din g Mo m e n t: En e rgizin g Co rp o ra te

, London: Palgrave Macmillan.

B u sin e ss Stra te gy

Hawkins, David E. and Shan Rajegopal (2005). Su n Tzu a n d th e Pro je ct

B a ttle g ro un d: Cre a tin g Pro je ct Stra te g y fro m ’Th e A rt o f Wa r’ , London:

Palgrave Macmillan.
Humphries, Andrew and Richard Gibbs (201 0). Co lla b o ra tive Ch a n ge :

Cre a tin g Hig h Pe rfo rm a n ce Pa rtn e rsh ip s a n d A llia n ce s , SC: CreateSpace

Independent Publishing Platform, Amazon.
Lank, Elisabeth (2005). Co lla b o ra tive A dva n ta g e : O rga n isa tio n s Win by

Wo rkin g , London: Palgrave Macmillan.

To ge th e r

Lipnack, Jessica and Jeffery Stamps (1 997). Virtu a l Te a m s: R e a ch in g A cro ss

Sp a ce , Tim e a n d O rg a n iza tio n s with Te ch n o lo g y , NY: John Wiley & Sons.

Partnership Sourcing. Future Co n n e ctio n s .
Partnership Sourcing. Visio n 2 01 0 .
Tate, William (2009). Th e Se a rch fo r L e a de rsh ip : An O rg a n isa tio n a l

, Devon: Triarchy Press.

Pe rsp e ctive

Tompkins, James A. (2003). No B o u n da rie s: B re a k Th ro u gh to Su p p ly

Ch a in , NC: Tompkins Press.

Exce lle n ce

286
I n d ex

A theory of human motivation , 2 C o n st i t u e n ts o f cu l tu re , 4

Ab i l i t y ve rsu s a tti t u d e , 6 C o n su m e rs , 3

Ab ra h a m M a s l o w, 2 C o n tra ct i n g cu rve , 21

Aca d e m i c re se a rch , 3 C o n tra ct i n g fo r fa i l u re , 24

Ad a m S m i th , 22 C o n tra ct s a n d peopl e, 5

Al l i a n ce p a rtn e rs, 3 C o n tra ct u a l b o u n d a ri e s, 8

AM E C , 26 C o rp o ra te cu l t u re , 4

Awa re n e s s i n i t i a l p a ra m e t e rs, 9 C o rp o ra te so ci a l re sp o n si b i l i ty

B a b co ck I n t e rn a ti o n a l ca se s tu d y, 1 7 co m m u n i ca ti o n s, 26

B a l fo u r B e a tt y c a s e s tu d y, 1 8 C o s ta i n G ro u p ca se st u d y, 8

B e h a vi o u rs a n d p o l i c y, 2 C RAF T m e th o d o l o g y, 8

B e h a vi o u rs a n d tru st , 1 5 C S R C o rp o ra te so ci a l re sp o n si b i l i t y, 26

B e n e fi ts a n d b u s i n e ss c a s e , 9 C u l tu re , 4

B P An d re w, 8 C u l tu re cru n ch , 4

BS 1 1 000 and th e th i rd s e cto r, 27 C u s to m e rs , 3

BS 1 1 000 i m p l e m e n t a ti o n ch e ckl i st , 1 7 D e fi n e va l u e , 1 4

BS 1 1 000-1 : 2 01 0, Collaborative business D e fi n i n g e xp e cta t i o n s, 7

relationships , xi i D e ve l o p i n g c l u s te rs , 25

BS 1 1 000-2 : 2 01 1 , G u i d a n ce , 1 D e ve l o p i n g re l a t i o n sh i p s , 1

BS 5 7 50, 2 D i sp u te re so l u t i o n , 5, 1 5

B T G l oba l S e rvi c e s ca se s tu d y, 23 D i s tri b u t i o n /re t a i l , 3

B u si n e ss co n t i n u i ty, 1 6 E co - e ffi ci e n cy, 26

B u si n e ss co n t i n u i ty a n d C S R, 1 0 Egan, 7

B u si n e ss e n vi ro n m e n t, 3 E l e m e n t s o f tru s t, 6

B u si n e ss o b j e ct i ve s , 9 E M C O R ca se stu d y, 20

C a p a b i l i ty a n d c o m p e te n ce , 1 3 E st a b l i sh i n g co m m o n o b j e cti ve s, 1 2

C l u st e rs a n d cl u s te r p o we r, 25 E va l u a ti n g re l a t i o n s h i p s, 1

C o l l a b o ra ti ve b e n e fi ts , 7 E vi d e n ce m a p, 1 7

C o l l a b o ra ti ve ch a n g e , 21 E xi t st ra t e g y i n i ti a l p a ra m e te rs , 1 6

C o l l a b o ra ti ve l e a d e rsh i p , 6 Future Connections , 28

C o l l a b o ra ti ve p ro fi l e , 1 1 F u tu re o p p o rtu n i t i e s, 1 6

C o m m i ss i o n i n g s e rvi ce s, 27 G e n e ra ti n g i n n o va ti o n , 1 4

C o m m i tm e n t, 5 G l a ss fl o o r, 1 9

C o m m u n i ca ti o n , 5 H u m p h ri e s A, 21

C o m m u n i ca ti o n s fl o w, 5 I AC C M I n t e rn a t i o n a l As so ci a ti o n fo r

C o m m u n i ca ti o n s p l a n , 1 3 C o n tra ct a n d C o m m e rc i a l

C o m p e te n c i e s a n d b e h a vi o u rs , 1 3 M a n a g e m e n t, 1 5

C o m p l i a n ce , 5 I d e n ti fyi n g c o l l a b o ra t i ve m a n a g e rs, 6

C o n fi d e n ce and tru s t, 26 I m p a cts o f b e h a vi o u rs , 5

C o n s o rti a /j o i n t ve n t u re s , 3 I m p l e m e n t a ti o n st e p s , 1 7

I m p o rta n ce o f t ru st , 5

2 87
In dex
Indicators of trust, 5
Information management, 1 3
Initial exit strategy, 1 0
Institute for Collaborative Working, 1
Integration of cultures, 2
Internal assessment, 1 1
Internal constraints, 1 1
Internal influences, 4
ISO 9000, 2
John Lewis partnership, 26
Joint exit strategy, 1 5
Joint team management, 1 5
Joint risk management, 1 3
Joint management team, 1 3
Joint sponsorship, 1 3
Just in time, 8
Key messages for outsourcing, 20
Key messages for business
development, 1 8
Key messages for supply chain, 1 9
Knowledge initial parameters, 1 0
Knowledge management, 4, 1 0
KPIs Key performance indicators, 1 5
KRAFT and Cadburys, 24
Kraljic model, 7
Kraljic P, 7
Latham, 7
Leadership and objectives, 2
Learning from experience, 1 4
Learning organization, 7
Lockheed Martin case study, 21
Management ethos, 6
Managing behaviours, 6
Manufacture, 3
MAP Maturity Assessment Programme,
12
Marketing collaboration, 1 8
Maslow’s Hierarchy, 2
Maturity assessment, 23
McMillan cancer research, 27
Measuring trust, 5
Mergers and acquisitions, 3, 24
Michael Porter’s five forces model, 4
Midas proposition, 25
MOD Case study, 1 9
Monitor and measure, 1 3
Nature of leadership, 6
NATS cast study, 1 9
Negotiation strategy, 1 2
288
Network Rail case study, 2
Networking in business, 25
’Outside in’ theory, 20
Outsourcing, 3
Partner profile, 1 1
Partner selection initial parameters, 1 2
Partner selection process, 1 2
Pera Training case study, 22
Performance based collaboration, 7
Policies and processes, 1 1
Profit and CSR, 26
Public sector delivery, 3
Purchasing must become supply
management, 7
R&D Research and Development, 3
Rachel Kessler, 24
Raytheon Systems case study, 8
Realizing the potential of GB Rail, 2
Relationship health check, 1 5
Relationship iceberg, 4
Relationship management engagement
areas, 1
Relationship management plan, 8,9
Relationship risk, 3
Resource sharing and supply chain
optimization, 27
Risk analysis, 3
Risk and integration, 3
Roger Harrison, 4
Sarbanes-Oxley, 5
Segregating relationships, 7, 9
Selex ES case study, 7
Services, 3
Sir Roy McNulty, 2
Skanska case study, 7, 26
Skills and competencies, 1 0
SLAs Service level agreements, 1 5
Social interaction, 5
SRM Supplier Relationship
Management, 1 9
Stakeholder management, 3
Strategy development, 1 0
Style of leadership, 6
Supply chains, 3
Supply chain risk, 1 9
Sustainability impacts, 26
Technologies versus people, 22
Terminal 5 Heathrow, 3
The glass floor, 1 9
 In dex

Th e g re e n a g en d a , 26

Th e i n t e l l i g e n t cu st o m e r, 1 8

Th e ’ o u ts i d e in’ th e o ry, 20

Th e va l u e p ro p o si t i o n , 1 8

Th e We a l th o f N a t i o n s, 22

Ti m e Wa rn e r a n d AO L, 24

To ta l co s t o f o wn e rsh i p , 6

TU P E Tra n s fe r o f U n d e rt a ki n g s , 21

U n d e rs ta n d i n g yo u r o rg a n i z a t i o n ’ s

ch a ra cte r, 4

Va l u e ch a i n , 8

Va l u e cre a t i o n fo cu s , 1 4

Va l u e cre a t i o n i n i ti a l p a ra m e te rs , 1 4

Va l u e cre a t i o n m od el , 1 4

Va l u e cre a t i o n p ro ce s s, 1 4

Va l u e o f tru s t, 5

Vi rtu a l o rg a n i z a ti o n s , 22, 25

Vi si o n 2 01 0, 2

Vo l u n ta ry s e cto r, 3

WI I F M – Wh a t ’s i n i t fo r m e , 1 8

Wo rki n g t o g e t h e r i n i ti a l p a ra m e t e rs , 1 3

2 89
I f you fou n d th i s book of i n terest, you m a y a l so wa n t to con si d er:

Com p l a i n t s M a n a g em en t
Tu r n i n g n eg a ti ve s i n to p o s i ti ve s

By M i ch a el Hill

Co m p la in ts Ma n a g e m e n t: Tu rn in g n e ga tive s in to p o sitive s h a s been d esi g n ed to

h el p a n y com pa n y or org a n i za ti on i m prove th e effecti ven ess of i ts cu stom er

com pl a i n t processes a n d system s. I t a d h eres to th e pri n ci pl es of th e com pl a i n t

m a n a g em en t sta n d a rd BS ISO 1 0002:2 004, Q u a lity m a n a g e m e n t – Cu sto m e r

sa tisfa ctio n – Gu ide lin e s fo r co m p la in ts h a n dlin g in o rg a n iza tio n s.

Th e book d ra ws on ca se stu d i es from a va ri ety of sectors, su ch a s fi n a n ci a l servi ces,

h ea l th ca re, n ot-for-profi t, u ti l i ti es, a n d th e tra vel i n d u stry to presen t th e rea d er

wi th opportu n i ti es to refl ect on g ood pra cti ce wh i l e rea l i zi n g th e u n d erl yi n g

ben efi ts of th e sta n d a rd .

Th e book i n cl u d es q u otes a n d sta ti sti cs th a t ca n su pport a n i n tern a l bu si n ess ca se,

a s wel l a s pra cti ca l ch eckl i sts for h a n d l i n g com pl a i n ts, a n a l ysi n g root ca u ses, a n d

con d u cti n g system revi ews.

Th e book a l so referen ces th e ben efi ts th a t ca n be d el i vered from extern a l d i spu te

resol u ti on sch em es a n d h ow B S ISO 1 0003:2 007, Q u a lity m a n a ge m e n t – Cu sto m e r

sa tisfa ctio n – Gu ide lin e s fo r disp u te re so lu tio n e xte rn a l to o rga n iza tio n s d el i vers a

sta n d a rd for i m provi n g th e effecti ven ess of su ch sch em es.

Th e book i s i n ten d ed a s a referen ce for a n yon e (i n d i vi d u a l , com pa n y or

org a n i za ti on ) con si d eri n g a revi ew of com pl a i n t m a n a g em en t processes or seeki n g

a ccred i ta ti on to B S I SO 1 0002 : 2 004. Th u s, i t wi l l be of i n terest to professi on a l s i n

cu stom er servi ce rel a ted i n d u stri es, reg u l a tors, om bu d sm a n a n d a d j u d i ca tors.

Al s o ava i l a bl e wi th s ta n d a rd s BS ISO 1 0002 : 2004 Q u a l i ty m a n a g em en t. C u s tom e r

s a ti s f a cti on . G u i d el i n e s f o r com p l a i n t s h a n d l i n g i n o r g a n i za ti on s . G u i d el i n e s f o r

com p l a i n t s h a n d l i n g i n o r g a n i za ti on s a n d B S ISO 1 0003 : 2007 Q u a l i ty m a n a g em en t.

C u s tom e r s a ti s f a cti on . G u i d el i n e s f o r d i s p u te re s ol u ti on exte r n a l to o rg a n i za ti on s
(s ee bel ow).

Pr i ce £40. 00 (wi th ou t sta n d a rd s) or £1 60 (wi th sta n d a rd s, m em ber pri ce)

£2 88 (wi th sta n d a rd s, n on -m em ber)

I S BN 9 7 8 0 5 80 7 1 87 6 2 (wi th ou t sta n d a rd s) / 9 7 8 0 5 80 7 65 5 3 7 (wi th sta n d a rd s)

For further more details see h ttp: //sh op. bsi g rou p. com /bi p2 2 1 1

290
Ra i si n g th e Sta n d a rd for Col l a bora ti on

H a rn e s s i n g th e b e n e fi ts of BS 1 1 000 :

Co l l a b o ra t i v e B u s i n e s s Re l a ti o n s h i p s

Fo r any o rg a n i z a ti o n , b uilding and m a i n ta i n i n g g ood b u s i n e s s re l a t i o n s is v i ta l . Fo l l o w i ng a co l l a b o ra t i v e a p p ro a c h n e e d n o t

be c o s tl y or re s o u rc e - h e a v y. Th e aim of th i s b ook is to p ro v i d e an i n t ro d u c t i o n to th e c o n c e p ts and va l ue of co l l a b o ra t i o n a n d

B S 1 1 0 0 0 : 20 1 0 Col l a bora ti ve B u si n ess Rel a ti on sh i ps. A fra m ework speci fi ca ti on s ta n d a rd . I t fo c u s e s o n p ro v i d i n g a fi rs t s te p

to a d o p ti o n a n d im p l e m e n ta ti o n . Th e co n ce p t of co l l a b o ra t i o n is i n ve s ti g a te d fro m th re e p e r s p e c t i v e s :

Wh y: Lo o ks at th e b e n e fi ts of a co l l a b o ra t i v e s ta n d a rd , o p p o r t u n i t i e s a n d r i s ks i n th e co n te x t of co l l a b o ra t i v e

wo r ki n g a n d h ow th i s ca n su p p o rt a b u si n e ss d e ve l o p m e n t s t ra t e g y th a t p o s i t i o n s re l a t i o n s h i p s to m a xi m u m e ffe c t .

H ow: E x p l o re s th e b e n e fi ts , s t ru c t u re a n d im p l e m e n ta ti o n of BS 1 1 000 to p ro v i d e a ro b u s t fra m e w o rk fo r

co l l a b o ra t i v e w o r ki ng, e n su ri n g a s u s ta i nable b u si n ess.

Wh ere: E x p l o re s th e p o te n ti a l a p p l i c a ti o n s of th e a p p ro a c h i n en su ri n g th e c re a t i o n of b u si n e ss va l u e.

Th e se p e r s p e c ti v e s a re d i s cu ss e d w i th a co m b i n a ti o n of t h e o r y, p ra c t i c a l ca s e s tu d i e s and an o u tl i n e of b uilding b l o c ks fo r

s u c c e s s fu l co l l a b o ra t i o n .

Th e b ook is a i m ed a t se n i or m a n a g em en t a n d s t ra t e g i c b u si n e ss d e v e l o p e rs .

Da vi d H a wki n s h as h ad an e x te n s i ve ca re e r i n p ro j e c t s a n d p ro c u re m e n t w i th i n th e co n s t ru c ti o n i n d u s t r y. O ve r th e p a st

d eca d e h e h as been a n a c t i v e p ro m o t e r of co l l a b o ra t i o n a n d p a r t n e r i n g c o n c e p ts , to g e th e r w i th th e d e ve l o p m e n t of e x te n d e d

e n t e rp ri s e s th ro u g h th e b u ild i ng of a l l i a n ce s .

H e wa s th e d ri v i n g fo rc e beh i nd th e c re a t i o n of BS 1 1 0 0 0 -1 : 201 0, Co l l a b o ra t i v e b u si n e s s re l a t i o n s h i p s – Pa rt 1 : A fra m e w o rk

s p e c i fi c a ti o n, and ch a i rm a n of th e BSI c o m m i tte e wh o d e ve l o p e d th e s ta n d a rd . I n 20 0 9 h e wa s a c kn o w l e d g e d a s o ne of th e

w o r l d ’s to p 1 00 th o u g h t l e a d e rs o n c o rp o ra t e s o ci a l re s p o n s i b i l i t y (CS R ) .

Wh a t revi ewers h a ve sa i d :

‘ D a vi d H a w ki n s h a s n ot o n l y a n s w e re d th e two m ost im p o rt a n t q u e s ti o n s a b ou t th e c ri ti c a l to pic of co l l a b o ra t i o n : wh y? and

p e rh a p s m o re el u s i v e l y, h ow? H e h a s a l s o a d va n ce d th e s ta te of p a r t n e ri n g by b ri l l i a n tl y bl en d i ng th e a rt of re l a t i o n s h i p

b uilding w i th th e s ci e n ce of m a n a g em en t i n to a h o l i s ti c s t ra t e g y th at wi l l p ro d u ce re s u l t s ’. M r J oh n J oh n s, Depu ty Assi sta n t

Secreta ry of Defen se, (M a i n ten a n ce) , U S D epa rtm en t of Defen se.

‘ Wh at D a vi d ' s th i n ki n g h a s re a l l y im p re s s e d u p o n m e i s th e fa c t th at th e fo u n d a ti o n s of s u c c e s s fu l co l l a b o ra t i o n beg i n w i th

yo u r o wn o rg a n i s a t i o n a n d th at s u c c e s s fu l co l l a b o ra t i o n n e e d s to be e ffe c t i v e l y d e si g n ed i n to th e p ro c u re m e n t a n d d e l i ve ry

p ro c e s s e s .’ Si m on Ki rby, M D, N etwork Ra i l I n fra stru ctu re.

BSI order ref: BIP 2225

BSI Group Headquarters

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