Cross-border collaboration

Collaborating with other organisations is key to many businesses, but two-thirds are considered failures. What can be done to make collaboration more successful?

By Graeme Burton

When European aircraft manufacturer Airbus Industrie started work on the mammoth A380 ‘super-jumbo’, it realised that it would need the help of engineering companies from all over the world if the aircraft were ever to take to the skies. Quite simply, the A380 was several orders of magnitude greater than any project that it had ever undertaken before, but it did not have the resources in-house to design and build every component itself.

The answer for Airbus was to construct a network of designers and suppliers in places as diverse as China, India, Australia and even Washington State – in the backyard of its great US rival Boeing. Its army of thousands, designing and building parts, both large and small, soon straddled the globe.

For such a gargantuan project, engineers could not collaborate by sending their designs in the post or by e-mail. Airbus needed a collaboration strategy that balanced its need to share design details with partners so that it could work with them on innovative new component designs, with a recognition of the security risks inherent in such modes of working.

Of course, such collaboration between companies is not new. What is new is the increasing scale of such partnerships and the rising number of organisations that are engaging in such arrangements. At the same time, what is also lacking is clear guidance and best practice to help make sure that such relationships are conducted securely and to the benefit of all partners.

Collaborative imperative
According to Elizabeth Lank, knowledge-management academic and author of the book, Collaborative Advantage¹, there are eight main ‘types’ of collaboration:

To conduct better quality research, often in collaboration with academia. In the European Union, the European Commission (EC) funds a number of projects that can involve a variety of different companies, again, often in conjunction with academia;
To influence legislative or standards-setting bodies;
To win business – because they stand a better chance of winning deals by collaborating. If an organisation is missing a set of skills, it can find a partner to mitigate that and, working together, they will both have a better chance of winning the business;
Collaborating in order to develop products and services, such as car manufacturers with their suppliers;
Collaborating in order to deliver products and services, such as retail chains with banks to deliver credit facilities to customers;
People and companies collaborating to learn from each other. For example, in so-called benchmarking clubs where organisations collaborate to share performance data;
‘Forced’ collaboration. “A client might say to a consultancy, ‘I will hire you, but you have to collaborate with McKinsey on this one because we are working with them already’,” says Lank;
Collaborating to save costs.

Today, virtually all organisations collaborate, although in many it will be at a more informal level – perhaps even off of the radar screen of senior managers. “I challenge you to find any organisation that isn’t collaborating with someone,” says Lank. “It’s so prevalent, whether it’s public or private sector, and it’s called so many different things – partnerships or alliances. But everyone is doing it in some shape or form.”

Yet, despite its widespread nature – and the increased deployment of specialist tools to support collaboration – Lank also indicates that up to 70 per cent of such partnerships either fail outright or struggle to deliver the anticipated benefits.

The reason for that is manifold. In some cases, there is a lack of organisation, particularly in terms of allocating roles and responsibilities, and important work does not get done. In other cases, organisations are over-prescriptive and can put together excessively rigid structures that cannot adapt to changing demands.

Indeed, this is especially true if the collaboration is bound from the beginning in long and prescriptive legal documents. Every change in the relationship may therefore require the intervention of teams of lawyers on all sides, reducing flexibility and increasing costs.

Frequently, too, collaboration is simply regarded as ‘a good thing’ and organisations rush into collaborative relationships too quickly, without thinking through properly how it will work, their main purpose and the resources and sheer hard work that they will require to ensure a successful outcome.

Best practice
However, there are a number of best practice recommendations that Lank suggests can maximise the chances of success.

First, she says, start with a small, pilot project before making a commitment to a major venture. This will establish relationships between staff at the respective organisations and enable the company to assess both the suitability of the organisation and its employees in a ‘live’ scenario. Trust – a vitally important factor – can be built up between participants at the same time.

Indeed, trust – along with ‘cultural compatibility’ – are two of the key success factors. That is to say, if the collaborators share similar values and can be confident that the project will bring fair rewards to all participants, they will have a greater chance of making their collaboration work.

If there is sufficient trust between the partners, then the inevitable and unexpected surprises that occur can more easily be dealt with. Building a partnership includes keeping it fair, says Lank, even when circumstances simply change to the benefit of one or more of the participants at the cost of others. If one or more participant feels that they are not getting a fair deal, that will breed resentment and distrust, however equitable the original agreement may have been.

Governance is also important, but getting the balance right between formal and informal is critical – and very difficult to achieve. “The main message from people involved in different collaborative relationships is to be cautious about being too formal and structured about everything,” advises Lank. Collaborations succeed or fail as a result of the relationships between the individual participants and involving too many lawyers, too early, indicates a lack of trust and will reduce flexibility.

“Sometimes, the best structure involves a framework agreement, but you don’t always need to be tied down with penalty clauses. I think there’s a business culture in many organisations that doesn’t trust partnerships. Therefore, people in those companies have the idea that they must protect themselves by bringing in the lawyers,” says Lank.

“Of course, organisations need clarity on what they are trying to do, who does what and, of course, everything has to be documented. But the main lesson seems to be that if you build the right relationships, you don’t necessarily have to go down this hugely contractual route,” she concludes.

Greater formality can be introduced at a later stage, as the collaboration gets closer to bearing fruit. If important matters are decided at too early a stage, that will stifle development.

Packaged software
Increasingly, companies are deploying collaborative software and other tools to help facilitate their employees’ collaborative relationships with other organisations. Such tools can enable disparate groups of people to video conference, share ideas and work interactively online in real-time, instant message each other and so on.

Increasingly, such software is being sold as integrated suites, enabling all the information relating to a particular project to be captured at the same time.

However, while the vendors of packaged software like to give the impression that their collaborative tools can be turned to virtually any project, not all prospective customers are so sure.

Dr Siegfried Schmitt, quality director of global IT at GE Healthcare, one of the world’s biggest producers of medical imaging systems, suggests that packaged software cannot handle the proprietary file formats and other specialist demands of GE Healthcare’s technical collaborations.

GE Healthcare’s collaborative relationships include work with hospitals, universities and other research institutions to refine the quality of the company’s ultrasound machines and CT scanners, which are used in hospitals to diagnose a range of medical conditions. “We sell our scanners to hospitals and only through the feedback from the medical doctors do we learn more about how we can improve these systems,” says Schmitt. “We use various tools to support that, typically research and development software tools, but also communication tools.”

Providing access to the GE Healthcare intranet is not an option either because of the wide range of people in different organisations that would require access and the security implications involved. In some instances – as observed by Lank – GE Healthcare is involved in EC-sponsored research in collaboration with non-profit research organisations. In these cases, GE Healthcare is able to use collaboration tools and networks provided to these non-profit organisations by the EC.

But the software tools it uses for most of its technical collaboration has to be bespoke, says Schmitt. “We can’t use many of the existing tools on the market. It’s not just because the files are bespoke in format, they are also very, very large,” he says.

Inside out
Nevertheless, the collaborative tools market is quickly changing, says Gartner analyst Betsy Burton. Until recently, she says, the collaboration software market was largely focused on individual point tools. That is to say, vendors used to sell standalone instant messaging or stand-alone web-conferencing tools, for example.

Increasingly, however, the major vendors, such as EMC Software, are rolling out integrated tools that offer the benefit of being able to store all the ‘collaborations’ related to a particular project – all the shared files, conferencing communications, e-mails and instant messages – in one place. This offers much quicker search and retrieval, enabling everyone involved to keep track of designs, plans and decisions more easily.

“Gartner believes a market is emerging, the integrated collaboration market, which includes software products whose primary purpose is to support a broad set of collaborative activities between any internal or external users,” says Burton.

But at the moment, these tools are deployed and used at only a minority of organisations. Indeed, Finland Post Corporation is typical. It currently lacks any specialist collaborative software support and cannot yet even offer staff guidance on business processes and best practices.

“We are just writing our policies about collaborating inside our company and with other organisations. [But at the moment], we don't have any corporate-level instructions or tools to communicate with other organisations. Usually we use e-mail,” says Marko Mikkola, a project manager at Finland Post.

It is a similar story in the UK local government sector, says Ciara Shimidzu, a corporate information manager at London’s Bromley Borough Council.

Local government in the UK has invested a great deal in IT systems in the past five years, but largely to comply with some tough legislative and regulatory demands from central government – particularly to meet the Freedom of Information Act and to implement electronic social care records software.

Implementing collaborative tools has, therefore, taken second place to installing systems to meet these regulatory demands, says Shimidzu.

Double-edged sword
But collaboration, particularly when automated software tools and connections between corporate networks are involved, can be a double-edged sword. On the one hand, for example, aircraft manufacturers such as Airbus and Boeing could scarcely function without close relationships with suppliers. However, at the same time, they must closely guard their technology for fear of industrial espionage and the loss of almost priceless intellectual property.

At Airbus, this risk is mitigated by demanding that partners meet certain minimum standards of security – and those standards are enforced by a rigorous in-house auditing function staffed by specialists who fly around the world to inspect the security of suppliers.

These suppliers are categorised according to the auditor’s reports, with laggards told to improve their security. The more secure they are, the more access to Airbus’s systems they will enjoy. That means not just securing their network appropriately and employing the correct tools – firewalls and anti-virus software, for example – but ensuring that sensitive Airbus information is also tightly secured within the organisation.

This is an important point: one of the most serious shortcomings Airbus auditors uncovered was a remote-access server physically connected to a partner’s network, feeding data back to a competitor. Many companies, they have found, fail to physically secure their computers as well – almost anyone can walk into their data centre.

Airbus is not alone. Its great rival Boeing operates a similarly robust regime and it has become de rigueur among major US investment banks – and some in the UK, such as the Alliance and Leicester. Most, however, prefer to keep the security aspect of their collaborative relationships under wraps.

Outside such sensitive sectors as aircraft and banking, organisations will typically establish a set of security policies and procedures that the technical side of their collaborations will need to adhere to, focusing on their own systems rather than anyone else’s. “We have our own internal security standards and they require that whenever we ‘do’ collaborative activities, we set up a specific environment,” says Schmitt.

In short, the collaboration technology they use must not be allowed to open a ‘back door’ into GE’s wider computer systems and the activity must adhere to certain standards. The system, “is also reviewed by the security team”, Schmitt adds, to ensure that it meets those standards.

Furthermore, while Schmitt is less mistrustful of the security risks posed by collaborative partners than the major aircraft manufacturers, he is still wary of certain weak links. “Some organisations we deal with are less thorough in terms of what goes on their network,” says Schmitt.

Universities, for example, with which GE Healthcare collaborates closely on the development of medical-imaging technology, have a constantly shifting population of students, many of them highly computer literate. But equally, if anecdotal evidence is any guide, they are also more susceptible than many organisations to embarrassing security lapses. “We wouldn’t expect them to have as good back-up and disaster-recovery regimes as we would require for our own systems either,” says Schmitt.

Besides, the kinds of relationships – and power – that big manufacturers such as Airbus and Boeing enjoy with their suppliers enables them to firmly lay down rules for doing business with them. In more co-operative (or equal) collaborative relationships, that is not so easy to do.

Security, nevertheless, remains a key factor in any collaborative relationship, because the biggest determinant of success or failure is simply trust. “It’s not the contracts, it’s not the structures. From all the research that I have done, I would say that it is actually either that the working relationships between people never get set up properly or, at some point, the trust is broken,” says Lank. “It seems to be down to personal relationships in one way or another.”

One of her key recommendations, therefore, is that at the start of a collaborative relationship between two companies, the people behind it should meet up and discuss the issues face-to-face, not online or over the phone – with, perhaps, a beer or two in the evening to ease the future working relationships.

That, at least, should be something that everyone can agree upon without the need for a formal legal agreement.

¹ Elizabeth Lank’s Collaborative Advantage: How Organizations Win by Working Together is published by Palgrave Macmillan. The book will be reviewed in the March issue of Inside Knowledge.

Box: Real-time imperatives
Real-time collaboration tools, such as instant messaging (IM) or video conferencing, will yield the most value when integrated with asynchronous tools, such as e-mail, and with business processes. That is a complex task, but Lou Latham of the Gartner Group offers the following recommendations:

Survey users to see how they collaborate in support of business processes. For example, does a team need to interact more, or does it mainly collaborate around documents? Does the team engage in standardised processes or do ad hoc processes work? Use this information to set your goals for real-time collaboration;
Choose collaboration tools that support the goals and functions of each team and match them to the tasks they must perform. Buy the type of collaboration tool that uses the least amount of bandwidth and resources to get the job done;
Look for collaboration tools that do not conflict with each other. Try to leverage systems that are already in place instead of duplicating functions;
Mix and match real-time and asynchronous tools to support various kinds of interactions. Don’t focus on generic collaboration suites alone, however broad their functions. Important processes will require users to tap domain-specific applications as well, such as customer-relationship management. Content and processes must reach users wherever they are, so your collaboration environment should support multiple devices, both mobile and desktop, and should provide for alerts to bring key personnel into the process when needed;
Look for opportunities to exploit presence awareness where it fits with your company’s culture. Start with easy-to-use, high-value, internal IM applications. Don’t rely on consumer IM services; deploy an enterprise IM application behind the firewall. Then, extend presence awareness beyond messaging.