As we enter the Era of Ecosystems, it is apparent that we need a different approach and thinking to manage these multi-dimensional and multi-lateral business relationships. I believe that the partner management processes we have developed as a profession are still relevant, but we do need to rethink how we apply them. Nine-way governance models just aren’t efficient and agile. However, by distilling what we know about effective partner management into ‘collaboration principles’, we can create a framework that is flexible and robust to handle the challenge.
I have been privileged to lead the U.S. delegation to the ISO Committee for the Collaborative Business Relationship Management standard. While very complete and vetted by many alliance professionals, it is still a bit of old school. Its application does provide a great framework for managing large, complex collaborations. It is however difficult to apply to the more modern, agile, and fast-moving environment of ecosystem partnering. As an offshoot of the Standards document, the committee spun out a ‘principles’ document that teases out twelve principles that summarizes the 128 requirements of the standards document.
The emergence of a principles-based collaboration model could not be better timing. Here is quick summary of the collaboration principles advocated in the ISO/TR 44000 Principles for successful collaborative business relationship management technical report.
Relationship Management. To be sustainable over time, a partner relationship needs to be based on systems and processes, whether internal or jointly developed, together with a continued focus on monitoring and developing competence and behaviors. While listed as number one, it is really a framework that overtime captures how you decide to collaborate as you figure it out. It becomes the plan of record for the partnership. Many of the principles listed 2-12 will find their home here.
Alignment on Vision and Values. Strong collaborations have a common vision, a common ‘north star’ which guides them toward creating greater value for their customers. Aligning on values also helps to keep a collaboration on track. These may not be identical but should be synergistic. Imagine how a scrappy start up partners with a Fortune giant. They might both value innovation and agility, but the large company may value process to much higher degree as they must to manage global operations. The values of these two partners are aligned but their differences are also what enables a great partnership.
Alignment of Business Objectives. Here again, alignment does not mean identical. As you define the reason for partnering, the outcomes should contribute to the business objectives of each partner. For example, systems integrators often partner with product companies to provide implementation services. The product companies try to maximize unit sales, while the integrator maximizes services. This can create friction in the relationship, but they still need each other to drive revenue.
Collaborative leadership. Collaboration is an unnatural act for many companies. It takes strong leadership who understands collaboration. It is a different management style. It is not command and control. It is leading through influence, consensus building, and seeking win/win outcomes. Important relationships should have an executive leader assigned to them to provide strategic guidance, promote collaborative behavior and ultimately be accountable for success.
Governance and processes. Collaborations require governance processes that reflect how partners mutually agree to work together, allocate resources to the collaboration and to hold each other accountable to their commitments. This can be structured through governance committees and contract terms, but partnerships that can work together based on trust and alignment on vision and values will be more agile and responsive in fast moving business climate.
Collaborative competence and behavior. Collaborations based on the most rigorous governance and processes may still struggle to deliver if the people in the partnership don’t have the aptitude to collaborate. These are often call soft skills, but my experience has taught me these are the hard skills to master. These skills include a mindset that resolves conflict through win/win outcomes, transparency in communications, and harnessing your differences create innovative value.
Trust and Commitment to mutual benefit. Trust is like air. When you have it, you don’t notice it. When it isn’t, you will experience great distress. Confidence that each organization is also looking out for the interests of partner organization(s) and of the collaborative venture builds and sustains trust in relationships. There is much to be gained from mutual agreement that each party’s success is a function of everyone’s success.
Value Creation. Creating value is the underlying reason to partner. How are you creating value for your mutual customers? How are you creating value in your business and in your partners? This is partner math 1+1 is greater than 3. This is foundation of sustainable partnerships. Long standing relationships are continually creating value. They have built strong relationships that become the fuel in powering an engine for continuous value creation.
Information and Knowledge Sharing. Creating value through collaboration requires sharing information and knowledge. This is enabled by trust and commitment to mutual benefit. Openness and transparency in interactions help build the relationship. But it is also important to be up front about what information cannot be shared, or what information can only be shared confidentially. One useful exercise during the formation stages of a collaboration is to come to an agreement of what can and cannot be shared. This is especially important in collaborations which have competitive overlap, which today, is most of them.
Risk Management. Business ventures have risk associated them. Some collaborations are formed as risk mitigation measures other incur unique risks. For organizations not skilled at managing collaborative relationships. There can be higher risks in delivering value from the collaboration because the skillsets to manage cultural or operational differences aren’t there. A different tolerance for risk can be itself a risk in the partnership. Partners should sit down and identify they risks in the relationship as well as in the venture and together decide how to manage the risks they identify.
Measurement and Optimization. If you can’t measure it, you can’t manage it. We have all heard some version of that. Same with collaborations. You need to create a metrics model that measures the value you are creating. You should also include metrics related to the health and strength of the collaboration because without a functioning collaboration, you won’t have the relationship capital to create value. Establish a baseline early in the partnership, so you can track progress and manage for continuous improvement.
Exit strategy. This is like a pre-nup. Some collaborations can be successful for many, many years, but even those should go through an evaluation from time to time to ensure they are still serving the purpose for which they were created and if not, can they by reinvented or is it time to wind them down? The exit strategy itself should be subject to continuous scrutiny and improvement as the business climate changes. Your exit triggers may change and the priorities in how you separate may change. How do you reallocate resources, intellectual property, and customer commitments?
Ecosystem collaborations in an agile world do not fit well with a highly process oriented management model. They will require a model more based on principles and mindset than on process and policies. Organizations large and small, public, and private can get a lot of mileage in applying these twelve collaborative principles.