The reality of corporate collaboration is that almost every second alliance fails. Yet some organisations are spectacularly successful at developing alliance cultures. Dr Jochen Schweitzer explains how leadership and governance are key to successful collaboration.
Collaboration is important for many organisations because it gives them access to resources that they would otherwise not have. While executives like the idea of minimising risks through collaboration, they are also attracted to the advantages that they can gain by having access to their partners’ knowledge and experience. With the learning that comes through combining and developing capabilities with external partners, alliances now contribute significantly to developing competitive advantages and achieving strategic objectives for all involved.
Alliancing has many obvious strategic and operational advantages, but the unpleasant reality of corporate collaboration in the last 25 years has been that almost every second alliance fails to achieve the anticipated outcomes. Although the wide spectrum of alliances has been intensively researched, it is not yet clear what really makes collaboration work and what doesn’t.
In my research I’ve been focussing on the issues of alliance governance, the role of alliance leadership and how innovation capabilities develop within alliance teams. In general, success often depends on to what extent the leadership team is able to agree and implement suitable governance structures and engage with the team to foster desired behaviours and work cultures.
Governance mechanisms like organisational structures, roles and responsibilities, decision-making processes or reward systems create work culture. Too often alliances fail because partners are unable to agree on governance to match their individual and joint work cultures. What’s more, organisations often have only limited ways of capturing the knowledge that is created and developing it into competitive advantages for the organisation.
I surveyed more than 400 alliances around the world, asking particularly about how they structure and govern their alliances, and how they perceive the leadership within their alliances. The focus in that study was on finding those factors that would make alliances achieve innovation and allow them to create capabilities that enable them to compete better in their markets. I looked at characteristics like innovativeness and proactiveness of people within the alliances, their ability to work with each other, the extent to which they learned from the alliance, and the extent to which they captured and advanced knowledge.
I also looked at the governance, the actual management structure and the mechanisms that were used to organise the partnership, as well as the leadership behaviour within the alliance.
In alliances as much as in any other type of organisation, leadership behaviour occurs on a continuum: At one end of the continuum we observe transformational (charismatic and inspirational) leaders, who motivate teams often based on their strong vision and outstanding personality. At the other end of the spectrum we have transactional leaders, who base their relationship with the team on the fact that they give people a reward for a certain type of work.
One might assume that a more charismatic leader would help an alliance create more entrepreneurial or innovative abilities, while on the other hand, the transactional leader would be less likely to create innovation. But in fact both types of behaviour are very important to create innovation-type capabilities. The more the leadership team in the alliance is able to show both of these types of behaviour, the more the alliance will innovate.
Alliances fail when they do not achieve the objectives that the partnering organisations agreed upon. Sometimes organisations agree to part ways when they realise this, and other times they stick to it, even though they realise it’s not going to go anywhere. Unsurprisingly it’s difficult to find data about alliances that have failed – it’s a lot easier to find examples of organisations that do really well: Organisations like IBM, Cisco or Hewlett Packard are known for their ability to collaborate at multiple levels with multiple organisations.
The key aspect for an organisation that is looking for innovation through alliances is to gain access to resources within another organisation that it wouldn’t have otherwise. From there on it is all about aligning governance mechanisms for the partnership, work culture and leadership styles with the strategic intention for the alliance.
If a firm is after innovation, there are certain mechanisms and leadership behaviours that work towards innovation. It really is about finding the right combination. Take decision-making. The partnering organisations could agree upon leaving all decisions with the alliance team (a decentralised approach). If the alliance team is flexible and open, there is a greater chance for them to be innovative and come up with solutions. On the other hand, if you leave all decision-making with the partnering organisations and force this mechanism upon the alliance, there is less flexibility, which leads to less innovation within the alliance.
If you then combine that with the type of leadership that you implement, by choosing a predominantly transformational or transactional type of leader for the organisation or the alliance, that again would influence the extent to which innovation takes place or not.
Organisations increasingly seek alliances to achieve innovation objectives and in doing so, they need ways to do it better than they did in the past. That’s why it is important to do the research to find the mechanisms that really make them work.
