When the Boeing 787 Dreamliner made its first commercial flight in October 2011, the aerospace giant wasn’t the only company with something to cheer about. Employees and executives from more than 50 other companies joined in the celebration—enterprises that had collaborated with Boeing on the Dreamliner, from initial idea through design, testing and manufacturing.
Earlier the same year, Endo Pharmaceuticals in the United States and Orion Corporation in Finland announced a collaborative agreement to pursue the lucrative oncology drug market together. The companies intend to co-develop all products coming out of the relationship, share development costs and pay each other royalties based on sales in their respective territories.
Something new is going on. It’s getting harder and harder to define what a “company” is anymore or to figure out exactly where the traditional boundary lines separating an enterprise from its vendors, partners and competitors are being drawn. Two companies may compete viciously in one part of the world and still cooperate in another. They can also entwine themselves in each other’s value chains. Have a Toshiba laptop in need of repair? UPS will pick it up for you, as always. But now UPS actually runs Toshiba’s repair business, too, and will have the laptop repaired and back to you within a few days. It’s all in the name of streamlining repair turnaround time and efficiency. But who exactly does that delivery guy in the brown uniform at your front door work for, anyway?
||In this podcast, the authors discuss the capabilities needed to enable this new model of cross-enterprise collaboration. They explain that companies must take a holistic approach to a range of human capital, governance, learning and technology issues. Transcript|
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The rise of strategic alliances—corporate relationships in which companies establish long-term go-to-market agreements with peers in their market space to fill capability, functional or technology gaps—is one major factor in this blurring of organizational boundaries. The air transportation industry has been a prime example. In 1994, the average airline company had four alliances; by 2008, the average alliance portfolio had a dozen, and some companies had as many as 40.
But this newer collaborative phenomenon goes well beyond what companies have meant by “alliances” over the past decade or so—relationships that were often more focused on the fulfillment of service-level agreements than on generating new and often unforeseen market opportunities. And it goes beyond simply working together as vendors as part of a company’s supply chain.
What’s happening now is fundamentally different. It is a move worthy of the word collaboration—literally, “working together,” not simply exercising mutual contractual obligations. The Boeing relationships, for example, went fairly deep into the essence of what it means to be a corporation, with participants sharing in risks as well as rewards. The Endo–Orion relationship means that both companies are opening up to each other a great deal of the heart of what makes each of them competitive—ideas, processes and market strategies.
To succeed in this coming era of cross-enterprise collaboration, companies must be able to manage relationships across organizational boundaries as effectively as they do within those boundaries. Success, in other words, involves far more than how contracts are established, how marketing is managed and how work handoffs are documented. What’s needed is coordinated attention to a range of human capital strategy issues covering talent, culture change, establishment of trust, shared learning experiences, organizational designs, governance structures, technologies that enable knowledge sharing and more.
Drivers and challenges
Cross-enterprise collaboration makes sense for a number of business reasons and has arisen in response to different kinds of market drivers. Yet each reason highlights an organizational or talent-related challenge to be overcome.
|Cost cutting. In industries such as pharmaceuticals, development costs can be so high—about a billion dollars to bring a new drug to market—that it makes financial sense for companies to collaborate with other enterprises to share costs and risks. However, this financial risk mitigation depends on effective collaboration tools and approaches to learning that can unite different companies in common ways of doing things.
New sourcing strategies. Outsourcing and shared services have made the structure of the enterprise more modular—which, in turn, highlights the need for better integration and coordination among the different parts. Indeed, executives whose organizations are involved in an outsourcing relationship will often speak proudly of a situation where it is almost impossible to tell whether a particular task is being performed by an internal employee or one from the outsourcing provider. Making that happen, however, requires thinking about more than the tactical efforts of workflow management and focusing instead on the leadership and cultural elements that can create more seamless cooperation.
Expansion into global markets. Another important driver of cross-enterprise collaboration is globalization. Establishing a solid presence in a new and unfamiliar market can often be accomplished faster and at lower cost and risk by collaborating with a local partner. Yet bringing together multiple enterprises across national boundaries—with different HR policies, performance management strategies and career paths—can cause misunderstandings among the different players and undermine success. Reconciling HR approaches and practices among the collaborating companies is vitally important.
Speed to market. In many cases, collaboration can reduce development times and speed products to market, in part through the ability to engage teams in round-the-clock workflows. Boeing estimates that its collaborative approach to building the 787 shaved about a year off the aircraft’s development time. BMW’s X5 Sports Activity Vehicle used more effective collaboration between its US-based and Europe-based teams to cut typical time to market for a new vehicle by at least 12 months. At the same time, however, companies can risk undermining that inherent collaborative advantage if they haven’t established adequate processes for workflow management and timely decision making.
Complexity of products. Another challenge has to do with the increasing complexity of products, especially those that are heavily electronics-based—from jet airplanes to cars to high-tech devices. Cross-enterprise collaboration is a way to fill in capability gaps rapidly, leveraging distinctive intellectual property, market presence and distribution channels of two or more companies. The collaboration between smartphone manufacturer Nokia and software giant Microsoft—focused on developing enterprise solutions involving mobile devices and applications—is an example of a relationship designed to deliver more value, faster, than either company might have been able to achieve by itself.
|Innovation. Finally, effective collaboration enables companies to tap into broader sources of new ideas that can translate into profitable products and services. In the communications and high-tech industry, for example, the success of “app stores” speaks to the power of a company opening up its development platform to other companies. Smaller innovators get access to a proven channel for their products, and device manufacturers, network providers and platform companies benefit from a surge in usage.
A comprehensive approach
Cross-enterprise collaboration challenges a company across multiple organizational dimensions, so it must be planned and managed in a comprehensive fashion. Such a comprehensive approach requires an integrated human capital strategy that crosses company boundaries—programs planned and executed across four critical areas:
- Talent: Critical elements of the employee lifecycle—from workforce planning to recruiting to learning and development to performance management—revised and refined to meet the unique challenges of working together across organizational boundaries.
- Leadership: Sourcing and developing leaders with the unique perspectives and skills to guide multiple organizations toward a common goal.
- Culture: The assumptions, beliefs and values that guide the perceptions and behaviors of people—a component especially important when forming a cooperative relationship involving organizations that may have different backgrounds and working styles.
- Organization: The structure, governance, processes and operating model that need to be in place to enable collaborative work over time.
With this integrated approach, collaborating companies can help ensure that the right people with the right capabilities are in place to drive the right solutions at the right pace.
The boundaries between the four areas are fluid, so programs and initiatives put in place to support and encourage cross-enterprise collaboration may involve different combinations. But companies that successfully partner with other organizations over an extended period to seize a marketplace opportunity will be those that create solutions covering all four dimensions.
The following are some key considerations to bear in mind within those four areas.
Integrated HR and workforce planning
One of the stumbling blocks to effective cross-enterprise collaboration concerns the detailed HR strategy and workforce planning required to anticipate what skills a collaborative initiative will need, where they will be needed and which of the participating organizations is best placed to lead from that skills perspective.
Companies within a collaborative enterprise must work together to project workforce demand, determining how many people are required for each type of job or role, now and in the future. Ideally, HR executives work from so-called “capability models.” They analyze the business strategy to determine impacts on the workforce—specifically the capabilities required to execute the strategy, as well as other implications ranging from new workforce segments to new workforce locations to new sourcing strategies. The results of a capability diagnostic are used in the workforce planning process, which involves configuring the workforce in terms of specific skills and competencies needed across units and locations.
Conducting HR and workforce planning across organizational boundaries is, by and large, unexplored territory, yet it is difficult to imagine successful cross-enterprise collaboration that does not involve coordinated work among a team of HR strategists from the participating organizations. This kind of cross-enterprise human capital strategy team would be charged with translating the business strategy into an HR strategy, creating and updating a workforce plan, and then operating employee lifecycle management functions—recruitment, development, performance and rewards—integrated across the different entities.
Companies at an advantage here are those that have addressed similar HR coordination issues through global expansion—acquiring companies in new markets and harmonizing HR systems among business units in different locations.
One vital ingredient of getting multiple enterprises working in sync is a common base of knowledge and skills about the functional and process areas at the heart of the collaboration.
Several recent developments in creating enterprise learning programs that can span several organizations show promise for helping collaborating enterprises. One area: common training programs for supply chain partners.
Wal-Mart Stores, the world’s largest retailer, has been a leader in elevating supply chain management to a science. Despite its advanced capabilities in areas such as supplier relationship management, transportation and delivery, executives determined that companywide skills in replenishment were less advanced than those in other areas. Inconsistent processes across regions were common. Leading practices were usually identified through trial and error. And the analytical proficiencies needed to make superior stocking decisions were often unavailable.
To give its worldwide network of vendors common skills in these areas, Wal-Mart took advantage of a leading third-party “supply chain academy,” an online learning environment, adapting the curriculum to its needs. The result: a cooperative effort between Wal-Mart and Accenture that includes a Retail Supply Chain Certification program for rollout to the company’s suppliers and in-house professionals. The supply chain academy incorporates leading practices and other input from industry experts and more than a dozen universities.
This approach has helped Wal-Mart build better, more sophisticated supplier relationships, make better decisions and identify even more ways for leveraging supply chain excellence to increase growth, profitability and competitive differentiation.
Another example comes from Avaya, a communications equipment and solutions provider. A division of the company, Avaya Learning, delivers Avaya product and solution training not only to its own associates but also to a variety of audiences, including business partners and end customers. The training is underpinned by a professional credential program that serves as a roadmap ensuring that companies across Avaya’s value chain develop common implementation, maintenance and troubleshooting skill sets. This enables better collaboration and helps stakeholders use and sell Avaya products and solutions more effectively.
A newer development that will be increasingly important in the learning area is social media. These platforms and applications offer complementary capabilities to collaboration and knowledge management tools that can drive timely learning experiences. Instead of being document-centric or workflow-centric, social media applications more readily mimic human interaction and can create a learning environment more capable of being effective across enterprise boundaries.
The challenges that cross-enterprise collaboration presents to many accepted ideas of leadership are varied and profound. It’s commonplace, for example, to prize “strong” leadership. But that concept of strength changes in cases where executives must work together and marshal their resources and energies toward a shared goal.
In many industries, companies have traditionally advanced people up the corporate ranks based on longevity; thus leadership status is often based on tenure and title. That understanding of authority may still have its place. But a new generation of leaders is also coming to appreciate the fact that they must seek to earn that authority through merit, and through the ability to collaborate and bring people together to carve out opportunities in a more open workplace environment.
One key will be to draw potential leaders from broader talent pools and then to develop those leaders in different ways. Technical and functional experience will always be relevant, but other management skills are also important today—capabilities such as:
- Thinking globally to connect with markets around the world, and to take advantage of the technology-enabled ability to perform work anywhere.
- Appreciating cultural diversity to draw on a broad range of employees, and to motivate people from a variety of backgrounds.
- Managing portfolios of change initiatives, meaning that executives must do more than lead an enterprise from point A to point B; they must also manage the interactions among disparate change programs.
- Building trusted relationships, which can help tap into innovations and augment core competencies.
- Sharing leadership, which requires a more cooperative and expansive leadership mindset and the ability to communicate across business units, geographic regions and enterprise boundaries.
For example, Lockheed Martin Corp. has created a program it calls Full Spectrum Leadership. This companywide program, developed with the full sponsorship of the company’s CEO, is specifically focused on the development of leaders capable of meeting tomorrow’s challenges. The program redefines the essentials of leadership more broadly, and offers resources as well as continuing education, including events that involve external speakers—many with national or international reputations—on the topic of leadership. Participation in the program is linked to incentives and rewards. Full Spectrum Leadership focuses on five values: shaping the future, building effective relationships, energizing the team, delivering results and modeling personal excellence, integrity and accountability.
Collaborating organizations do not have to have identical cultures. But they must understand and respect each other, and people must know how to work together effectively in an atmosphere of trust. Any cultural differences need to be explicitly addressed so they do not impede the ability of the organizations to work together.
The cultural challenges of bringing several companies together have been well documented in recent years. After a merger or acquisition, for example, integration specialists work intensively in the area of culture, analyzing the essential characteristics of the merging companies to find points of both similarity and conflict, and then putting in place the programs that can help blend the organizations together in a new, cohesive way.
|For example, when Siemens and Nokia merged to form Nokia Siemens Networks in 2007, the new company suffered setbacks in a number of areas, including incompatible systems and processes. But one issue in particular was lurking in the background, compromising the post-merger integration: the very different cultures of the two entities. Because Nokia’s heritage was in the device manufacturing business, its culture was less explicitly customer-facing than the culture at Siemens, which was in the business of providing more holistic, customer-centric solutions. In terms of working style, Siemens had been more hierarchical in its structure, so employees needed to adjust to the less formal culture of Nokia Siemens Networks, with open offices and an expectation that interaction with colleagues at all levels would be more informal. A comprehensive change program initiated by the company has helped to address these cultural differences and to establish common attitudes in a new, shared way of working.
Culture change has also been key to the success of GE Healthcare’s “healthymagination” initiative to bring quality care at lower cost to more people throughout the world. Parent company GE has invested $6 billion to launch more than 100 innovations by 2015 to reduce healthcare costs, increase access and improve the quality of healthcare delivery.
Corporate executives knew that the success of the initiative depended on two major cultural changes. One was becoming more customer-centric. According to Bob Cancalosi, chief learning officer for GE Healthcare, who has been leading the company’s culture transformation effort, “One of our big efforts from a cultural perspective is to restructure the business from one that was product-centric to one that is customer-centric.”
The second cultural element was to develop a more collaborative extended workforce—one capable of teaming with customers, governments and other partners globally to address some of today’s biggest challenges in healthcare. As Cancalosi puts it, “Innovative product ideas can emanate from every direction. We want our managers quickly funneling great ideas and moving them to action across geographies.”
Part of this effort involved diagnosing the company’s existing culture, focusing in particular on six characteristics of open, or what the company calls “boundaryless,” collaboration: teamwork, trust, managing conflict, minimizing political maneuvering, eliminating siloed behavior and openly sharing information across the organization. The diagnosis identified several areas where GE Healthcare could strengthen its collaborative capabilities to take advantage of opportunities for growth. These insights have helped GE Healthcare take specific steps to build a more effective culture.
To guard against failure, structures must be in place to provide cross-organizational visibility into alliances and collaborations and to facilitate the reporting that leads to better decisions.
Collaborative relationships can sometimes fail, with potentially devastating effects. Alliances that are formed without sufficient coordination from a portfolio perspective—those formed by a single business unit or geography, for example—can actually damage business value.
One company entered into an important alliance, only to find that one of its business units had forged another go-to-market relationship seen as competitive to the primary alliance. The company was forced to withdraw and pay a multimillion-dollar fine. So effective collaboration is about more than just attitudes; effective structures and governance processes are also essential.
Processes and tools
Cross-enterprise collaboration has a better chance of success when the participating organizations can follow established structures and processes and use a set of common communication tools.
One of the best-known examples of creating structured processes for collaborative work comes from Procter & Gamble, which has pioneered the concept of “open innovation,” tapping into ideas from outside its own organization—individuals, companies, research institutions and even competitors—and then helping to move those ideas forward in the development cycle. A P&G online portal, Connect + Develop, enables people and organizations to submit ideas directly to the company.
Companies are growing more accustomed to collaboration tools that encourage better cooperation and idea sharing within an organization. But these tools are rarer in the field of cross-enterprise collaboration. One example is electronics retailer Best Buy’s vendor portal, which was created to improve collaboration among the company’s vendors, carriers and its own business groups through a secure, efficient and consistent means of accessing and exchanging information.
Effective technologies that encourage collaboration beyond the four walls of any single company—while also ensuring data security and information privacy—will be especially vital to success. Collaboration tools and social media applications in a cross-enterprise environment must do more than just provide platforms for communication; they must also establish trust and make the people involved comfortable enough to share ideas and concerns with others. Hence, tools that provide richer interactions are preferred—technologies such as videoconferencing (so body language and the subtleties of facial expressions can be captured) will be used more heavily in this kind of environment. (For more on collaborative technologies, see Sidebar.)
Even at this early stage in its development, the best examples of cross-enterprise collaboration are coming from organizations working together to expand opportunities, not to defend turf or simply ward off competition. Banding together will enable many companies to move forward in the expansive way necessary to win in today’s and tomorrow’s marketplace.
The winners will move forward to manage their collaborative endeavors in a comprehensive way, focusing on the talent, structures, leadership and culture needed to compete in an increasingly complex marketplace.
For further reading
“Open innovation: How to create the right new products, the right way,” Outlook 2009, No. 3
“A new era of collaboration,” Outlook 2011, No. 3
Sidebar | Digital pathways: Six technology capabilities that support cross-enterprise collaboration
By Kelly L. Dempski and Alex Kass
Successful cross-enterprise collaboration requires attention to a broad set of human capital components (see article). Comprehensive technology capabilities play an important role as well by establishing the pathways that enable the participating organizations to work together.
These pathways operate at the person-to-person, system-to-system and process-to-process level. That is, technologies can support the sharing of information between individuals and the sharing of large streams of data between collaborating enterprises’ systems, as well as the coupling of partners’ business processes.
Planning those pathways in an optimal way requires identifying what data and information need to be shared; creating the technologies, systems and platforms that enable sharing; and establishing trust as a foundation so that collaborating enterprises are willing to share.
Here are six especially important technology capabilities to think about in support of better cross-enterprise collaboration.
1. Effective web services
Cross-enterprise collaboration requires more than effective communication among people—it also requires systems that know how to “talk” to one another. For any form of system-to-system collaboration, the members of a cross-enterprise relationship need to have an easy and effective way for systems on opposite sides of enterprise boundaries to interoperate. In recent years, an increase in the maturity of technologies related to web services, service-oriented architectures and legacy integration have largely solved the problem. By opening up key systems through web services (with appropriate levels of security), organizations will enable the data sharing required to collaborate effectively.
2. Federated identity management and communications
Person-to-person collaboration within most enterprises relies on various forms of digital communication and information sharing. But, with the exception of email, many critical collaboration tools, such as instant messaging, social media and telepresence, have traditionally been accessible only within an enterprise. However, vendors of these technologies are increasingly able to support federated identity management and communications channels between partnering organizations, allowing collaborators to use these digital channels across enterprise boundaries.
3. Security beyond the enterprise border
Data security in the era of cross-enterprise collaboration requires approaches that go beyond simply providing protection at a company’s digital “borders.” A firewall cannot provide sufficient protection, since the whole idea is to share information with partners outside the firewall. However, new technologies enable enterprises to track who has access to data and what they are doing with it. Digital Rights Management (DRM) and Data Loss Prevention (DLP) technologies are examples of capabilities designed to help organizations control the ways data is used even after it has left the owner’s control.
4. Cloud data platforms
Cloud providers are well positioned to provide the service of connecting, mediating and supporting cross-enterprise collaboration. Enterprises using such services could immediately benefit through more streamlined collaboration and data sharing.
5. Crowdsourcing platforms
Crowdsourcing—harnessing the intellectual power of a large number of people within a company or across enterprises—is supported by wiki platforms and other distributed ideation tools. Crowdsourcing systems are now relatively easy for companies to create—and off-the-shelf platforms are available as well—because they do not require significant integration with other enterprise systems. However, organizations must think about the incentives they need to put in place to encourage cross-enterprise knowledge sharing. Some crowdsourcing systems reward good ideas with tangible items such as cash and prizes, or with intangible rewards, such as recognition within the organizational community.
6. Process-driven collaboration tools
Many traditional collaboration platforms are really just general-purpose communication tools and thus don’t explicitly support the work processes that users are performing. Newer, more process-driven collaboration tools, by contrast, are tailored to support the effective execution of specific processes. They provide collaborative workflow management and integrate collaboration tools deeply with business processes and applications. For example, a process-driven collaboration technology can automatically search for knowledge and expertise relevant to individual steps in the process and present that information directly within the application used to execute that process. (Back to story.)
About the authors
Based in Atlanta, Yaarit Silverstone is the managing director responsible for human capital and organization effectiveness offerings within the Accenture Talent & Organization group. With more than 25 years of experience in management consulting, Ms. Silverstone has extensive experience diagnosing complex organizational performance issues and designing, implementing and sustaining human capital strategy and talent management solutions. She is co-editor of The Organizational Network Fieldbook (Jossey-Bass, 2010).
Terence Wallis is a senior director in the Accenture Talent & Organization group, with a focus on the financial services industry in Canada. Mr. Wallis has more than 18 years of management consulting experience, with an emphasis on talent management, learning and collaboration, organizational effectiveness and change management. He also leads Accenture’s “Workforce of the Future” research initiative, which explores future trends in the areas of talent production, workforce IQ, innovation and collaboration. Mr. Wallis is based in Toronto.
Craig Mindrum is a Chicago-based visiting research fellow for Accenture and a contributing editor to Outlook. During his 30-year career as a consultant, author and college professor, he has focused on areas of human performance and organizational change, including learning, communications, leadership and the moral design of organizations. He is coauthor of Return on Learning (Agate, 2006).
Kelly L. Dempski leads Accenture’s Enterprise Social Media Innovation Center, part of Accenture Technology Labs in Silicon Valley. He also oversees global R&D in “digital experience,” for which he has numerous patents in fields ranging from large interactive screens to social networking and knowledge management.
Alex Kass is a senior manager in Accenture Technology Labs. Based in San Jose, he currently leads the Labs’ R&D efforts in social collaboration.