Collaborate With Your Competitors and Win

1. Collaborate With Your Competitors � and Win Gary Hamel, Yves L. Doz, and C.K. Prahalad (Adil Minocherhomjee)

2. What are Strategic Alliances? A quick, low-cost route for new competitors to gain access to new technology and markets Saves R&D costs and time Strengthens both companies against outsiders Usually, weakens one partner

3. Principals of successful collaboration Collaboration is competition in a different form Successful collaborators enter alliances with clear strategic objectives and understand their partners� objectives Harmony is not important measure for success Occasional conflict may be the best evidence of successful collaboration

4. Principals of successful collaboration Cooperation has limits Must defend against competitive compromise, with on and off-limits knowledge clearly identified and monitored by all employees Learning from partners is paramount Successful companies view each alliance as a window into their partners� broad capabilities and build skills in areas outside the formal agreement & diffuse this knowledge into their own company

5. Why Collaborate? When commitment to learning is one-sided, collaboration invariably leads to one side taking advantage of the other Western companies enter just to avoid investments abroad Eastern companies attempt to learn core skills of collaborating company The strategic goals converge while competitive goals diverge

6. Why Collaborate? Both partners must contribute something distinctive Basic research Product development skills Manufacturing capacity Distribution channel access The size and market power of both partners is modest compared with industry leaders Partners believe they can learn from each other and limit access to proprietary skills

7. How to build Secure Defenses Challenge: share enough skills to create advantage vis-�-vis companies outside the alliance while preventing a transfer of core skills to partner Potential for transfer is greater when one partner�s contribution is easily transported, easily interpreted, and easily absorbed A discrete, stand-alone technology is more easily transferred than a process competence such as manufacturing excellence

8. Guidelines to build Secure defenses Limit the scope of the formal agreement to cover only a single technology Part of a product line rather than an entire line Limit distribution to a few markets at a time Limit unintended transfers at the operating level Have a �collaboration� division Control information flows to a partner Limit the number of gateways Restrict access to key facilities and people Declare sensitive laboratories and factories off-limits to partners Make sure all participating/non-participating employees understand the objectives and risks of the alliance

9. Enhancing the Capacity to Learn Learning begins at the top Have a desire to learn but don�t always play teacher Learn about as many areas as possible Inform employees on partner�s strengths and weaknesses Acquire particular skills to bolster competitive position Develop precise benchmarks of partner�s performance Diffuse skills acquired from partner through organization Predict how rivals behave when alliance unravels its course Proceed with care-but proceed

10. Proceeding with care Collaboration may sometimes be unavoidable; surrendering too much information is not Do not be obsessed with the legal ownership structure of the alliance Companies confident in their ability to learn prefer ambiguity in alliance�s legal structure Running from collaboration is not the answer Remember, collaboration can be a low-cost strategy for building new process capabilities and winning new product and technology battles