The war for marketplace supremacy is not what it once was for multinational corporations (MNC). Where once MNCs could out-compete each other by taking claim to larger market regions and making use of greater available resources, it has now become that giant MNCs compete directly in the same massive marketplace using comparable resources. Morten T. Hansen and Nitin Nohria believe the solution to getting ahead today lies in collaborative advantage, the ability to share knowledge, and develop new products and services within the departments of the company.
For building that advantage, there is a basic framework with three elements. The first of those elements is value creation. Collaboration must produce a clear benefit for the company, or else time and resources are being wasted. The five major categories of benefits include: cost savings through the transfer of best practices, better decision making as a result of advice obtained from colleagues in other subsidiaries, increased revenue through the sharing of expertise and products among subsidiaries, innovation through the combination and cross-pollination of ideas, and enhanced capacity for collective action that involves dispersed units.
The second framework element involves four barriers to interunit collaboration. These are social barriers that prevent people from better working together, and they involve: unwillingness to seek input and learn from others, inability to seek and find expertise, unwillingness to help, and inability to work together and transfer knowledge. Learning to get rid of the walls that divide people is necessary to create the best final product.
The last element in the framework is management lever. On the subject, Hansen and Nohria say:
Potential management levers that can reduce the barriers fall into three broad categories: leadership, values and goals; human resources procedures; and lateral cross-unit mechanisms. The latter category can in turn be divided into information systems, informal networks and formalized lateral mechanisms. Each mix of barriers in a company requires a specific mix of management levers to foster collaboration across business units, subsidiaries and departments. It’s important to carefully choose and implement a management lever or levers that will reduce a specific barrier.
They go on to warn that collaboration can easily be overdone, creating a situation where meetings of all kinds take place and nothing useful is ever accomplished. With management levering, it is also important to remember to make clear who is responsible for what at both the individual and business unit levels. Still, when used correctly, collaboration can be just the thing your business needs to get a leg up on the competition. The best part is that your competitors will have no idea how it happened.