Partnering, Clustering and .nets: The Next Challenge for Operational Excellence

In reviewing the three big challenges of business model development (Partnering, Clustering and.nets), continued operational process improvements and innovation research has found a pervasive theme in successful organizations.

“Partnering is no longer a part of our business; it is our business.”

Peter ward, Vice President and General Manager – Xerox Europe

“The future will belong to those companies that embed alliance management capabilities into the fabric of their culture and how they do business.”

Fred Hassan, CEO – Schering-Plough

As the first decade of the 21st ends, we can envisage that collaborative relationships will multiply and intensify. The concept of operational excellence and issue resolution based solely within a single department, function or organization will give way to collaboration between function (spanning geographic boundaries) and organizations.

This shift will be supported by a new wave of IT investments. The trend over the last ten to twenty years of firms investing in administrative process and infrastructure automation which has been focused on finance, manufacturing and reporting, will shift towards a focus on IT in order to enable knowledge workers to collaborate more effectively. IT systems will be developed that enable IT budgets to be split between new collaboration and communication suites; decision – support tools to enhance knowledge worker productivity and tools to help retrieve, filter and process data and information more effectively. This new IM framework, in conjunction with the interconnected global economy, will enable firms to source know-how andexpertise seamlessly around the world. The traditional supply chain will be atomized (in time and space) with elements and components sourced around the clock and around the world. Skills and talent will not in themselves be automated but the creativity needed will be created by digitized know-how and knowledge.

Partnering is not a new management approach. Most firms will operate with partners in some form or another. While many firms will operate with what can at best be described as average levels of partnering performance, the benefits of highly effective partnerships are significant and are termed “relational rents” – gains that accrue as a result of the above average cooperation where 1+1 equals more than 3. Numerous research studies clearly show that these relationship benefits are tangible with a 15% gain in terms of growth and margins attributable to successful partnerships, as well as shorter time to execution and lower costs. In these situations the partnership has moved from a traditional supplier or outsourced service provider relationship to a collaborative endeavor than can form the basis of a true competitive advantage.

What is increasingly apparent however, is that the more successful firms are now recognizing that the solution to the big three challenges resides as much outside the organization as within it. They are responding with the development of more complicated forms of partnering enabled by the technology such as networks of organizations and clusters of firms working together across time zones and cultures.  Partnering is shifting from being solely focused on production and cost to a growing focus on partnering for innovation and change

A research survey as part of the Gibbs&Humprhies program investigates the extent to which change management is embracing the strategic trends for working with external partners as a source of collaborative change and improvement. Fifty-four responses have been gathered so far.

An important, yet expected finding is that while firms have a relatively poor track record in change, they anticipate commencing more initiatives.

  • 71% of change initiatives have been successful.
  • 89% of firms believe that the number of change initiatives will increase.

56% of firms see collaborative change as primarily driven by the need for internal organization change and downsizing, compared to only 29% who see a primary focus on creative change and innovation. The latter is a recognized priority for senior management in 2010 according to other research.

Two key data points are apparent:

  • Few firms appear to co-fund collaborative change with partners; a trend that is set to increase.
  • The integration of partners into existing change initiatives appears to be low.

Richard Gibbs is a recognised expert in marketing channels and alliances. He has a PhD from the University of Gloucestershire and an MBA from HenleyManagement College. He is a strategy architect and change manager for XeroxEurope and has over 20 years experience managing partnerships. His first book was published in 2009 and he has two new editions due in 2010. For more information on his research go to


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