Business collaboration might sound like buzzwords that get passed around in boardroom meetings. Certainly, the words are bandied about in conversations and social media.
At its essence, collaboration is people working together to achieve a common goal. While collaborating, people share knowledge, skills, competence, and resources. When collaborations are functioning properly, all involved deem the sharing of value to be equitable.
In general, business involves people and organizations agreeing to exchange value. Following an agreement to exchange value, each party delivers and receives components of the agreed-upon value.
In business collaborations, each party agrees to contribute value to achieve a common goal. While that sounds like it could be applicable to all businesses, it is not.
Strategic concepts – including business vision, mission, values, and goals – exist to provide framework for creating, delivering, and receiving value. While many expert consultants teach the importance of sharing business vision, mission, values, and goals, that sharing is rarely achieved with true collaboration.
Few will claim that organizations exchange ‘shared’ value. Simply put, most [for profit] businesses engage in buying and selling, where buyers’ perceptions of the value they receive from their purchases differ from the sellers’ perceptions of the value they receive from their sales. Few will claim that the value employees receive for the work they do for employers is the same as the value received by employers.
ln general, business involves organizations delivering and receiving different types of value. Whereas collaborative business relationships involve organizations delivering different types of value and receiving a share of the value generated when the collaborating organizations achieve shared goals.
A Business Strategy Decision: To Collaborate or Go It Alone
The decision between business organizations collaborating with other business organizations (partnerships, alliances, joint ventures, etc.) and going it alone (remaining independent and self-reliant) involves weighing various pros and cons, as well as understanding the key differences.
The Key Differences: Collaborating and Going it Alone
- Resource Sharing vs. Resource Ownership: Collaboration involves sharing resources, risks, and rewards with partners, while going it alone means retaining full ownership and control over resources and decisions.
- Access to New Markets: Collaborations can provide easier access to new markets through partners’ existing presences, whereas independent organizations may need to invest significantly to enter new markets.
- Innovation and Knowledge Exchange: Collaborative efforts often lead to innovation and knowledge exchange due to the value in diverse perspectives and expertise, unlike independent operations that may have limited viewpoints.
- Flexibility and Speed: Independent businesses can often make decisions and pivot more quickly without needing consensus from partners, whereas collaborative efforts might be slowed down by the need for alignment and agreement.
Pros and Cons: Collaborating and Going it Alone
Collaboration Pros:
- Risk Sharing: Collaborating allows businesses to share financial and operational risks.
- Access to Resources: Partnerships provide access to additional resources, including specialized knowledge, technology, and capital.
- Market Expansion: Collaborative efforts can facilitate easier entry into new markets or sectors through partners’ existing networks and customer bases.
- Innovation: The combination of different skills, expertise, and perspectives can enhance innovation and creativity.
Collaboration Cons:
- Dependency: There’s a risk of becoming too dependent on other organizations for critical competencies or resources.
- Conflict of Interest: Differences in culture, objectives, and working styles can lead to conflicts and inefficiencies.
- Profit Sharing: Gains must be shared with partners, potentially reducing the individual share of profits.
- Control and Autonomy: Collaboration often requires sacrificing some degree of control over decisions and strategies.
Going It Alone Pros:
- Full Control: Retains complete control over the direction, decisions, and operations of the business.
- Greater Share of Profits: All profits generated remain within the organization, without the need to share with partners.
- Independence: Avoids the complexities and potential conflicts that can arise in partnerships.
- Flexibility and Speed: Decisions can be made quickly without the need for consultation or consensus with partners.
Going It Alone Cons:
- Increased Risk: All risks are borne by the single organization, with no partners to share the burden.
- Limited Resources: May face limitations in terms of resources, expertise, and capital compared to what could be accessed through partnerships.
- Market Entry Barriers: Entering new markets or sectors may be more challenging and costly without the leverage of a partner’s existing presence and resources.
- Innovation Limitations: Less exposure to diverse ideas and practices, which can limit innovation and creativity.
Choosing between collaboration and going it alone depends on the specific goals, capabilities, and strategic vision of the business. Each approach has its unique benefits and drawbacks, and the optimal choice varies based on the context and objectives of the organization.
