A group presentation about the key stages organisations go through when merging together or working as a cohesive unit

1. Collaborative Advantage:
The Art of Alliances

6. Competing on the edge:
• Improvisation
The ability to survive • Co-adaptation
change and re-invent
a firm constantly over
time • Experimentation
• Regeneration
• Time pacing

7. FUNDAMENTALS OF COMPETING ON
THE EDGE
1.UNCONTROLLED 2.INEFFICIENT 3.PRO-ACTIVE
4.CONTINOUS 5.DIVERSE

8. Core concepts
Where do you want to go? How do you get there?
THREE CORE CONCEPTS:
EDGE OF CHAOS
EDGE OF TIME
TIME PACING

9. MANAGING CHANGE
LEADING
REACTION ANTICIPATION
CHANGE
CONTINGENCY BEING AHEAD OF
TAKING DEFENSE
PLANNING. THE GAME

10. CHANGE IS DIFFICULT
BUT RESISTANCE TO
CHANGE IS FATAL.
1.The future is too
unpredictable to plan thus  However , Managers cannot
managers cannot plan wait for the future to unfold
effectively.
2.There is fierce
competition in most high  However, they cannot focus
velocity industries.
only on change

11. Edge of chaos
- An organization is only partially structured.
-The natural state between order and chaos, a
compromise between structure and surprise.
-An intermediate zone should be maintained
where the system is most vibrant, surprising
and flexible.

12. Edge of time
-Thinking simultaneously about multiple time
horizons.
-The challenge is to balance on the edge of
the past the present and the future.
-The intermediate zone where managers look
backward to the past and forward into the
future while concentrating on today.

13. Time pacing.
-Change is triggered by passage of time rather
than occurrence of events.
- Creating an internal rhythm that drives the
momentum for change.
-Systems evolve most effectively by shedding
off what was useful in the past and adopting
what will be useful in the future.

14. Cont’d
• Variation is enhanced, making evolution more
effective (filling the inefficiency during the process)
• Keep what works and adopt what will be useful in
future
• Slower and more gradual change process
• Stretches managerial thinking across a longer time
frame
• The key is to remain at the edge of time (where past
and future are still connected)

15. How Organizations Change
Complexity theory
• Change is the marriage of two processes
Evolutionary theory
Complexity Theory
• Adaptation is most effective in systems that are only partially
connected (not too structured)
• Quicker change process that happens as managers adapt to
current situations
• The key is to stay poised on edge of chaos

16. Too many cooks spoil the broth??

17. Grow Adapt Change
Variation through
successive
Natural selection Acting on inherited
generations over
time

18. Competing on the Edge | Intellectual Roots
• Competing on the edge is based on the fundamentals of change
and the elements that affect:
- adaptive behavior
- evolutionary change and
- origins of speed
Assumption 1:
Marketplace is in a constant flux
• Competitions come and go
• Market changes (emerge, close, shrink, collide and grow)

19. Assumption 2:
Firms are composed of numerous parts
• Links of parts together at the edges of chaos and time forms
complex adaptive system
Complex Adaptive System:
1. Made up of multiple agents (people or companies)
2. Agents must differ from each other
3. Exhibits COMPLEX behavior (behavior that is orderly
enough to ensure stability but also full of flexibility) –
Think Jazz band !
4. Behaviors are ADAPTIVE
5. Behaviors are EMERGENT

20. What does this mean?
• The organization has the ability to adjust to obstacle together
without an established ‘leader’

21. GOAL of Competing on the edge strategy
Flexibility
Adaptation to Ability to locate the
current change & constantly changing
evolution over time sources of advantage
Resilience in the
face of setbacks

22. Poised on the Edges at 3M
How did the managers do it?
CHAOS
• Scientists : Allowed to spend 15%
of their time on anything
• Business run with lots of
freedom & loose planning
• Grants for external projects
• Allowing change to happen will
flexibility
• This is pursuing edge of chaos

23. The other elements in their structure..
Structure Past Future
• Sophisticated • Rooted on edge • Acceleration of
financial of time their R&D
controls & • Routinely projects
• Sophisticated recombine past • Ensure every
information techonologies 3M business
systems • Eg. can reinvent
Mircoreplication itself
periodically

24. Cont’d
• 25% of sales • Constantly • 38th of dividend
must be from finding new increase
products less products
• 9% of sales
than 4 years old • Their strategy: increase
focuses on
• Sets the rhythm • 3M
coating
of change technologies & continuously
• Past > present > innovations reinvent itself
future • Edges of chaos &
time

25. Conclusion
Where do you want to go?
How are you going to get
there?

26. 2nd Reading

27. An Introduction…
• An alliance is not necessarily a merger or acquisition. It can
also be an agreement between businesses to work
collectively to achieve their objectives (mutually common or
different).
• Either way, a good business alliance can give a firm
Collaborative Advantage.
• What to consider when establishing an alliance?
– Not just cost minimisation, improved funding, better productivity…
– Human factors are also important!
Barriers to effective use of relationships is social, not strategic factors
Distinctions between organisational classes can interfere with adaptive
capability
-Kanter-

28. 3 Fundamental Aspects of a Business Alliance
Alliances should Alliances should not Alliances cannot be
provide continuity. It be just an exchange restricted by strict
should provide new of resources and rules. It should provide
opportunities rather skills. That’s not an interpersonal
than being one-off alliance, more of just connections and
a supplier-consumer encourage change &
relationship development.

29. Collaboration & Driving the Market
• Shaping the Market via deconstructionist approach.
• Deconstruction of competitors
• Accomplished by joint ventures, hostile takeovers,
partnerships, mergers, acquisitions…etc.
• E.g.
– Eliminated direct competition in international telecom
– Increase likelihood of competitors exiting & preventing
new entrants
• Can be done with suppliers, channels…

30. Types of Alliances
Combining
core
competencies

31. Collaborating within the Value Net
Customer
• Retailer
• End user
Competitors
• Wholesaler Complementors
• Playstation
• Gamecube • Xbox Linux Project
• PCs • User-communities
• Online-gaming • Magazines,
platforms fanzines…etc.
• Stand-alone DVD • ISPs
player • ModChips
Suppliers
• Nvidia
• Intel
• Content rights
holders
From Martin Koser

32. Courtship Engagement
Setting up
Housekeeping
Changing within
Learning to
Collaborate

33. Courtship
• The stage where a suitable partner firm is
discovered
• Business alliances are more commonly initiated like
romantic relationships; from optimistic ambition,
feelings or intuition.
• It is important for firm’s executives to hit it off at a
personal level.
• Relationship compatibility is not measured just by
numbers and statistics.
• Strategic and financial analyses just contribute a
level of confidence.

34. Criteria for partner selection
1. Self-Analysis
• Important to assess the firm itself: Find out the
firm’s resource levels, internal SWOT analysis,
objectives…etc.
• Calls for a deep evaluation of the industry (their
own and the targeted industry).
• Focus on a shortlist of potential partners and
evaluate them. You wouldn’t want any surprises!

35. Criteria for partner selection
2. Chemistry
• Focuses on the personal side of a business alliance
• A good understanding between executives creates
some goodwill to draw on in times of tension. (can
include business & personal interests)
• Important to consider cultural, religious, ethnic and
regional differences when interacting with another
company.

36. Criteria for partner selection
3. Compatibility
• Compatibility on financial terms is important
• But so too are intangible measures such as:
• Historical
• Philosophical
• Strategic
• E.g: common experiences, values and principles
and future aspirations

37. Engagement
• The alliance becomes formally institutionalised.
• Relationship becomes complicated when
stakeholders enter the picture.
• The management can follow certain steps to ensure
the relationship keeps it balance between personal
and institutional:
– Meeting the Family
– Establishing the Vows

38. Meeting the Family
• Like the executives, the lower-level
management and employees should be given
the chance to build a good rapport with staff
of the potential partners.
• Also ensure that other stakeholders approve
of the alliance.

39. • Third party professionals (lawyers, investment
bankers) enter the fray to oversee the contracts and
legal side.
• Must control their role at this stage as these
professionals tend to focus more on technical
elements and less on operational compatibility.
If professionals dominate,
this may happen Operational
Friendly
Professional
savvy rules
and
contracts

40. 1. Incorporate a specific joint
The Vows activity
Ways to ensure the
best agreement is
2. Include a commitment to
established
expand the relationship
3. Incorporate clear signs of
independence for partners.

41. Setting up Housekeeping
• As companies get past the initial set-up, there are
bound to be some barriers when the actual alliance
is put into practice.
• These obstructions include:
1. Problems of Broader Involvement
2. Discovery of differences
3. Respect vs. Resentment

42. Problems of Broader Involvement
• This involves the problems which arise among
employees of the partnering firms.
• Problems may arise due to:
– Insufficient opportunities for staff to create a
good working rapport
– Employees may have a different perspective about
the alliance compared to the executives
– Employees may focus on the company that
primarily hired them instead of the partner firm
– Some staff may oppose the alliance

43. Discovery of differences
Operational and cultural differences start to emerge.
These differences can be classified as:
• Differences in authority and decision making
• Logistical and operational differences
• Money related conflicts
• Language barriers

44. Respect vs. Resentment
• Resentment from the different groups of
employees may arise from:
– Stereotyping
– Blaming the “outsiders”
• Higher-level management should encourage their
respective employees to be open and supportive
of partner firm’s staff, regardless of background
or nationality.
• Respecting other’s work will help them feel
appreciated and contribute more to the venture.

45. Learning to Collaborate
• Firms have to develop procedures to eliminate
organisational and interpersonal disparities to obtain
the maximum value of the alliance.
• Alliances can achieve 5 levels of integration:

46. • Involves frequent communication
among executives regarding
Strategic objectives and company changes
• Helps firms move in a complementary
direction
• Develop plans for joint activities,
knowledge transference, firm
changes that enables better linkage
Tactical • Involves appointment of as Alliance
managers, Worldwide account
directors (WWADs)

47. • Concerned with providing staff with
necessary information, resources
and training to do their tasks.
Operational • E.g. participating in mutual
workshops to formulate common
work schemes
• Develop personal relationships
between the companies
• This helps in improved sharing of
Interpersonal resources and information
• Prevents small conflicts from
growing

48. • Involves managers acting as teachers
as well as learning about the skills
Cultural and cultural awareness required to
eliminate any differences

49. The US team leader described his Japanese counterpart as
weak, incompetent and completely disinterested in the project. “He
never says anything in meetings, he just sits there. Sometimes I think
he is asleep. I do my best to drive the project, but nothing happens.
“headquarters gave him a weak team; he must always present things
himself. He can’t rely on his team for any support. We don’t believe
anything his people send us, how could we?”
Marshall n.d.

50. Both sides were interpreting the other’s behaviour
strictly in terms of their own corporate and national
cultural assumptions.
Where the Japanese executive was demonstrating
confidence and support for his team the Americans
saw passivity and disinterest.
In trying to correct that perceived problem the
American executive unintentionally convinced the
Japanese that the American team members were not
up to the task at hand – anything that did not come
from the American executive himself could not be
trusted
Marshall n.d.

51. Changing within
• An alliance will produce changes which were
unexpected at the start of the collaboration.
• Manager should exchange ideas in order to garner
the full value from the partnership.
Empowerment of Relationship Managers
• Managers must be able to adapt their firm’s
methods accordingly to venture-specific tasks
• E.g. Northern Telecom gives independence to its
managers in Turkey and China branches to alter the
working procedures.

52. Changing within
Infrastructure for Learning
• Companies discover that strong communication and
exchange of ideas across departments lead to increased
productivity.
• This leads to internal modifications to allow more teamwork
across departments and the exchange of information and
ideas.

53. THANK YOU
Q&A