Cyclical approaches to innovative collaboration

Jason P. Davis
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Cycling gives all players more room to exercise their own individual interests, with the ability to isolate one partner, knowing that they’ll get the benefit of that partner’s participation later.

Why do some collaborations soar and others flounder? For the better part of a decade, I sought answers in Silicon Valley, doing intensive fieldwork at some of the world’s best-known computer firms. I even went to work at one. Specifically I examined eight technology collaborations involving 10 firms, performing more than 100 interviews all told.

In the first article derived from this research, which appeared in The Administrative Science Quarterly in 2011, a colleague from Stanford University and I found that successful collaborations rotated control of the project back and forth between two partners. This rotating leadership process worked better than domineering approaches in which a single partner controlled all phases of the collaboration or a consensus-based approach in which the partners shared control of every phase.

In the course of further research with these companies, however, it became clear to me that thinking of collaborative innovation in terms of its smallest unit — two companies — misses a crucial part of the picture. I’m now finding that innovative collaboration faces unique challenges — and unique opportunities — when a third party enters the equation.

Not solely a tech-industry enclave, Silicon Valley is an ecosystem unto itself. The elite companies within this small world of technology wizards and wunderkinds boast an inescapable presence in every important market. As formidable as they are, though, the Silicon Valley colossi still need to draw on the expertise of outside firms. The long-standing relationship between Intel and Microsoft is a good and often-noted example, but Cisco Systems also had been a frequent, if less-noticed partner of both firms.

Triangles such as Intel-Microsoft-Cisco have become common in the tech sector, though companies often don’t announce it, preferring to tout their partnerships with only a single other firm. Groupings of more than three are rare in this industry, however, probably because the addition of a fourth makes the juggling act of collaboration even harder.

I zeroed in on these triangles, isolating six cases in which different pairs of partners had to decide how they would manage their ongoing collaboration with a third firm, an industry titan that will remain unnamed — for our current purposes, let’s call the company “Lear.”

Forging an alliance between two companies has its own share of obstacles, including corporate-culture clash, divergent strategic interests and fear of intellectual-property poaching. Adding a third player to the mix, especially one as prominent as Lear, brings an exponential increase in potential headaches. Companies generally have a strong preference to stick to twosomes, but Lear was too big to be shut out completely.

With some measure of input from Lear being unavoidable, some pairs chose to include Lear all the way through the collaboration, hoping to benefit from the industry leader’s savvy and market ubiquity. In one particular case, prospects were especially good, because the partners previously had enjoyed fruitful collaborations both with each other and, one-on-one, with Lear.

Clashing priorities and pre-existing allegiances ultimately left the triangle bogged down in infighting, however. One partner’s desire to speed up the timeline to edge out a competitor led to rifts within the group, as did disputes over whether to invite sales vice-presidents into the collaboration. Compromises made in an attempt to patch things up resulted in a loss of efficiency and focus. In the end the three-way collaboration was dissolved after two mostly unproductive years. The partners made no subsequent attempts to collaborate.

Aiming to avoid this type of conflict, other pairs of partners opted to work with Lear only in twosomes, collaborating independently at roughly the same time. This plan backfired in one case, however, when a partner began asking questions about a collaboration to which it was not privy, triggering unplanned negotiations among the three companies. As relations among the three became increasingly strained, deadlines were missed and a vice president at Lear began pressuring participants to wrap up the collaboration even though all the targets had not been met. Final results of the collaboration fell far short of the initial proposal and, again, the three partners have not worked together since.

By themselves, I found, both twosome and threesome configurations tend to be a drag on innovation. In general, groups fared better when they adopted a hybrid strategy I call “group cycling,” which employs consecutive collaborative pairings among the three partners. In this way participants get the best of both worlds: relative independence from third-party interference without the isolation and opacity of parallel twosomes. By feeding the outcome of each newly completed collaboration into the next one, the three partners were assured a continual flow of fresh ideas, which might otherwise have been lost in micromanagement and infighting.

Cycling also gives all three players more room to exercise their own individual interests, with the ability to isolate one partner, knowing that they’ll get the benefit of that partner’s participation later. That was the case with one project I studied, in which Lear was pointedly excluded from the initial phase of collaboration, which lasted two-and-a-half years. The other two partners wanted leeway to develop their project without interference from Lear’s managers. Upon completion of the first phase, however, the three began to pair off in earnest, switching partners until innovation and integration reached full completion.

All in all, the three cycled through 11 collaborations — but, in an important point, they did not plan more than one or two pairings in advance. The agreed-upon cycling framework allowed the partnership to grow organically, without being hemmed in by a rigid twosome or threesome arrangement.

For cycling to work, of course, a good-faith atmosphere has to prevail among all partners in the group. In my study the particular culture of Silicon Valley was certainly pertinent: Due to the nature of the tech industry and the positions of the firms involved, all the collaborators could be fairly sure that they would have future opportunities to work together. This made them feel confident in agreeing to sit out a cycle for the greater good of the partnership.

This ability to take the long view, rather than to fixate on short-term objectives, may mark the difference between sturdy and shaky collaborations.

Jason Davis is an associate professor of entrepreneurship and family enterprise at the international business

school Insead.

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