Collaboration matters for differentiation

• Tweet

• Tweet

I recently penned a piece called: Black cab innovation, so why not us? In recent days it has received some interesting attention – see the comments to understand what I mean. Last week I sat in on a panel discussion featuring John Hagel 111 talking about innovation in the emerging economies of India and China. While there I picked up a copy of Hagel and John Seely Brown’s From Transactional Markets to Relational Networks: Amplifying the Innovation Potential of High-Tech Markets. Despite the lengthy title, the 29 pages can be read and digested in a couple of hours. For those that don’t know, Hagel and Brown are among the world’s best strategic management thinkers. I found Hagel to be extremely engaging and thoughtful at a deep and useful level. His discussion about how the Indian and Chinese markets are developing competitive networks rang a bell with me.

Hagel was joined by Michael Hsieh of Fung’s Capital USA Investments. Hsieh described how Li and Fung, a massive Chinese outfit partners, promising to place between 30-70% of a partner’s business. The idea is that any company that has 100% of output owned by a partner will never fully trust the relationship because what happens if they pulls the plug? On the other hand, leaving say 30% open to others helps spread load and risk while encouraging continuous innovation. Why should this matter to professionals and why do I care?

No one person ‘knows it all.’ Therefore in order to provide the best service you’re always going to need partners in topics of client interest. Whether that is specialised tax expertise, consulting, IT or business planning, there is always someone out there who knows more than you do and from whom you can benefit. The network tools are now so ridiculously cheap that almost anyone can engage, using them as a discovery mechanism from which relationships are built.

During the discussion, Hagel drew the distinction between the collaborative approaches being favoured in China and the ‘Fortress America’ (my term), top down approach common in the US and the UK. While the US/UK model has advantages, Hagel argues that the rigidity that comes with it makes for inflexibility and difficulties in fostering innovation. I get that.

The big issue for practitioners comes in wondering whether the introduction of external partners will cannibalize what they already have. That’s untrue and unfounded. If the partnership is correctly organized and managed then everyone should be a winner. I’ve seen that happen time and again in what I describe as a virtuous circle of learning. Today more than ever, I believe we need to be actively engaged in networks, not simply to spread ‘our’ message but as opportunities to learn and acquire fresh insights into issues about which clients care. It is how we can differentiate and collaborate in a mutually beneficial way that doesn’t threaten our portfolios but adds value to all in the chain. What can be bad about that?

Related articles by Zemanta

• John Hagel on serendipity (ethanzuckerman.com)
• The shift index – How companies need to understand and adapt to the changing environment (thecustomercollective.com)
• Developing “personal APIs” will be the key to scaling collaboration. (unstructuredventures.com)
• Schooled by China and India (money.cnn.com)
• In this crisis, do you choose innovation over revenue? (ac-idealog.blogspot.com)