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A CHALLENGE FOR SMES INVOLVED IN INNOVATION COLLABORATIONS

Monday, October 31, 2016

It is often said that innovation is a team sport.

The challenges of international innovation collaboration manifest in many different areas – from managing IP risks to spending time and money in travel, to understanding language, cultural, regulatory differences.

In the context of all this complexity and strain on your resources, especially for an SME, you are having to build a new team with people in another country.

The research and report funded by WEF (Collaborative Innovation - Transforming Business, Driving Growth, 2015 – cited in the GII report Chapter 8) provides a good summary of this and a range of valuable points. They propose that this is seen as involving three main phases – Prepare, Partner and Pioneer. When supporting SMEs I break this down further looking across the full life cycle with a 6 stage model from project initiation where you establish the overall purpose and key components through to Exit where you aim to terminate the collaboration in a way that retains as much value as possible and with minimal loss/cost.

From putting in place clear and agreed IP sharing agreements, deploying leading negotiators with the right attitude, being open on both sides about objectives, the WEF report highlights a number of key points that can be crucial to develop trust.

Relationship building and maintenance is key throughout this with the SME CEO having to balance the myriad challenges of assessing potential partners, reaching decisions about what form of collaboration is going to be to your advantage, interpreting behaviour taking account of cultural differences, resolving the inevitable issues and misunderstandings and gradually building value together.

Studies in this area have found that getting the balance right between building trust and maintaining control can be tricky and requires sensitive handling (Das and Teng, 1998).

From my own experience and the extensive research and case studies that have been reported over the years there are a number of key points that can be critical in facilitating the development of a strong collaborative business relationship:

 

  • Starting from scratch with someone you don’t know is high risk – both sides will need time before they will open up and share the valuable intellectual property on which a genuine collaboration will be based. I suggest three potential strategies for finding a partner with whom you can move forward:
    • Are there potential partners within your existing network and that of your senior staff? (indeed, in selecting the country you target for seeking partners, many find that it can help to start with a country where your team has a track record of engagement and already some understanding of the business environment)
    • Reach out to your external network/customers/supply chain, informally describe what you are looking for and see if any of them can suggest an organisation or individual who they have worked with who they have found to be an effective collaborator. (This intermediary can become a useful facilitator if your collaboration gets into difficulties later.)
    • Accept that moving towards partnership is going to take time and develop a staged model that allows some early work and discussions to take place that involve minimal risk but that encourage mutual disclosure and trust-building.

 

  • Communication in a collaboration is clearly critical but often under-resourced. Key points include:
    • Use of an intermediary can be very valuable, especially early on, if there is someone who both sides trust and who can help to resolve differences and uncertainties, however…
    • Face to face time is critical and you need to be prepared to invest a considerable amount of time and money in this. There will be limits to what an intermediary can do on your behalf…
    • Keep frequent communication so that issues can be identified and resolved, suspicions and rumours can be addressed, trust can build, avoid sense of hiding anything… Remember some cultures will not say NO, or may find the requirements to produce reports to satisfy funding bodies challenging so don’t just rely on what people say – check what they are actually doing.

 

  • Maintaining and building trust as the relationship progresses can be tricky. Some tips that have worked for others would be:
    • Draw up a collaboration agreement early on as the process of negotiation and setting this out will provide a key test of compatibility, and once it is in place it provides a framework… Be prepared to review this as you learn about each other.
    • Getting the balance of trust and control development measures can be critical. If you put too much emphasis on controlling the other party they can see this as evidence of distrust. Being willing to make yourself a little vulnerable and open can be valuable in building a trusting relationship and stimulating openness on the partner’s side… NDAs and Due Diligence have a key role in a business relationship and if neither side has any intention to act other than honourably should not be seen as a threat – indeed the process of negotiating over these can, again, serve as a useful test of the relationship and means for developing a mutual respect and understanding.
    • One way to manage risks in a collaboration relationship is to build relationships both with your primary partner and with those in his/her network and wider business/innovation environment. This will help you gain greater value form the collaboration and at the same time make it less likely they will opportunistically abuse your trust
    • While you may develop a trusting relationship with the CEO, etc of your partner business this may not extend to all his/her workforce and know-how leakage through a key individual deciding to leave and exploit the knowledge they have gained in a different competitive venture needs to be explicitly managed – seek legal/HR advice on how this can best be done in the particular country involved.

 

Posted by:
Dr Nick Rousseau

Unconventional Connections

www.unconventionalconnections.co.uk

Das, T. K. and Teng, Bing-Sheng (1998) Between Trust and Control: Developing Confidence in Partner Cooperation in Alliances, The Academy of Management Review, Vol. 23, No. 3 (Jul., 1998), pp. 491-512.

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