Business Case Studies, Executive Interviews, Theo Forbath on Collaboration

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Executive Interviews: Interview with Theo Forbath on Collaboration
March 2008 - By Dr. Nagendra V Chowdary

Theo Forbath
Chief Strategiest with Wipro Technologies
and leads the company`s Global Product Strategy and Architecture (PSA) Practice.

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  • What are the potential areas of conflict in collaboration initiatives? Where domajor disagreements tend to come from?
    They often stemfromflawed assumptions about the best way to organize. For example, many partners vary the staffing on projects to match the workload, allowing them to achieve greater resource utilization. But this alsomeans that experienced staffmay leave projects, to be replaced by new members with little knowledge of the project or client context. In innovation projects, where "tacit" knowledge is so important, this can lead to serious performance problems. Hence leading firms insist on greater staff continuity, and arewilling to pay extra for this type of relationship.

    Another area in which conflicts can emerge is contract structure. Writing contracts the size of a phone book is obsolete in an era where the greatest value a partner provides comes from the ideas they possess and not the wage rate that they pay. Partners must be encouraged to share ideas, an aim that is best accomplished if they also share in the spoils that come from their realization. Hence successful firms look to reward partners through revenue and profit sharing, while also hedging risk by asking them to absorb a portion of development costs.

    Finally, many collaboration projects get bogged down over how to manage Intellectual Property (IP). Traditionally, firms often assume that they must develop, own and jealously protect their IP, given this is their main source of competitive advantage. By contrast, leading firms often seek to pool IPwith partners, focusing on how these joint assets can improve their collaborative outputs. Ultimately, the advantages in terms of speed, cost and performance outweigh concerns about the need for control.

  • Are there industries or contexts inwhich it doesn'tmake sense to collaborate?
    The number of industries where a goit- alone approach makes sense is rapidly declining. Leading firms are pushing the boundaries in terms of where and how to use collaboration, while resolving critical organizational and intellectual property issues in creative ways. The old adage of keeping the "core" in-house and using partners for the surrounding pieces is not good enough. Consider that Boeing recently spun out its supplier of nose cones and fuselages a business that many would consider "core" for an aircraft manufacturer. Examples such as these are forcing us to rethink the advice we give about what parts of the innovation value chain a firm should keep inside and those in which it should look to partner.

  • Can you give an example of a firm that competes through collaboration? Why do you suggest that it can be a new source of competitive advantage?
    Boeing's development of the 787 "Dreamliner" aircraft exemplifies what collaboration can achieve. The project includes over 50 partners from 130+locations who have worked together for over four years. From the start of the project, Boeing's aim was to leverage advanced capabilities from its network, not to replicate the skills they already possessed. For example, the firm signed up smaller partners with expertise in the new composite materials being used in the airframe, integrating theirwork with other firms developing complementary technologies. This project would never have left the ground without the ability to collaborate effectively.

    One could argue that the firm has been doing this for years what is so different now? Well historically, Boeing used a "build-to-print" approach. Innovation was driven by a central R&D team, and only the manufacturing taskswere distributed to partners. This is not collaboration it is outsourcing. In recent projects however, the firmhas adopted amore collaborative approach, requiring partners to fund and design many critical parts. This isn't an easy transition. Apart from the need to invent new processes and practices, it implies a distinct shift in culture. Indeed, there have been hiccups along the way, given the huge challenges involved in managing projects of this complexity. Rarely do such transformation efforts run smoothly. In essence, Boeing must learn how to collaborate.

    In our view, Boeing's source of competitive advantage is shifting. It is less and less related to the possession of deep individual technical skills in hundreds of diverse disciplines. While the firm still possesses such knowledge, this is no longer what differentiates it fromcompetitors such as Airbus, who can access similar capabilities. Rather, Boeing's unique assets and skills are increasingly tied to the way the firm orchestrates, manages and coordinates its network of hundreds of global partners.

  • At a personal level, what was the basis for your own collaboration, involving people from two very different institutions Wipro and Harvard Business School?
    We have to practice what we preach! In essence, our partnership was founded because we bring different skills to the table, all of which are needed to perform a study with academic rigor and managerial impact. Wipro is interested in developing new intellectual capital in this area because the firmhas a duty to informits clients how best to collaborate. The firm has run thousands of innovation projects, building a deep reservoir of knowledge which we used to shape the research agenda. We combined this practical experience with academic insights on the broader challenges of collaboration to define the focus and methods for the study.

1. Collaboration Case Study
2. ICMR Case Collection
3. Case Study Volumes

The Interview was conducted by Dr. Nagendra V Chowdary, Consulting Editor, Effective Executive and Dean, IBSCDC, Hyderabad.

This Interview was originally published in Effective Executive, IUP, March 2008.

Copyright © March 2008, IBSCDC No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of IBSCDC.

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