- The spoils go to the company that succeeds in benefiting from other companies' strengths
Few companies can compete efficiently with no outside help. The most successful companies are the ones that do well in benefiting from other companies' strengths. On 3 October 2004, Helsingin Sanomat wrote about the ideas of J. Michael Geringer, a respected professor and business consultant from the United States.
Geringer was giving a lecture at a leadership training program at the Helsinki School of Economics. Many others share his views. Some experts go so far as to compare the current change to the revolution in businesses caused by the introduction of the assembly line.
Current developments are blurring the lines between companies and their environment. These days, companies have to work closer and closer together with their clients and subcontractors. Co-operation among competitors is also increasing. All of this creates a complicated network of co-operative relationships. According to Geringer's view, the ones who can use this network to their advantage will also be the ones who succeed in the future. This calls for knowing how to be greedy, yet restrained, and how to share part of their gains with others. There are no alternatives; otherwise, co-operation is cut short.
Corporate management spends more time combining different views and action plans into a working solution than ever before. Partner strategies and working methods are always different, sometimes even conflicting. In addition, they change constantly. At the same time, there is a reduction in formal authority in giving orders to others. Because of this, corporations will be lead by diplomatic individuals with social skills instead of people barking orders.
Few companies know enough to compete on their own
Co-operation usually turns into a strategic alliance when the period of time that co-operation has lasted can be measured in years. In practice, an alliance can mean almost anything. It might be a joint venture between partners. Or, it might also be nothing but product development or marketing cooperation based on a contract.
All of these are various methods of benefiting from the strengths of others. The point is to work together to attain something that the company could not do itself. In Finland, Nokia has been the most systematic in building their co-operative network. Nokia has hundreds, if not thousands, of various types of partnerships. The significance of co-operation was highlighted a few weeks ago when Nokia raised its estimate of its Q3 cellular phone sales. One of the reasons given for the improvement was improved relationships with operators.
Companies are forming alliances because they have to. Few companies know enough about all potential markets, technology developments and funding to compete efficiently on their own. This is why they need knowledge and resources from other companies.
Source: Helsingin Sanomat, October 3rd, 2004
The full text availble in section E3 Talous & Työ (Economy and Work)
Author: Helena Ranta-aho