In the first part of this series, I presented three challenges open organizations face when seeking strategic, external partners. To quickly recap, these challenges are:
- Competition with ongoing business for scarce resources in both companies,
- Divided time, energy, and attention of shared staff, and,
- Disharmony in partnership and building a new community
I also noted that company-to-company alliances typically form through three stages, namely:
- The discovery stage, to determine exactly what issues the alliance will address and select the appropriate partner
- The implementation stage, to get to know the partner and coordinate according to open organization principles (transparency, inclusivity, adaptability, collaboration, community, accountability and commitment), and
- The maintenance stage, to confirm the value of the joint project and make adjustments where necessary
In this article on external collaboration, I'd like to bring these concepts to life. Let's look at some actual scenarios.
Scenario 1
Several years back, I was asked to establish a global sales network for products heavily sold in Japan. During the discovery stage, it was proposed to open sales organizations in both Europe and the United States. After looking at the demand for our products (and their profit potential), I learned that setting up sales companies in those regions was just too costly. I also considered regional distributors, but in that case, I would distance myself from the market and wouldn't be able to work according to open organization principles.
So I decided to find national distributors in each country in Europe and specialty distributors in the United States. This way, I could work very closely with distributors in promoting, exhibiting, and marketing products in each territory. In the implementation stage, the distributors and I openly and collaboratively designed packaging, branding, and promotion. After several years, in the maintenance stage, we started to see our successes and failures. We dropped some under-performing products from the line and added new products and sizes. We did all of this by being as transparent, inclusive, adaptable, collaborative, and accountable as possible. Before long, we'd established a community with a common goal.
And after working with these people for more than 15 years, I can now easily handle all our projects with just an Internet connection and a smartphone.
Scenario 2
Around 10 years ago, a German company approached me and said they were developing a new product but didn't have the expertise necessary for building one component in the machine. They needed a partner to develop that single component and make it compatible with their machine. So we formed a product development strategic alliance.
In this case, we worked on the discovery stage together. We selected German and Japanese development people to work on the project, applying open organization principles as we did—particularly joint transparency (even when there were embarrassing set-backs), adaptability (when major adjustments were required), and collaboration (so we could adjust our course of action when needed)—throughout the implementation stage. Believe it or not, the maintenance stage is still technically ongoing, because the joint partnership continues to this day. From time to time, we've held reviews to see where we should make adjustments and how we can further improve. Our close collaboration has evolved into a very special community that unites specific individuals in the German company and my Japanese company.
Scenario 3
Around 12 years ago on another project, I learned my company had excess space in our factory in China. We wouldn't need that space for many years to come. I also knew that we'd been hiring, training, and supervising manufacturing employees in our plant—people who actually produced our products. On top of that, we'd been importing raw materials and exporting finished products from our plant.
So I thought I'd try to find a company that needed manufacturing in China but had no experience doing so, as we had all the expertise required with our on-going experience. Therefore, the discovery phase moved quickly—but it took me a year to find a partner that we could strategically affiliate with. I did that by contacting companies at trade shows I regularly attended. In the implementation stage, I learned they could not just initiate all of the production processes in China quickly, so we had to start the production transplant process very slowly (beginning with simple assembly of the products only). We rented space and hired employees in carefully determined stages to avoid potential cash flow problems.
Together, we produced the products in stages: from simple assembly, to more detailed manufacturing and assembly, to complete manufacturing. To make our partner comfortable, we made sure we did not get involved in marketing or any similar interaction with their customers, both in China and worldwide. We trusted each other on that point. With that agreement and trust, the project was a great success.
After a year and a half, it was fully up and running. In the maintenance stage, we reviewed our progress regularly and slowly added processes, new products, and new export destinations over an eight-year period. Around that time, our partner felt like he had the confidence he needed to establish his own manufacturing company near our plant. We carefully invited all our employees involved in that production to transfer from our company to their newly established company. In the end, 33 people transferred to that new company, and all were very happy about the overall long-term outcome. Selective transparency, inclusivity, adaptability, and collaboration were very important throughout this entire process. We made sure the transparency of our joint project covered employee hiring, training and supervision, raw material and equipment purchasing, and importing and exporting.
Guiding questions
Apart from these examples, though, you can find potential alliances in a wide range of areas outside your current core business model. Using open organization principles can greatly improve your chances of success when you form partnerships. Here are some areas you can explore:
- What seasonal equipment is underused in your company? Could it support another company's operation?
- What service specialties are underused in your company? Could it support another company's operation?
- What space is underused in your company? Could it support another company's operation?
- What personnel are underused in your company? Could any of these people be shared with trusted partners?
- Along your product/service value chain, what is most costly in-house? Could any process be fully or partly outsourced to a trusted open organization partner?
Applying open organization principles to your work can help you discover what hidden marketable assets you didn't realize you had. And these could generate many opportunities you've never dreamed of.
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