Collaborate to outlast your competition

How has this affected collaboration though?

A precondition to any collaboration is an open mind. Where one can  freely discuss synergies than be worried about theft of intellectual  property by sheer discussion itself. With an open system environment,  companies began to see how great technology could be accessed by  everyone for a fraction of the cost, establishing that letting someone  in can save money. Now organizations needed a nudge to say that  collaborations can add business value. In 2009, I remember how an  acquisition by another big bellwether of a small technology outfit in  Europe was of strategic importance to them. Making less than 1% of their  own top-line, this large technology company was ready to take the  plunge of letting in a small team of engineers join them rather than do  what might come to them easier – build their own team. A surprising  move, but it gave them access to a downward integration possibility  which could get them into market 3 years sooner and maybe worth billions  in years to come.

Why would a tech company have this internal conversation though?

There can be 3 different time phases which show the transition of this conversation:

The Pre-2000 Era

• Improve performance: Banking on economies of scale to be able to provide better profitability by operational synergies and far lesser redundancies.
• Consolidate and remove excess capacity: Use the combined workforce and bring down bench strength and increase utilization by looking at leaner teams of support.

 2000-2010  

• Provide market access: Use relationships  and delivery capabilities to enter a segment or market where the other  may have significant leverage or reduce time to market.
• Provide a new product/ service: Utilisation of the other organization’s technology so that they would be able to use the same relationships.

2010-2016

• Solve a current challenge: Use something  that has been perfected/ done better by another organization to be able  to apply the shared learnings in its own company. 
• Complete a cycle: Use the other  organization’s offerings to be able to solve problems at a vertical  level above or below and become a ‘one-stop’ solution.

 Today  

• Create new offerings: Leverage the  potential of both organization’s offerings to be able to create a new  product that will solve a problem in another industry altogether. In  early 2017, we advised a logistics company and facilitated introductions  to another block-chain implementation client of ours. Together, they  developed a POC (which we advised on) in the supply-chain logistics  space which on deployment would make the company one of the first in the  country with capabilities to provide a future-ready block-chain  solution positioning it at the cutting edge of similar solution  providers in the country. For the block-chain company, they now had a  product to resell and a test case in one of the largest industries for  block-chain disruption.
• Expand horizontally: Leverage a product’s  offerings to be able to expand into new geographies. When we advised a  mid-size tech company on a potential collaboration, we felt the  possibility of being on the delivery side of the solution and having  their share of the pie. While the move was inorganic, it also meant that  the company was on the winning side of a massively expanding foodtech  industry. This collaboration resulted in a large transition of the  rewards of the technology they were building.
• Transform organization completely: Work  together to completely transform the offerings to a new paradigm. We  advised a company in mid-2016 to be able to fill up their idle capacity.  While one of the collaborators had approached us for a sale of his  business, the collaboration was able to lift up both their margins while  reducing the costs of them operating individually. After the addition  of few new key management personnel, the business had reached a  stability which allowed it to fetch a 2x improvement in valuation in  under a year.

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Is this the next big thing then?

It is evident. Maturity of a tech collaboration has significantly  risen. Now, organizations look beyond just current year cash flows. They  are looking 3-5 years from now. And the belief in a union of equals has  emerged. Earlier, ‘big fish eat small fish’ was the thinking making  organizations work as silos of expertise. In my personal opinion, there  is a massive consolidation of strengths underway. More and more  organizations are becoming cognizant of their strengths and accepting of  their weaknesses. ‘Collaboration’ (which is being used as a buzzword  for achieving impact internally) will be the buzz word of the next 7  years  as organizations become more open, learn to work better and grow  together faster than they individually could have.

hope that you find this information as a conversation starter with  your CXOs. If you would like to have a conversation on how you can  achieve this for your organization or need assistance in sourcing good partners, we can be reached on connect@prequate.in.

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