Collaborative Innovation. Things that motivate companies to collaborate in innovation - Essay Example

? Collaborative Innovation Introduction Technology is essential to any firm in today’s world. Technology enhances the business by creating efficient systems that maximise on the opportunities provided in the market. Companies should innovate different technologies that enable them to have a competitive advantage in the markets they exploit. Technology increases the productivity and profitability of a firm in which it is used. Usually, firms collaborate to innovate in the running of their businesses (Gloor, 2006, p72). When two or more firms choose to work together to develop a technology, they identify the things they have in common. Various factors that are perceived to be beneficial to partnering firms cause them to come together and innovate together. Some of the factors that cause firms to collaborate in innovation include reducing the cost of development of the technology, reducing the potential risks that are involved in technological development or entering the market, to achieve the economies of scale, which reduce the cost of production, promoting shared learning between the firms involved, and reducing the time taken to produce and market new products (Tidd, Bessant and Pavitt, 2005, p25-78). The results of the collaborative invention vary significantly according to different companies, and these factors may be beyond or within the abilities of the partnering firms. Some factors that influence the results of a collaborative interaction between firms include: the competitiveness of the partners, the transparency issues, receptivity of ideas, the rate of learning and bargaining power of partners, the intention of the firms when they accepted to enter into collaboration, and sustainability of the deal (Hamel, 1991, p.83-101). These factors determine whether or not the collaboration will continue in order to develop technologies together; if the factors are favourable to the collaborating firms, they continue to develop technologies together. Different companies collaborate in innovation according to different interaction policies. These interactions are determined by conditions that are set by those partners, when joining together as well as those that are related to sustainability. In order to understand the issues that are related to the collaborative innovation, there is need to explore the factors that influence firms to come together as well as those that influence the sustainability of collaborative innovation interactions. Things that motivate companies to collaborate in innovation In events where firms collaborate to innovate, they need to put into consideration all the issues that can arise from it. When firms focus narrowly at the reduction of cost, it may work not for their benefit because although collaboration may reduce the cost of production and enhance economies of scale, it is also possible that the company will need to establish a strategy of developing the collaborative relationship. For instance, if firms consider the factor of cost reduction in a collaborative innovation deal, they can evaluate other costs apart from the basic raw materials for the company. A good collaborative innovation deal needs to consider the amount of money that will be required to facilitate collaborative capabilities. For instance, different firms will need to develop people within their firm that will sustain the technology that they develop. This means that they should not develop a technology that they will lose within a short time (MacCormack, Forbath, Brooks & Kalaher, 2007, p17-102). Firms may be driven to form a collaborative interaction in innovation by their need to increase the income share; this is by maximisation of all the opportunities they have in their production. Every chance a firm has to reduce the risk of making losses and increase profitability becomes a motivation for the company to involve other companies to innovate (Da Vinci, n.d, p1). When firms come into collaboration, they intend to develop fast to gain their competitive advantages. This is because there are risks that are involved in development and implementation of new business ideas. Although it is not obvious that a firm may make loses during development, a situation may arise in which it will not be able to handle the circumstances of a new innovation. When a firm introduces a new technology, it may not be assured that it will facilitate better productivity. For this reason, the firm will consider collaborative innovation so that it can be in a position to distribute the risk of failure among its partners. The case of Cadore Region in Italy is one of the collaborative relationships that have conquered the market. In this case, many companies have come together to control production and sale of eyewear. The business partnership is made up of 900 firms, and through their interaction, they have conquered the world eyewear business (Da Vinci, n.d, p1). Another motivation of firms to collaborate is to increase their flexibility and capabilities in exploiting a market. Through collaboration, firms gain knowledge and skills that are necessary to improve their productivity. Firms attain skills and knowledge relevant to their goals of innovating new products in the market. Such collaborative innovation partnership lead to increased size of the customers’ pool for the companies’ involved. The plasticity of firms in the partnership reduces the investment on marketing because the more the customers they have for various products, the more people are able to get information on other products (Da Vinci, n.d, p1). When companies are collaborating in innovation and development of new products to their customers, they reduce the time that is required to develop or manufacture products. When firms are producing products together, they make large volumes of products to their customers in the market (Chesbrough and Socolof, 2000, p13-17). This method of interaction reduces the investment on making products and marketing them because the firms involved share resources in the whole process from production until delivery of services. Collaborative innovation ensures high quality of products; in such cases, firms commission their experts in the production. High quality of products is ensured because partnering firms present ideas that are potentially important to increase their productivity. All ideas that are presented by the selected experts are scrutinised so that the one that can assure the highest productivity can be implemented. High quality products draw people, and therefore becomes a marketing tool for products, and to the firms, it is one of the factors of attraction to the potential buyers, and this gives surety that all the firms apply ideas that promise high returns; this could be a good reason that draws firms to do business as partners. Through their commodities, the partnering firms achieve a competitive advantage in the market. Those firms are able to make sales even when other firms producing similar commodities are not making sales (Rothwell, 1994, p1-7). In a collaborative innovation interaction, the management is streamlined to reduce any form of ambiguity. The partner firms define their goals so that they can be able to establish means to ensure success in the business. The firms also establish the means that they can use to realize their goals. The planning is done in very elaborate ways so that the processes of production take place as planned (Anderson, 2013, p1, p1). Proper planning in a collaborative business interaction ensures reduced losses because responsibilities are distributed to different stakeholders. The companies, which team up, are consequently, capable to establish accountability in handling resources, which decreases the probability for failure through misappropriation of funds. Another thing that motivates firms to collaborate in innovation is the possibility of promoting employees’ performance. In a joint venture, partners are caught up in a kind of internal competition. The competition arises because none of the partners would like to carry the blame of any failure in the business. Collaborative innovation relationships increase the participation of all employees in the individual firms in a partnership. This is because in that kind of partnership, all the responsibilities are distributed to each partner (Anderson, 2013, p1). These responsibilities are defined according to different policies of division of labour in partnering firms. The management of each firm is charged with the responsibility of ensuring that all the employees are actively involved in production. This is because the terms of agreement when the firms are coming together specifies the role of every partner. The agreement arrived at in making a partnership facilitates smooth learning of business. When firms have come together in partnership, they are likely to face some issues that may influence their productivity, profitability and sustainability. Firms may bump into different complications that are from within them or those that are from outside. The factors that are important in influencing the performance of a collaborative innovation interaction may be dictated by the role played by each of the partners, and for this reason, a firm’s role may promote the partnership or may lead to failure of the company. On the other hand, outside forces may face a collaborative innovation interaction; for example, a partnership may be predisposed to the existing market conditions. This means that partnering firms may play their respective role according to the agreement but still fail to accomplish their collective goal (Koen, 2011, p.101-153). Factors that Influence the outcomes of a collaborative innovation venture Some factors that influence the outcomes of a partnership in innovation include the misalignment of goals. When companies come together to perform innovative tasks, they always carry their initial goals to the partnership. When the companies struggle to achieve their individual goals, they may lead to unnecessary internal competition in the partnership. These internal competitions may work against the plans of partners and result to failure. Firms in such a situation have divided loyalty in the partnership deal, and this creates a probability danger of collapse, however, positive competition within the partnership may enhance participation of employees (Da Vinci, n.d, p1 and; Hamel, 1991, p.83-101). Another issue that influence the outcomes of a collaborative innovation initiative is the lack of the independence of the partnering firms. This is since the companies involved in the collaboration are required to have a common body for decision making. The firm that feels superior to the others in a partnership may not welcome this kind of a plan. This influences the receptivity of ideas that are brought about in the partnership (Hamel, 1991, p.83-101). In this kind of a situation, firms may pull out or remain but make the rate decision making in the partnership will be too slow that it remains ineffective and hence, reduce the productivity of individual firms. In the case of Cisco Company, they got stranded in decision making about a management innovation. They moved on to facilitate a decision making process that reduced their contactors from 5,000 to 1,000 (Anderson, 2013, p1). Another factor that influences the outcomes of a collaborative relationship is the lack of ability to work together. Firms produce experts to facilitate development and implementation of a technology or another business innovation. However, some cases happen in which the persons involved in that partnership do not like to work together. In fear of being suppressed, the other partners withdraw from the partnership making it to collapse. With the withdrawal of some partners, the venture to innovate together fails, causing the firms to remain low in productivity (Von Hippel, 1986, p795-801). The firms that are involved can assess their need and the goals of each partner before they venture into a partnership (Hamel, 1991, p.83-101). In a collaborative relationship, the bargaining power of a firm, through its managements, influences the way other partners will respond to the circumstance. For example, if the supervision of one company dominate others, they are likely to influence the yield. The negotiation expertise of one company may influence the marketing of products, as they are in a capacity to influence huge groups of buyers to buy products. This will work for the benefit of all the partnering firms. On the other hand, if the bargaining power of one firm is to exploit the opportunities in the collaboration, it may cause dissatisfactions within the customers (Hamel, 1991, p.83-101). The outcomes of a collaborative innovation interaction are influenced by the amount of resources and time that is invested by individual firms to make it happen. In many instances, firms require to invest a lot of their monetary and human resources to realise the goals of the collaboration. In addition, a lot of time is required by firms to realise their goals. For instance, partnering firms need to train their employees on the ways to cope with an innovation that is introduced in a business, whereby the investment is worth taking considering the fact that innovations are intended to promote the productivity of the company involved. Monetary resources will be invested to pay trainers who inform firm employees on the ideals of the technology introduced (Hamel, 1991, p.83-101). In a collaborative innovation relationship, there is a lot of information that has to be shared between different partners; this may turn out to be matter involving the firms involved in the partnership. In some cases, some companies potentially decline any form of sharing of information, which makes it difficult for a collaborative relationship to achieve its goals; for instance, people from one firm may feel threatened to share their confidential information with other companies. These firms make accessibility of the information about their business difficult. Those firms, which allow accessibility of their information, may feel that they are in an asymmetrical relationship. Such firms are likely to withdraw from such a partnership (da, Vinci, n.d, and; Hamel, 1991, p.83-101). Conclusion Any firm in the world would value an innovation that would increase their productivity and ensure that they are able to compete favourable with others in the market. Market circumstances keep on shifting and those firms, which adapt to such environment, are able to survive. Collaboration helps different firms to exploit the market with ease. There are reasons that draw firms to do business together, and are planned to assist these firms to expand and grow extensively, however, in collaborations, some factors that are caused by the partner firms or the business environment influence the business either positively or negatively. Through different factors in collaborations, firms may benefit or fail to benefit from the business. Some firms feel insecure in some relationships and therefore, withdraw from them and lender the situation of individual partnering firms inefficient in the business. References Anderson, K. 2013, What makes Collaboration Work in a Company? Forbes 02.02.2013 [Accessed on 25th May, 2013] Chesbrough, H. W., & Socolof, S. J., 2000. Creating New Ventures from Bell Labs Technologies. Research Technology Management, 43, 13-17 Da Vinci, n.d, Ensure successful collaboration with our unique methodology. [Accessed on 25th May, 2013] < http://smecollaborate.com/?p=benefits> Gloor, P. A.., 2006. Swarm creativity: Competitive advantage through collaborative innovation networks. Oxford: Oxford University Press. Hamel, G., 1991. Competition for Competence and Inter-Partner Learning Within International Strategic Alliances. Strategic Management Journal, 12, 83-103. Koen, C. I., 2011. Collaborative innovation in high-technology sectors: Develop your collaborative innovation strategy based on your goals. Tilburg: Tilburg University. MacCormack, A., Forbath, T., Brooks, P., & Kalaher, P., 2007. Innovation through global collaboration: A new source of competitive advantage. Boston: Division of Research, Harvard Business School Rothwell, R., 1994. Towards the Fifth-generation Innovation Process. International Marketing Review, 11, 1, 7 Tidd, J., Bessant, J. R., & Pavitt, K., 2005, Managing innovation: Integrating technological, market, and organizational change. Chichester, West Sussex, England: Wiley. Von Hippel, E., 1986. Lead Users: A Source of Novel Product Concepts.Management Science, 32, 7, 791-805. Read More