Yesterday I wrote about the numerous benefits a company can derive from closer collaboration with external partners, whether they are customers, suppliers or partners.  There are three main types of partnership arrangements you can engage in, and it helps to look at these in a visual context, with each subsequent level revealing more detail about the collaboration network of which you are a partner.  I’ll be touching on levels 2 and 3 later this week, but lets get started looking at level 1.

The first level of collaborative partnerships looks primarily at the individual relationships between you and those you’re collaborating with.  At a basic level therefore, it’s all about how you can combine the resources you have, with the resources another company has for competitive advantage (whether mutual or otherwise).

These kind of relationships tend to work based upon two core characteristics:

• Compatibility
• Complementarity

Complimentary collaborations are by far the most common as they don’t involve the prickly discussions around whether you’re collaborating with the ‘enemy’.  The resources on offer from both parties tend to be complementary to one another and therefore often aren’t seen as competitive.  These skills and resources are combined for competitive advantage.

A good example could be of a company looking to enter a new territory and collaborating with a local company to help them enter that new market (China is a good example of this kind of collaboration).  Another might see a drug company who are great at testing collaborating with another who specialise in marketing, such as when biotechs team up with pharmas.

Compatible collaborations by contrast are much less common, and rely on a high degree of trust between both parties in order to function well because the skillsets in each partner tend to be similar, which is a big part of why it’s so easy for them to work together.

This compatibility is central to the success of collaboration partnerships because both parties need to be comfortable working with one another.  This will often involve things such as sharing processes and systems, whether they are in research, development or production.

If you have significant differences in processes therefore it’s a recipe for failure, just as significant differences in culture is going to hinder your attempts to collaborate effectively.  You can imagine the challenges that might exist collaborating between a hierarchical firm and a decentralized one for instance.

It is often the case that a lot of thought is given to how two partners compliment each other in the resources they bring to the table, but insufficient attention given to the compatibility of each partner is what will ultimately make or break the relationship.