The past few months have presented both challenge and opportunity for all organizations. The problems are immediate; businesses face financial pressures to sustain an existing cost base in a context of reduced staff availability and reduced revenue. Given the changing social dynamics, the opportunities are numerous.
For many, the challenges cannot solely be addressed through unlocking internal value, i.e., through operating model changes and the optimization of assets and controlling cost. Hence, they require a new business model. For these organizations, success will be based on how quickly they can transition to a new business model that overcomes these immediate challenges and exploits new opportunities. The new business model can be achieved through internal adaptation or by seeking partnerships to provide new market opportunities and drive increases in scale.
Unlocking internal and external value through Operating Model and Business Model optimization. See my previous blog on Finding and Unlocking Business Value.
It is in this context that organizations scan the horizon for partners that offer an accelerated path to increasing their scale, market share and offer. A partnership typically releases the following value:
- Smooth demand variability and increase productivity through economies of scale
- Increase competitiveness or manage risk exposure by diversifying your offering, such as bringing on board a company that opens a new market for your existing offerings
- Exchange technologies to develop end-to-end product offerings
- Promote information sharing, enabling big data analysis
- Leverage investment from within the partnership or through increased scale and reach
- Expand market go-to-market channels, by leveraging partner relationships
Many factors will determine the most effective approach. Fundamentally, these boil down to the potential business value that can be derived, the political context and the effort required to transform. In seeking a new model for inter-organizational relationships, companies may in broad terms Compete, Cooperate, Coordinate, Collaborate or Consolidate .
Although businesses can ultimately achieve their goals through organic growth and change, collaboration offers an accelerated path to increased market share, scale and capability without the need to develop new capabilities from scratch. The trade-off between organic growth and collaboration is one of balancing risk, speed, control and market capacity. Partnerships offer increased speed but may introduce uncertainty, complexity and bureaucracy. Choosing the right partner, with a shared vision and commitment, is essential to successfully unlock the intended business value and see through a change that may be significantly disruptive to both partners.
Mature organizations are constantly scanning the horizon for new opportunities, either internally with a focus on optimization, or externally in search for new business models and partners. Collaboration can be highly attractive. However, in many cases, organizations are caught out by the hidden complexity during integration, which results in either complete failure of the collaboration, or the goals never fully realized.
Industry standards, such as ISO 44001, promote continuous horizon scanning for appropriate partnerships and their effective management from inception to exit strategy. As stated by the standard, “ISO 44001 is a roadmap for establishing and managing collaborative relationships with suppliers (upstream), customers (downstream), partners (horizontal) and inter department or function (internal) in order to generate benefits for all parties”. The process of collaboration, described in ISO 44001, can be coupled with the architectural rigour of an Enterprise Architecture language, such as ArchiMate. An Enterprise Architecture approach limits uncertainty by systematically identifying areas of potential duplication, synergy, conflict and integration during the early phases.
This reduction in uncertainty, in turn, limits the risk exposure, focuses activity and enables organizations to accelerate towards their new operating model. Whereas previously many businesses would undertake detailed organization design post-merger, Enterprise Architecture enables us to identify risks much earlier in the assessment. With little upfront investment, this leaves enterprises in an informed position earlier in the process.
BiZZdesign’s Collaboration Model, based on ISO 44001 Collaborative Business Relationships
Using BiZZdesign’s Collaboration Model, organizations can systematically assess the “fit” between their partners. This enables those companies to score the attractiveness of the collaboration by the potential value it brings, balanced against the changes necessary during integration. The assessment follows the ISO 44001 approach, overlaid with architectural views and detailed assessment criteria. These criteria form the backbone of the partnership selection phase. A “capability” approach is fundamental to the partnership selection. Each organization is assessed against an industry benchmark.
Assessing organization capability against industry benchmarks
This assessment informs the unification options selected, its prioritization, level of business value to be unlocked and the level of investment required to undertake the change. The resulting options include:
- Eliminate – the capability is no longer required in the new collaboration
- Absorb – one organization has a greater level of capability maturity. The organization of lesser capability adopts those practices.
- Best of Breed – each partner has a similar capability maturity. A best of breed blends the capabilities of each enterprise, resulting in blended processes, people and technology
- Preserve – the status quo and capabilities of each partner are maintained
- Transform – the capabilities within the partners are not sufficient and must be transformed to meet the goals.
- New – entirely new capabilities are to be developed to meet the goals of the collaboration
Each resulting capability is assigned a work package and state, which provides the post-transaction roadmap, integration and investment plan. Thus, the assessment not only supports the partnership selection process but also forms the backbone of any post-selection integration and migration. This provides a seamless handover from partnership selection to live operation.
For more information about BiZZdesign’s approach to Collaboration, feel free to reach out to our Customer Success team.