Competitive Advantage at Risk in Collaboration
by Lisa Renner
I was speaking at a conference this week and posed the following question to a group of CEOs and directors: “What keeps us from collaborating; what causes us to hesitate?” Immediately, a CEO down front responded, “How do we keep from becoming a sea of sameness?” The heart of his question is “how do we protect our competitive advantage—that which makes us unique?” This is a great question and one that frequently surfaces when collaboration is the topic of discussion.
First, you have to identify your organization’s true competitive differentiation. This is where I see most companies miss opportunities. The tendency is to think we do everything better than our competitors, and that everything we do contributes to our market differentiation and must be protected. Not true. Nearly every day I see competitor companies performing the same backend processes in exactly the same way. They’re missing out on huge opportunities to collaborate. IT platforms, research and development, and even steps within the production process are typically not competitive differentiators. How these elements are synchronized and delivered to the end consumer will define competitive advantage. To identify your true compeitive advantage you have to change your perspective. Stop analyzing your products and services from the inside-out and learn to take an outside-in view through the eyes of your customer. When you understand what your customers value in your products and services you can trace those characteristics back to the processes that are truly differentiating. Everythiing else is collaborative opportunity.
Once leaders understand what truly differentiates their business, the next concern is how to collaborate and at the same time mitigate the risk of exposing that competitive advantage to their partners. The key is to clearly define the scope for collaboration—what is open for inclusion in the collaboration and what is clearly off limits. Last December at the International Auto Show, Toyota and BMW announced they would collaborate on the automobile industry’s next green technology—the lithium ion battery. Here’s an example of two, highly competitive, industry leaders willingly collaborating on an innovative new technology that could change transportation as we know it today. Many look at this and think the stakes are too high and potential too great to risk exposing their competitive advantage. But Toyota and BMW seemed to take this in stride. Their response was to tightly define their scope. They didn’t say they were going to become the next TMW or Boyota; they limited the scope of their collaboration to the development of an improved lithium ion battery.