Competition and Collaboration

  • BMW, Daimler and Collaborating with Competitors

    Manu12lowres1_3 Collaborating with competitors involves yin and yang, two opposing and simultaneously complementary facets of a single phenomenon. This balance can create substantial value, particularly when the collaboration involves common processes that provide no competitive advantage. An example of this is the Exostar consortium, which has brought efficiencies to purchasing through a shared, online environment.

    BMW is currently in talks with its competitor, Daimler, to produce and purchase vehicle components including engines. As a story by Edward Taylor in today’s Wall Street Journal points out, Germany’s archrival luxury car makers have determined that collaboration may give them bigger economies of scale to prevent further erosion of margins.

    Ford Motor Company has successfully reduced costs by sharing components across its brands. The premise is that there are many commodity parts that have little to do with customer perception of brand value. In Ford’s C-Car shared technologies program, engineers and executives of Mazda (partially owned by Ford), Ford Europe and Volvo collaborated to reduce development costs for specific small car models. An added benefit is that Ford has reduced internal competition among brands and increased the sharing of best practices.

    Since BMW and Daimler are smaller than Ford, the German companies have fewer opportunities to achieve economies of scale without collaborating across company lines. The Wall Street Journal quotes a source who says that executives and engineers from both companies “from the top right down to the middle management” are discussing collaboration.

    My experience in working with numerous organizations on implementing collaboration is that a bottom/up strategy is just as important as top/down. For BMW or Daimler to collaborate with an arch rival involves a cultural shift, and there will undoubtedly be resistance. Therefore, leaders must engage and involve team members at all levels and corners of the organization in this shift so that both organizations will ultimately embrace the new way of working. 

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  • Sustainability Fuels Collaboration Consciousness

    Both academia and business are realizing that the lack of collaboration can impede progress. Traditionally, university researchers compete for limited grant money, so there is little incentive to collaborate.

    In a Christmas day story in The New York Times, Claudia H. Deutsch reported on several academic sustainability centers that focus on collaborating across disciplines. One is the Golisano Institute for Sustainability at the Rochester Institute of Technology. The article quotes Nabil Nasr, the institute’s director, as saying “the problem of sustainability cuts across economics, social elements, engineering, everything. It simply cannot be solved by one discipline, or even by coupling two disciplines.” Well said!

    Now The Dow Chemical Company, through its foundation, is funding a Sustainable Products and Solutions Program at The Center for Responsible Business at the Haas School of Business at The University of California-Berkeley. Dow is providing $10 million over the next five years and sending a Dow leader to Berkeley as an executive-in-residence. Part of his role is to recruit other industry partners to fund the program. What’s compelling about the sustainability program is that the Department of Chemistry is collaborating with the business school and the program will likely involve students and faculty from other disciplines. The bottom line is that environmental and sustainability concerns run deep enough and are so complex that they’re sparking collaboration among people who would otherwise do one of three things: compete with each other, ignore one another, or remain at odds with each other.

    Urgency in the environmental realm is clearly driving collaboration across disciplines, but sustainability is by no means the only area in which universities and corporations should be applying collaborative principles, practices and processes. In the business realm…marketing should be collaborating with research and development, R&D should be collaborating with information technology, sales should be collaborating with the market research group, and so on. This should be happening asynchronously and in real time.

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  • Collaboration and Star Culture

    Collaboration requires collaborative culture. That’s the whole point of this blog. The opposite of collaborative culture is star culture, which our collective culture—particularly in the United States—perpetuates. The media is certainly complicit, because celebrity stories draw audiences. Therefore, the media has a vested interest in manufacturing stars—not just Hollywood people, but business leaders, athletes, entrepreneurs, surgeons, chefs and others. Food writers are particularly culpable, and we’ve certainly seen the celebrity craze spread to winemakers.

    Now, apparently, star culture is trying to envelop tequila makers. Last Friday, the San Francisco Chronicle ran a short article by Camper English headlined “Next big thing: Tequila bottle signings.” You can read the article here. The story begins, “Further evidence that distillers are the new rock stars…” We learn from the article that Carlos Camarena, owner and third-generation master distiller of El Tesoro Tequila, will be in San Francisco to sign autographs on $185 bottles of tequila at a liquor store.

    Clearly, Mr. Camarena is not alone in contributing to the success of El Tesoro. According to El Tesoro’s web site, making tequila begins with the jimador, the person who hand picks perfectly-ripe agaves and separates the pina, the juicy blue core, from the rest of the plant. “Most other tequila producers use an automated system that processes the entire stem,” the web site notes. Next workers cut the pinas into quarters with a special ax. In the next stage, workers use the traditional method of baking the pina quarters for 36 hours and cooling them for another 36 hours. Next workers use a one-ton stone wheel called a tahona to crush the pinas, extracting their juices. There are three more steps.

    The point is that many people with a variety of expertise collaborate to make El Tesoro tequila. While I appreciate the marketing benefits of Mr. Camarena signing tequila bottles during his rock star-style tour, this feeds into star culture and sends the wrong message to the public and to El Tesoro team members. Promoting the CEO as a star may produce a momentary marketing bounce, but a collaborative culture sustains greater business value than a star culture.

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  • BMW Collaboration with DaimlerChrysler

    Collaboration creates value internally, with business partners, and sometimes with competitors. But how do we know whether collaborating with competitors makes sense? One test is whether collaboration saves money for everybody involved without risking marketplace position or advantage.

    BMW and DaimlerChrysler are expanding their collaboration on developing hybrid drive systems. The collaboration, described in a story in Reliable Plant Magazine, will let the two companies achieve increased efficiency through economies of scale. The plan is to accelerate commercialization. Since each company will adapt the components in different ways to complement each brand, the deal is considered win/win. 

    BMW has a long and rich commitment to collaboration. As I describe in The Culture of Collaboration book, BMW figured out how to integrate collaborative tools and culture into its operations long before many other companies. Telecooperation is the word BMW has used to describe the marriage of collaborative tools and culture in a globally-distributed design and manufacturing environment. And the X5 was the first vehicle built entirely through telecooperation. In 1999, the company invited me to visit its design center in Munich. I witnessed then how engineers in Munich were successfully collaborating with counterparts in Spartanburg, South Carolina. Some months later, the physical representation of their collaboration, the X5, rolled off the line.

    Whether collaboration is internal or external, the marriage of tools and culture can create awesome value.

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  • Collaborating with Cuba

    On a flight from Montego Bay, Jamaica a couple of weeks ago, I was passing the time by monitoring pilot/control tower communications. United Airlines lets passengers eavesdrop on Channel 9 of the airline’s audio system. As the plane left Jamaican air space, the controller signed off with a customary “Good day.” Shortly thereafter, I heard a female Spanish accent. The plane was entering Cuban air space, and the pilot had established a link with Havana air traffic control. There was constant conversation as the Cuban controller guided the pilot in his ascent. This collaboration continued until the Cuban controller handed off the pilot to controllers in Miami but not before signing off with a friendly “Buenas tardes.”

    It makes absolute sense, of course, that U.S. commercial airline pilots collaborate with Cuban air traffic controllers as planes enter and leave Cuban air space. Nevertheless, the U.S. embargo suggests that Cuba is an enemy of the state. So, in effect, the United pilot was collaborating with the “enemy.”

    In the business realm, competitors are often considered enemies. Does it make sense to collaborate with competitors? Sometimes. Consider the many joint ventures among competitors and such consortiums as Exostar in the aerospace industry. Exostar lets competitor/partners and suppliers collaborate asynchronously through team rooms and synchronously through web conferencing. It’s a situation in which people may be collaborators in the morning and competitors in the afternoon. The acid test of whether collaborating with competitors makes sense is whether the collaboration creates value for all of the collaborators.

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  • Collaborative Road Code

    I travel a lot in developing countries where staying alive on the road requires adhering to a sort of collaborative road code. Since roads are often single or double lane and narrow, a collaborative road code has evolved that represents more than etiquette. The idea is to maximize resources.

    In the U.S., when a car wants to pass, too often another car speeds up to block the way. In developing countries, this form of competition rarely manifests itself. Drivers are more likely to collaborate. So when a car wishing to pass moves into the lane with oncoming traffic, cars in both lanes move to the shoulder and make a path for the passing car. This is split-second collaboration in which people who may never have met join together for a common goal—staying alive. When road code collaboration fails to happen, cars collide.

    Similarly, companies that fail to collaborate are on collision courses. The fatalities are, at least initially, customers. Customers increasingly expect vendors to collaborate. This means sales and marketing must move in sync. It also means that customers receive integrated, coordinated messages rather than multiple contacts from people in different silos unwilling to collaborate and unaware that colleagues are contacting the same customers..

    Companies refusing to collaborate first lose customers and ultimately may lose market share. Survival increasingly requires collaboration whether we’re on the road in any country or doing business locally or globally.

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  • Ford and Toyota

    Collaborating with competitors may sound like a contradiction in terms.

    So why did Ford President and CEO Alan Mulally and Mark Fields, Ford’s head of operations for the Americas, meet with Toyota Chairman Fujio Cho and other top Toyota executives in Tokyo the week before Christmas? Ostensibly, the meeting was to explore environmentally-friendly technology including hybrid-electric and hydrogen fuel systems and ways that Toyota can help Ford boost manufacturing efficiency.

    Ford and Toyota have a history of both competition and collaboration. In the 1930’s, Ford allowed Toyota leaders to study its production techniques. In 1950, Toyota leaders including President Eiji Toyoda (yes, the family name is spelled with a “d”) spent a few months visiting U.S. auto plants and studying production. They were particularly interested in Ford’s Rouge complex in Dearborn, Michigan. Subsequently, Toyota Plant Manager Taiichi Ohno developed the Toyota production system which not only includes “lean manufacturing,” but also emphasizes input from team members at all levels and functions.

    Mulally, who until September ran Boeing’s commercial airplanes business, helped implement collaborative product development and manufacturing techniques at Boeing. And besides internal collaboration, Boeing collaborates extensively with competitors. Alan Mulally is undoubtedly interested in applying his collaborative instincts at Ford.

    I wrote about Toyota, Boeing and Ford’s Premier Automotive Group in The Culture of Collaboration book. There are some similarities in how these companies collaborate, but also there are distinct differences. Smart organizations consider collaborating with competitors. The acid test of whether competitive collaboration makes sense is whether it creates value for all the collaborators.

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