Thursday, July 16, 2009

The Power of Collaboration

Maya Payne Smart at has an interesting article on small businesses collaborating with one another to compete for contracts, reduce costs, and introduce new products and services. Collaboration through contracts and relationships provides an appealing alternative to either going it alone or engaging in a full-blown merger with another firm. However, such collaboration raises key challenges. First and foremost, firms must be careful to protect their intellectual property. Second, firms have to think carefully about how to divide both the costs and the profits associated with a collaborative endeavor. They have to think about carefully delineating each firm's roles and responsibilities. They must think about the extent to which the company cultures are compatible with one another. Finally and perhaps most importantly, they must consider their exit strategy for this collaborative venture. Is this going to take place for a finite period of time? Is it going take place for a particular project? How will it end, and when it does, how will firms separate from one another in a constructive way?

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