Managing synergy in collaborative enterprises

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This article was downloaded by: [Texas A & M International University]On: 03 October 2014, At: 02:39Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House,37-41 Mortimer Street, London W1T 3JH, UKProduction Planning & Control: The Management ofOperationsPublication details, including instructions for authors and subscription information: synergy in collaborative enterprisesU. Bititci a , T. Turner a , D. Mackay a , D. Kearney c , J. Parung a & D. Walters ba Strathclyde Institute for Operations Management , DMEM, University of Strathclyde ,James Weir Building, 75 Montrose Street, Glasgow, G1 1XJ, UKb University of Western Sydney , Sydney, Australiac Supply Network Shannon , Limerick, IrelandPublished online: 23 Aug 2007.To cite this article: U. Bititci , T. Turner , D. Mackay , D. Kearney , J. Parung & D. Walters (2007) Managing synergyin collaborative enterprises, Production Planning & Control: The Management of Operations, 18:6, 454-465, DOI:10.1080/09537280701494990To link to this article: SCROLL DOWN FOR ARTICLETaylor & Francis makes every effort to ensure the accuracy of all the information (the Content) containedin the publications on our platform. However, Taylor & Francis, our agents, and our licensors make norepresentations or warranties whatsoever as to the accuracy, completeness, or suitability for any purpose of theContent. Any opinions and views expressed in this publication are the opinions and views of the authors, andare not the views of or endorsed by Taylor & Francis. The accuracy of the Content should not be relied upon andshould be independently verified with primary sources of information. 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WALTERSzyStrathclyde Institute for Operations Management, DMEM, University of Strathclyde,James Weir Building, 75 Montrose Street, Glasgow G1 1XJ, UKzUniversity of Western Sydney, Sydney, AustraliaxSupply Network Shannon, Limerick, IrelandThe purpose of the paper is to better understand the reasons behind high failure rates incollaborative enterprises. This research follows a constructive research methodology. Theexplanation phase reviews the literature to develop an understanding of the reasons behind thehigh failure rates in collaborative enterprises. The construction phase develops the synergymodel to assess readiness for collaboration. The testing phase validates the synergy model,through workshops with 11 companies. The description phase analyses the results and developsconclusions. It seems entirely possible to develop assessment frameworks to establish anorganisations readiness to collaborate. The results show the four perspectives of the synergymodel to be valid, thus providing an initial step towards developing a better understanding ofthe factors we need to consider to create sustainable collaborative enterprises. The results arelimited to data from 11 companies who were already engaged in a network. Further research isrequired with larger sample sizes, and with independent companies, to substantiate theconclusions. The synergy model provides an original and practical way of assessing anorganisations maturity towards collaboration as well as providing mechanism for facilitatinga discussion between enterprises considering collaboration.Keywords: Collaboration; Synergy; Audit1. Introduction and purposeIt is now an accepted fact that in the 21st centurycompetition will be between value-chains, whichefficiently and effectively integrate their competenciesand resources in order to compete in a global economy(Bititci et al. 2004). Similarly the SME2000 conference,which was held in Bologna, concluded thatSMEs belonging to networks are often morecompetitive and innovative than those operatingin isolation. When working together, SMEs canincrease their focus through specialisation infunctions that are complementary within theirnetworks.In todays global economy, companies are trying tore-invent their businesses and maintain their competitiveadvantage through collaboration. Collaborative prac-tices, such as supply chains, value chains, extendedenterprises, virtual enterprises and clusters, are becom-ing commonplace.Through collaboration, companies aim to shareresources, share and exchange information, reducerisks, reduce cost, reduce time-to-market, reduce deli-very-time, increase market-share, increase asset-utilisa-tion, increase skills and knowledge, increase customer-services, and so on (Lewis 1990, Kanter 1994, Huxham1996, Parker 2000, McLaren et al. 2002, Sahay 2003).Despite the fact that collaboration has significantbenefits, earlier studies also identified a high failure rateamongst collaborative companies (Lewis 1990, Elmutiand Kathawala 2001, Zineldin and Bredenlow 2003).These works identify many factors as the drivers for*Corresponding author. Email: Planning and ControlISSN 09537287 print/ISSN 13665871 online 2007 Taylor & Francis 10.1080/09537280701494990Downloaded by [Texas A & M International University] at 02:39 03 October 2014 success and failure, and go on to develop a betterunderstanding of the reasons behind these failures(Ohmae 1992, Kanter 1994, Das and Teng 1998,Kalmbach and Roussel 1999, Huxham and Vangen2000, Child 2001, Daniels and Radebaugh 2001).This paper explores the reasons why a large numberof collaborative enterprises fail, and goes on to developa synergy model that would increase the chances ofsuccess for future collaborative enterprises through acollaboration readiness assessment. The purpose of thepaper is to disseminate the results of the research workcarried out in order to. Better understand the reasons behind failure ofcollaborative enterprises.. Develop the synergy model and the correspondingmaturity model to facilitate assessment of colla-borative readiness of organisations.. Test the use of the synergy model in a developingcollaborative enterprise in Ireland to identifypotential weaknesses and development needs.2. MethodologyThis research follows a classic constructive researchmethodology (Kasanen et al. 1993, Meredith 1993,Kaplan 1998) through the explanation, construction,testing and description phases.At first, the relevant literature is studied in detail todevelop a better understanding of the reasons behind thehigh failure rate of collaborative enterprises. Thesereasons are then categorised and aggregated, againbased on this literature, which resulted in the construc-tion of a synergy model that would increase the chancesof success for future collaborative enterprises. Againbased on the earlier findings of the research, i.e. reasonsfor failure, the synergy model was further developedinto a maturity model that could be used as an audittool to assess the collaborative readiness oforganisations.The synergy model was then tested with a newlyforming collaborative network based in Ireland. Thiswas done on a self-assessment basis through a half-dayworkshop with senior managers/owners of the partici-pating businesses. The objective of the workshop was:1. For the participants to develop a good under-standing of the synergy model.2. To facilitate the participants to conductan open and honest self-assessment against thesynergy model.3. To elicit the participants perceptions of the levelof maturity an organisation needed to attain to beconsidered ready to collaborate.To achieve these objectives, the workshop wasstructured in two phases as follows:Phase 1. The education phaseThe research team provided an overall introduction tocollaboration and provided a definition of terminologyused to eliminate any ambiguity.Case studies on the success and failure ofcollaborative enterprises were provided by the researchteam, with a specific focus on the reasons behindthe failures.The facilitated discussion led to the research teamproviding an overview of the reasons behind failure ofcollaborative enterprises, which in turn led to theintroduction of the synergy model.Phase 2. The self-assessment phaseHere the research team explained each criterion ofthe SM and facilitated discussion aroundthese. Throughout, the participants were askedto make a judgement against the following twoquestions:1. Against the criterion provided how would youassess your maturity right now?2. What level of maturity do you think you need toreach for the collaboration to be successful andsustainable?This was achieved by each participant placing an x tomark their current maturity level and a to X indicate thematurity level they needed to attain before theyconsider themselves ready to collaborate. Wheretwo participants represented the same organisation,they were asked to work as a team to make a jointjudgement.Throughout the self-assessment phase, the facilitatorswere careful not to lead the participants towards aparticular judgement by having a specific discussionabout a participants organisation. Emphasis was placedon ensuring that the participants understood what wasmeant by each criteria and the final decision withregards to how each participant positioned theirorganisation in the maturity scale was left to theindividuals judgement.Following the workshop, responses from the11 companies were collated in a spreadsheet andgraphics (as illustrated in figure 2 later) were produced.The outcome of the self-assessment process and itsresults were discussed with the participants ofthe exercise to assess completeness, usability andusefulness of the tool from the perspective ofits potential users, as well as for drawing genericconclusions.Managing synergy in collaborative enterprises 455Downloaded by [Texas A & M International University] at 02:39 03 October 2014 3. Background literature3.1 What is collaboration?Collaboration literally means working together.The term is often used when individuals or organisationswork together towards some common aim. The follow-ing are the most common definitions of collaboration:. Joining of power between two or more companiesfrom the same or different countries in order toimplement a particular operation (Parker 1994).. A distinct mode of organising with a positive,purposive relationship between organisations thatretain autonomy, integrity and distinct identity,and at the same time, the possibility to withdrawfrom the relationship (Cropper 1996).. A process in which organisations exchange infor-mation, alter activities, share resources andenhance each others capacity for mutual benefitand a common purpose by sharing risks, respon-sibilities and rewards (Himmelman 1996).. A positive form of working in association withothers for some form of mutual benefit (Huxham1996).. Links between companies to create and support aservice or product for its service life, including finaldisposal (Jordan and Michel 2000).As all the above definitions are similar to one another,the definition adopted by this research is: collaborationis a number of autonomous organisations workingtogether, pooling and sharing resources, information,systems and risk for mutual benefit.3.2 Why do companies collaborate?When collaborating, organisations share resources,share and exchange information and complement eachothers weaknesses. Table 1 summarises the potentialbenefits of collaboration. Thus, collaboration provides amechanism by which risks are shared (and thusminimised) and opportunities maximised quickly bybringing together the right mix of competencies andcreating a critical mass.3.3 Why collaborative ventures fail?Evidently, many studies report that, although thenumber of collaborative enterprises is increasing, 70%of collaborative enterprises fail (Lewis 1990, Harbinsonand Pekar 1998, Zineldin and Bredenlow 2003).The literature contains a number of examples thattypify why collaboration fails. The most commonlyquoted examples include:Honeywell/Ericsson (Zineldin and Bredenlow 2003). It isclaimed that collaboration between these two organisa-tions failed due to localised interests, lack of commit-ment, lack of trust and failure to understand eachothers needs.Ikea and its suppliers (Zineldin and Bredenlow 2003).When Ikeas sales volume declined many of its strategicpartners in Denmark and Sweden went bankrupt.NWA/KLM (Elmuti and Kathawala 2001, Zineldinand Bredenlow 2003). After investing $400 billion, thecollaborative was considered a failure attributed largelyto ineffective communication between the two organisa-tions. Consequently there were large losses for bothorganisations.General Motors/Daewoo (Zineldin and Bredenlow 2003).This collaborative venture failed because of trust in therelationship and failure to understand each othersexpectations. General Motors blamed Daewoo forinappropriate labour relations andDaewoo blamed General Motors for failure to promoteaggressively.Volvo/Renault (Bruner and Speckman 1998, Elmuti andKathawala 2001). Failure of this collaborative venture isattributed to misalignment and lack of coordinationbetween management teams due to differences inleadership style and organisational culture.Research to date has identified eight key reasons thatmay cause a collaborative enterprise to fail. These are:1. Lack of commitment by one or more of the partners(Ohmae 1992, Zineldin and Bredenlow 2003). Thisis usually a symptom of one or a combination ofthe following reasons. Lack of commitment canlead to problems with trust and eventual failure ofthe relationship.Table 1. Typical benefits of collaboration.Reduced. . .. Risks. Costsdevelopment, distribution, fulfilment, etc.. Time to market. Delivery time. InventoryIncreased . . .. Market share. Assets utilization. Quality. Flexibility and responsiveness. Skill and knowledge. Critical massLewis 1990, Kanter 1994, Huxham 1996, Lummus and Vokurka 1999,Stank et al. 1999, Holmberg 2000, Ireland and Bruce 2000, Parker2000, McLaren et al. 2002, Sahay 2003.456 U. Bititci et al.Downloaded by [Texas A & M International University] at 02:39 03 October 2014 2. Failure to identify a common ground (Parker 1994).Here, typically, the internal and external valueproposition of the collaborative venture has notbeen made explicit. That is, the partners cannotanswer the question: What additional competitiveadvantage is the collaboration going to createand for which markets/customers and/orshareholders?3. Unrealistic objectives of partners (Huxham 1996).This is because, at the outset, the expectations ofeach partner had not been shared and madeexplicit.4. Failure to fulfil objectives and needs of partners(Huxham 1996, Zineldin and Bredenlow 2003). Oneor more of the partners pull out or lose commit-ment because their expectation is not being met.This may be due to having unrealistic expectationsat the outset, but it is most commonly due to thelack of understanding of each others expectations.5. Failure to focus on customers needs (Dryer et al.2001). There are instances where the unique sellingpoint and value propositions are forgotten, mainlydue to internal management difficulties of thecollaborative enterprise.6. Focusing on individual short-term benefits ratherthan focusing on long-term benefits collectively(Zineldin and Bredenlow 2003).7. Unfair distribution of benefits due to ignorance ofeach others competencies and contribution. This isexacerbated by the absence of commercial andoperational business models dealing with this issue(Gomes-Cesserres 1999, Donlon 2000, Inkpen andRoss 2001, Das et al. 2003).8. Absence of an operational system to manage thecollaborative enterprise (Kanter 1994, Gomes-Casseres 1999, Elmuti and Kathawala 2001). Eachpartner has their own management systems, whichthey use to manage their own business. But whomanages the collaborative enterprise? It is usuallymanaged collectively. It is, therefore, critical thatmanagement systems are in place to provide thepartners sufficient visibility to allow them tomanage the collaborative enterprise.3.4 What are the conditions in which collaborationworks?Porters (1980, 1998) work on regional industrialclusters identifies a number of conditions, whichfacilitate regional industrial competitiveness wherecluster members benefit individually. In effect, clustersare also a form of collaboration. These conditions areillustrated in figure 1 below.In addition, previous research into team working alsoprovides some valuable insights. In effect, team workingis collaboration between the members of the team formutual benefit. In our view, a collaborative enterprise isnot so much a team of organisations than a team ofpeople. The work of MacBryde and Mendibil (2003)is particularly relevant as they classify performancefactors as:. Teaming factors. These are factors that ask thequestion; Is the team capable of working together?Thus covering issues such as the chemistry, culture,trust, etc, between team members.. Process factors. These are the performance objec-tives and criteria of the business process withinwhich the team is working.. Team management factors. These are environ-mental factors within which a team has to work.It raises the question: Has the management createdthe right environment for the team to work andsucceed as a team?4. Development of the synergy modelFrom the literature it seems that there are a number offactors that can cause collaborative enterprises toFIRMSTRATEGY,STRUCTUREAND RIVALRYDEMANDCONDITIONSRELATED ANDSUPPORTINGINDUSTRIESFACTORCONDITIONSFigure 1. Porters diamond of factors in regional competitiveness.Managing synergy in collaborative enterprises 457Downloaded by [Texas A & M International University] at 02:39 03 October 2014 succeed or fail. Having reviewed the literature table 2illustrates how the reasons for failure, identified earlierin the paper, map on to Porters diamond (Porter 1980,1998) and the teaming performance factors (MacBrydeand Mendibil 2003).From table 2, it seems that, although there is a degreeof synergy between Porters diamond, team performancefactors and the reasons for failure of collaborativeenterprises, the categorisation of the reasons for failureseems to require an alternative model to aggregate,categorise and describe these reasons. Thus the fourperspectives of the synergy model:1. Strategic synergy. To ensure that theparticipants have a common ground and thattheir individual objectives and expectationsare understood and are consistent with compe-tencies and contribution of each partner, as wellas the additional value and competitive advan-tage to be delivered through the collaboration.2. Operational synergy. To ensure that each partnersinternal management processes and difficulties areunderstood and resolved, and that customerfocused operational systems extend across organi-sational boundaries.3. Cultural synergy. To ensure that the mindset,organisational culture and management styles arecompatible between partners and there is asufficient level of trust and commitment in place.4. Commercial synergy. To ensure that the short andlong term expectations, benefits and risks areunderstood and appropriate agreements have beenput in place with regards to distribution of risks, aswell as benefits arising from collaboration.5. The synergy modelIn this section we will describe the structure and thecontents of the synergy model. In summary it comprises:. Four perspectives, i.e. strategic, cultural, opera-tional and commercial.. A set of assessment criteria under each heading.. A maturity scale for each heading.The development of the four perspectives has beenexplained in some detail in the previous section. Theassessment criteria under each heading were alsodeveloped from the literature on success and failure ofcollaborative enterprises. The reader will note that theassessment criteria presented in tables 3 to 6 closelyfollow the reasons for failure, as summarised in table 2earlier. To enable objective assessment of each criteriona five-point maturity scale has been developed specific toeach criterion. Although, due to space restrictions, it hasnot been possible to include the full details of thematurity model, the self-assessment tool can be accessedat http:\\ However, as arough guide, the five levels of maturity are:1. Initial. Unpredictable or does not exist.2. Embryonic. Basic understanding of requirementsbut not able to apply.3. Defined. Basic understanding of requirements andwith a basic ability to apply.4. Standardised. Requirements well understood andcompetently applied.5. Optimising. Fully competent and able to demon-strate leadership.5.1 Strategic synergyThere are two elements to this section of the model. Thefirst part requires an organisation to be self-aware, i.e.understand its strategic and operational environment.The second part requires the organisation to becollectively aware, i.e. to understand its collaborativepartners, each partners objectives and expectations,what each partner is going to contribute to thecollaborative enterprise, as well as the new valueproposition of the collaborative enterprise. Table 3illustrates criterion used to assess both parts of strategicsynergy.5.2 Operational synergyThis section of the model also comprises two parts.The first part focuses on operational processes andcontrols internal to an organisation, to ensure that itsown house is in order in the first place. The second partexplores the maturity of cross-enterprise processes toassess the ability of the organisations to coordinatetheir operational business processes beyond theirindividual boundaries. Table 4 illustrates the criterionused to assess both parts of operational synergy.5.3 Cultural synergyThis section of the model focuses on organisational andpeople related issues and is designed to assess culturaland organisational compatibility of the partneringorganisations. Table 5 illustrates the criterion used toassess cultural synergy.5.4 Commercial synergyThis section of the model focuses on assessing the clarityand robustness of commercial arrangements for all the458 U. Bititci et al.Downloaded by [Texas A & M International University] at 02:39 03 October 2014 Table2.Mappingoftherelevantliterature.CommonreasonsforfailureofcollaborativeenterprisesPortersdiamond(Porter1980and1998)Teamperformancefactors(MacBrydeandMendibil2003)DimensionsofthesynergymodelCommonground(Parker1994)FirmStrategy,Structure&RivalryDemandCondsRelatedandSupportingIndustriesProcessFactorsTeamManagtFactorsStrategicsynergyAdditionalvalue(Parker1994)Additionalcompetitiveadvantage(Parker1994)Objectivesofpartners(Huxham1996,ZineldinandBredenlow2003)NeedsandExpectationsofpartners(Huxham1996,ZineldinandBredenlow2003)Competenciesandcontribution(Gomes-Casseres1999,Donlon2000,Dasetal.2003)Customerneeds(Dryeretal.2001)OperationalsynergyManagementdifficulties(Dryeretal.2001)Operationalsystems(Kanter1994,Gomes-Casseres1999,ElmutiandKathawala2001)Operationalbusinessmodel(Gomes-Casseres1999,Donlon2000,InkpenandRoss2001,Dasetal.2003)Commitment(Ohmae1992,ZineldinandBredenlow2003)FactorConditionsTeamingFactorsCulturalsynergyTrust(Ohmae,1992;ZineldinandBredenlow,2003)Focusingonshorttermbenefits(ZineldinandBredenlow2003)CommercialsynergyDistributionofbenefits(Gomes-Casseres1999,Donlon2000,InkpenandRoss2001,Dasetal.2003)Commercialbusinessmodel(Gomes-Casseres1999,Donlon2000InkpenandRoss2001,Dasetal.2003)Managing synergy in collaborative enterprises 459Downloaded by [Texas A & M International University] at 02:39 03 October 2014 partners in the collaboration. It ensures that partnersare aware of each others commercial robustness andthat any agreements concerning risk, IPR and gainsharing are robust, clear and transparent. Table 6illustrates the criterion used to assess commercialsynergy.6. Case studyThe synergy model and the audit tool were applied in anetwork of small- and medium-sized enterprises (SMEs)based in the west of Ireland. The network is facilitatedby Enterprise Ireland, with a view to preparing theparticipating SMEs for collaboration, and encouragingthem to develop small collaborative enterprisestoallow them to bid for and win international contractsthey would not be able to win otherwise.The entire network consists of 16 companies rangingfrom 10 to 700 employees in size. The authors wereengaged to conduct a workshop to educate the networkon benefits and pitfalls of collaboration and to facilitatea self-assessment workshop against the synergy modeldeveloped as part of this research. The event took placein June 2004 with 11 companies participating in the self-assessment exercise. All the participants were keyStrategic synergy - Part 1: Self-awareness0123456PEST 5-Forces SWOT Core competencies Value propositionABCDEFGHIJKAverageStrategic Synergy - Part 2: Collective-awareness0123456Objectives YourcontributionPartners New Value Gain sharing StrategicsynergyABCDEFGHIJKAverageOperational synergy - Part 1:Internal processes0123456Internal process Mng. Int. business processesInt. Support systems Team-workABCDEFGHIJKAverageOperational Synergy - Part 2: Cross-Enterprise Processes0123456Management processesPerformance manag.Extended business proc.Cross enterprise teamworkingABCDEFGHIJKAverageCutural synergy0123456ManagementCultureTrust &CommitmentOperationalCultureManagementAgilityRisk SharingSystemsSharingInformationSharingABCDEFGHIJKAverageCommercial synergy0123456CommercialrobustnessRisk prevention IPR agreements Financing/fundingGain ShareAgreementsABCDEFGHIJKAverageFigure 2. Collective self-assessment results.460 U. Bititci et al.Downloaded by [Texas A & M International University] at 02:39 03 October 2014 Table 3. Assessing strategic synergy.Maturity levelAssessment criteria 1 2 3 4 5Strategic synergy. Part 1: Self-awareness. Awareness of global political, economic, social and technological forcesthat affect the competitiveness of the organisation.. Global awareness of competitors, suppliers, new-entrants, substitutes,customers.. Understanding of companys strengths, weaknesses, opportunities andthreats with respect to the PEST and competitive forces above.. Clear understanding of the core competencies of the organisation whichare difficult to replicate.. Clarity and focus of the value proposition.Strategic synergy. Part 2: Collective-awareness. Clear and specific views on what a company wants to get out of thecollaboration.. Clear recognition of the competencies that the company is bringing to thepartnership.. Clear understanding of the competencies and capabilities partners arebringing to the partnership.. Clear understanding of the new value that will be generated through thecollaboration.Clear views on how the new-gains and risks should be shared between thepartners.. Unanimous understanding and agreement by each partner on: Otherpartners objectives; partners contributions; new value proposition; gainsharing.Table 4. Assessing operational synergy.Maturity levelAssessment criteria 1 2 3 4 5Operational synergy. Part 1: Internal processes. A clearly defined/articulated process that enables the management tomanage the performance of the internal business and support processes inline with the strategic objectives of the business.. Clearly defined business processes for the key business processes of theenterprise, e.g. generate demand, develop product, fulfil order, supportproduct.. Clearly defined processes for the internal support systems, e.g. HRD andM, quality systems, IT systems, financial and risk management systemsand processes.Operational synergy. Part 2: Cross-enterprise processes. A clearly defined continuous process that facilitates strategic conversationto take place between partners ensuring that decisions are unanimous,explicit, unambiguous and locally meaningful.. A process that provides visibility into the performance of thecollaborative enterprise. This means that some partners should be ableto look into the performance of other partners processes whereappropriate.. Clearly defined business processes across the collaborative enterprise,crossing the boundaries of each partner enterprise.. Cross enterprise team working.Managing synergy in collaborative enterprises 461Downloaded by [Texas A & M International University] at 02:39 03 October 2014 decision makers in their businesses, typically ownersand/or directors. The workshop followed the processdescribed earlier in this paper in section 2. Figure 2summarises the results of the self-assessment exercise forthe group of 11 companies that participated in theexercise.7. FindingsThe following paragraphs summarise the findings ofthe research and the interpretation of the data presentedin figure 2.7.1 General findingsEven though most of the participants were able toarticulate their core competencies quite precisely, mostfound that their level of self-awareness was largely inmaturity levels 2 and 3. The participants suggested thata minimum maturity level of 4 would be required toparticipate successfully in a collaborative venture.With respect to collective-awareness, the maturitylevel ranged from 2 to 4with 4 being the minimumlevel of maturity required to collaborate successfully.Most companies were quite clear about their ownobjectives from a collaborative venture (level 4) butnot quite sure of others objectives, motivations andcontributions (levels 2 and 3).The maturity of internal operational systems averagedat level 3, whilst the maturity of collaborative opera-tional systems averaged at level 2with 4 being theminimum target for both categories. In fact the maturityof collaborative operational systems was rated ratherlow, particularly with respect to having defined extendedbusiness processes.The cultural maturity of the organisations rangedbetween levels 1 to 4with level 3 being the average.Once again, level 4 was identified as the minimum levelof maturity required to collaborate successfully.Table 5. Assessing cultural synergy.Maturity levelAssessment criteria 1 2 3 4 5Cultural synergy. Management culture and style: Level of compatibility of senior manage-ment culture and behaviour between the partners.. Trust and commitment: The level of trust and commitment at seniormanagement levels between partner organisations.. Operational culture: Level of compatibility of operational culture andbehaviour between. Management agility/responsiveness: Capability and flexibility for rapidchange of processes, responsibilities, structures, etc., between partners.. Risk sharing: Level of risk partners that are prepared to share.. Systems sharing: The level of systems the partners are prepared to share.. Information sharing: The level of information the partners are preparedto share . . . e.g. V high, IP, market intelligence; Med, commercial andperformance data; Low, training, suppliers.Table 6. Assessing commercial synergy.Maturity levelAssessment criteria 1 2 3 4 5Commercial synergy. Commercial robustness: The clarity and transparency of the financialposition of each partner.. Risk prevention: The availability, clarity and robustness of a riskmanagement strategy.. IPR agreements: The availability of IPR agreements.. Financing/funding: The clarity and transparency of financing/fundingarrangements to all partners.. Gain share agreement: The availability, clarity and transparency of anagreement on how the gains are to be shared.462 U. Bititci et al.Downloaded by [Texas A & M International University] at 02:39 03 October 2014 Similarly, commercial maturity also rangedbetween levels 1 and 4with 3 being the average.However, in this case the minimum level of maturityrequired is highlighted as 5 in order to collaboratesuccessfully.7.2 Specific findingsThe data suggest that the participating companies havedeveloped a slightly higher level of strategic synergy(2.95) compared with the cross-enterprises operationalsynergy they have developed (2.23). The likely reasonbehind this is that the companies, being part of aformalised network, already knew of each othersbusiness and had been talking about collaboration atthe network meetings for approximately 9 months.Thus, they had developed a better understanding of eachothers businesses, competencies, contribution and soon. In contrast, they had not developed a cross-enterprise operational synergy, as they had not identi-fied an opportunity to collaborate, thus having tounderstand and develop cross-enterprise operations inany great depth.Company F was already in a successful collaborativerelationship with another company that was not one ofthe participants. This collaboration, company F and itspartner (another SME in the west of Ireland), werecollaborating to supply completely assembled interiorlighting units to the Swedish automotive industry,whereas the other participants in the workshop werenot involved in a collaborative venture of similarintensity. This, therefore, explains Fs relatively higherdegree of collaborative maturity in all areas. However,Fs management does not seem to be as confident oftheir maturity in cultural and commercial issues com-pared with strategic and operational issues. This may bethat, as they have experienced collaboration, they cansee greater opportunities to improve in these areas.With respect to strategic synergy, at the outsetthe research team predicted that a low score in Part 1(i.e. self awareness) would automatically affect thePart 2 (i.e. collective awareness) score, in that the teamdid not expect to see a collaborative-awareness scorehigher than a self-awareness score. The data shows thisnot to be the case. Companies A, B, H, J and K all showgreater collaborative-awareness than self-awareness.Only company C shows a lower level of collaborative-awareness. This phenomenon may be explained in oneof two ways:1. There is no dependency between self-awarenessmaturity and collective-awareness maturity. Thismay be due to the fact that some companies mayfeel that they do not have sufficient informationrelating to their own strategic orientation but theyhave sufficient information relating to othersobjectives, competencies, contributions, and so on.2. There is indeed a strong link between the two.Low-maturity in ones own strategic orientation(self-awareness) may lead to a rather nave self-assessment of ones collective-awareness.Unlike strategic synergy, under the heading of opera-tional synergy, the internal management systems seem tohave higher levels of maturity compared with cross-enterprise management systems. This result is as predic-ted by the research team. As most of the organisationsfeatured operate to formalised management systems,such as ISO9000 or similar, they show relatively higherdegrees of internal operational synergy but thesepractices do not cross organisational boundaries.8. ConclusionsThis paper has reviewed the reasons behind high failurerates of collaborative enterprises. It has classified thesereasons under four generic headings: Strategic, opera-tional, cultural and commercial. It then went on tointroduce the synergy model developed to provide anaudit tool to facilitate the assessment of an organisa-tions, or a number of organisations, readiness tocollaborate.The synergy model was applied in a collaborativenetwork with 11 SMEs participating in the exercise. Theself-assessment exercise concluded that:. In order to collaborate successfully a maturity levelof 4 or 5 would need to be achieved by eachparticipating organisation.. All of the participating organisations were short ofthe required maturity levels with most averaging atlevels 2 and 3.. Companies who have already collaborated success-fully are likely to have higher maturity levels.. The format of the audit tool is considered to beusable and results can be obtained quite quickly.. All participants have considered the self-assessmentexercise a useful activity with the results helping tofocus on the key issues each enterprise needs toaddress, in order to be ready to collaborate. Thus, itis a useful tool for formulating development plans.. The synergy model and the audit tool, whilst beingvalid, would require further trails and amendmentsin order to prove its completeness.It seems that it is entirely possible to develop assess-ment or audit frameworks to establish an organisationsreadiness to collaborate. Furthermore, companiesManaging synergy in collaborative enterprises 463Downloaded by [Texas A & M International University] at 02:39 03 October 2014 and networks are quite prepared to participate inself-assessment exercises in order to understand theirown strengths, weaknesses and development needs. Infact the audit tool provides a useful mechanismto facilitate the necessary conversations betweencompanies who are about to embark on a collaborativeventure.The results of the research presented here is limited intwo ways. First, the synergy model and the audit tooldeveloped have only been tested in an environmentwhere the participants, having used the model and thetool, provided their opinions on their completeness,usefulness and usability. Further longitudinal researchwill be required to further test and validate the model.Secondly, the validation has been based on a singleexperiment with only 11 companies participating. It willbe necessary to use this model in other settings withdifferent cultural characteristics and so to develop abetter understanding of the relative remits and limita-tions of the model and the audit tool.In conclusion, the work presented in this paperprovides an initial step toward developing a betterunderstanding of the factors we need to consider tocreate sustainable and successful collaborativeenterprises.ReferencesBititci, U.S., Martinez, V., Albores, P. and Parung, J.,Creating and managing value in collaborative networks.Int. J. Phys. Distrib. & Logist. Manage., 2004, 34(3/4), 251.Bruner, R. and Spekman, R., The dark side of alliances:Lessons from Volvo-Renault. Euro. Manage. J., 1998, 16(2),136150.Child, J., TrustThe fundamental bond in global collabora-tion. Org. Dynam.s, 2001, 29(3), 274288.Cropper, S., Collaborative working and the issue sustain-ability. In Creating Collaborative Advantage, edited byC. 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Rev., 1998, November/December, 7790.Sahay, B.S., Supply chain collaboration: The key to valuecreation. Work Study, 2003, 52(2), 7683.464 U. Bititci et al.Downloaded by [Texas A & M International University] at 02:39 03 October 2014 Stank, T.P., Dougherty, P.J. and Autry, C.W., Collaborativeplanning: supporting automatic replenishment programs.Supp. Chain Manage., 1999, 4(2), 7585.Zineldin, M. and Bredenlow, T., Strategic alliances: Synergiesand challenges. Int. J. Phys. Distrib. & Logist. Manage.,2003, 33(5), 449464.Professor Umit Bititci is Director of The Strathclyde Institute for Operations Management and theProfessor of Technology and Enterprise Management at the University of Strathclyde. He has over20 years of academic and industrial experience working with a range of UK, European and Asiancompanies on Business Transformation, Strategy Management, Performance Measurement, SupplyChain Management and Business Process Improvement. Umit has been responsible for a number ofEuropean and UK funded research and development programmes. To date Umit has published threeedited books and over 140 papers in international journals and conferences.Joniarto Parung is a Senior Lecturer of Industrial Engineering and Postgraduate School ofUniversity of Surabaya, Indonesia. He holds a Masters degree from ITB Bandung, Indonesia and aPhD from University of Strathclyde, Glasgow, UK. He has published and presented some of hisresearch and has delivered invited seminars in Glasgow, Singapore, Fontainebleau, Beijing,Allahabad/India and around Indonesia.Trevor Turner is a Senior Research Fellow in the Centre for Strategic Manufacturing at theUniversity of Strathclyde. He spent 27 years in manufacturing industry in a variety of roles prior toentering academia eleven years ago. He is now using this experience to develop approaches that canbe used to improve and sustain the performance of manufacturing organisations in collaborationwith industrial partners.David Walters is Professor of Logistics and Supply Chain Management at the Institute of Transportand Logistics Studies at the University of Sydney. He has published a number of textbooks inbusiness and marketing subjects, the most recent Strategic Operations Management: A Value ChainApproach. In addition to his wide teaching experience he has acted as a consultant for a number ofinternational companies.Denis Kearney is an independent provider of support services to industry with a focus on innovationand collaboration. Denis has led several EU projects across programmes such as BRITE, ESPRIT,IMS, INNOVATION, Leonardo da Vinci and LIFE Environment. He previously managed theAMT Ireland Centre at the University of Limerick for Enterprise Ireland. Denis is the author of theworkbook Collaborating in BusinessDelivering Results for Small Organisations.Dave Mackay is a research fellow in DMEM and a member of the Strathclyde Institute forOperations Management. Dave graduated from the University of Strathclyde in 2000 with an MEngwith distinction in Manufacturing Sciences and Engineering and a diploma in business management.Dave joined Procter and Gambles Product Supply division in Seaton Delaval as a productionprocess engineer and subsequently fulfilled project engineering and manufacturing managementroles. In 2005, Dave returned to Glasgow to project manage Competitive Scotland in DMEM at theUniversity of Strathclyde. Since then, Dave has worked with over fifty manufacturing organisationshelping them improve performance. Daves research focuses on developing an integrated approachto managing people and systems to deliver sustainable performance improvement.Managing synergy in collaborative enterprises 465Downloaded by [Texas A & M International University] at 02:39 03 October 2014