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					The Role of
Interdependence in
Strategic Collaboration
                                                 ranklin uttered the words at the left at the signing of the
DAVID R. PRESTON                                 Declaration of Independence. Why, during one of histo-
                                                 ry’s greatest moments of freedom and autonomy, did a
                                                 leader of the cause emphasize togetherness and depen-
       As Ben Franklin said,                     dence? The answer lies in the importance of interdepen-
                                                 dence, the underlying key to any strategic alliance, com-
         “We must all hang              munity partnership, or interpersonal collaboration.
      together, or assuredly               Inter-organizational relationships can be competitive, interde-
                                        pendent, or a combination of the two. Sometimes the relationship
           we shall all hang            between two companies is not even a matter of intentional strate-
                                        gy, but the result of brand association in the marketplace. Think
                separately.”            of Coke and Pepsi. Although not a traditional alliance in any
                                        sense, both organizations profit through this type of bond by the
                                        presence of their competitor. Each keeps the other in the public
                                        eye, and each keeps its own people sharp by referring to the com-
                                        petition. In this way, the organizations are interdependent in
                                        terms of their performance and organizational cultures.
                                           Business research and trends of the past 20 years suggest that
                                        it is useful to consider inter-organizational relations in terms of
David R. Preston, Ph.D. is president    both competition and collaboration. In the 1980s, Michael Porter
of The Preston Group, Inc., a           and others focused the business world on models of competition.
management consulting and training      In the late 1980s and 1990s the emphasis shifted to corporate
firm with offices in California and     strategy and association. Some of the reasons for this shift
New Mexico, and a Web site at           include the following: global marketing, converging tastes, the
www.prestonconsulting.com.              ever shortening half-lives of technology and product cycles, and
Dr. Preston teaches courses on
                                        large capital investment demands. In addition, the effective
management, education,
teambuilding, and leadership at
                                        implementation of inter-firm relationships provide market aware-
UCLA and New Mexico Highlands           ness and cost discipline that would not likely be evident in a sin-
University. He also consults, speaks,   gle integrated organization with captive markets.
and conducts seminars around the           The term “strategic alliance” has evolved. Once, strategic
country. He can be reached at           alliances referred specifically to governance structures involving
dpreston@prestonconsulting.com.         an incomplete contract between separate firms, in which each

48                                                                        HANDBOOK OF BUSINESS STRATEGY
partner has limited control. In this relationship,
because the partners remain separate firms, there
is no automatic consensus on strategy or action.        It isn’t the money that
To deal with unforeseen contingencies, the part-
ners must make decisions jointly.
                                                        sinks an alliance—it’s
   In today’s business climate interdependence is       the people.
more important than ever, partially because of the
creative variations on traditional strategic
alliances. Now, the term “strategic alliance” refers
to all sorts of collaborative relationships and
endeavors. Leaders can no longer afford to adopt        become part of our cultural fabric of education,
strategies that are based on isolationism, competi-     business, and life. Darwin’s model of evolution
tion, or self-interest. Nor can they expect a simple,   illustrates the natural tendencies of organisms to
one-size-fits-all approach to strategic alliances.      create relationships, networks, and communities.
And when executives and managers are forced to          The “fittest” are not necessarily most independent
create strategies for partnership and cooperation,      or most self-sufficient; they are the most adapt-
they must do it in a way that fits their organiza-      able, the most diverse, and the most interdepen-
tions and human resources.                              dent. It is possible that strategic relationships are
   Consider interdependence at its most basic           simply one expression of this evolutionary impera-
level. Our ability to work with others is more fun-     tive. If that is true, then the question becomes not
damental than creating strategic alliances or           whether to form a strategic relationship, but iden-
teams, or even successful interpersonal relation-       tifying the right ones and building and sustaining
ships. We depend on other people for our very           them effectively.
existence and survival. Corporate leaders, acade-           Determining which are the appropriate strategic
mics, and pundits often mistakenly characterize         relationships and how to implement them can be
business endurance as a matter of competition,          challenging issues for managers. While inter-orga-
rather than of dependence. In reality, most suc-        nizational strategic alliances and intra-organiza-
cessful businesses strive to achieve desired            tional teams have become popular management
results as measured against their own potentials.       concepts, they are often not considered in context
Only rarely does a company’s vision focus on a          or applied appropriately. Many executives are
competitor’s failure.                                   determined to create teams where single-leader
                                                        workgroups would be more efficient, or form
SURVIVAL OF THE INTERDEPENDENT                          strategic alliances with organizations that do not fit
Charles Darwin described the very struggle for          their business models or organizational cultures,
existence this way: “A plant on the edge of a desert    simply because these concepts are now familiar or
is said to struggle for life against the drought,       have worked somewhere else.
though more properly it should be said to be                Here it is also important to note that what
dependent on the moisture.” The distinction             appears to be a good idea in theory may not work
between fighting the absence of a valuable              in practice. The human factors, such as trust and
resource versus attracting, cultivating, and            communication, play a significant role in the suc-
depending upon the resource itself is critical. How     cessful implementation of any interdependent
many executives and companies are deploying             effort. The human factors will also naturally sabo-
their resources to fight the drought when they          tage any initiative that does not fit their value sys-
should be looking for ways to attract the moisture?     tems, like a patient rejecting an organ transplant.
   Many people seem to have missed Darwin’s                 Organizational interdependence has deep his-
point entirely. Darwin’s commentary is noteworthy       torical roots, and has branched out over time to
not only because he described evolution as we           take many different forms. To use interdependence
now understand it, or because he coined the             most effectively, you must have an understanding
phrase, “survival of the fittest,” which has since      of the qualities of collaboration and how the peo-

HANDBOOK OF BUSINESS STRATEGY                                                                              49
ple and culture within your organization will per-
ceive and use the tools you give them.
   In order to strengthen any business, leaders         Solidify strategic
must understand the nature of working relation-
ships within the organization and, in the case of
                                                        relationships within the
strategic relationships, between partner organiza-      company by developing
tions. The most effective alliances incorporate
human factors such as trust and organizational          esprit de corps.
culture. Objectively assessing these dynamics may
also indicate when an alliance is not such a good
idea. Conducting an organizational audit to evalu-      sacrifice has increased in recent years with the dis-
ate these factors is often an important first step in   integration of the bond between employee and
creating a strategic relationship.                      employer. There is now little loyalty and few “com-
                                                        pany” men or women. In the bigger picture, there
AMERICAN CULTURE AND THE FALLACY OF                     is also the question of whether communities as we
“GOING IT ALONE”                                        know them will continue to exist.
Before examining the nature of organizational              Perhaps the most important cost of devout indi-
capacity-building itself, it is useful to ask why       vidualism is that it fails to address the realities
strategic relationships are a discipline in American    that confront organizations today. The ideal of
business, as opposed to something that occurs nat-      “going it alone” simply does not work. In fact, it
urally. The answer, to paraphrase Shakespeare, lies     represents a kind of wish fulfillment, because
not in the alliances but in ourselves.                  deep down we know we need other people and
   Although a founding father at the very signing       strategic relationships, some of which we wish we
of the Declaration of Independence stressed inter-      could do without. Fictional characters such as
dependence, this country’s culture has always           western heroes or Rambo, or even the magazine
championed the ideals of “going it alone”/”one          cover of the Working Mom, are compelling pre-
against the world”/”conquering nature”/Manifest         cisely because they typify an unattainable ideal—
Destiny and other such values that lionize the indi-    the completely self-sufficient human being who
vidual’s lonely, heroic quest against long odds.        has no apparent material, medical, or social
   The socialization of these ideas continues to        needs. These characters are uniquely American,
begin at a young age. A student is encouraged to        in that they run counter to virtually every histori-
do her “own” work in school. Collaboration, unless      cal notion of the hero.
required or sanctioned by an authority figure (and         In describing the world’s myths surrounding
therefore done generally without much considera-        heroes, Joseph Campbell pointed out the impor-
tion of the process or the benefits), is considered     tance of the figurative mother, father, guide, and
cheating. Upon entering the workplace many              the dark enemy. It is only through the hero’s inter-
young professionals are unprepared for the politics     dependence with these figures that we know him
of organizational life, and must actually unlearn       as a hero. And even if these figures are taken out
much of what they think about individual perfor-        of the equation, the hero would still need a chal-
mance and accountability, as well as accepting          lenge, some way for him to prove himself a hero:
blame and credit.                                       How can you call someone a hero if he hasn’t done
   The ideal of independence is important. It has       anything?
helped many people achieve great things, and it            Portrayals of companies and corporate execu-
has inspired freedom, creativity, innovation, and a     tives in American culture are often not very realis-
high level of achievement and perceived self-           tic. In our business mythology, captains of industry
worth. To achieve ideal independence, though,           stand tall. They don’t take anything from anyone.
something must be sacrificed, and generally what        They put entire companies and markets on their
is lost is a sense of community, of teamwork, of        shoulders as they blaze their trails. To be sure,
belonging to something greater than oneself. This       strong leaders possess the abilities to create, to

50                                                                         HANDBOOK OF BUSINESS STRATEGY
inspire, and to prove their resilience in times of
adversity. However, they very rarely do it alone.
Even the most powerful executive office functions         Young professionals must
best through interdependence. As history has
shown, the most effective Presidents of the United
                                                          unlearn much of what
States have relied heavily upon the best cabinets         they think about
and advisors, and have created extensive strategic
alliances around the world.                               individual performance.
   Strategic partners, employees, and coworkers
may be unaware of or resistant to the need and
the dynamics of interdependence. You may need             ships were medieval guilds and trade partnerships
to teach them explicitly how to create and sustain        of merchants in northern Europe. Because these
a successful strategic relationship. Though it may        networks were based upon interactions over the
appear to be common sense, it is extremely impor-         long term, and because there was relatively little
tant to provide a satisfactory answer to the              turnover, personal bonds were formed and sus-
“What’s in it for me?” question. A collaborator           tained by trust. Participants knew one another, and
must be able to justify his investment in a strate-       there were few representatives or intermediaries
gic relationship. You can do this effectively either      between principals. Generally speaking, the parties
by promoting the benefits of creating a strategic         to these relationships did what was best for the
relationship, or creating fear about the ramifica-        relationship, because their reputations and values
tions of acting without a strategic relationship. As      sustained their ability to be successful. This is sel-
participants learn about the process, they should         dom the case today.
also receive explicit information about communi-              Many of us remember when business was done
cation and decision-making processes, conflict            on a handshake, but few of us are willing to do
management, and any other rules of engagement             business that way now. The ethics of general busi-
that may influence their psychological or emo-            ness practice and strategic alliances have changed.
tional responses. As nearly every participant in a        Business relationships are more likely to be short
failed strategic relationship will attest, it isn’t the   term, and there is less general expectation of loyal-
money that sinks a partnership or an alliance—it’s        ty. Therefore, it is not unusual for partners to act
the people.                                               out of pure self-interest instead of doing what is
                                                          best for the relationship. As Harvard Professor of
VALUES OF STRATEGIC RELATIONSHIPS                         Public Policy Robert Putnam suggests in his book
For purposes of effective communication, decision         Bowling Alone, this may reflect general social
making, and benchmarking, it is necessary to dis-         trends toward selfishness; community participa-
tinguish between the value of a strategic relation-       tion is down, and divorce statistics are up.
ship and the values of a strategic relationship. The          Self-interest is certainly a reasonable motive for
value of a strategic relationship usually lies in such    entering a strategic relationship, but acting out of
factors as reduced costs, economy of scale, or            self-interest can conflict with doing what is good
shared investment burden. The values of a strate-         for the alliance. Interdependence requires that one
gic relationship are often tied to the values of the      party do for the other and vice versa. The existence
participating organizations, which might include          of a partnership presupposes that it will be good
integrity, quality, or speed. They are also tied to the   for each participant; why else would the parties
individual partners, whose impressions of the             want to come together?
strategic relationship are naturally formed through           In addition to our predisposition and early
the lens of personal attitudes, beliefs, and values.      socialization to “going it alone,” we also face soci-
   The values of strategic alliances have changed         etal, cultural, and organizational influences that
over time. Historically, partners built strategic         reinforce values of self-interest. For a strategic
alliances upon relational foundations of trust.           alliance to work, the participants must be able to
Among the first strategic organizational relation-        articulate and agree to set of values and rules of

HANDBOOK OF BUSINESS STRATEGY                                                                                51
engagement. Further, the stated values should be
an accurate reflection of the participants’ operat-
ing principles, rather than some utopian ideal.       Partners must agree to
Failing to do this can open the Pandora’s box of
miscommunication, which often leads to flawed
                                                      values that reflect their
projects, mistrust, and the ultimate collapse of a    operations, rather than
strategic relationship.
                                                      some utopian ideal.
Corporate citizenship. Business-school partner-
ships. Nonprofit relationships. Gonzo marketing.
These types of strategic relationships have           allowed to reach out to the community on the
emerged as examples of interdependence between        company’s behalf?
business and the communities in which they exist,        The Internet presents a unique opportunity for
be they geographical communities, market com-         companies to create an interdependent network.
munities, or online/virtual communities.              Several large corporations, including Ford Motor
   Going back to basic Darwinism for a moment,        Company and Delta Airlines, have issued PCs to
many evolutionary theorists have suggested that       their employees for home and general interest use.
communities came into existence as a result of        These employees are now able to connect with
our need for diverse resources, protection, and       online communities according to their own unique
adaptability. We come together in communities to      interests, in ways that marketing plans cannot pre-
share food, water, and power (literally and           dict. These connections, these mini strategic rela-
metaphorically). Many companies act strategically     tionships, are more real, more enthusiastic, and
to be good corporate citizens and establish posi-     potentially more valuable than millions of dollars
tive public relations with the communities that in    spent on advertising. In his book Gonzo Marketing,
turn support them by purchasing their goods and       Christopher Locke describes this phenomenon as,
services.                                             “A model whereby companies can stop manipulat-
   Capacity building through community relation-      ing people as if they were abstract demographic
ships is more important than ever. In the wake of     data, and instead create genuine relationships with
September 11, 2001, the American community            emergent online communities of interest: powerful
came together in a rush of financial support for      new web micromarkets.”
the victims and a wave of psychological reinforce-       In the same way that the online community pro-
ment for our way of life. Around the same time,       vides an interest-based network, a company’s geo-
however, trust in corporations was severely under-    graphical space provides a strategically interdepen-
mined. Even independent auditors and their prac-      dent network that has an obvious common bond:
tices have become suspect in the wake of the          the physical community itself. Everyone cares
Enron scandal. If companies cannot be depended        about the place in which they live, and there are
upon to tell the truth to their own investors and     many opportunities to contribute time, energy, and
government investigators, how can consumers and       money to efforts that improve living conditions
community partners trust them? Interdependence.       within a community. Companies such as Sony
   Companies are comprised of people. People          have recognized the value of having teams of vol-
have interests, personalities, and relationships.     unteers participate in projects ranging from build-
Neither the most expensive corporate identity         ing houses to reading bedtime stories to orphans.
nor the most elaborate marketing campaign will        These projects solidify strategic relationships with-
ever be as dazzling, as compelling, or as interest-   in the company by developing esprit de corps, and
ing as an individual person. Isn’t it ironic that     they highlight the strengths of interdependence in
companies often spend millions of dollars trying      the community by sharing their resources.
to make themselves seem human, when their                One of the largest opportunities for capacity
offices are populated with humans who are not         building exists in the nonprofit sector. Many

52                                                                       HANDBOOK OF BUSINESS STRATEGY
501(c)3 organizations serve similar constituencies     marketing licenses. At this point in history, we are
with similar resources and programming, and they       questioning our sense of community and our abili-
do not understand much about strategic relation-       ty to reach people in general. Commercials that
ships or interdependence. As a result, they furious-   promote everything from insurance services to
ly pursue the same dollars as their competitors        shoes illustrate the need to connect with real peo-
with labor-intensive efforts that are often ineffi-    ple and places, and the viewers of these commer-
cient. There is a world of opportunity for strategic   cials are more savvy and cynical than ever.
collaboration between nonprofit organizations and         Effective interdependence facilitates not only
their for-profit counterparts.                         business success, but also the preservation of an
   Many business thinkers and corporate leaders        environment in which both for-profit and nonprofit
have struggled with the issue of “keeping it real.”    ventures can continue to thrive. In the words of
In other words, how do companies maintain their        Nobel-winning economist Milton Friedman, “Fun-
integrity and their market share at the same           damentally, there are only two ways of coordinating
time? The answer lies in interdependence. By           the economic activities of millions. One is central
simply allowing and encouraging relationships to       direction involving the use of coercion—the tech-
take place among companies, departments, and           nique of the army and of the modern totalitarian
individuals and other members of their online,         state. The other is voluntary cooperation of individ-
market, and geographic communities, companies          uals—the technique of the marketplace.” G
can achieve multiple goals in marketing, public
relations, and just plain old good will through
altruism.                                              FURTHER READING
                                                       The Alliance Revolution: The New Shape of Busi-
THE TECHNIQUE OF THE MARKETPLACE                       ness Rivalry, by B. Gomes-Casseres, Harvard Uni-
There has been so much discussion about global-        versity Press, 1996.
ization, telecommunication, and transportation—           Bowling Alone: The Collapse and Revival of
the new dynamics of business—that many execu-          American Community, by R.D. Putnam, Touch-
tives have forgotten a basic truth of strategic        stone, 2000.
relationships: We need each other. Companies              The Collaboration Challenge: How Nonprofits &
need customers; participants in alliances need         Businesses Succeed Through Strategic Alliances, by
complimentary skills, experiences, and assets; and     J.E. Austin, Jossey-Bass Publishers, 2000.
no single leader or company can go it alone. Inter-       Gonzo Marketing: Winning Through Worst Prac-
dependence may not be as glamorous or heroic as        tices, by C. Locke, Perseus Publishing, 2001.
independence, but it works much more effectively.         The Hero With a Thousand Faces, by J. Camp-
   Creating and sustaining effective strategic part-   bell, Princeton University Press, 1968.
nerships requires an understanding of how inter-          “On Strategic Networks,” by J.C. Jarillo, Strate-
dependence works, and the human factors that           gic Management Journal, Jan-Feb 1988, pp.31-41.
influence both individual and organizational rela-        The Origin of Species, by C. Darwin, Collier
tionships. This process is a little like reading the   Books, 1872, reprinted 1962.
instruction manual for a children’s toy; we think         Strategic Alliances & Process Redesign: Effective
we have enough experience to dive right in and         Management & Restructuring of Cooperative Pro-
start building, and yet we often omit a simple and     jects and Networks, by A. Gerybadze, Walter de
important step that leads to malfunction later on.     Cruyter, 1995.
   Recognizing our own needs in strategic collabo-        Values, Nature and Culture in the American
ration goes beyond questions of capital invest-        Corporation, by W.C. Frederick, Oxford University
ment, distribution channels, production models, or     Press, Inc., 1995.

HANDBOOK OF BUSINESS STRATEGY                                                                            53

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