How to share resources and foster innovation among different parties.
In manufacturing, collaborations between companies may come in a handful of different forms, according to PricewaterhouseCoopers in Navigating Joint Ventures and Business Alliances. Some of the forms that may be employed include:
Sometimes a venture includes more than two parties. To foster collaborative ventures and innovation, cities and regions are establishing networks--business ecosystems--of educational institutions, government agencies, research organizations, entrepreneurs, mentors and sources of capital. In the Grand Rapids, MI, region, for example, a tech-driven initiative of several partner organizations led by GR Current is supporting startup medical device manufacturers. This collaborative also includes customers--area hospitals--in the mix.
If you enter a joint venture, you will be committing to sharing certain resources, knowledge and activities with your partner. The intention to collaborate can break down unless both parties have a full understanding of exactly how resources, risks and rewards will be shared. Each partner must be ready to make the degree of commitment the new business will require. And new ventures are complex. Shared assets and structures from one partner may be very unlike those of the other, making integration difficult.
Any successful collaboration requires firm, mutual trust. To support trust, create transparency. Your plan should define the key business and performance indicators to be measured, as well as the monitoring mechanisms to be used--and how they will be reported. While the venture is being structured and negotiated, the parties must thoroughly and explicitly share and understand a vision and purpose for it. Key stakeholders and their objectives need to be identified, and the objectives of the new venture aligned with them. There should be a clearly documented strategy for how to achieve the objectives.
The companies should make a firm commitment of the resources and leadership needed to start up and manage the new venture. Expectations and accountability should be part of the plan. The agreement also should establish policies and procedures within a solid operating and governance framework. However strong your trust and plans are, things can change. Be sure that your understanding and contracts are clear on exit mechanisms you may need if things are not going the right way.
Another company and yours may have the right ingredients to do more together than you could do separately. With all details clarified beforehand, your joint venture will be able to hit the ground running.
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