Why businesses need to invest in developing their Collaborative Advantage.
Adidas and Allbirds collaboration to create the sports shoe with the world’s lowest carbon footprint.
Looking to the future, Yuval Noah Harari notes in his book 21 lessons for the 21st century that “Many pedagogical experts argue that schools should switch to teaching “the four Cs” — critical thinking, communication, collaboration and creativity.” As society becomes more globally interconnected and as technology becomes integral to our professional and personal lives, collaboration becomes an essential personal skill for the future. The same is true for business. There are three observable shifts that are forcing businesses to invest in developing Collaborative Advantage: the global scale of challenges faced, the move to an economy of ecosystems and the rise of the experience — and transformation economy.
It goes without saying that global challenges such as climate change, pollution, ageing population or social inequality are too big for one business to tackle. To address these problems meaningfully, businesses will need to partner up as collaboration can create an impact far larger than the sum of what each business could achieve on its own. Consider sustainability. A business might make its product fully recyclable, but in order to be sustainable, this product also needs to be collected and recycled post-consumption and somebody needs to buy the recycled material to manufacture a new product from it. Unless the post-consumption recycling chain is functional and user-friendly, it doesn’t really matter if a product is recyclable or not. The recent COVID19 pandemic provides us with another illustration of the need for collaboration to tackle big challenges quickly. In this case, old rivals GlaxoSmithKline and Sanofi joined efforts to find a vaccine against SARS-CoV-2. Even more interesting are the collaborations between businesses with no medical background at all and medical experts. Mercedes the car manufacturer collaborated with University College London to develop a breathing aid called UCL Ventura. The collaboration combined the Mercedes engineering and manufacturing assets and the UCL medical expertise to quickly create a machine that can help with one of the most significant problems in COVID-19, the respiratory issues patients experience.
Secondly, the digitalisation of our society has given rise to the ecosystem economy. Michael Jacobides at the London Business School describes the ecosystem economy in MIT Sloan Management Review as “dynamic, multi-company systems as a new way of organising economic activity”. He further notes that seven of the world’s ten largest companies depend on ecosystems and that the strategic use of ecosystems is more prominent in faster-growing companies across the S&P 500. A great illustration for this is Google Nest. On its own, Google Nest is a smart digital thermostat that can be controlled remotely. Whilst useful, this is not terribly convincing to encourage consumers to pay more compared to a thermostat that is not connected . However, by partnering with other companies such as Fitbit or Mercedes, Google Nest transforms your house into a responsive home. Through your Fitbit, Google Nest knows when you wake up and when to turn the heating on. Through its connection with your Mercedes car, Google Nest anticipates your arrival and can prepare your house for your arrival.
Finally, the shift towards the experience economy and now also the transformation economy further forces businesses to explore strategic collaborations to enable them to offer services and experiences that elevate their product. The Apple watch Nike series, a collaboration between Nike and Apple, is a great illustration of two businesses collaborating to tap into the transformation economy. Nike offers the gear for people to work out in and Apple brings the technology that delivers the Nike training, helping people to reach their personal fitness goals. Collaborations don’t always have to rest on digital either. For example, Marriot hotels created a festival called ‘Gather’ which focuses on food, wine and wellbeing. They collaborated with ALO amongst other brands to create a truly unique experience. ALO, which sells yoga apparel, brought its experts to the event to create master classes, workshops, and wellbeing sessions. Through the collaboration Marriot was able to elevate the guest experience beyond the usual hotel stay and ALO was able to bring to life the brand’s philosophy beyond their products.
Strategic collaborations not only help business adapt to emerging environmental constraints, but also allow them to develop a better proposition, deeper consumer engagement and a stronger brand.
Firstly, strategic collaborations allow businesses to expand their proposition, adding more value to their product. An elaborate and complex proposition is also more difficult to replicate, making it more competitive. Take the collaboration between Stella McCartney and Google Cloud where the supply chain data from Stella McCartney is used with the machine learning algorithms from Google Cloud to yield insights into sustainability at every step of the supply chain. This allows Stella McCartney to improve their environmental footprint and meet the growing consumer demand for sustainable and circular fashion. Only through the collaboration is Stella McCartney able to unlock this value.
On a consumer level, strategic collaborations enable businesses to connect with more consumers on a deeper level. For example, Adidas and Allbirds recently announced their collaboration on a high-performing sustainable running shoe. This allows Adidas to connect more widely with consumers who deeply care for sustainability (the Allbirds customer), while Allbirds gets to engage with athletes. Not only does strategic collaboration unlock new consumers, but it can also give businesses deeper insight into how consumers use their products and services. Nike’s collaboration with Apple gives them access to a wealth of new information on their consumers that in turn can inspire new products and services to better serve them.
Finally, strategic collaborations can also be a great brand building tool. It enhances the perception of the brand to be more innovative and purposeful as well as helping to build brand stretch. Recently Patagonia and Columbia Sportswear partnered to contest the replacement of the Clean Air Act with the weaker Affordable Clean Energy (ACE) rule. This demonstrates brands can amplify their purpose even more through collaborations. The IKEA and Sonos collaboration illustrates how collaborations can help to build credibility and brand stretch as it gave IKEA license to play in home audio, enabling them to also launch other, own brand audio products.
As the world we live in increasingly requires organisations to invest in Collaborative Advantage, businesses should start today to investigate what their future Collaborative Advantage will be. Below I have outlined questions that can help you start to explore how to build and develop your Collaborative Advantage.
What ecosystem(s) should we be a part of?
Is there an emerging ecosystem e.g. smart home, self-driving cars, online marketplace, etc. that we need to plug into (to increase consumer convenience)?
Should we attempt to build our own ecosystem like Apple or should we partner?
2. How can we increase the value we bring to our customers and who could help us with that?
What are the consumer needs and aspirations that our products and services play a role in and how could we help consumers even more?
3. Who shares our values and purpose (inside our outside our industry) and can help us deliver on our mission?