Growth and Fitness
through Innovation
How to
augment the returns
from your stake
© Klaus G. Saul
7. Operate symbiotically
In this seventh chapter we discuss the symbiotic sharing of complemetary tasks among partners who are prepared to engage themselves in most efficient win-win co-operations.
7-1
The emphasis of
the first six chapters was on strategies. In this chapter it is on tactics. We have
learned that strategies are a prerequisite to identify the appropriate resources and the
optimum path to translate human creativity into market success. But to actually win a
battle it needs more than this: It needs good tactics, too. While strategies are proactive
in view of a selected target, tactics are reactive with respect to actual facts.
7-2
In this context
it is worth to watch spectacular winners of the New Economy who, strangely enough, seem to
ignore innovative strategies at all. Instead they devote much energy to tactics. Take the
Cisco Systems company as an example for a feature which similarly can be found at Nortel,
3Com, Lucent, Dell, Microsoft, Bombardier, Teledesic or the other companies mentioned in
[Exhibit 23]. Cisco participates via equity investments in nearly 60-70 technological
start-ups. But John Morgridge its chairman and CEO deliberately abstains from any specific
commitment to any technology what so ever. He just makes wagers across the entire span of
possible technology alternatives through partnerships. As soon, however, as the customers
signal to Cisco that one of the technological options is close to a success then Cisco
enters the scene and plays its full game. Cisco, indeed, buys “real
options” on which it does not call unless its clients signal that a new form of value
creation “is in the money”.
7-3
The Cisco model
has proven extremely successful in all rapidly changing environments marked by
unprecedented speed, high degrees of interconnectivity and a dominant role of the
intangible assets. But it requires a clear task sharing partnership with the technological
competent start-ups. If Cisco was forced to bet on any pet technology prematurely it would
risk to waste valuable resources. Instead Cisco entrusts the prove of the most fruitful
technology to its strategically operating technological partners entirely.
7-4
Symbiotic
partnerships of the Cisco kind enable both the tactical and the strategic partners to
preserve a maximum flexibility for their specific task. Symbiotic partnerships result in
major advantages for all partners: (1) synergies, (2) enhanced stability and (3) an
accelerated “time-to-market”.
7-5
Unfortunately
most public administrators are not yet familiar with such symbiotic partnerships. The word
tactics has rarely any meaning for them. They prefer to address any strategic construction
which might raise private funds or compensate for a weak public management or reduce
prohibitive transaction costs through burocracy or to manage other shortcomings as
public-private partnerships. But they rarely are successful since their idea of P-P-P is
confused and often heavily overloaded with contradicting partial interests. The problem
with their rigid strategic business plans is that they prevent stakeholders from
responding to opportunities that emerge as the future [Exhibit 25] becomes clearer.
Instead they are rigidly bound to assumptions that increasingly appear to be wrong. Sam
Blyakher has illustrated the situation as follows: “....rigid assumptions are rather
like planning a drive from New York to Los Angeles with only fragments of a map, and then
sticking firmly to your original route even as you see highway signs and find out what
traffic and road conditions are like.
7-6
This is why we
are concerned with a more generic and scientific sound terminology [Exhibit
28]published in the study of the “Hochschul-Informations-System (HIS)” {HIS-2000} .
7-7
According to the
study, “private-public partnerships” can assume various shapes extending from
informal co-operations via contractually agreed exchange relationships to the founding of joint research institutions. They all can
be condensed into six ideal-typical models:
a. informal networks,
b. framework
agreements,
c. associations,
d.
project co-operations,
e. dependent research
units,
f.
independent research institutions.
All these symbiotic partnerships allow to pool common invested property and to build on common network externalities, know-how, staff skills, customers’ reputation and other resources procured from complementary origin at often considerably reduced costs.
7-8
In accordance
with [Exhibit 4] the innovative value creation depends on the resoluteness and the
capability of the stakeholders to track and proceed on the optimum trajectory. But in
private-public partnerships there must also be a coherence of the partners’ interests
and a clear agreement on the distribution of investments and their returns. Partnerships
with members who try to ride free on the expense of others will fall apart sooner or
later.
7-9
Successful
private-public partnerships must provide advantages for each member. They therefore are
distinct from any “one-sided” dependencies as there are e.g. fund raising,
sponsoring, funding, subcontracting, subsidising, privatising, franchising, endowing etc.
which by their nature are not necessarily market driven.
7-10
The experience
has taught that “rent seeking” and market orientation never do fit together.
Whenever the smell of subventions or subsidies arises the innovative power dies out.
Subventions and subsidies are a suffocating poison for all self-organising mechanisms.
Moreover they are often associated with public legitimisation costs and controlling
bureaucracies which force the subsidised sectors to degenerate into “infant
industries”
7-11
Therefore a
watchful prophylaxis seems to be necessary to avoid the suffocation of innovation through
fatiguing tutorial regulations and unbalanced dependencies. Instead, the success oriented
partnerships need an equilibrium of values and rights on a sovereign and independent
basis. All partners should pursue the common goals voluntarily and unconditionally.
7-12
A good division
of tasks is essential with each partner contributing according to his specific
capabilities and resources. Moreover, each individual partner must be assured of
equivalent contributions from the others. Furthermore all partners must be capable and
determined to operate in mutual fairness, confidence and trust.
7-13
Good indicators
for the success or the failure of strategic innovation partnerships are:
a.
the strength of commitment to the strategic alignment,
b.
the openness to the exchange of knowledge and the internal
communication,
c.
the internally guaranteed exchange of persons and resources,
d. the agreed distribution of all profits and
losses.
LITERATURE
Dr. Klaus G. SAUL; Leiter Fachausschuss S1.3
INNOVATIONSMANAGEMENT
DEUTSCHE GESELLSCHAFT FÜR LUFT- UND RAUMFAHRT - LILIENTHAL- OBERT e.V. (DGLR) 53175 Bonn