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Do alliances suggest organizations are ‘dumbing down’?

December 5, 2013
At the IACCM Sydney workshop, Stephen Hayes (CEO of the International Centre for Complex Project Management) posed the question whether increased ‘alliancing’ implies organizations are becoming less skilled. He came fresh from an executive briefing where this topic had been raised and it was especially relevant given the interest at the workshop in ‘relational contracting’.
The IACCM audience was universal in its rejection of this suggestion. While recognizing that specific organizations may have reduced their capability in recent years (e.g. as a result of outsourcing), the general driver for increased collaboration is the need to tackle increasingly complex projects or to enter new markets. In other words, the motivation is normally to supplement existing skills. Alliances or other forms of collaborative relationship reflect alternative approaches to risk / reward allocation; they are part of a ‘spectrum’ of contracting models that include anything from a traditional purchase order, through to a joint venture.
In some cases, it may be the customer who pushes their suppliers into a more formal alliance or partnering arrangement. They may see this as adding efficiency and reducing risk, forcing separate suppliers to work together in a more integrated fashion. Other times, a supplier may view this relationship as an opportunity to raise their internal skills by having more direct insight to their partner. It may even be a phase in the journey towards merger or acquisition.
Overall, the shift in the business environment to outcome-based contracts and more thoughtful allocations and management of risk suggest that ‘partnering’ in various forms will become increasingly common. Far from being a statement of weakness, the ability to form and manage partner relationships effectively will in fact be an indication of strength and a key factor in supplier selection.
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