Thursday, February 17, 2005

How and when collaborating can accelerate innovation

An article worth reading by John Hagel III and John Seely Brown on the optimal conditions for achieving innovation through collaborating with other companies in this month' HBR. They explain that - although coordinating with other companies has [negative] friction cost (transaction costs as decribed by Nobel Prize winner Ronald Coase) - collaboration between companies also be very fruitful, in particular with respect to innovation. Productive [positive] friction.

To achieve productive friction, the authors recommend the following things when collaborating on innovation, which they call the 4P's: performance requirements, people, prototypes and pattern recognition:
  1. Build a shared sense of what must be achieved (a. create a basis of shared meaning and trust, b. use forward looking incentives, c. avoid overemphasizing near-term cash rewards, d. define the concept 'trust' narrowly, e. trust-but-verify)
  2. Parties must have relevant specializations and diverse perspectives,
  3. Use a prototype (boundary object) to enable participants to see beyond the boundaries of their specialization,
  4. Capture and disseminate the learning, leveraging various ICT systems.