By Dr Chris Needham-Bennett, Managing Director, and Garth Banks, Consultant, Needhams 1834 Ltd
The interconnected nature of businesses mean they are often confronted by difficult to predict, disruptive events, which are seemingly increasing in their regularity and impact. The frequency and magnitude of incidents, such as catastrophic weather events, political instability, terrorism, economic volatility, regulatory changes, and mass immigration combined with absolute reliance on technology have led to a strikingly frictional world.
In conjunction with this evolving instability, highly competitive business environments have encouraged organisations to implement tighter and leaner new business practices to eke out greater efficiencies. This has necessitated new business models that can result in extended linear supply chains and fragile ecosystems and has increased dependence on outsourcing and international partnerships. These changes have made business operations more agile and margin efficient, however, they also introduce new sources of vulnerability as a result of reduced inventories and increased dependence on suppliers.
A solution set to this is interorganisational collaboration where efforts can overlook conventional competition, fostering a collective strength that fortifies each participating business. This cooperation can be strategically imperative for navigating broad and profound challenges, building operational flexibility, and achieving sustainable growth.
There are inevitable fundamental risks to collaboration that have traditionally been barriers to greater interconnectivity of organisations, despite potential benefits.
Dependency risks mean an overreliance on partners if processes or products are exceedingly intertwined and may become problematic if one party fails to deliver as expected. Intellectual property concerns can be restrictive due to the necessity of exchanging information and technologies because of potential unauthorised use or leakage. Security and cybersecurity risks are inevitable when marrying of differing IT systems is necessary, and add layers of complexity to critical and already vulnerable systems. Compliance needs involve navigating complex legal and regulatory processes, where any gaps or errors can have severe consequences. Reputational risk can be crucial element of many business decisions, if one partner faces a crisis or reputational damage, the entire collaboration can be harmed. Conflict of interest or competing priorities could arise during the partnership, stifling operational processes and decision making. Cultural misalignment leads to differences in organisational values and priorities which create inefficiencies and conflicts within a cooperative framework. Lack of flexibility can result from overly rigid collaboration structures and may hinder adaptability and agility. Other potential issues, preventing collaboration include unequal contribution, communication challenges, and operational risks.
Collaboration is, however, becoming more common where the advantages outweigh risks and competition fears, and the benefits can no longer be disregarded. Collaboration can take many forms – the manner and the complexity of partnerships a business chooses to pursue will depend on industry, sector, size and supply chain makeup.
Information sharing, where communicating relevant, timely industry intelligence, market trends, and risk assessments amongst strategic partnerships, can help organisations anticipate problems and proactively adjust their strategies. Joint research and development initiatives can create new innovative solutions and technologies that enhance resilience through more advanced sector specific risk management tools or crisis response systems. Cross-training and exercise programmes where employees from different organisations can share skills and knowledge enhances individual capabilities, creating a more adaptable and versatile workforce while fostering a culture of continuous learning. Technology development and implementation solutions that enhance resilience, such as shared cybersecurity initiatives, cloud-based disaster recovery systems, and data analytics aid risk management. Supply chain networks formed with suppliers and distributors to create a more robust supply chain may involve dual-sourcing critical components, maintaining surplus inventory, or developing contingency plans for alternative sourcing as well as analysing vulnerabilities. Joint crisis planning helps develop response and recovery plans with key partners ensuring a coordinated and efficient response when a disruption occurs. Mutual support networks within industries or regions provide a reserve system during crises and can include sharing resources, personnel, or facilities to ensure the continuity of operations for member groups. Finally, government agencies, regulatory bodies and industry collaboration ensures aligned concepts and processes as well as faster, coordinated responses on local, national and international scale where necessary.
These are all valid and applicable solutions that risk, and resilience managers could consider implementing; however, it is clear that these have a resource cost to them – personnel, financial, and somewhat ironically, potential implementation disruption.
The risks of collaboration are as inherent as they have always been, but the changing geopolitical, climatic and business landscapes are altering risk perspectives and encouraging collective approaches to problem solving.
It appears collaboration between organisations is becoming increasingly indispensable for enhancing business resilience in today’s complex and interconnected world. The benefits of combining resources, sharing knowledge, and building group capacity create a robust framework that enables businesses to resolve disruptions, adapt to change, and succeed in the face of uncertainties. There are direct and indirect costs attributable to implementing unifying processes and there are vulnerabilities due to greater openness, but these risks are diminishing in significance in relation to broader, universal threats that can impact businesses throughout the globe, in all sectors.
