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Executive Interviews: Interview with Theo Forbath on Collaboration
March 2008
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By Dr. Nagendra V Chowdary
Theo Forbath Chief Strategiest with Wipro Technologies and leads the company`s Global Product Strategy and Architecture (PSA) Practice. 
What was the impetus for your
study "Innovation through Global
Collaboration"?
The management of innovation is
changing. No longer is the creation
and pursuit of new ideas the bastion
of large central R&D departments
within vertically integrated organizations.
Instead, innovations are increasingly
brought to the market by
networks of firms, selected according
to their comparative advantages, and
operating in a coordinated manner.
In this new model, organizations
deconstruct the innovation value
chain and source pieces from partners
that possess
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lower costs, better
skills and/or access to knowledge
that can provide a source of differentiation.The aimis to establishmutually
beneficial relationships through
which new products and services
can be developed. In short, firms increasingly
seek superior performance
in innovation through collaboration.
So we need to understand
how firms can effectively develop
and deploy this new skill. -
What trends are driving firms to
adopt collaborative approaches to
innovation?
There are three main drivers.
- First, the complexity of products
is increasing, in terms of the breadth
and number of technologies they include.
Cars send maintenance data
wirelessly to dealerships; sneakers
contain silicon chips to fine-tune
their fit. It just isn't possible for one
firm to master all these skills, let
alone house them under one roof.
- Second, a pool of low-cost yet
highly skilled labor has emerged in
developing countries, creating incentives
to substitute these for highercost
equivalents. Indeed, some regions
of the world are developing unique skills which can provide a
valuable source of product differentiation.
India, for example, is well
known for its software and engineering
expertise, while China and the
Philippines, are known for their
skills in low-cost electronics manufacturing
and assembly.
- Finally, advances in development
tools (e.g., computer-aided design)
coupled with a move to more open
architectures and technical standards
have driven down the cost of
distributing work.
When you add these different
trends up, it is clear that collaboration
is no longer something that is
"nice to have." It is becoming a competitive
necessity. -
What are the advantages to firms
that do it well?
A big one is lower cost. That's often
the reason that firms look to collaborate
in the first place. But lowering
cost in R&D is not a source of sustained
competitive advantage; so
leading firms look for payoffs that go way beyond cost. Collaboration can
help shorten development time and
increase capacity; it can facilitate access
to skills, capabilities and intellectual
property that a firm does not
possess; and it can allow firms to acquire
relationships and knowledge in
parts of the world where it has no experience.
In essence, collaboration
helps firms improve their bottom
lines through lower costs and their
toplines through increased growth.
For a few, it provides a real source of
strategic advantage. -
What are the main findings from
your study?
Our study revealed dramatic differences
in the performance of firm's
collaboration efforts, driven by contrasting
approaches to their management.
In particular, many firms mistakenly
applied a "production
outsourcing" mindset to collaboration,
viewing the use of partners only
as a means to achieve lower costs
through "wage arbitrage" substituting
a US resource with a cheaper one
of equivalent skill. These firms saw
little need to change the way they organized
their innovation efforts to facilitate
collaboration. By contrast,
successful firms went beyond simple
wage arbitrage, asking global partners
to contribute knowledge and
skills to projects, with a focus on improving
their topline.And they re-designed
their organizations, to increase
the effectiveness of these efforts. -
Why can't firms manage collaboration
the same way they manage
outsourcing?
Production and innovation are fundamentally
different activities
while the former seeks to replicate an
existing product, the other seeks to
develop something entirely new and
valuable. Furthermore, outsourcing
and collaboration have different objectives.
Outsourcing involves procuring
a commodity asset or resource
at the lowest price. Collaboration, in
contrast, entails accessing dispersed
knowledge, leveraging new capabilities
and sharing risk with partners. It
is a much more sophisticated skill.
1.
Collaboration Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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