Collaboration works much better when you raise the stakes

One of the most ‘normal’ things to do in any kind of business is to reduce risk. A whole industry has been developed around risk management, which by the way is now one of the sacred cows of business. No surprises there. Poor risk management is a big fat no-no! It can cost businesses a lot and it can also send it packing.

Most senior managers understand that risk management is about knowing how far a business can progress on the way it operates before it is pushed too far. I also note that people tend to be risk averse and often overestimate risks more on the basis of potential losses rather than gains. So, we can think of risk like actor Jeremy Irons, who remarked that ‘risk is more life’. Or, it may be what risk management expert Glyn Holton says: “There are two ingredients that are needed for risk to exist. First is the uncertainty about potential outcomes from an experiment, and the second is that outcomes have to matter in terms of providing utility.” Either way, risk is an unavoidable part of any business transaction, collaboration included.

When it comes to collaboration, I think that the more risk we take on the better the quality of collaboration. The reason is simple: people invest more of themselves in a way that is good for collaboration if they put more on the line. Well intended collaborations where parties can walk away easily are almost certain to generate little value, or not be worth writing home about. That is not to say that collaborating should not commence unless heavy investment is made by all stakeholders; rather that we should apportion the expectation of the outcome to what collaborators are willing to invest.

Alberto Alessi, head of the famous Alessi design firm, is well known for his focus on pushing boundaries (one example of how risk taking can be good). In a recent interview he summed up his approach like this: “It’s very important to work on the verge of the impossible, without veering into products that people will not understand or buy. We must have one or two fiascos a year to retain our leadership in design”. This approach does not need to be limited to singular processes, such as product design. In an era of growing reliance on the ability of a business to innovate and compete against a flood of better products and services (not to mention an emergent state of disruption) collaboration as a strategy of adapting resources into a process of heightened capacity for innovation is also well suited for absorbing Alessi’s approach to risk.

Placing collaboration into a larger context is vital at this point in human development. It can’t be overstated how important it is to recognise that new principles and practices should consider the big picture. When the first modern principles of economic thought were postulated in the mid 18th century, the human population was still a long way off its first billion. Today, with over seven times that amount, an unprecedented level of connection and the emergence of the digital world, the idea of competition has acquired new meaning. Participation in economic competition and sharing the process of value creation is far beyond jobs and consumption. The very nature of economic transaction has already changed significantly; the main point being the fusion of economic and non-economic life. Compartmentalised life is a thing of past as is the idea that value can be created in sequences akin to the early days of ‘conveyor belt’ production.

There is an observable trend towards collaboration that forms the basis for entrepreneurial human endeavour. Entrepreneurs have almost always been seen as single minded risk takers. There is some element of truth in that as we survey a history which is filled (and at times made) by precisely those archetypes. Now though, we recognise that the value we demand, and are prepared to pay for, is more attractive when it reflects on our collective instinct to be connected from conception through to production and consumption. Collaboration offers a safety net that traditional risk management is not designed for. Put simply, the next several decades will be shaped by the collaborative instinct as a guiding force in value creation. This year for instance has seen a major spike in collaboration in all its forms. Internal collaboration has proven to be a far more reliable strategy for business competition. Equally so inter-organisational collaborations are on the rise and have almost become the default setting for solving major socio-economic challenges everywhere. That alone is enough of a driver for the private, public and community sectors (not for profits in general) to rethink risk in terms of value adding property.

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