Collaboration & risk

Les Pyle

The growing importance of Collaborative Working as business discipline is recognised by the publication by ISO Geneva of the International standard for Collaborative Business Relationships in March 2017.

The standard, known as ISO 44001 addresses the life cycle for a collaborative approach in an eight step model within the ISO management systems high level structure. The standard is a framework of good practice principles identifying the many issues that need to be considered to establish an effective, sustainable, and mutually beneficial business relationship, says Les Pyle chief executive Institute for Collaborative Relationships.

Throughout the standard risk is highlighted at every stage as a “red thread” to guide the process to focus on the unique risk implications that arise when two or more organisations commit to work together for a particular business purpose.

The standard sets out what needs to be considered at each stage for those involved in building the business relationship to address each of the issues with appropriate rigour recognising that collaborative working is not an easy option, like so many things in life the outcome is proportionate to the input.

The “Red Thread”

Having established that risk threads its way throughout the ISO 44001 standard it is appropriate to identify how risk is addressed in each of the eight stages of the collaborative life cycle.

Stage 1 – Awareness

The initial risk assessment needs to recognise that collaborative approaches introduce alternative ways of working which require alternative approaches to managing risk. Most importantly a joint approach to risk with the partner(s) will be required.

Stage 2 – Knowledge

The success of any venture depends on the business strategy which requires an in-depth risk evaluation to precede action. Development of the business strategy must involve a risk management strategy to identify a profile of the levels of acceptable risk and how to address them.

Stage 3 – Internal assessment

A collaborative relationship is not just about processes, procedures, systems and contracts but requires internal leadership skills and a collaborative capability. The inherent risks in weak leadership and a lack of collaborative skills need to be recognised and addressed in a Relationship Management Plan.

Stage 4 – Partner selection

Selecting a business partner goes beyond product, service and contract. It is necessary to establish a clear understanding with potential partners of joint objectives and whatever risks are identified in the relationship. How this process evolves will determine the degree of integration, a major influence on the approach to risk management. Once the partner has been selected the principles agreed should be incorporated into the enhanced Relationship Management Plan.

Stage 5 – Working together

The most important stage in the development of any business relationship is where the agreement comes together in actual operational execution. This will test all aspects of the joint governance approach through measurement, review and early issue resolution. This is when the outline of an exit strategy is formed. Fundamental to effective delivery is the joint risk management process to build a sustainable / flexible operation where the partners support each others risk.

Stage 6 – Value creation

The Holy Grail for collaborative working is co-creation – gaining greater value from the relationship than that which brought them together. This frequently arises by a collaborative relationship stimulating innovation. As innovative initiatives come into focus the same rigorous approach to analysing the joint risk involved should be undertaken and reflected in the Relationship Management Plan.

Stage 7 – Staying together

As business relationships evolve operational performance should build trust where any change will require on-going management to maintain focus to avoid complacency setting in. A potential risk to any long term relationship is a change of key stakeholders where working to the Relationship Management Plan should ensure the process is de-personalised and remains objective.

Stage 8 – Exit strategy

The life span of any business relationship will vary according to numerous factors and market influences. The exit strategy should enable both parties to disengage effectively and provide continuity whilst the relationship ends. Both parties need to openly address an orderly exit facing up to whatever short term risks are involved. Ideally both parties will retain their integrity over this period which could offer the possibility to consider future joint opportunities.

The author of this blog is Les Pyle, chief executive Institute for Collaborative Relationships

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