Defense Business May-July 2018 Issue

32 June/July 2018 Defence Business
Inter-Firm Collaboration: Closing The Trust Gap?
By David Pender and Alan W Boal
BACKGROUND
Preparing for a recent workshop on inter-firm collaboration, we undertook some
simple survey research with SMEs in the defence industry manufacturing sector. Here
are some of the results.
• 88% of participants thought it more likely they could win part of the future
A$200 billion defence spend if they were bigger than they are now and/or could
do more than they can do now.
• Gaining access to complementary competencies and access to larger contracts
were the two most cited reasons participants would consider forming an alliance
with another SME.
• Participants clearly identified many of the technical hurdles that would be
involved – terms of agreement, finances, workshare and the like. But, they
identified even more adaptive or “soft” hurdles – like transparency, culture and
attitude. The most often cited was trust.
There is the opportunity for a bigger pie and more capacity for everyone.
Obstacles can be overcome. There are options.
We can take advantage of these questions we just posed. Let’s use the time
to focus on exploring common problems and better pursuing excellence.
Some examples:
• We know immense change will occur in manufacturing processes that arise
from automation and the integration of supply chains. What will we have to
able to do in this future world compared to the world we operate in now,
and know so well?
• How could we reduce the cost of compliance with the various ISO standards
(e.g., quality, occupational health and safety, environmental challenges)?
How could we use these standards to drive better results to the bottom line?
• How can we better prepare our employees (and improve their level of
engagement) for the different operating environments they will face in
the future?
• How could we make aspects of the Primes’ supply chain more seamless?
• Do we have the skills, competencies, attitudes and culture that could make
an alliance work?
TRUST – THE BUILDING BLOCK OF SUCCESSFUL COLLABORATIONS
Alliances can be complex and the trust gap hard to close.
Contracts are a good start, but they cannot cover all future possibilities.
Often intangible early, trust must become tangible for successful collaborations.
High trust alliances have lower transaction costs, limit risk, produce better results
and last longer.
Partners earn respect,
expect the prosperity of their
partners and are committed to
the fulfilment of their obligations.
At the same time, they
do not expect their partners to
neglect self-interest.
Trust takes time to build
and an instant to destroy. In
every alliance, it takes time to
understand how people react
under different circumstances,
stresses and pressures.
It takes time to measure
the inputs and outputs that
may cause an imbalance, and to
know the imbalance will even
out over time.
POTENTIAL FIRST STEPS
How can an SME close the
trust gap and enjoy the benefits
of an effective alliance?
• Are you seeking access to
complementary competencies?
• Or seeking to participate in larger contracts? Or both?
• Do you want to understand and see if you can cope with the uncertainties
of alliances?
• Are there ways to limit risk?
• How can we embrace future uncertainty?
• What else can we do to build trust with potential alliance partners?
undertook.
What your company
MUST DO
Strategy gap
What your company
CAN DO
There were many other reasons for forming alliances cited in the research we
FUTURE
NOW
BUILDING TRUST IS EASIER WITH A MAP
The diagram explains how this might work between the time zones -
Now and The Future.
No matter which option you take, there is a strategy gap – the difference
between what your company can do now and what it will need to do in the future.
What your company
MUST KNOW
Knowledge gap
What your company
KNOWS
There is also a knowledge
gap – the difference between
what your company knows now
(competencies) and what it must
know in the future.
strategy gap.
Start off by identifying the
Compare what you know
your company can do now and
must be able to do in the future.
Make sure you can
describe this with clarity.
Then address the
knowledge gap. Compare what
you know your company knows
now and what it must know in
the future.
Make sure you can
describe this with clarity.
Closing both the strategy
and knowledge gaps becomes
the alliance’s first action plan.
CONCLUDING THOUGHTS
We believe SMEs in the defence industry manufacturing sector can close their
knowledge, strategy and trust gaps.
Emails, memos, tweets and white papers cannot bridge these gaps.
What can close the gap are an open mind, respectful listening, and face
to face conversations to explore the three 0’s of collaboration – Options, Obstacles
and Opportunities.
David is Principal of Knowledge Perspectives (a DTC member) and an adjunct
senior lecturer at the Adelaide Business School. Alan is President of Idea Transfer Inc
(USA). They have collaborated on projects for more than 20 years.