That's the theory.  In practice, the failure rate for mergers, alliances, JVs, other forms of partnering is staggering.    While studies do vary (see table below), most management researchers put the failure rate of business combinations at 60% to 75%.   There are significantly more unhappy endings than joyous marriages.  My own experience with a large telecommunications company (where I did learning histories on our attempted mergers) bears out the gloomy statistics.   Our failure rate in large mergers was even higher than 75%.

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At first blush, we might suppose financial issues or poor strategy are the most common drivers of failure, but this is not what the research says.   Poor or damaged partner relationships are the leading cause, at 64% of failures.  [Mirvis and Marks, Joining Forces]   

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There are many contributing factors to the disappointing outcomes of mergers, supply chain alliances, strategic partnerships, and so forth.  Many of the studies cited in the table give careful attention to this, reflecting the great cost in money, time, corporate image, market momentum, and then stock price.   Many a CEO has been forced out after a failed merger.

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I would like to suggest, however, that the majority of causes of failure can be cataloged under the general heading of Collaboration at Large Scale, as with the "poor or damaged relationships" cited above.   The benefits of working together (co-laboring) that are so evident in small scale environments, and available in theory in the large scale, are simply very hard to achieve  in large complex organizations, with "lots of moving parts," and cross-cutting motives from many directions.

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A more detailed review of failure in business combinations, with parallels to collaboration behaviors in general, will have to wait for a later blog post.    In the meanwhile, if you see any connections here, any common threads, please leave a comment.

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Of course, we do not have to go to alliances and political parties to view difficulties in collaboration.  Within a single multinational corporation, as any candid employee will confirm, there are also prevailing patterns of poor collaboration from one division or department with others.  Morten Hansen and Nitin Nohria argue in an excellent article, "How to Build Collaborative Advantage," [Sloan Mgmt Review, Fall 2004] that corporations can be seen to " come into being in order to enable human beings to achieve  collaboratively what they could not achieve alone."   As global markets mature and traditional sources of advantage decline, it may be that exploitation of "collaborative possibilities may hold the key" to out-perform rivals. [p.10]  

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Based on interviews at 107 companies, Hansen and Nohria identify four powerful barriers to collaboration within the enterprise:  

(1) the unit in need of help is unwilling to seek input, or unwilling to learn from others;
       ("Not Invented Here" Syndrome)

(2) the unit in need may be willing, but search costs make it impractical;
       (Needle in Haystack problem)

(3) the unit with the answers may be unwilling to help;
       (Hoarding expertise, local cultural rules)

(4) the unit with the answers may be unable to help;

       ("the stranger" without prior relationship cannot transfer tacit knowledge)

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Hansen and Nohria, writing at the latest in 2004, could not be expected to anticipate the rise of social software and today's intense development of E-2.0 tools, strategies, work norms. With 2.0 on our side, we can argue persuasively for the continuing fall of search costs and gains in resource-locator systems (as in #2).  With some stretch, we can look forward to an easier time transferring tacit knowledge (#4).   But the pesky classes #1 and #3 still remain: the parties are unwilling to seek or give help, and nifty technology or inspiration from the public web are not likely to reverse these problems anytime real soon.

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What do you see in this array of issues?   Is the collaboration imperative going to overcome these barriers, inside or outside the walls of the enterprise?  Where are the natural limits, at which the hard-wired human urge to cooperate and collaborate starts to founder on size and scale?      Leave a comment.