Technology is now so complex and fast-moving that few companies can go it alone. According to a survey of 300 senior global executives conducted by Clifford Chance and Forbes Insights, three-quarters of businesses are choosing to grow through collaborations, compared with 25% who rely on organic growth.
Those who collaborate are merging with or acquiring other companies; forming joint ventures, partnerships and licensing agreements; or procuring third-party technologies.
For example, at American Water, the largest U.S. water utility company, partnerships have helped the firm grow and develop new capabilities more quickly. By working with startups, CEO Susan Story says American Water has built digital apps and tools that allow frontline employees to immediately reference their customers’ water usage, service information, potential water quality and meter problems and other data so they can solve issues on the spot.
The Risks Of Collaboration
While collaboration may be the preferred path to tech-driven growth, Paul Landless, co-head of the Tech Group at Clifford Chance, points out that technology collaborations bring new risks, many of which are still unknown.
“In the belief that survival depends upon the speed of innovation, businesses are racing to collaborate to access new technologies, data and intellectual property,” says Landless, “which is creating incredible dependencies and vulnerabilities.”
“As businesses collaborate, they leave behind a ‘data exhaust,’ a trail of data relating to the business model, markets and geographies,” Landless adds. “This leads to cyber, data protection or resiliency risks. In many cases, the established and slower players stake their growth on newer players who can provide superior data analytics or product innovation, and in the process, they begin to surrender customer access, integration and interactions.”
For a minority of companies, the thorny legal and ethical issues, along with the uncertainties of collaboration with external parties, outweigh the business benefits. These companies take a more cautious approach and refuse to partner and collaborate so they can keep control of their data and technology stack.
“These companies tend to be highly focused, with a narrower customer and product base,” says Landless. “They will become relatively static, but they may be better able to withstand the shock of a major cyber incident or a major corporate bankruptcy of a technology player. They may be slower and may fall behind for most of the race, but they may win in the end.”
To learn more, read “Ready, Steady, Grow: Building A Sustainable Tech Strategy For The Next Decade.”
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