OBCA: Objective Based Cooperation Approach

“The Objective Based Cooperation Approach is an approach to organizational cooperation which focuses on limiting cooperation to the minimum level necessary to achieve the objectives of the participating organizations.”
 
Concept Summary
When two organizations come together in pursuit of a common set of objectives, the results can be a game changer in terms of delivering efficiency, increased value offerings, and the value derived from the collective wisdom of two organizations each having their own methodologies, systems, and best practices. However this is often not the case, even dare say, usually not the case. Alliances, mergers, and other cooperative agreements often tend to destroy participant value and the real value from cooperation shadow that of what was expected  before the cooperation agreement was implemented. In other words the Real Value of the cooperative agreement is most often overstated while the barriers or impediments are understated. With the Objective Based Cooperation Approach managers and decision makers can isolate the value they wish to extract from cooperation and develop the terms of that cooperation accordingly. The tool assists in determining the lowest level of cooperation needed which will still yield the results and value sought. This maximizes the value of  cooperation  and minimizes resource expenditure in terms of management commitment and disruption.
 
Desire for Competence– Can be defined as the organizational desire to develop or build competence on all levels. This includes the enhancement or creation of core competencies within an organization.
Objective Seeking– Organizations should constantly seek to achieve the objectives they set for themselves and if they have met these objectives, create new ones. Objectives provide purpose, with Strategies and Tactics that can be molded with the intention of meeting them.
Organizational
Compatibility
– Organizational compatibility measures the ability or inability of two organizations to cooperate with the purpose of achieving an objective. This is applicable to two areas within the same organization as well. This measure takes into account communications, methodologies, culture, etc  for which each participant has a unique approach.
High Rate of Cooperative Failure– There is high rate of failure observed when examining alliances and other organizational cooperative agreements.
Destruction of Shareholder Value– Organizational alliances and other cooperative agreements often diminish or destroy value for  participating
organizations.
Efficiency– Efficiency can be reached between organizations by taking advantage of a partner’s infrastructure, competencies, etc. Efficiency can also be diminished if organizational incompatibility is too high.
Leadership Limitations– Can be defined as the limitations of organizational leaders in their ability to promote a cooperative relationship and resolve conflicts in that relationship as they arise. Those abilities must be enough to overcome organizational incompatibility. The broader the scope a cooperative agreement, the more these abilities are stretched.
Real Value of Pre-Cooperation Expectations– A realistic valuation of the probable results of a cooperation agreement before agreement is reached. This valuation strips away the hype and artificial values pushed by the champions of the alliance and appraises organizational compatibility as well.
Hidden Agenda– Just as individuals have a hidden agenda, so do organizations when it comes to the negotiation or development of agreements. There are two types of objectives when it comes to cooperation which is the transparent objectives which are visible and widely discussed, and those that are hidden. Organizational Hidden Agendas are molded by the individual hidden agendas of organizational leaders for all participating organizations.
 
The Situation
There is a lot of excitement and glamour that goes along with cooperative agreements between organizations. The act of sealing the deal, the attention  they receive, and the excitement that goes hand in hand with the promise of new possibilities have all made them favorites of CEOs and organizational leaders. Alliances, mergers, etc have become the new norm and while they often provide benefits they can just as often invite a high degree of risk. The market has seen a fair share of cooperative agreements over the past few decades, and the same market has watched as once high flying organizations have been brought to their knees by their own ill fated cooperation attempts.
An agreement between two individuals is difficult enough. The inherent mistrust, the misconceived and unaligned perceptions of value, and hidden agendas all act to resist value added cooperation. When multiplied exponentially, as occurs when organizations attempt to cooperate, the difficulties in turn multiply as well.
Organizations tend to have self imposed limitations to risk which they practice throughout their organization however when it comes to cooperation it is almost as if risk takes a backseat to the perception of new value that can be obtained. What were once conservative organizations find themselves in  risky cooperation agreements because of the often hidden agendas of organizational leaders on each side.
The first and largest element is that of organizational compatibility. This is often downplayed as a risk factor even though it is usually the primary reason behind cooperative failure. Cooperative participants may have cultures or structures that are just not able to interact effectively. This can be remedied to a point by the abilities of the cooperative leadership team and the support of the organizational leaders. However organizational compatibility should be considered for the most part to be a fixed element. There is only so much that can be done to improve compatibility without gutting and rebuilding an organization with the intent of making it more compatible.
The second element of risk is the lack of a clearly defined scope for cooperation. Cooperation agreements tend to encompass far more than what is needed to achieve the objectives desired by the participants. A “Maybe more value can be found later” approach is taken and wide ranging agreements are made. The risk is that the larger the scope of cooperation, the greater the risk of organizational incompatibility reducing value. Furthermore the resources of the cooperative leadership are stretched to accommodate the larger size of the agreement. In other words the size of the front is expanded and the same number of soldiers now have to man the longer lines.
Another risk lies in the danger of overvaluing  benefits of cooperation. Value is reduced when excessive resources are expended to achieve a result that was overvalued in the first place. With cooperative agreements value is often enhanced by subjective factors and the perception of the champions supporting it. These champions often are the organizational leadership and not easily challenged in their assumptions or expectations. Realistic assessments that take into account the scope of cooperation as well as organizational compatibility are often lacking leading to poor decisions which can ultimately lead to the failure of the agreement and may negatively impact the participants.
These two organizations are each seeking one capability with an alliance. However they enter into a much more engaged cooperative agreement which is much riskier, and lowers the chance of obtaining their original objectives.
The Concept
The Objective Based Cooperation Approach or OBCA is a tool which can be used to increase the likelihood of achieving organizational objectives through cooperation, by limiting the cooperation to the minimum necessary. The tool is not used to change or modify organizational characteristics to fit a cooperative agreement, but rather shapes cooperative agreements to fit defined organizational objectives.
I accept that organizational culture and behavior is very difficult and often prohibitively expensive to adjust or modify, which is why organizational compatibility is a fixed value. Organizational leaders may vainly assume they can adjust the complex cultures that often predate them to meet cooperative objectives. This effort is a futile and can often lead to failure to meet cooperative objectives set.
The Objective Based Cooperation Approach also requires a value to represent the limitations of leadership. With the cooperation agreement’s planned and invested resources, i.e. personnel, in place how much organizational incompatibility is mitigated by the level of leadership.
The scope is determined by the number, type, and complexity of the objectives to be realized. The larger and more expansive the scope the higher the impact organizational compatibility will have. As a result the abilities of leadership will either be stretched thinner or have to be increased with additional investments in terms of time and involvement of organizational leaders.
All three of the above factors should be represented in a comparable format on a numerical scale. I measure these three factors and then applies them to a simple formula which provides insight as to the possibility of a proposed alliance succeeding. Based on the results of this analysis the analyst can then suggest modifications and adjustment to the scope or the leadership investment of the proposal.
For example if a cooperative agreement is very ambitious and the scope is large given the number of objectives being sought it may be prudent to invest additional leadership resources to increase the likelihood of success. Conversely if the chance of success is very high, because the calculated risk is low, then it might be worthwhile to increase the number of objectives or scope in order to obtain additional value from that cooperative agreement.
It is important to keep in mind that the likelihood of cooperative success which is limited by the abilities of the personnel employed. The accuracy of this tool is limited to the non partial assessment of the analyst utilizing it. If a cooperative arrangement is too large in scope and exceeds the abilities of leadership to manage it, then this should be communicated and clearly understood by the decision makers. After a cooperative agreement has been agreed then  it will be difficult to mitigate such risk later without further organizational investment which is unexpected and reduces the value of the agreement.
The OBCA is useful in assessing cooperative proposals as well as the formulation or modification of those proposals to increase the likelihood of  participants realizing their objectives. Simple and easily accessible it can greatly increase the value of organizational cooperation while diminishing the risks associated with it.
By minimizing the scope of cooperation the organizations can focus their resources and efforts on the desired objectives, raising the chance of a successful relationship.
Implementation
1.     Identify and define the objectives the organization wishes to accomplish through cooperation of some kind. These should be objectives that cannot be met organically or can’t be met without great expense.
2.     First determine and quantify the scope of cooperation that would be necessary to achieve such an objective. Now that the value of scope has been determined it can be plugged into the formula.
3.     Next determine the level of organizational compatibility. This is more subjective in nature and the method of determining a value will be more difficult. This is based on the scope being considered for a cooperation agreement. If for example you wish to provide a joint marketing campaign the areas to measure organizational compatibility would most likely be limited to marketing and sales.
4.     What is the level of leadership the organization wishes to invest in managing the day to day affairs of the agreement? What is the caliber of management committed that will troubleshoot and resolve situations as they arise?
5.     Now that you have determined the three values you can input them into the formula to determine the level of risk for the cooperative agreement.
6.     If the risk is higher than would be acceptable perhaps you can either add leadership resources to improve the chance of success. Alternatively you may wish to remove some objectives in order to reduce the level of cooperation to a more manageable level.
7.     On the other hand if the risk is very low you may wish to reduce the level of management involvement so they can provide elsewhere. Alternatively you may wish to add objectives and increase the level of cooperation in order to improve the value returned from the agreement.
Luffy Notes
A.   It is best to retain outsiders in order to utilize this tool effectively and with greater accuracy. Leadership tends to overvalue their own competence when it comes to managing the complexities of a cooperative agreement. Also some aspects that would affect organizational compatibility might be overlooked during the diligence process. This tool depends largely on impartial analysis to deliver accurate results that can be used for review and discussion.
B.    To determine organizational compatibility it is best to conduct surveys rather than perform top down analysis. Open feedback should be highly encouraged in order to reveal any potential situations that might arise in the course of the agreement.
C.    Leadership ability must account for the amount of time an assigned leader will spend with the agreement. If they plan to spend 20% of their working time this should be factored into the final value.
D.   It might help to determine an appropriate level of risk to target when planning cooperative agreements. It might be a waste of valuable leadership ability and focus to over commit resources to an agreement. Or you may wish to raise the scope of the agreement to achieve a larger array of objectives.

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