Collaboration Between Companies is Vital for Success

Leadership Communication

Collaboration between companies can be a chief component in creating the most innovative products. Here’s how you can foster this relationship.

It’s not always evident, but collaboration between companies can be a chief component in creating the most innovative products and services. For instance, Apple brought us the iPhone, but not without the help and collaboration of dozens of partners, Jason Davis, Ph.D., professor of entrepreneurship at Insead Business School, says in Forbes. Companies like Microsoft and Intel are known for their ongoing collaborations with each other. Just like the high-tech leaders of innovation, your company can likely benefit from smart outsourcing.

If you’ve worked with outsourced partners in the past, you probably realize that not all partnerships result in smooth innovations. Research by Davis and other business scholars reveals that there are specific steps business leaders can take to help make their collaboration successful and innovative.

Fostering Collaboration Between Companies

Want to forge stronger, more productive relationships with outsourced partners? Follow these guidelines derived from business scholars’ research of top companies.

1. Two Is Company, But Three Is a Crowd

Many companies work in pairs successfully, but, often, the expertise or market share of a third company can be helpful in meeting the goals of the collaboration. However, Davis’ research shows that partnerships among three different entities are often fraught with difficulty. Instead of trying to build three-way partnerships, he recommends “group cycling,” or consecutive pairings among all three partners. For instance, your company might work with Company A on one piece of a project, while Company A and Company B work on another piece of the project. When those parts are complete, you and Company B may collaborate on yet another portion of the project. These ongoing pairings allow all three partners to be involved without risking the infighting or competition that can occur with three-way partnerships.

2. Rotating Leadership

To partner effectively with other companies, it’s important that no one company is in charge all the time. By rotating leadership throughout different phases of the project you’re working on together, you and your partners can foster greater innovation and partnership strength. “While dominating and consensus leadership processes are associated with less innovation, a rotating leadership process is associated with more innovation,” according to an article in Administrative Science Quarterly. When you rotate leadership, you alternate control of decision-making, allowing the project to benefit from the capabilities of both partner organizations, including their networks and employees with unique ideas.

3. Taking the Long View

While you may be working on just one project at the moment with a partner or set of partners, your collaboration may be more successful if you approach it with an eye toward future opportunities to work together. For instance, if your partner wants to cycle in another collaborator for a portion of the project, don’t let that hurt your corporate feelings. Instead, keep in mind that your dedication to meeting project goals successfully — rather than hogging all the work for yourself — can help partners stay interested in working with your firm again on future projects. By playing nicely now, you may be able to set your company up for more lucrative collaborations later.

Nancy Mann Jackson
Nancy Mann Jackson

Nancy Mann Jackson writes regularly about finance, the workplace and career issues. Her work has appeared on,, Entrepreneur,, and Fortune.