Tuesday, August 21, 2018

Alliance networks?

On the HBR Blog Network, Andrew Shipilov has a eye-catching post on "hub and spoke" project networks, or alliances between project partners, as he describes them.

(Say "network" to me, and I always jump first to a mind's-eye image of a "mesh", but actually that's one of several general ways to think of networks, and in most situations not a good general model for governance.)

When simple is too simple: Shipilov posits that simple hub-and-spoke arrangements in truly complex and challenging systems, with the prime contractor and an SI (system integrator) at the hub, inhibits critical interactions between the other partners, each of which is on a spoke. He attributes some project failures to this governance model.

What to replace it with? After all, hub-and-spoke is the essence of prime contractor command-and-control over the myriad sub-contractors, to say nothing of the legal details of who has privity of contract.

Some complexity required: For the really complex project, Shipilov recommends the "alliance network" wherein there are multi-lateral relationships between the major partners. Each partner is actually the hub for a traditional "simple" hub-and-spoke.

Shipilov maintains that the multi-lateral relationships between the major partners provides opportunity for, and even promotes innovation, data exchange, and cooperation.

About the alliance network, we are told there are these advantages:
"First, alliance partners are more likely to deliver on their promises.  If information flows freely among interconnected partners, how one firm treats a partner can be easily seen by other partners to whom both firms are connected. So if one firm bilks a partner, other partners will see that and will not collaborate with the bilking firm again.

Second, integrated networks facilitate fine-grained information exchanges because multiple partners have relationships where they share a common knowledge base. This shared expertise allows them to dive deep into solving complex problems related to executing or implementing a project."
Fair enough. But one big caution: Who is actually in charge? Someone has to be king of the hill, more or less controlling the strategic narrative. It could be the customer (read: source of the money), as in the government for defense system and public works projects, but it could be a "prime contractor" or an equivalent commercial "big dog", the so-called alpha-partner. Shipilov doesn't really address this …. but you will have to.

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