Co-operation, collaboration, patient/user/customer driven involvement, open innovation …a series of buzzwords now in fashion also in the health and pharmacy sector. Yet few of these words become actually value adding collaborative projects. One example of a collaborative, patient involving and open innovation driving initiative is the construction of a European wide network of fertility clinics that research together and share many more efforts and resources. Yet, before describing this exemplary project, I want to rescue 2 older posts of this blog that are not translated into English just to show what it takes to build a real working collaborative network, what are the pitfalls and how to begin from scratch. The SME networks described were very artisan because there was no previous experience before and they lacked IT platform support since collaborative tools were at the time not that well known, but they bear very valuable lessons for everybody that wants to start a collaborative project among small entities –often even competing- in the health sector. The series is composed by 3 articles 1. Today’s post on positive Norwegian experiences and how their methodological toolkit was applied to build 3 SME networks from scratch in Spain 2. A post on how to build a successful network based on the experiences described 3. The making of the European collaborative fertility network; a process that is in the making I hope you enjoy them
SME networks – when small companies gather to become more competitive
Nowadays, when entrepreneurship experts recommend entrepreneurs to work in “ecosystems” and much talk is spent about “collaboration” among SMEs or among entrepreneurs, many of them say: “sounds nice, but how?”
This is why I would love to bring back to this block a wonderful co-creation experience with SMEs that took place in Spain between 2006 and 2007 and that was somehow ahead of these “collaborative” times. The experience proved that SMEs and entrepreneurs can create collaborative networks that work: they save costs and generate new business. Yes, in a country like Spain and in such unexpected places as a town with wind mills.
In Norway it works since the 90s
2005 I was fortunate enough to have an academic visit to Cornell University invited by Professor Davydd Greenwood in order to know in depth those action research experiences for which Cornell is well known since the 1950s of the past Century such as the self management of the Vicos Community in Peru by its members, the regeneration of Saint Louis by its neighbors or the improvement of services at Maimonides Hospital in New York with the staff and even the unions.
By chance, during my stay, a colleague of Professor Greenwood was working at Cornell as visiting professor. It was Morten Levin, lecturer at the University for Science and Technology of Trondheim (NTNU) in Norway. Professor Levin had developed together with Davydd Greenwood several participatory action research programs in Norway, linking SMEs, major companies and universities in shared projects. He explained about a program called Value Creation 2010 (now you know why ValueCreation company bears this name), that followed another one called Enterprise Development 2000, where SME clustered to co-operate among them and also with big companies and universities.
Participation of workers in innovation and enterprise development
Professor Levin explained us that for instance in fishermen towns, where many family businesses were competing against each other in the salon market, action research projects allowed that some companies got specialized in fishing, other in canning and others in distribution, transforming thus rival companies into actors of a value chain. The reason for this sort of intervention was that during the 80s, Norwegian companies lost competitiveness against other countries with lower salaries.
By redefining their value chains (today we would say by “innovating in their business model”), small companies increased their competitiveness, developed an interest in co-operation and produced new synergies. For example, once co-operation was not seen any longer as “helping the rival”, SMEs could be persuaded to join into a common quality process. How? A major shipyard started the process for itself and shared the cost of two quality consultants with 12 providers of the yard and others that belonged to what nowadays we would call an “ecosystem”: fishing businesses, small canning industries, etc. This way, 20 to 30 small companies that would never had the resources to pay for a quality consultant had access to this knowledge and to all its advantages in form of continuous improvement and cost saving.
The interesting point about the Norwegian model is that the improvements in competitiveness happened because intensive worker participation in the companies’ innovation and improvement processes: exactly this is participatory action research (today we would say “co-creation”). The role of the university is to provide knowledge through technicians –engineers, economists, etc. – who are usually PhD students. The role of the company’s management is to establish the goals. The role of unions is to provide the worker’s knowledge. PhD students act as neutral facilitators between company and unions.The model works with high salaries
The Norwegian strategy to build a competitive economy that could survive without the income from the powerful oil sector (thought for times when oil becomes scarce) did not chose the path of lowering wages and labor costs –as Spain has done. Instead it chose a positioning of high end products in the global market that can be sold at high process worldwide.
High salaries have –as in Germany- a positive and key economic function: they force companies to get the maximum from their worker’s knowledge and to migrate them permanently to higher added value tasks. For this reason they have to ensure, that worker’s knowledge increases constantly.
Would the Norwegian Model work in Spain?
As I was listening to Levin I thought: “this would be great for Spain, because conditions are similar: not very competitive companies in a very positive economic environment” (those were the years of the construction boom). The second think I thought was: “with the low level of Spanish small business owners this will be impossible”. But Greenwood and Levin told me not to think like that:
”Why do you believe that Norwegian fishermen are different than Spanish small construction business owners?” They explained that reaching the current co-operation level meant many years of failure. Nevertheless, the Norwegian experience happens in a very different social and political context, with an important innovation tradition, a strong education and university system committed to R&D and a political framework called industrial democracy where labor relations and enterprise development go together; it is true, with many problems, difficulties and conflicts, but together. Davydd greenwood answered to this objection: “you have done the same think as the Norwegians at Mercedes-Benz in Spain and you were alone, why do you give such an importance to the context?”
Thus, in a may be naïve way, we agreed to try a pilot of the Norwegian experience in Spain with the support of Cornell University and NTNU.
Co-laboratories for Enterprise Action Research
Indeed, one year after that conversation, the budget was found with the help of the Spanish Ministry for Industry. It funded a feasibility study in order to create three collaborative networks of small and medium enterprises in Spain by using the Norwegian action research model. The project was called CIADE (co-laboratories for enterprise action research) The cases chosen were a cross sector network in a town in La Mancha (Herencia), a network of local televisions in Catalonia and a third one clustering around traditional Iberian Ham production in Extremadura. The project was enlarged one more year in order to ensure actual implementation of these networks and to include another network in Catalonia after the Extremadura experiment failed.I will not enter into the details of the Project, but want rather describe its results. Yet it is important to say, that over 30% of the budget was invested in training so that the Spanish SME owners could travel to Trondheim to learn from the Norwegian experience and also that the experts from the NTNU and Sintef (one of the biggest contract research companies in Europe) could coach local SME owners.
Spanish participants were amazed to visit Norwegian companies, were union leaders talked openly about sharing entrepreneurial goals and about how the leadership of many of the innovation projects was in the hands of the workers. As a setoff, workers clearly benefited from the company’s development in form of high salaries, employment security, variable compensation and other labor benefits. Interesting was also to witness the role of the university and of Sintef in these projects as catalysts of these projects by providing technical knowledge (engineering for instance) and social science knowledge to the projects, acting as facilitators of the process and producing new meaningful and applied academic knowledge.
One fact: 70% of these action research projects fail; mainly because in many of them competition among companies weights more than the perceived benefits of co-operation. Yet they are supported because the competitiveness gain of those projects that succeed pays off for the investment.
Workers owning enterprises
Back to Spain, it was not easy to obtain a critical mass of SME owners interested in participating in the program. In the cases of La Mancha and Extremadura the town hall played a decisive role as catalyst, backing the project from its very beginning. Many of the owners were reluctant to participate: “we are not businessmen”, they said. “We are workers that own a small business. We did it to escape unemployment, but we have no managerial knowledge. We need basic management tools”.
To the contrary, in Catalonia with its long industrial tradition, the local TV companies were well organized and it was a highly professional sector. Here the resistance came from the tremendous feeling of competition and mistrust, since it was a very mature market in the midst of the digital revolution and many of those local TV stations were clearly not viable.
At the end of the process three SME collaborative networks grew out of the project: two in Catalonia and one in La Mancha. The Extremadura experience failed.
Efficiencies for small family businesses
The case of the La Mancha SME network is very interesting because it was not a cluster and there was no possibility to create a regional value chain of specialized SMEs. The case shows, that even without a value chain or an ecosystem, companies can benefit from co-operating, achieving interesting savings and new business. We are not talking about well structured companies, but of micro-companies and family businesses such as car mechanic workshops, local hotels and restaurants, metalwork workshops, small construction firms…. Their owners view themselves as “workers with a business” and need effective, tangible and simple solutions.
The 37 companies of the cross sector cluster in La Mancha achieved very promising results:- Save 112.000 euro in shared purchase of gasoline, office material, payroll management and paper (the minimum common items they could agree on).
– Implement quality processes and certification for all 37 members lead by the local big company, Tecnove, a local body builder for Lorries that works for the Spanish army, among others.
– Set up a cross training system between the different businesses of the network. Important competencies increase at zero cost.
– Agree better conditions with the local savings bank and further, this co-operation meant for many the start of international business, which they never thought off.
New business model for local TV stations
In Catalonia, the network of local TV stations did never achieve the integration the family businesses of La Mancha showed. Yet, the collaborative work had a big impact in the understanding of their business.
They never achieved more, because mistrust due to their position as competitors was an important factor. If they had dared to go beyond their mistrust they probably could have created a value chain. Nevertheless, for an experience of low co-operation results were interesting:
– Business model: the actors evolved from a model focused on being a channel for local advertising to a model focused in being a producer of contents for a regional and Latin-American market.
– Product: from being conceived for own consumption, designed for a mass market: new versions of productions with synchronization and subtitles.
– Some external purchased productions were shared at better prices.
– Processes: the network was a no return experience for those stations concerning common processes, such as the research for new audience measurement systems. Also new indexation systems for better tracking were sought.
Collaborative strategic plans for vocational training centers
The second Catalan project was more modest, but had very good results and shows that units with different interests can design and implement a common strategic plan in a bottom up way. The project was done in an institution called “Fundación Inform”. This foundation offers training services in vocational training in order to ease access to labor market for young people. Yet it is not a uniform entity, but it is integrated by 18 different training centers; each with its own interests. Since 1987 the foundation runs the so called SEFED program, which is simulation software for training purposes.
As a result of the CIADE project, all 18 centers agreed to use a co-creation approach and they achieved:
– A strategic plan for the Foundation made by the staff of all 18 centers
– A collaborative sales plan for the SEFED software
– Common work of the centers offering SEFED to track common strategic goals
– Knowledge co-creation of third sector institutions needed for further development
High potential with on line platforms
The CIADE project shows that even in the Spanish context it is possible to break the barriers that prevent companies of working in networks. Results were notably positive, although the projects were experimental and done in an artisan way. All of them are still alive and have created an impact in their environment.
The potential of collaborative networks is much higher by using co-creation and innovation professionals as well as the proper on line collaborative tools. For instance, in the case of the Catalan local TVs this is the way to reach the Latin-American market.
But even though this is true, the artisan work of creating the community, finding the common interests, overcoming mistrust and suspicion cannot be done by a platform and it is the key to gain momentum and market acceptance.
The experience shows also, that the Norwegian cluster and value chain approach is not the only one: sales and efficiencies can be gained also if companies from different sectors co-operate.
Most of the benefits were not initially sought, but were co-created by the opportunity to share a common space for innovation and developed an own dynamic, different from the one initially planned: the nightmare of middle managers and the dream of innovators.
Finally, this open and participatory action research strategy is also for very modest businesses, such as car workshops, small retailers, and small construction companies.
Applications for health care and pharma
Now, dear reader, think of your current environment: a hospital, a small clinic, a pharmacy, a big pharma looking for ´beyond the pill approaches, a CRO company, a research center, a dentist waiting room ….what value can you obtain if you think of the examples described? How can a collaborative network approach help you or your patients? I let you thinking, may be you want to comment your innovative ideas in this blog. You are invited to share.