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Home   >Best Practices

Mastering External Collaborations

December 6, 2023

In this article, we dig a bit more into the nuances of external collaborations or the dynamics of collaborations that transcend organizational boundaries. This is intended to be a companion piece to our article on “What is External Collaboration.”  In this article, we explore:

  • The core elements and multifaceted aspects of external collaborations.
  • Provide a guide to the key documents essential for effective collaboration with external stakeholders, covering a wide range of necessary agreements and contracts. 
  • Walkthrough typical collaborations, step-by-step, to facilitate understanding 
What's an external collaboration?
It's when entities work together towards a common end while maintaining their individual identities and goals. External collaborations can be big or small, transactional or strategic.

What are the key aspects of external collaboration? 

External collaborations are multifaceted, involving a blend of strategic alignment, mutual goal-setting, and trust-building. They require structured communication, coordination, and formal agreements to succeed. 

Here are their key characteristics:

  1. Strategic Importance: These collaborations often hold significant strategic value for the participating entities. They are crucial for achieving overarching objectives such as driving innovation, market expansion, or gaining competitive advantages. Now this is not to say that all external collaborations are strategic, the can range from strategic to transaction, they can be big or small.
  2. Mutual Goals: The core of external collaboration is the pursuit of shared goals and objectives. Collaborations are formed around common aims, whether it's launching a new product, or improving operational efficiency.
  3. Self-Interest: While working towards mutual goals, each entity also has its own agenda and objectives. Balancing these individual interests with those mutual goals is a delicate and necessary part of the process.
  4. Cross-Organizational Trust is a Must: While trust is foundational in any collaborative effort, because of the pursuit of both mutual goals and self-interest trust is critical to the success of the external collaboration.  Establishing and maintaining trust involves demonstrating reliability, transparency, and a commitment to mutual success.
  5. Formal Lines of Communication and Coordination are Required: Effective communication and coordination are vital for aligning strategies and ensuring the smooth operation of the collaboration. This involves setting up formal channels and mechanisms like regular meetings and shared management tools.
  6. Agreements Help Protect Everyone: Legal frameworks such as contracts are essential in external collaborations. These agreements help protect the interests of all parties involved by defining roles, responsibilities, deliverables, and terms of engagement, providing clarity and structure to the partnership. [e.d., In the next section, we focus on the types of documents one typically finds in these kinds of collaborations.] 

In summary, the key characteristics of external collaborations include strategic importance, mutual goal setting, balancing self-interests, building trust, formal communication, and protective agreements. These elements are integral to ensuring that collaborations are effective, sustainable, and mutually beneficial.

Commonly used documents in external collaborations

As we previously pointed out, agreements help protect everyone when collaborating with external stakeholders or entities outside of your organization.   But what kinds of documents does one generally encounter? And what role do these documents play?  We discuss those topics in this section. 

In external collaborations, the exchange of formal documents is a critical aspect of establishing and managing successful partnerships.  These documents, ranging from legal contracts to agreements outlining specific terms of cooperation, form the foundational backbone of the collaboration. They serve to clearly define roles, responsibilities, expectations, and the scope of the partnership, ensuring that all parties are aligned in their objectives and understandings. These documents not only provide legal binding and protection to the entities involved but also facilitate effective communication, trust-building, and compliance with regulatory standards. Whether it's a business venture, a joint research project, or a public-private partnership, the careful drafting and exchange of these documents are essential for the smooth operation and success of the collaboration.

1. Contracts

  • Description: Legally binding agreements that detail the terms and conditions of the collaboration, including scope of work, deliverables, timelines, and payment terms.
  • Purpose: To provide a clear, enforceable framework for the collaboration, outlining each party's responsibilities and rights.

2. Memorandums of Understanding (MOUs): 

  • Description: Documents that express a mutual agreement and intention, often serving as a precursor to a more formal contract.
  • Purpose: To establish an initial understanding and framework for the collaboration, outlining general terms and the intent to work together.

3. Service Level Agreements (SLAs): 

  • Description: Agreements that define the level of service to be provided by a service provider, including performance metrics and responsibilities.
  • Purpose: To ensure that the service provider meets the client's expectations in terms of quality, availability, and responsibilities.

4. Non-Disclosure Agreements (NDAs): 

  • Description: Legal contracts that protect the confidentiality of sensitive information shared during the collaboration.
  • Purpose: To safeguard trade secrets, proprietary information, and other confidential data shared between parties.

5. Licensing Agreements: 

  • Description: Contracts that allow one party to use another party’s intellectual property, such as patents or trademarks, under specified conditions.
  • Purpose: To provide permission for using intellectual property while protecting the rights of the owner and specifying the terms of use, including financial arrangements.

6. Joint Venture Agreements: 

  • Description: These define the terms of a new joint entity created by two or more parties, detailing contributions, governance, and profit-sharing.
  • Purpose: To establish the structure and operation of the joint venture, ensuring that each party’s investment and responsibilities are clearly defined.

7. Partnership Agreements: 

  • Description: Outline the terms of a business partnership, particularly in collaborations that do not involve forming a new entity.
  • Purpose: To define roles, responsibilities, profit-sharing, and decision-making processes within the partnership.

8. Investment Agreements: 

  • Description: Legal contracts detailing the terms of an investment, including the amount, equity stake, and conditions.
  • Purpose: To outline the investor’s rights and obligations, the use of the invested funds, and any conditions related to the business's management and operation.

9. Letters of Intent (LOIs): 

  • Description: Documents that outline the preliminary understanding between parties who intend to enter into a contract or agreement.
  • Purpose: To signal the seriousness and genuine interest of the parties in moving forward with negotiations and to provide a roadmap for formal agreements.

10. Data Processing and Confidentiality Agreements: 

  • Description: Specify the terms under which personal data will be processed by a subprocessor or contractor, particularly important for compliance with regulations like GDPR or standards like SOC2.
  • Purpose: To ensure that subprocessors or contractors adhere to the same data protection and confidentiality standards as the primary data processor.

Each of these documents plays a critical role in establishing, managing, and protecting the interests and responsibilities of all parties involved in an external collaboration. They provide the necessary legal and operational frameworks to ensure the collaboration's success and sustainability.   As we pointed out in our guide article on “What is External Collaboration,” these collaborations can be both big or small, strategic or tactical.  The number of documents and their extent will depend on the magnitude of the work being performed. 

TakeTurns is external collaboration software that enables you to share, request, and collborate on documents and files with any external stakeholder.

What are the typical steps one finds in an external collaboration?

It’s worth pointing out that most external collaborations, even the smaller or transactional ones, happen as a series of collaborations or stages.  In each phase, your party and your external stakeholders will collaborate on documents to document those mutual objectives and outline the various obligations and accommodations made for each party.  

It’s easy to see this by looking at concrete examples. For example, let’s consider the steps required to establish a strategic alliance. In some organizations, it might look like this: 

  1. Initial Discussions and Agreement in Principle: Involves collaboration with external consultants or advisors to evaluate potential partnership opportunities and develop initial strategies. This might include market analysis, strategic alignment assessment, and preliminary negotiations facilitated by third-party mediators.
  2. Due Diligence and Risk Assessment: Engages external financial and legal experts to conduct thorough due diligence on potential partners. This collaborative effort often includes audits, regulatory compliance checks, and risk analysis, requiring cooperation with specialized firms.
  3. Defining Objectives and Scope: Collaborative sessions with strategy consulting firms to help articulate clear objectives, define the scope, and set measurable goals for the alliance. These firms bring an external perspective that can enhance strategic planning.
  4. Negotiation and Drafting of Agreements: Legal teams from both organizations collaborate closely with external legal counsel specializing in corporate partnerships to negotiate terms and draft agreements. This collaboration ensures that all legal nuances are adequately addressed.
  5. Operational Planning and Integration: Collaboration with external IT consultants and logistics experts to plan the integration of systems and operations. These external parties assist in aligning different technologies, workflows, and logistical processes.
  6. Implementation and Execution: Collaborative efforts with external project management professionals and industry-specific consultants to facilitate the smooth execution of the strategic plan. Their expertise ensures effective coordination across various departments.
  7. Monitoring, Evaluation, and Adjustment: Teams often work with external evaluation firms or business analysts to monitor the alliance's performance, assess its effectiveness, and suggest adjustments. This external input is vital for objective assessment and continuous improvement.
  8. Communication and Relationship Management: Collaboration with public relations firms and external communication experts to manage the messaging and publicity of the alliance, both internally and externally. These firms help in crafting communication strategies and maintaining a positive public image.

For another example, we could consider one of the RFx processes and examine what happens during a vendor selection/procurement when an RFP is utilized. Here’s a breakdown:

  1. Exchange of NDA: The process often begins with an indication that the vendor is interested in participating. Afterwards there's an exchange of Non-Disclosure Agreements (NDAs) between the purchasing organization and potential vendors. This step is crucial to ensure that all subsequent discussions and shared information remain confidential.
  2. Dissemination of the RFP Package: The purchasing organization, often through a procurement group or external consultants, disseminates the RFP and supporting documents to potential suppliers. This package provides detailed information about the project requirements, timelines, and criteria for selection.
  3. Potential Supplier Q&A: A phase is typically allocated for potential suppliers to ask questions. This interaction helps clarify the project's scope and the purchasing organization's specific needs and constraints, ensuring that vendors can submit informed and tailored proposals.
  4. Submission of RFP Responses: Vendors submit their proposals in response to the RFP. These responses often include detailed technical and financial proposals, addressing the requirements outlined in the RFP.
  5. Downselection and Proof of Concept (POC): The purchasing organization then shortlists vendors based on their proposals. In many cases, especially for technology acquisitions, shortlisted vendors are invited to participate in a POC. This stage may involve the distribution of realistic data for vendors to demonstrate the feasibility and effectiveness of their solutions in the buyer's actual business context.
  6. Contract Negotiations: After selecting the winning vendor, contract negotiations take place. These negotiations cover the terms of the agreement, pricing, and may include detailed Statements of Work (SoWs), particularly if post-sales implementation services are required.
  7. Vendor Onboarding: The final step involves integrating the winning vendor into the purchasing organization’s operational systems. This integration is crucial for handling operational aspects like billing, project management, and ongoing support.

In understanding the nature of external collaborations, it's crucial to recognize that what might initially seem like a single collaboration is often a series of nested or stage-gated collaborations. Each stage in processes like the RFP and the formation of strategic alliances requires the collaborating parties to successfully complete specific milestones before advancing. This nested structure is a common feature across various forms of external collaborations, making meticulous record-keeping an essential factor for success. It is particularly important as participants often change throughout the different stages, and a centralized repository for collaboration content helps prevent confusion and misunderstandings.

Furthermore, while these processes differ in their specific steps and objectives — with RFPs primarily focusing on procurement and vendor selection, and strategic alliances aimed at long-term partnership building — they both share a foundational need for meticulous planning, clear communication, and structured execution. Each phase is critical to the overall success of the collaboration. Together, they underscore the importance of trust building, mutual understanding, and strategic alignment, highlighting how these collaborations are vital tools in achieving organizational goals and establishing productive, mutually beneficial relationships.

Wrapping up

As we conclude our exploration of external collaborations, it’s clear that this landscape is remarkably diverse, ranging from strategic partnerships to transactional agreements. We've seen how these collaborations typically unfold in interconnected stages, each demanding careful management. A key takeaway is the importance of maintaining clear records, documentation, and effective communication throughout these stages, especially as participants may change over time. However, it’s equally crucial to recognize the variability of these collaborations. A successful approach must blend structure with a fair dose of flexibility in order to meet the requirements of each collaborative exercise. This balance is pivotal in ensuring both clarity and the agility to respond to evolving dynamics.

Moreover, our journey through this article reinforces a common thread that runs through all forms of external collaborations, irrespective of their specific nature. Be it a comprehensive partnership or a more short-term collaborative effort, the essentials of meticulous planning, transparent communication, and structured execution remain constant. Embracing these elements, while also allowing room for adaptability, empowers organizations to effectively navigate the complexities inherent in external collaborations. The insights and strategies highlighted here extend beyond theoretical frameworks; they are practical tools indispensable for leveraging external collaborations in pursuit of strategic goals, fostering successful, and mutually beneficial relationships. This dual approach of structure and flexibility is not just a recommendation but a necessity for mastering the art and science of external collaboration in today’s dynamic business world.


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