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Building Blocks for Healthy Alliance Coordination Premium

A Micro Framework for Macro Efficiency

Authors: Ariño, Africa; Andreu i Civit, Rafael

Date: First Quarter 2018

Tags: alliances, interorganizational collaboration, microcomponent, coordination, healthcare partnership

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A 60-year-old man went to his general practitioner (GP) and was referred for tests at the hospital, where they determined he had respiratory failure. They prescribed oxygen therapy. The patient met with the rep who would be delivering oxygen tanks to his home and training him on how to use them. At home, the man received follow-up visits from a caregiver who monitored his progress. This was, essentially, an alliance -- an organizational arrangement whereby various partners combined their resources and capabilities to create value in a way that none of them could do alone. And depending on how capable the partners were at coordinating their activities, value might or might not be created.

In this real-life scenario -- the subject of our research -- we detected some coordination issues that meant value was being lost. For instance, relevant information gathered at the patient's home was known by distributors but not by GPs, some of whom were not even aware that their patients were receiving the treatment. What's more, some patients continued to receive the treatment when it was no longer needed, just because no one at the hospital had decided to stop it. This illustrates that, even with a seemingly straightforward process, alliances won't realize their full potential if the partners don't learn to coordinate their activities effectively.

In this article, we examine the building blocks of interorganizational coordination. We present a framework to help managers think differently about the microcomponents of alliances. We illustrate it with one study of a healthcare partnership in Barcelona. By seeing where knowledge is being lost or where new routines are being created in novel or unexpected ways, readers may discern how to boost the performance of their alliances.

The Components of Coordination
Our framework is inspired by the knowledge-based view of the firm, which posits that sustained competitive advantage and superior performance derive from the individual-level capabilities, knowledge pieces, routines and coordination schemes embedded within the firm. It's important to know the specific characteristics of each partner's contribution at the intrafirm level, which helps when later extending them to the interfirm level. Unless alliance partners are able to understand and coordinate these micro-level components, they are less likely to create value at the macro level. See KNOW YOUR TERMS (below) for definitions of each component.

Put simply, individuals use their capabilities, either individually or together with those of other people, as dictated by a coordination scheme. In so doing, they work with knowledge pieces and/or objects to produce expected or unexpected results in terms of transformed objects, new or updated knowledge pieces, new or streamlined coordination schemes, and even new or refined capabilities and routines, generated through experience and learning.

Extending the Framework
Let's reflect on how partners in an alliance may learn to coordinate and implement their plans in the most effective way.

Here we define the microcomponents of our framework.

Individual-Level Capabilities (C)
These are the skills that enable a person to perform a task. We distinguish two main types:
* Procedural, which relate to manipulation of physical objects, and can be learned through practice.
* Cognitive, which involve abstract reasoning, and may require training to exploit or explore abstract knowledge.

Knowledge Pieces (K)
Any input or output for the operation of a capability (e.g., ROI, sales forecasts, budget figures), categorized as follows:

* Explicit knowledge is well known, easily transmitted and readily shared.
* Implicit/tacit knowledge cannot be well-defined, so sharing it may require coaching or observing how somebody else uses it.

* Individual knowledge is used by a single individual.
* Collective/organizational knowledge requires organizing two or more people for some collective purpose through coordination schemes.

* Firm-specific knowledge is known only to particular individuals or groups who study, explore and practice it inside the firm.
* General-purpose knowledge is readily available on the open market.

Routines (R)
Combinations of capabilities and, potentially, other routines. In our framework, capabilities are at the individual level, whereas routines frequently involve several people, representing the full firm dynamics, and are usually collective or organizational in the sense that they do not relate to a single individual nor can they be operated individually. As such, each routine requires a shared coordination scheme to operate.

Coordination Schemes (CS)
These indicate how individual capabilities and routines should be ordered, combined and controlled for the purpose of allocating resources and synchronizing tasks. A strategic plan or preparing year-end accounts are examples of coordination schemes with explicit protocols. We distinguish the following:
* Sequential. This is the simplest structure: the outputs of one become the inputs of another.
* Decomposable. Here the coordination scheme can be broken down into a series of discrete tasks: sometimes the outputs of one may be contingent on the inputs of another; other times the interactions are minimal.
* Non-decomposable. Because the tasks cannot be broken up without losing the fundamental organization, logic or character, they have to be treated as a whole.

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