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Product development is inherently risky, particularly when new technology is involved. Although collaborative product development is promoted as a means for reducing or at least sharing risk, such partnerships present their own challenges. Collaboration can also accentuate many of the risks inherent in product development. For example, any product development project requires effective communication among development team members. In a collaborative effort, this challenge is even greater because the development team spans organizational as well as functional boundaries. Dale Littler, Fiona Leverick, and Margaret Bruce describe the results of a survey that was conducted to identify the risks and benefits of collaborative product development as well as the key success factors for such relationships. The main reasons cited for collaborating on product development projects include satisfying customer requirements, taking advantage of market opportunities for which the firm lacks necessary skills and technical expertise, and responding to changes in technology. Other reasons for collaboration include reducing the cost and risk of product R&D, improving time to market, and gaining access to new markets. In addition to the risks associated with product development by a single company, the partners in a collaborative effort face several other challenges. For example, one company might gain inside knowledge of its partner's unique skills and expertise. Despite the cost and time involved in managing the collaboration, such a relationship usually results in less direct control over product development. Of particular concern are the difficulties of coordinating the divergent management styles and budgeting processes of the collaborating firms. Collaboration requires frequent communication among all involved parties. The likelihood of success is greatly enhanced by the presence of a product or collaboration champion. Other success factors include ensuring that partners contribute as expected, creating the perception of equal benefits among partners, and building trust between partners. Firms that are more experienced with collaboration also cite the importance of flexibility in corporate systems and management style, fit with existing businesses, and the choice of a partner.
Littler et al. (Sun,) studied this question.