Strategic Alliances
Session-3: Alliances - A learning perspective
Swapnil Garg
Strategic Alliances
INTRODUCTION
● Objective: Alliances and learning:
○ Joint learning
○ Learning from partner
○ Asymmetric learning
● Case
Inkpen, Andrew C. "Learning through alliances: General
Motors and NUMMI" California Management Review 47, no.
4 (2005): 114-136
https://forms.gle/P8eF2ZdiaSELSmxS7
Prof.Swapnil Garg/Professor (Strategic Management) 2
Strategic Alliances
Alliance as a learning strategy
Learning Through Alliances
Case Questions:
✔ What was the rationale for forming an alliance?
✔ What are the typical problems in learning from
alliances?
Did GM face these challenges in NUMMI, and how
did it address.
✔ Identify the key processes which enabled GMs
learning from the NUMMI alliance.
Prof.Swapnil Garg/Professor (Strategic Management) 3
Strategic Alliances
Alliances as learning strategy
What is the structure of the alliance?
Prof.Swapnil Garg/Professor (Strategic Management) 4
Strategic Alliances
NUMMI
Product Development -- ?
Knowledge Engineering -- ??
Workforce /Existing Practices Product Design
Market Access Toyota Production System
General NUMMI Toyota
Motors
Equity Joint Venture 50:50
Structure
$89 Million PLant $100 million cash
$11 million cash CEO (Chairman’s son)
16 General Managers COO
Prof.Swapnil Garg/Professor (Strategic Management) 5
Strategic Alliances
NUMMI (Motivation)
1982 -- GM & Toyota -- Equity 50:50
Toyota ($100Million): GM ($89 million plant, $11 million cash)
Assemble small cars in US
Toyota
● Rapid market entry into US (Honda/ Nissan)
● Negotiate US-Japan Trade problems
● Learn to work with US workforce
GM
● Source a small car
● Use an idle plant
● Learn from Toyota (Chairman’s dream)
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Strategic Alliances
NUMMI
● 1984 -- Starts operating
● Toyota responsible for plant operations and
product design
● CEO -- Son of Toyota Chairman
● GM deputes 16 GMs
● Exposed to Toyota way of working
○ Not exposed to product development / Engineering
Prof.Swapnil Garg/Professor (Strategic Management) 7
Strategic Alliances
Alliance as a learning strategy
https://www.youtube.com/watch?v=8odnFywwp6Q (Trailor)
Nature of the problem 1:
https://www.youtube.com/watch?v=Om3C1EpHLGs (10/10)
Tacit knowledge:
Morning Exercises (4):
https://www.youtube.com/watch?v=h9jsnAD4aNw
The problem:
Change workers attitude (5) :
https://www.youtube.com/watch?v=hKNeFHBPgRo&list=PLZb
XA4lyCtqqbrkaSw0r3lhXOZwLeQrJJ&index=6&t=0s
Prof.Swapnil Garg/Professor (Strategic Management) 8
Strategic Alliances
Alliance as a learning strategy
Prof.Swapnil Garg/Professor (Strategic Management) 9
Strategic Alliances
Alliance as a learning strategy
✔ Where is the problem?
● Exploitation of the learning opportunity window is
○ Inherently Difficult
○ Frustrating
○ Often misunderstood process
● Why? --
○ Partner’s knowledge not properly understood
○ Intended recipient rejects knowledge
○ Transfer mechanisms are inappropriate for the type
and scope of knowledge
○ Insufficient resources applied to learning task
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Strategic Alliances
Alliance as a learning strategy
The five obstacles to learning
○ Causal Ambiguity
■ What → How/Why (Deeply embedded/Difficult)
○ Leadership commitment to learning
■ Ownership/Structure → Learning opportunity
○ High cost of learning (Unwillingness to invest)
■ Redundancy/ Duplicacy/ Costly/ Unrelated - haphazard/ idiosyncratic
○ Lack of system to capture individual learning
■ Knowledge brokers/ Rotations
○ Not invented here syndrome
■ Relevance not evident / Threatening
Prof.Swapnil Garg/Associate Professor (Strategic Management) 11
Strategic Alliances
Alliance as a learning strategy
● The learning context -- What is it?
● SM-II -- The knowledge creating company
○ Nonkana Article
○ Mckinsey Example
● Spiral of Knowledge
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Strategic Alliances
Knowledge -- Explicit and Tacit
EXPLICIT – hard data, codified procedures, universal
principles
● Formal and systematic
● Usually discussed as information processing and is central to
organizational view as systems, and machines
● It increases efficiency, lower costs, improved ROI
TACIT – highly subjective insights, intuitions, hunches
● It was usually adopted by Japanese firms
● A firm is not a machine , but a living organism
● It provides a sense of identity and fundamental purpose.
● Shared understanding what the firm stands for
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Strategic Alliances
Tacit Knowledge
● Everyone's business, not only of a select few like
the R&D
● It provides a way of behaving
● Provides a sense of purpose for the organization
● Can provide an integrating theme for the
organization
Prof.Swapnil Garg/Associate Professor (Strategic Management) 14
Strategic Alliances
Creating knowledge → Transferring Knowledge
What is the implication of the two kinds of knowledge
(explicit and tacit) on knowledge creation
– Distinct patterns of learning /Spiral for
knowledge
Four patterns of knowledge creation
● Tacit to tacit (Socialization) E.g., Craft apprenticeship
● Tacit to explicit (Articulation) E.g., Write out new procedures, for
something so far only in the head
● Explicit to explicit (Combination) E.g., aggregation in financial
reports
● Explicit to tacit (Internalization) E.g., Internalize the explicit
knowledge to develop new ideas
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Strategic Alliances
Spiral of Knowledge
Socialize → Articulate → Combine → Internalize
● Restart at a higher level
● Articulation and Internalization require huge
amounts of personal commitment
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Strategic Alliances
Alliance as a learning strategy
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Strategic Alliances
A Learning System
The Technical Liaison Office
Since 1985
In 1992, changes in how it supported learning
Nummi → GM, and also Within GM
Enhance to the Advisor System
Recognition of the advisor as knowledge broker
Mentors to Advisors with GM
Systematized/ White papers/ Next assignment
Change to GM’s Knowledge base
A larger complement of GM’s employees exposed
Leadership commitment and Involvement
Learning Network
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Strategic Alliances
The New CEO
● 1992
● Jack Smith is new CEO
● He had headed GM’s negotiating team when NUMMI
was formed
● Recognized the learning opportunity
Role of Alliance champion
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Strategic Alliances
Lessons from GM’s experience
● Knowledge transfer requires both
■ Moving the knowledge
■ Changing the recipient's knowledge
● Knowledge transfer effectiveness can be actively
managed and improved.
● Learning requires experimentation and innovation
● Knowledge transfer is about ties between people
● Value of learning greater than as understood (in early
phase)
● Knowledge needs to be leveraged to generate real
returns
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Strategic Alliances
Coping with learning obstacles
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Strategic Alliances
Summarizing: Alliance as a learning strategy
Alliances not only bring together complementary
resources and skills, but they are also a tool for learning.
● They provide a window into the skills and knowledge of other
firms.
● An opportunity to work closely, and gain access to best
practices of their partners and then transfer them back to the
parent organization.
● But this learning is not automatic and has to be managed.
The finally the learning happened
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Strategic Alliances
Alliance as a learning strategy
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Cirque du Soleil
Swapnil Garg
