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Conflict Could Lead to Better Products    [Date Added : 01/23/2017 ]
US-based pharmaceutical firm Eli Lilly measures the health of its alliances with a "Voice of the Alliance Survey." Members from each partner organization rate the alliance in areas related to strategic fit, operational fit, and cultural fit. Sample questions include: "Knowledge and information from our partner is freely shared with us" and "Our partner openly listens to our ideas and opinions."

Lilly recently analyzed 14 years of data to understand the relationship between the health of these alliances (as evidenced by the ratings on the survey) and the technical and commercial success of the products on which they worked.

When the Lilly employees in the alliance were irritated with the partner, there was an increased probability of technical and commercial success. It wasn't that they didn't like their partners; they typically held them in high regard. What distinguished successful from unsuccessful alliances was more of a "productive" irritation - creative tension between differing ideas about how to develop alliance products - reflected in disagreements about the strategy and tactics. Even more interesting, there was no relationship between how the partner viewed the alliance and future success. What mattered in forecasting success was how Lilly people viewed the alliance.

For example, Lilly and its alliance partners might differ in how to design a clinical trial. These design differences have significant resource implications for both organizations. Tensions are often high as experts from both sides argue the merits of each other's ideas. Professional opinions clash and irritation results as both parties struggle to make the best decision. It is this kind of irritation that forecasts later technical success, according to 14 years of survey data.

Why does this happen? Enrique Conterno, Senior Vice President and President, Lilly Diabetes, sums it up well: "Nothing great is achieved without some conflict. Conflict sharpens the senses; it invites full engagement in solving important problems. However, you must create more light than heat when you engage in conflict. Heat degrades the substrate of innovation, while light catalyzes it."

This idea that disagreement and conflict between groups can be productive is not new. Similar findings have been found in research looking at individual work teams. For example, the research in hospital emergency rooms shows that the failure to speak up can lead to medical mistakes with disastrous consequences. Similar failures among cockpit crews can lead to airline crashes. Finally, there are countless examples of business misconduct among corporations where employees were aware of misconduct but they simply did not feel comfortable speaking up and reporting it. Creating an environment where team members feel "psychologically safe" to speak up and share their point of view can dramatically improve the effectiveness of these kinds of teams. Lilly's research shows these same effects can happen between members of alliance innovation teams.

The managers in charge of these alliances caution us, however, that a positive relationship between irritation and success does not mean that you should be looking for opportunities to create just any kind of conflict. The beneficial irritation is respectful conflict on the most pivotal issues to the project.

Leaders can enhance the value they get from alliances using various strategies that reap the benefits of conflict:

- Focus on the areas of risk that produce the most productive conflict. Lilly trains its alliance managers to look at risk as the precursor to conflict, as parties typically engage in conflict as a method of reducing or controlling alliance risk. They regularly see three common types of risks: human risk - the sum of the positive or negative affinities of people working in an alliance, weighted more heavily towards those leaders that govern the alliance; business risk - all of the factors related to getting a product or service to market made easier or more difficult due to the partnership; and legal uncertainties - the risk that is created by writing a contract that cannot possibly foresee all of the future obstacles and issues that will need to be surmounted by the alliance. Conflict in each of these areas is interconnected and is found in every alliance.

- Focus your conflict-management resources where it matters most. Identify clearly where value is created and destroyed in your own value process and deploy your conflict management/alliance management resources there.

- Train key alliance personnel to listen and make space for disagreement and conflict. Lilly trains its alliance managers to use structured empathic listening, a manner of listening and responding to others that improves mutual understanding and trust. Lilly alliance managers report that conflict "heat" becomes "illumination" when partners truly listen to each other. At Lilly, escalated alliance issues are strongly encouraged to be presented jointly. The disputants need not agree with each other, but they must agree that their joint presentation accurately reflects their disagreement. This aligned presentation often catalyzes quick and healthy issue resolution.

- Establish an alliance management function. If resources allow, the formation of such an area within your organization will increase the chances of alliance success. Task the alliance management team with creating greater value by learning how to build, maintain, and unwind alliances efficiently and effectively - and train them in spotting and encouraging productive conflict. An alliance management department can be both a repository of information and experiences, as well as a champion for the organizational learning that comes from forming alliances, where each company can benefit by learning from and emulating the best that their partners have to offer.

("The Right Kind of Conflict Leads to Better Products," David S. Thompson, Gary Butkus, Alan Colquitt and John Boudreau, Harvard Business Review, December 23, 2016. Copyright 2016 Harvard Business School Publishing)
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