There Is A Lack Of Control Since The Project Is A Joint Venture

There are many instances where the operations in specific locations are jointly owned and controlled by several firms. These firms typically have very different cultures and methods of management. Managing a joint venture project is very challenging for these reasons. Since the project is being carried out by equal partners, it is very difficult to establish control. Instead, firms typically create coordination. Unfortunately, this is not the same as control. When actions are required, it may take too long to get decisions since each party must understand the situation and agree on what is to be done—a very tall order.

Impact

The joint venture sounded like a good idea. The problem was that little thought was given to how things other than daily work would be done. When confronted by a project, just getting the project started is a major challenge. In one such firm, it took 3 months to get any substantial project approved. Managers in the field quickly learned that they had to work informally and not call the work a project— to avoid the bureaucracy. The impact is that the work is driven underground.

Prevention

At the time a joint venture is established, the ground rules for projects as well as the daily management of work need to be established. It is recommended that several sample projects be dry run so that guidelines for projects can be set up. In one joint venture each partner firm supplied managers in alternate years. This sounded like a good idea in theory since it established formal authority. However, many problems arose. The cultures of the two firms were almost diametrically opposite. In one there was a formal structure; in the other managers were encouraged to be entrepreneurial. This led to differences in project reporting, control, and direction. If a project spanned the period of the end of the year, there were likely to be many changes to the active projects due to this major cultural difference.

Action

It is better to surface a number of smaller issues to the management of both firms than to wait until a major crisis arises. This will pave the way for better ways of addressing problems later. An active project can be used as an example and standardized reporting and review methods established.