The term consortium is defined as an agreement between two or more organizations to work together for a common goal or purpose. The goal can range from pursuing a big business venture that none of the organizations can do alone, to standardizing processes, common policies, shared resources, and leveraging skills and experience across the group. Consortiums in the business world are most commonly found in construction or infrastructure projects, but they can also be helpful in other areas such as research and development, marketing, and technology.
Examples of Consortiums in the Modern Business Era
One recent example of the use of consortiums is Google and 5 other major technology companies partnering together to form the Open Invention Network (OIN). This consortium’s goal was to help protect the Linux platform from patent trolls, and the group has recently been expanded to include IBM, Toyota, and Ford, in addition to the original members.
Another example of a consortium is The Linux Foundation, which was created by IBM, Intel, and other technology companies in 2000 in order to promote the open source development of the Linux operating system. Members of the foundation work together to share resources, coordinate marketing efforts, and collaborate on research projects.
Benefits and Risks of Forming a Consortium
The advantages of forming a consortium for business include reducing overhead costs, gaining access to resources or technology that would normally be too expensive for an individual organization, and creating a larger entity that can leverage collective resources and skillsets. The risks of forming a consortium include the complexity of managing a large and diverse group of members, and dealing with disagreements among the members over policy and direction.
Consortiums have become increasingly prevalent in the modern business era, as businesses recognize the potential benefits that can result from collaborating and pooling resources in order to reach a common goal. Understanding the concept and structure of consortiums and their potential benefits and risks can help businesses create a strategic plan that will maximize their chances of success.