HBR's 10 Must Reads on Collaboration

1. Collaboration is essential, but not always beneficial

Too often a business leader asks, How can we get people to collaborate more? That's the wrong question. It should be, Will collaboration on this project create or destroy value?

Collaboration isn't always positive. While internal collaboration is often viewed as universally good, it can sometimes undermine performance. Companies need to be strategic about when and how they encourage collaboration. The key is to determine whether working together will produce better results than working independently.

Potential benefits and drawbacks:

• Benefits: innovative cross-unit product development, increased sales through cross-selling, transfer of best practices
• Drawbacks: wasted time, damaged relationships, delays in getting to market, budget overruns, lower quality

Evaluate carefully: Before launching collaborative initiatives, assess whether the potential benefits outweigh the costs and risks. Consider factors like the complexity of the project, the expertise required, and the existing relationships between units.

2. Evaluate collaboration using the collaboration premium framework

A collaboration premium is the difference between the projected financial return on a project and two often overlooked factors—opportunity cost and collaboration costs.

Use the collaboration premium framework. This approach helps determine if a collaborative project will create or destroy value. It involves estimating three key factors:

1. Projected return: The expected cash flow generated by the project
2. Opportunity cost: The potential value of alternative projects that won't be pursued
3. Collaboration costs: Expenses arising from working across organizational boundaries

Formula: Collaboration Premium = Projected Return - (Opportunity Cost + Collaboration Costs)

If the calculation yields a positive number, the project is likely to create value. If it's negative, the collaboration may destroy value and should be reconsidered.

3. Avoid common errors in assessing collaborative projects

Never forget that the goal of collaboration is not collaboration but, rather, business results that would be impossible without it.

Be wary of common pitfalls. When evaluating collaborative projects, managers often make three key mistakes:

1. Overestimating financial returns: Don't let enthusiasm for collaboration lead to overly optimistic projections.
2. Ignoring opportunity costs: Consider what other valuable projects might be sacrificed.
3. Underestimating collaboration costs: Account for challenges like coordination, travel, and potential conflicts.

Real-world example: DNV's food safety initiative failed partly because managers didn't properly assess opportunity costs and collaboration costs. They overlooked a potentially more lucrative IT opportunity and underestimated the difficulties of getting different units to work together effectively.

4. Implement strategies for managing conflict at the point of disagreement

Without a structured method for dealing with these issues, people get bogged down not only in what the right result should be but also in how to arrive at it.

Equip employees to resolve conflicts. To manage disagreements effectively at the point of conflict, implement these strategies:

1. Devise a common method for resolving conflicts: Establish a clear, step-by-step process for parties to follow.
2. Provide criteria for making trade-offs: Give people guidelines for balancing competing priorities.
3. Use escalation as a coaching opportunity: Help employees develop conflict resolution skills.

Benefits of this approach:

• Reduces wasted time and ill will
• Encourages innovative solutions
• Integrates conflict resolution into day-to-day processes

Example: Intel trains new employees in a common method and language for decision-making and conflict resolution, providing a shared framework that expedites problem-solving.

5. Develop methods for resolving escalated conflicts

The solution to these problems is a commitment by managers—a commitment codified in a formal policy—to deal with escalated conflict directly with their counterparts.

Create a system for handling escalated conflicts. When disagreements can't be resolved at lower levels, use these strategies:

1. Establish joint escalation requirements: Require conflicting parties to present issues together.
2. Ensure managers resolve conflicts directly with counterparts: Avoid passing problems up the chain.
3. Make the resolution process transparent: Explain decision-making rationales to provide guidance for future conflicts.

Benefits:

• Reduces unproductive escalations
• Ensures decision-makers have comprehensive information
• Provides valuable lessons for the organization

Example: IBM's Market Growth Workshops and Cross-Team Workouts provide structured forums for resolving escalated conflicts, with clear processes for moving issues up the management chain when necessary.

6. Choose the right collaboration mode for your organization

Different modes of collaboration involve different strategic trade-offs. Companies that choose the wrong mode risk falling behind in the relentless race to develop new technologies, designs, products, and services.

Understand the four collaboration modes. Choose the most appropriate based on two key dimensions:

1. Openness: Is participation open to anyone or limited to select players?
2. Hierarchy: Who makes key decisions - one "kingpin" or all participants?

The four modes:

1. Open, hierarchical (Innovation Mall): Anyone can offer ideas, but your company defines problems and chooses solutions.
2. Open, flat (Innovation Community): Anyone can offer and solicit ideas; no single participant has decision-making authority.
3. Closed, hierarchical (Elite Circle): Your company selects participants and decides which ideas to develop.
4. Closed, flat (Consortium): A select group is invited to participate, with shared decision-making.

Consider your organization's capabilities, structure, and assets when selecting the most suitable mode for each innovation initiative.

7. Foster a culture of productive collaboration

When a company begins to see conflict as a valuable resource that should be managed and exploited, it is likely to gain insight into problems that senior managers may not have known existed.

Create an environment that supports effective collaboration. To maximize the benefits of working together while minimizing drawbacks:

1. Train employees in conflict resolution and collaboration skills
2. Establish clear processes for initiating and managing collaborative projects
3. Recognize and reward successful collaborative efforts
4. Encourage open communication and constructive disagreement
5. Regularly assess and refine collaborative initiatives

Benefits of a collaborative culture:

• Increased innovation and problem-solving
• Better knowledge sharing across the organization
• Improved employee engagement and satisfaction
• Enhanced adaptability to market changes

Remember: The goal is not simply more collaboration, but the right collaboration that creates value for the organization.

Last updated: November 20, 2024