PROFITABILITY BLOG

Collaboration – It Can Mean Make or Break for Value Creation
14 Jul 2016

Collaboration – It Can Mean Make or Break for Value Creation

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categories: Experiential Learning

What’s the definition of Collaboration? It is the expectation that 2+2 will equal 5. That is, according to an expert on the subject, Dr. Morgan Chambers. Her views are very well worth listening to, because they are borne out of experience and of in-depth research.

Having held senior HR and Learning and Development posts at Amex, Reed Elsevier and National Grid, Morgan founded her own consultancy, The Business of Leadership, in 2007 and also studied the topic of Collaboration and Competition over 5 years for her PhD, completed last year at Cranfield University,  School of Management.

Interviewed following a successful Forum for HR & L&D professionals (in which she co-presented with Mark Haenel from the leading experiential learning specialist, ProfitAbility) she outlined how collaboration should work in organisations: and how, and why, it too often does not.

Asked about the role of silos, she is clear that they are inevitable – “you will always build up a silo”. She has interviewed many senior managers who have spent their whole working life building up a cohesive, focused team in their business unit, only to encounter a paradox: that in so doing they have created a level of  competition between them and other units. The sense of belonging that workers feel to their immediate team can work against the common good.

Therefore, she says, the key task is to bridge the silos – not to destroy them. And the bridging can take different forms and have varying degrees of involvement. They may not involve true collaboration in every case.

At the senior levels – Chair, Group CEO, Subsidiary Directors – the desired ‘collaboration’ is often between newly merged or acquired operations: or between different parties in a major new product or service development (NPD)project. This is where collaboration is critical if 2+2 = 5 is to be achieved: too often, M&A activity and NPD can struggle to reach 2+2 = 4.

CollaborationVsCooperation

At lower levels, the terms ‘collaboration’ may be too strong: in practice, there may simply be a communication hub and people exchanging data through Sharepoint or similar platforms. This is more about information sharing than adding value, and it is really ‘cooperation’ rather than a formal or deeper collaboration between functions.

 

The Synergy Myth

“Synergy has been used as part of the justification for almost every takeover since Alexander moved into Egypt.” (Tim Hindle, The Economist)

As Morgan points out, it is not healthy to always strive for collaboration in its fullest sense. She quotes with approval references the heading of Goold and Campbell’s HBR article – ‘Desperately Seeking Synergy’. It is generally known that most acquisitions fail to meet expectations: Michael Porter found that 55% of major acquisitions by large American companies were later divested.

Morgan’s study also identifies those factors that most often get in the way of collaboration; and she finds that collaborating internally is sometimes even harder than externally between organisations. The key stumbling blocks are – 

  1. Transfer Pricing
  2. Cross-Selling
  3. Level of Relatedness
  4. Polarity Thinking
  1. Transfer Pricing

The problem is often that each unit will bicker over who gets what share of the business that is being done with an external client, or where one silo supplies goods or services to another. This leads to a feeling that it is not worth the effort and pain to collaborate.

 

  1. Cross-Selling

CEOs of diverse organisations always push for cross-selling but it can be very hard to achieve. A salesforce trained in one set of products will often struggle to master another, or will resist it. Leaders who are incentivised to maximise the profit of their core business will not see the point in diverting resources to an initiative where the gains are shared with another unit and the net profit of each is therefore lower.

 

  1. Level of Relatedness

This is all about complementarity – do business units  Y and Z make sense working together? Is there the possibility of convergence? Problems will occur if the end client is reluctant to trade with an ill-matched pair of firms or units. They often find that they can buy cheaper from an integrated competitive supplier.

 

  1. Polarity Thinking

Many operations are characterised by ‘either/or’ poles of thought – and conflict results. Morgan says that you should aim to make a shift towards ‘both/and’. In other words, a North/South sort of divide in a company should become more nuanced and allow for collaboration where it can be effective, and accept healthy competition in some cases. She says “most organisations want a collaborative culture; then they wonder why it’s not working”. There are always going to be competitive elements – so acknowledge them and don’t let them go underground and turn bad.

“Tensions are inherent in a system that (un)intentionally fosters competition while emphasising the value of collaboration. Execution of an organisational strategy requires an appropriate proportion of both” (Morgan Chambers)

One very potent weapon in the armoury of an HR Director, she points out, is Gamification.  It can be harnessed both internally, with contests and recognition for people who excel in collaboration – and externally, using bespoke business simulations such as those set up by ProfitAbility. In these, competition is encouraged and indeed celebrated; and people emerge with a new trust in their peers, whether they be within their own function, or they come from a mixture of cross-silo specialities.

In a future article we will explore further the ways in which CEOs and functional heads can employ practical strategies to use collaboration to best effect. And for a hands-on experience of what ProfitAbility’s experiential learning techniques can do to build teamwork and collaboration, sign up for the next free 1-day taster session – register here.

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