Working together… sometimes

With a focus on collaboration within large companies, Morten Hansen's book provides a framework for teamwork to deliver results: better innovation, higher sales, and better operations. In this first part we examine whether to collaborate or not to collaborate.

	Title:	Collaboration
	Author:	Morten Hansen
	Pages:	231pages
	Publisher:	Harvard Business Press
	Price:	$29.95

Shall we start off with how not to collaborate? And what a mess that can make? That is how professor Morten Hansen of UC Berkeley dumps us in the hot collaboration bath. His chosen example? The fiasco that Sony made in trying to develop a worthwhile competitor to Apple iPod.

We are in 2003, when Howard Stringer was the president of Sony-USA. In conjunction with the President of Sony-Japan, they tried to cobble together the required divisions of the company in order to quickly mount a riposte to this intruder in what should have been Walkman territory.

Alas, the software division cannot cooperate with the hardware division, which cannot link up with the flash memory division, which cannot come into communion with the music division… In the end, what should have been a nine-month quick and coordinated effort ended with Sony Connect, a virtual stillborn in 2004, and put to rest in 2007.

What is collaboration?
In this book, Morten Hansen has limited his research to collaboration within a same (large) company. For example collaboration between divisions, or business units. Although much of the recommendations could be applied to ‘external’ collaboration – for example between two companies – Hansen is careful not to touch upon these cases.

In part, this is because his 15 years of research – at Stanford, Harvard, INSEAD and while working for management consulting firm BCG – focused on collaboration within the same company.

Is collaboration useful?
When asked why he focused on collaboration, Hansen says, “Because if people know how to collaborate well, the world would simply work better.” Such solid footing, and his decade and a half of research, could only lead to a book rich in supportive arguments and bountiful anecdotal evidence.

For Hansen, collaboration can provide numerous benefits. He cites three as top valued: better innovation, better revenues, and better operations.

Better innovation can occur across business units or territories and allows the collaborative team to ‘recombine existing resources’ in order to develop new ideas. An example? Hansen delves into Proctor & Gamble’s approach for WhiteStrips, the teeth-whitening product. WhiteStrips were conceived with input from three divisions: technology, oral care and the fabric and homecare divisions.

Collaboration can also drive better sales, namely via cross-selling among divisions. Hansen shies from the word synergy, but his example taken from the banking world illustrates the concept. When Wells Fargo merged with Minneapolis-based Norwest bank in 1998, it was the triumph of collaboration within Norwest that attracted the suitor. The magic continued after the merger, with the average number of bank products per household rising from just over 3 to almost 6 in ten years. It was collaboration between the different operating areas (e.g. credit cards, mortgages, insurance) that enabled such growth, and nicely profitable at that, thanks.

Lastly, collaboration can improve operations. Hansen calls this the productive ‘reuse of existing resources’. He illustrates this concept with an example from BP, the British energy giant. Their head of gas stations in the southeast USA was seeking ways to improve the performance of her stations. After a bit of digging, she was told of various innovations at British pilot petrol filling stops. After a quick UK inspection tour, she launched three prototypes in the Atlanta area and bingo: 26% fewer SKUs, 20% drop in working capital and a 10% increase in sales.

Assessing the benefits and costs
Professor Hansen is quick to point out that collaboration has a downside. Like a nice Bordeaux claret, too much of good thing can hurt. In particular, his research on over-collaboration proves that it can become counter-productive. This is why he recommends that managers assess the benefits and costs of collaboration before embarking on a collaborative venture.

To illustrate this point, Hansen pulls out an example from his own experience with Norwegian company DNV, which specializes in industrial inspection, testing and IT systems. When examining which of the four divisions of the company could benefit from inter-divisional collaboration, only nine options seemed worthy, even though the complete universe included 16 theoretical possibilities.

Collaboration traps
So collaboration can have a cost. Hansen also points out that collaboration has traps that can also make it the wrong thing to pursue.

Of the six traps mentioned, the ones that Hansen warns most about are the over-collaboration and overestimating the potential benefits. Collaboration for its own sake can lead down the path of low productivity. Colleagues meet and certainly share ideas (sugar coated as ‘best practices’), but is the time really productive?

Likewise, overestimating collaboration’s potential value has lead to many a lousy deal. Hansen cites an example from the Sony-Columbia realm, when Sony’s electronics division introduced myriad devices based on Columbia’s movie Last Action Hero. Alas, the movie bombed, taking all those devices to gizmo hell with it.

Three steps of disciplined collaboration
To avoid collaboration traps, Hansen recommends a three-step disciplined collaboration approach.

This approach enables leaders to assess when to collaborate, and then prepare the terrain for collaboration by instilling the motivation and providing the ability to cooperate within the team.

In the next issue of Casium we will examine the four barriers to effective collaboration.

Published February 2010.