HBR's 10 Must Reads on Collaboration

Too often a business leader asks, How can we get people to collaborate more? That's the wrong question.

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.

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: Projected return: The expected cash flow generated by the project Opportunity cost: The potential value of alternative projects that won't be pursued 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.

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: Overestimating financial returns: Don't let enthusiasm for collaboration lead to overly optimistic projections. Ignoring opportunity costs: Consider what other valuable projects might be sacrificed. 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.

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: Devise a common method for resolving conflicts: Establish a clear, step-by-step process for parties to follow. Provide criteria for making trade-offs:…