By Humam Mustafa and Svetlana Vityugova
Collaboration is often encouraged in many industries. Companies pride themselves on having a collaborative culture. However, is collaboration always advantageous? How can companies optimize collaboration levels to increase value proposition and margins especially when labour is specialized? All these questions are addressed in Heidi Gardner’s latest book “Smart Collaboration”.
Effective collaboration can have tangible effects on margins
In her book, the former McKinsey consultant and Harvard Business School professor, makes a case for the benefits of true collaboration in the workplace and its tangible effects on margins. She demonstrates through multiple case studies the true impact of collaboration, not only to the firm but also, to the client. She shows that in firms where services are very highly specialized and employees normally operate in silos, collaboration amongst specialists and teams can result in higher margins for the firm with much higher quality of service delivered.
Simplified work complexity
The research showed that collaboration provides great value when the type of work is complex. As clients face different issues in an age where the only stable currency is change, they are faced with various complex issues ranging from regulatory compliance, cybersecurity, and digital transformation. These sensitive and highly complex situations can only be effectively tackled with a team of specialists. Even with this knowledge, firms resist the financial cost of collaboration and they often assign highly specialized experts into narrowly defined areas. Heidi argues that in these types of firms, collaboration can create wonders. Several empirical studies of highly specialized professional firms showed that clients who paid higher labour costs to cover the law firm’s collaboration costs, where not only more satisfied but also more loyal to these firms.
Building a culture of trust and support to boost innovation
Another indirect benefit of collaboration is the impact on culture. Researched showed that business where collaboration is encouraged tend to have a healthier work culture than businesses where work is more individual. The study explains the finding to show that when employees collaborate, they expand their own network and get to know each other in a way that they wouldn’t have if it wasn’t for collaboration.
A clear distinction is made, however, between cross-selling and collaboration. Cross-selling involves selling more existing services to clients after selling them one service. Heidi describes it in one phrase “Do you want some fries with that?”. Collaboration, on the other hand, is creating new and innovative solutions catered to the client and aimed at creatively adding value.
Although collaboration is often useful with complex tasks, Heidi argues that it is not necessarily so with common “commodity” off-the-shelf services. This is because the clients are paying for the labour and if all they get is a standard product then it’s not a worthy investment from the client’s perspective. Another major barrier to collaboration is creating trust and innovative environment for experts to take risks with their colleagues.
You cannot mandate organic collaboration. What you can do is create an environment of trust where specialized experts take the risk and collaborate with each other to produce creative solutions. This is also the heart of innovation.
To learn more how we could help your organization transform and succeed with effective collaboration, team alignment and culture design, talk to us by booking a 30 mins discovery call.
1) Smart Collaboration, Heidi Gardner, Harvard Business Review: https://store.hbr.org/product/smart-collaboration-how-professionals-and-their-firms-succeed-by-breaking-down-silos/10001
2) The way we work together is often overlooked as a creative force, Financial Times, https://www.ft.com/content/4d019784-d9ba-11e6-944b-e7eb37a6aa8e