Disciplined
Collaboration
Morten T. Hansen
MIIC March 2, 2009
The Apple iPod story
iPod introduced in Cupertino,
California, in October 2001
September 11 2001
October 23 2001
iPod a combination of existing pieces
Apple as Masterful Collaborator
External
• 1.8 inch drive (Toshiba)
• Hardware blueprint (PortalPlayer)
• MP3 decoder controller (PortalPlayer)
• Codec (Wolfson
• Lithium battery (Sony)
• Power management (Linear Technology)
• Basic software (Pixo)
• iTune software (Soundjam)
• Interface controller (Texas instrument)
Internal
• Architecture
• Hardware engineering
• Display
• Design
• User interface
• Scroll wheel
iPod a combination of existing pieces
Apple as Masterful Collaborator
External
Internal
• 1.8 inch drive (Toshiba)
• Architecture
• Hardware blueprint (PortalPlayer)
• Hardware engineering
• MP3 decoder controller (PortalPlayer)
• Display
• Codec
(Wolfson
“This
was a highly leveraged product
• Design
• Lithium battery (Sony)
• User
interface
from
the
technologies
we
already
had
in place”
• Power management (Linear Technology)
• Scroll wheel
Rubinstein,
head
of
hardware
at Apple
• Basic software (Pixo)
• iTune software (Soundjam)
• Interface controller (Texas instrument)
iPod had tight collaboration across
three units inside Apple
Steve Jobs
Rubinstein
Hardware
Software
Design
Fast:
Time to market was 8 months!
iPod
Team
Launched
March 2001
iPod
Introduced
Nov 2001
8 months from concept to introduction
Xmas
Amazing success: iPod/iTunes a $10bn
business in 6 years
.. has become a $10bn business
12,000
100,000,000
10,000
80,000,000
8,000
in $mln
120,000,000
60,000,000
40,000,000
6,000
4,000
20,000,000
2,000
0
0
20
02
20 Q1
02
20 Q3
03
20 Q1
03
20 Q3
04
20 Q1
04
20 Q3
05
20 Q1
05
20 Q3
06
20 Q1
06
20 Q3
07
20 Q1
07
Q3
cum. units sold
Growth of iPods sold …
quarter
2002
2003
2004
iPod iTunes
2005
2006
Sony’s Connect Story
Sony had all the pieces in-house
- How hard could it be?
Sony had all the pieces in-house
- How hard could it be?
“We can do this in nine months. We got the
product, hardware, software.”
Executive Philip Wiser telling
Howard Stringer (U.S. head) in 2003
Hard!
Rivalry among 5 groups in Sony in 2003
PC
Japan
Walkman
Japan
Sony Music
Japan
Sony Music
US
Own music
player
Own music
player
Own online
music
Own online
music
Sony
Electronics
US
Own online
music
Hard!
Rivalry among 5 groups in Sony in 2003
“It’s impossible to communicate with everybody when
you have that many silos.”
Howard Stringer, Sony CEO
PC
Japan
“Sony has long thrived on a hyper-competitive
culture, where engineers were encouraged to outdo
each other,
not working
together”
Sony
Music
Sony Music
Walkman
Sony
Own music
player
Japan
Japan
Own music
player
theonline
Wall
Own
music
US
Street
Journal
Own
online
music
Electronics
US
Own online
music
Connect launched 2004, a flop, taken
off, re-launched, terminated 2007
A Long, painful decline in Sony audio
7,000
6,000
in $mln
5,000
4,000
3,000
2,000
1,000
0
2001
2002
Note: audio sales includes all audio products
2003
2004
2005
2006
Howard Stringer appointed CEO of
Sony in June 2005
One of the first steps?
Howard Stringer appointed CEO of
Sony in June 2005
One of the first steps?
Sony United
Bad collaboration is worse than no
collaboration …..
Collaboration Traps
Trap #1. Wrong organization set-up.
Collaboration efforts run into a wall.
Example: Sony Connect
- Decentralized structure hindering
collaboration
- Competition among units
- Incentives skewed against working
across the organization
Trap #2. Over-collaboration: Collaboration run amok.
“Must be good to collaborate…..”
Example: BP
“People always had a good reason for
meeting…You’re sharing best practice.
You’re having good conversations with
like-minded people. But increasingly,
we found that people were flying
around the world and simply sharing
ideas without always having a strong
focus on the bottom line.”
John Leggate,
CIO,
British Petroleum
Trap #3. Over-shooting potential. Upside of
Collaboration not as high
Example: Sony buying Columbia
Pictures
Idea was to that Sony’s electronics
division should collaborate with filmmakers on cross-promotions etc.
- Last Action Hero Movie: soundtrack
by Sony Music, joint marketing of TVs,
video recorders, and the film.
- But upside was far smaller and never
large.
+
Trap # 4. Under-estimating costs of collaboration.
Costs much higher
Example: DNV food case
- For the IT consulting division,
probably not the best project
- Lots of hassles working across
business units (costing time and
money)
Trap #5. Getting the organizational problem wrong.
Mis-understanding why people don’t collaborate.
Leaders mis-understand why employees don’t
collaborate better
-“We thought the key problem was difficulty in finding
knowledge and people in our company, when in reality
the key problem is people’s unwillingness to collaborate.”
IT manager, large U.S. company
Trap #6. Implementing the wrong solutions to
organizational problems
Leaders put in place the wrong solutions because
they mis-understood the problem
-“Because we thought the key problem was search, we
invested in an elaborate IT and knowledge management
system to help people find things in the company. But the
key problem wasn’t search.”
IT manager, large U.S. company
Getting collaboration right
You must put discipline in collaboration!
Collaboration can get
great results……
…Provided you have the
discipline
Disciplined Collaboration
ECONOMIC OPPORTUNITY
How much value—and where—from collaboration?
BARRIERS TO COLLABORATION
Find them, tear them down
MANAGEMENT LEVERS
Tailor solutions to specific barriers, and don’t overdo
ECONOMIC OPPORTUNITY
How much value—and where—from collaboration?
Executives need to articulate goals of
collaboration in three areas
Better
Innovation
Revenue
Growth
Improved
Operations
Better
Innovation
Cross-unit
product innovation
New businesses
by combining
Revenue
Growth
Improved
Operations
Procter & Gamble master at
innovation through collaboration
$ 34.99
“New study shows
whiter teeth can lead
to greater success in
work and love”
P & G website, 2007
Procter & Gamble master at
innovation through collaboration
$ 34.99
teeth whitening
expertise
novel film
technology
bleach
expertise
“New study shows
whiter teeth can lead
to greater success in
work and love”
P & G website, 2007
Procter & Gamble master at
innovation through collaboration
$ 34.99
teeth whitening
expertise
Oral
Care
Division
novel film
technology
Corp.
R&D
bleach
expertise
Fabric &
Home
Division
“New study shows
whiter teeth can lead
to greater success in
work and love”
P & G website, 2007
Executives need to articulate goals of
collaboration in three areas
Better
Innovation
Revenue
Growth
Cross-selling,
Re-package
Customer service
by coordinating
Improved
Operations
Wells Fargo: best in cross-selling
products to banking customers
Best in U.S. with 5.2 products per consumer
Next goal to
go from 5.2
to 8 products
per consumer
No. products/customer
18
16
14
Avg. U.S. banking
Customer has
16 financial products
12
10
8
6
4
2
0
avg. consumer
avg. Wholesaler
Wells Fargo current
Goal
avg. U.S. all
products
Wells Fargo: best in cross-selling
products to banking customers
Best in U.S. with 5.2 products per consumer
Next goal to
go from 5.2
to 8 products
per consumer
No. products/customer
18
16
14
Avg. U.S. banking
Customer has
16 financial products
12
10
8
6
4
2
0
avg. consumer
avg. Wholesaler
Goal
Wells Fargo current
One Wells Fargo
80 business units
avg. U.S. all
products
Executives need to articulate goals of
collaboration in three areas
Better
Innovation
Revenue
Growth
Improved
Operations
Costs/investments
savings by sharing
Better decisions
by getting input
BP: lots of best practice transfers
- example: retail in gas stations
BP UK
Best practice
transfer
Best practice
transfer
BP Netherlands
BP Atlanta
BP: lots of best practice transfers
- example: retail in gas stations
BP UK
Best practice
transfer
BP Atlanta
Best practice
transfer
Much improved:
15%
BP Netherlands
10%
+10%
% change after
5%
0%
-5%
-10%
-20%
-15%
-20%
-26%
-25%
-30%
# SKUs
Working
Capital
Retail
Sales
Summary: assess opportunities for
collaboration in three areas
Better
Innovation
Revenue
Growth
Improved
Operations
Cross-unit
product innovation
Cross-selling,
Re-package
Costs/investments
savings by sharing
New businesses
by combining
Customer service
by coordinating
Better decisions
by getting input
Assess opportunities:
One high-tech company
Costs & Decisions
Customers
Innovation
Gap
Scale: 100=very high; 1 = very low
bu
si
ne
ss
es
ne
w
pr
o
du
ct
in
no
v
Curremt
re
ve
nu
cu
e
ga
st
om
in
s
er
se
rv
iv
e
co
st
sa
de
vin
cis
gs
io
n
m
ak
in
g
80
70
60
Scale 50
40
30
20
10
0
DNV assessment of opportunity;
large gaps
Costs & Decisions
Customers
Innovation
80
70
60
50
gap
40
current
30
20
10
0
costs
problem
solving
cross selling
cross
pollination
The Collaboration Matrix:
DNV example
Provider of competencies/services
Business
Unit
Maritime
1. Sell Energy’s
competencies in
material and testing, fire
and explosion, and
asset risk., to Maritime
customers
(20 million)
Maritime
Holder of
customer
relations
Energy
Energy
4. Sell Maritime’s
Mobile offshore
platform
classifications to
Energy customers.
(200m)
Industry
Low
7. Sell Energy’s
competencies in
material and testing, fire
and explosion, and
asset risk, to Industry
customers
(50m)
IT Global
Services
Low
9. Sell Energy’s
technology within risk
and reliability
To IT customers
(10m)
Industry
IT Global Services
2. Sell Industry’s
leadership systems to
Maritime’s customers
(10m)
3. Sell IT risk
management services
to Maritime customers
(100m).
5. Sell Industry’s
integrated leadership
systems to
Energy’s customers
(10m)
6. Sell IT risk
management services
to Energy’s customers
(100m)
8. Sell IT risk
management services
to Industry’s
customers
(300m)
Low
BARRIERS TO COLLABORATION
Find them, tear them down
Four barriers to collaboration
#1. Not-invented here
#3. Search
Do not want to reach out
Cannot find good help
# 2. Hoarding
# 4. Transfer
Do not want to help
Cannot work together
“wrong chemistry”
Motivation
Ability
Barrier #1: Not-Invented-Here
Insular culture:
Interacting inside the group
Status gap:
Don’t want to cross status lines
Norm of self-reliance:
Ought to fix your own problems
Fear: Do not want to reveal
problems or poor performance
Motivation
Not-Invented-Here:
People are not willing to reach out
to colleagues in other parts
of the company to collaborate
with them.
Barrier #2: Hoarding
Competition among units in a
company leads to less cooperation
Time famine: people do not have
time to help and collaborate
Biased incentives: rewards for narrow
goals means people do not help
Fear: people think sharing what they
know makes them less powerful
Motivation
Hoarding:
People are unwilling to help
and share what they know
Barrier #2: Hoarding
Competition among units in a
company leads to less cooperation
Too busy: people do not have
time to help and collaborate
Biased incentives:
rewards for narrow goals
Fear: people think sharing what they
know makes them less powerful
Motivation
Hoarding:
People are unwilling to help
and share what they know
Barrier #3: Search
Size: Big and complex companies
make searching across it harder
Spread out: geographical distance
makes search difficult
Information overload: too much
information makes search harder
Poverty of networks: few
Horizontal links undermine search
Ability
Search:
People who look for information
and people cannot easily find
them.
Barrier #4: Transfer barrier
No common frame: don’t know
how to work together on a project
Tacit knowledge: very difficult to
transfer
Weak ties: strangers
do not transfer knowledge well
Ability
Strangers:
People are unable to transfer
knowledge from one place to
another
Barriers vary by company
- Example: DNV
Lowest quartile
(lowest
barriers)
Second lowest
quartile
Median
Scores between 3
and 105
106 – 159
160
Second Barrier:
Hoarding
3 – 60
61 - 99
Third Barrier:
Search
3 – 90
Fourth Barrier:
Transfer
3 – 110
Good
First Barrier:
Not Invented Here
Implication:
Second highest
quartile
Highest quartile
(highest
barriers)
161 – 200
201 - 300
Bad
169
100
101 - 140
141 - 300
133
91 - 134
135
136 - 180
181 - 300
180
111 – 167
168
169 – 210
211 - 300
194
Barrier not a
problem
Barrier might
cause some
problems
Barrier might
cause
problems
N=107 companies. “How to Build Collaborative Advantage.” SMR, 2004
Barrier a
problem
Barrier a big
problem
Example: Large high-tech company
Good
First Barrier:
Not Invented
Here
Lowest quartile
(lowest
barriers)
Second lowest
quartile
Median
Scores between 3
and 105
106 – 159
Highest quartile
(highest
barriers)
160
161 – 200
201 - 300
100
101 - 140
141 - 300
135
136 - 180
181 - 300
Bad
137
Second Barrier:
Hoarding
3 – 60
Third Barrier:
Search
3 – 90
Fourth Barrier:
Transfer
3 – 110
Implication:
Second highest
quartile
61 - 99
72
91 - 134
184
111 – 167
168
169 – 210
211 - 300
169
Barrier not a
problem
Barrier might
cause some
problems
Barrier might
cause
problems
N=107 companies. “How to Build Collaborative Advantage.” SMR, 2004
Barrier a
problem
Barrier a big
problem
MANAGEMENT LEVERS
Tailor solutions to specific barriers, and don’t overdo
Tailor Three Levers
Unification Lever
•Big Common Goal
•Teamwork Value
•Language
Tailor Three Levers
Unification Lever
People Lever
•Big Common Goal
•Collaborative leaders
•Teamwork Value
• Selecting:
promotion, recruiting
•Language
• Development
Tailor Three Levers
Unification Lever
People Lever
Network Lever
•Big Common Goal
•Collaborative leaders
•Internal Networks
•Teamwork Value
• Selecting:
promotion, recruiting
•External Networks
•Language
• Development
• Knowledge
Management
Summary of Disciplined Collaboration
ECONOMIC OPPORTUNITY
How much value—and where—from collaboration?
BARRIERS TO COLLABORATION
Find them, tear them down
MANAGEMENT LEVERS
Tailor solutions to specific barriers, and don’t overdo