Is Collaboration Destroying Value at Your Company?

Is Collaboration Destroying Value at Your Company?

When managers see collaboration as an end in itself, they lose sight of the big picture.

Collaboration is good, and more collaboration is better, right? Wrong, says Morten T. Hansen in this month's Harvard Business Review. Managers sometimes forget that collaboration is a means to an end, he says. The end is business value, and not all collaboration produces it; in fact, some collaboration can actually destroy value.

Hansen is a professor at the University of California, Berkeley, and author of 'Collaboration: How Leaders Avoid the Traps, Create Unity and Reap Big Results' (Harvard Business Press, May 2009). He talked with Kathleen Melymuka about how to spot destructive collaboration.

Your article seems heretical. How can internal collaboration be counterproductive?

People engage in cross-unit projects that turn out to cost more than the value they produce. Sometimes they drank the Kool-Aid that collaboration is great and we must do more, and they start collaborating on projects that have marginal value to begin with.

You say that managers shouldn't be asking, "How can we get people to collaborate more?" What should they ask?

"How can we instill the right kind of collaboration so we increase results?" The consequence of asking the second question is that you also ask, "When should we not do it?"

The goal of collaboration is not collaboration; it's results. It follows that to master collaboration is to know when not to do it.

You say the way to answer that new question is to calculate the collaboration premium -- or penalty. What is that, and how do I calculate it?

You need to know three things: First, what is the cash flow from this project if we execute it very well?

Second is opportunity costs: What can we not do because we are doing this? What do we have to forgo because of limited resources, and what is the cash flow from that?

The third thing is difficult to calculate: What is the collaboration cost? If we can't agree on everything, we'll run into problems. How much will they deduct from the rosy estimate of cash flow from the project?

You subtract the second two from the first, and suddenly, it may not be looking like a rosy estimate anymore. If you're looking at a negative number, it's questionable whether you should do this project.

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