“Effectively running a business today involves working with multiple organizations and with multiple departments within those organizations,” says Nari Viswanathan, research director, supply chain and logistics, at the Aberdeen Group, in Boston, Mass. “That can only happen if traditional silos are broken down.”
Yet wholesale collaboration can be too much of a good thing. Without proper organizational, you risk losing focus or slowing progress on strategic objectives in an attempt to satisfy too many demands. Without proper technological controls, you’re in danger of giving away proprietary information.
How can you maintain a happy medium when collaborating? Here are four best practices that enable you to work closely with others without losing sight of your own goals:
Get buy-in from the very top of all relevant organizations Directives to work with others must be mandated by leaders at all organizational levels or effective collaboration simply won’t happen. This doesn’t just mean executives in the C-suites of all separate businesses involved, but the senior managers within each functional department of each business. At the same time, guidelines and rules for keeping out the “noise” of requests or suggestions from partners and customers must be set and communicated throughout the enterprise to avoid employees being distracted by conflicting demands.
Align everyone’s incentives to meet strategic goals People who talk the talk may not always walk the walk. “Unless people understand what’s in it for them, they won’t truly participate,” says Jan Twombly, president of The Rhythm of Business Inc., a consulting firm specializing in collaboration based in Newton, Mass. “Collaboration is all about ‘give and get.'” This means making sure that people are rewarded for acting to further the aims of the enterprise in general rather than just their own particular profit. “If a sales person has the incentive to push for volume only, he or she might not be thinking about whether the products being sold are the most profitable,” says Viswanathan.
Drive mutual decisions through agreed-upon metrics “Different strokes for different folks” may be a nice management mantra, but to collaborate successfully, all parties must agree to one shared standard of what is being measured and how it is measured. Is it the overall profitability of the business? Is it keeping customer service levels high? Is it minimizing inventory? “You have to think about the kinds of actions you want to encourage and put the metrics in place to change behaviors,” says Viswanathan.
Install the right infrastructure to protect valuable data Some types of collaboration can leave organizations vulnerable by providing competitors with insight into proprietary operations or strategies. “When you open up your systems to an external organization, you are taking risks,” says Sam Pullar, founder and executive partner in the Cumberland Partners Inc., a consulting firm based in Suwanee, Ga., that provides manufacturing firms with distribution and logistics services. “You must put the appropriate technical controls in place to guard against those risks.” Twombly agrees that, “Most enterprises already have security systems in place that authorize certain internal people to access certain kinds of information. With external partnerships, you need to slice and dice those access rights even further.”
There are innumerable benefits to collaborating across organizational boundaries — both inside and outside the four walls of the enterprise. For example, by bringing together all participants in the supply chain — from internal manufacturing and distribution functions to external partners such as raw-goods suppliers, wholesalers or retailers — businesses can dramatically reduce inventory and slice the amount of overall working capital that is tied up in the supply chain at any one time. Likewise, internal collaboration between formerly siloed functions or departments can drive efficiency and result in tangible bottom-line benefits.
“It really comes down to entrepreneurial thinking,” says Twombly. “If you think about it, the chief job of an entrepreneur is to rally people around a vision — most particularly, those people that you might not have authority over. You must constantly be thinking of ways to get them to pay attention to your particular needs. Simultaneously, the controls must be in place to make sure you aren’t serving their objectives at the expense of your own.”