The Culture of Collaboration

Collaboration Means Knowing When to Step Aside

“Do you want to be rich or do you want to be king?” That’s the question Mark Perry, general partner with New Enterprise Associates, asks founders of portfolio companies who resist being replaced. Often, venture capitalists like Mark seek to replace founding CEO’s with leaders who are more suited to take a company to the next level.

 

Collaborative leaders willingly step aside when it’s the right decision for the company. After all, many people have a stake in a company’s success including investors, employees and customers. For a founder to remain CEO because of ego and bravado can damage the company he or she has worked hard to create.  And, as Perry points out, the rewards for everybody are often greater when the founding CEO moves on at the right juncture.

 

At the 19^th Annual IBF Venture Capital Investing Conference last month in San Francisco, venture capitalists and executive search consultants debated issues including CEO succession on a panel called “Building a Management Team in 2008.” The panel included venture capitalists Mark Perry of New Enterprise Associates, Cameron Lester of Azure Capital Partners and Mark Sugarman of MHS Capital plus recruiter Aaron Lapat of J. Robert Scott. Recruiter Jeff Kuhn of FLG Partners moderated the panel.

 

The VC’s agreed that it becomes obvious over time if the CEO puts his or her own success above that of the company. This is exactly the kind of behavior smart VC’s seek to identify before they invest. Cameron Lester of Azure Capital Partners recommends asking founders the question, “If this company grew beyond you, would you be willing to step aside?”

 

Stepping aside, deferring to others, and soliciting input are among behaviors key to collaborative organizations of all sizes.  When we use collaborative tools including web conferencing, it’s important to relinquish control and let colleagues take the cursor while sharing applications. In a broader sense, collaborative people understand how their expertise contributes to collaborative work and know instinctively when to defer to those with complimentary skills.

 

Challenges for collaborative leaders include resisting the control paradigm and inviting input from all levels and functions.  Then it’s easier to recognize when changing roles, relinquishing authority, or even leaving the organization benefits the company. The acid test is whether stepping aside creates organizational value.

Washington Times Understands The Culture of Collaboration

Many traditional media outlets have difficulty understanding collaboration. Newspapers, magazines and TV networks are typically steeped in star culture and embrace competition. So the notion that collaborative culture is changing business models and the nature of work leaves many reporters and editors scratching their heads.

Last Sunday, however, The Washington Times showed that it’s head and shoulders above most other traditional media outlets when it comes to understanding collaborative culture and the future of business. For a media outlet to capture the essence of collaboration, the reporter and his or her editor need to be on the same page—collaborating, if you will. Clearly, this occurred at The Washington Times. The paper selected James Srodes to review The Culture of Collaboration book. You can read the review here. Srodes, a veteran business writer, is well-suited to understand the value of collaboration. He is the former Washington bureau chief for both Forbes and Financial World magazines.

According to Srodes’ web site, he is also the biographer of Benjamin Franklin, auto industry maverick John DeLorean and Allen Dulles. Dulles served as the director of central intelligence under U.S. Presidents Eisenhower and Kennedy. Currently, the intelligence community is working on adopting a more collaborative culture.

In The Washington Times, Srodes writes:

“Where once there were chains of command, flows of information (and power), central locations and memo buck slips of Talmudic complexity and obtuseness, technology has made it possible for diverse creative and managerial teams operating in locations around the globe to work simultaneously on projects that bring better, cheaper, more effective products on line at an accelerated pace.”

At the end of the review, Srodes notes that the culture of collaboration “may be the most exciting business development since the assembly line.”

Is Ford's New Marketing Head a Star? Plus Keith Richards Provides Collaboration Insight

James Farley is no star, but The New York Times would have us think otherwise. Farley is Ford Motor Company’s new group vice president of marketing and communications. He took the job after spending seventeen years at Toyota, most recently as group vice president and general manager of Lexus.

The Times ran as its business section lead last Sunday a story about Farley headlined “A Star at Toyota, A Believer at Ford.” There is little in the story that would suggest Farley is a star, but the Times nevertheless packaged the story in a way that perpetuates the Myth of the Single Cowboy. This is the notion that one self-sufficient, rugged individual can achieve smashing success without help from anybody. We turn athletes, chefs, surgeons, politicians, entrepreneurs and corporate leaders into stars. The media drives this myth into our living rooms, our organizations and into our consciousness.

In the same edition as the Farley story, the Times travel section's first page promoted a story on French chefs on page 7 as “The New Culinary Stars of Bordeaux.” What about the line cooks, the prep people, the servers and the expeditors? It takes more than a single, star chef to prepare a meal in an upscale restaurant. But the Times and many other media outlets would prefer that we believe one person makes it all happen.

Toyota emphasizes collaboration over star culture. Farley clearly chalked up significant achievements at Toyota, because he collaborated across levels, functions and business units. Rather than practicing shoot-from-the-hip management, Toyota leaders practice nemawashi, which means literally “to prepare a tree’s roots for the soil.” Nemawashi is essentially about getting broad input into decisions and making decisions slowly by consensus. As a star, Farley could never have achieved much at Toyota. As a collaborator, Farley and his colleagues created considerable value.

Over the weekend, I saw the awesome IMAX version of the new Rolling Stones movie, Shine a Light, directed by Martin Scorsese. In the film, Keith Richards discusses his guitar prowess as compared with that of Ron Wood, who shares with Richards the title co-lead guitarist of the Stones. “We’re both pretty lousy, but together we’re better than ten others,” Richards says. This sums up the value of collaboration over star culture.

Dana Holding Corporation Gets Collaborative CEO

Gary Convis is willing to roll up his sleeves and get dirty, and he listens closely and collaborates with people at all levels. The retired chairman of Toyota Motor Manufacturing, Kentucky is joining Toledo, Ohio-based Dana Holding Corporation, as its CEO.

When I was researching The Culture of Collaboration book, Convis was generous with his time and provided tremendous insight into how collaboration creates value for Toyota. Published reports have focused on Convis’ knowledge of lean manufacturing techniques, but he will likely engage Dana team members in every function, region and level to adopt a more collaborative culture.

Convis speaks softly and exudes confidence, but without a trace of egotism. At Toyota, he expected aspiring leaders to spend time on the assembly line. “When you put in days of working on the line with your own hands building a car, what the team member does every day, that means you really connect with that team member and you have respect for what they do,” Convis told me.

As a collaborative leader, Convis seeks broad input into decisions and expects people to contribute regardless of role or title. He also believes strongly in mentoring, and will guide protégés to adopt more collaborative approaches to leadership. Shoot-from-the-hip managers, information hoarders, and people used to star status will likely need to adapt.

Dana and Convis share some values. The “Dana style” of management emphasizes idea generation from everybody and “cooperation among Dana people globally.” However, Convis will likely work across business units and functions to help nourish seeds of collaboration.

Dana’s values, as described on the company’s web site, include employing, developing and promoting “the very best people based on personal performance and skills.” With Convis at the helm, Dana may change this statement to “the very best people based on collaborative performance and skills.”

Ford Keeping Volvo: Collaboration a Factor?

Collaboration was percolating beneath the surface of Ford Motor Company’s announcement last Thursday that it would focus on fixing rather than selling Volvo. I argued in an August 3 post entitled “Why Ford Should Keep Volvo” that the greatest value Ford stands to gain by keeping Volvo is the Culture of Collaboration. You can read my post here.

In the announcement, Ford said that it has developed a plan for Volvo. The priority is to improve the unit’s financial performance, which has been stymied by several factors including foreign exchange rates. Another objective is to increase “synergies” (essentially collaboration) between Ford-brand operations and Volvo, particularly in product development and purchasing.

In The Culture of Collaboration book, I write about highly-collaborative enterprises. Ford is included mostly because of Volvo. While Ford’s collaborative culture is a work in progress, Volvo collaborates constantly and is consensus-driven. In short, Ford has much to learn from Volvo on many levels. Clearly, Ford CEO Alan Mulally wants to accelerate collaboration between Ford and Volvo. Until recently, Alan ran Boeing Commercial Airplanes—and Boeing is among the most collaborative companies. My sense is that Alan is the right leader at the right time for Ford. He understands the value collaboration can create. Clearly, the desire to collaborate with Volvo is playing a role in Ford’s decision to keep the unit.

Overcoming Fear of Failure Enhances Collaboration

Zane Safrit, the highly-collaborative CEO of Conference Calls Unlimited, has added substantially to the conversation about how accepting and learning from failure enhances collaboration. Incidentally, Zane is a living, breathing example of a CEO who leverages collaborative culture and tools to create value.

Conference Calls Unlimited has integrated many collaborative tools into its culture. Using the basecamp Wiki product from 37 Signals, Zane notes, helps eliminate backdoor channels of conversation and decisions at Conference Calls Unlimited. But minimizing fear of failure is more about the culture Zane has helped instill than it is about the tool per se. Rather than trying to hide mistakes, team members feel comfortable sharing work and ideas for all to see. Some ideas work and a few fail, but everybody keeps learning and collaborating; and the company benefits from the cultural acceptance that it’s ok to fail. Zane and his team avoid using the word mistake and instead focus on learning and collaborative accomplishments. And the result is that Conference Calls Unlimited, Zane feels, makes fewer mistakes because of the collaborative culture and environment. You can read Zane’s post here.

Meantime, Citigroup and Merrill Lynch are searching for CEO replacements in the wake of the sub-prime mortgage meltdown. The problem, according to a story (subscription required) by Aaron Lucchetti and Monica Langley in Monday’s Wall Street Journal, is that these firms suffer from a thin talent pool. It seems that the lack of internal CEO candidates stems from a Wall Street culture that is so focused on quarterly returns that leaders quickly lose their jobs if they fail to deliver.

Something else that’s at play on Wall Street is the star cultures that plague many firms. An individual must perform as a star analyst, star trader, or a star executive. If he or she fails, the company is quick to sack the individual. Trust is out the window, and the organization—as we’re now seeing—suffers. This kind of culture gives rise to scandals including numbers fudging. Enron, which had a star culture, comes to mind. In collaborative cultures, team members brainstorm, make mistakes, chalk up successes, and often create far more value for the organization. Overcoming the fear of failing advances collaborative culture and can deliver significant returns.

Collaboration and the New York City Subway

Collaboration enhances efficiency and innovation and keeps the equipment maintained and the trains running on time, literally, for the New York City subway system. In the 1970s, the New York subway system was in a shambles. I know, because I rode the subway to school in those years when I was growing up in New York. System delays and breakdowns were commonplace.

(Above image: A New York subway car in 1979. Photo by Doug Grotjahn, collection of Joe Testagrose)

Part of the problem was that the transit system rarely maintained subway cars and instead bought new ones when it had money, which was rare. This, according to a story by William Neuman headlined “After 45 Years, Subway Chief Has Reached His Stop” in the October 13 edition of The New York Times. You can read the story here. Neuman writes that in the 1960’s, a transit system mechanical engineer named Doug Tilton believed there was a better way and developed a plan to perform scheduled maintenance on subway cars, which was then a novel concept. In those days, according to the article, “most managers at the transit agency were not interested in new ideas from their employees.”

In the 1970’s,Tilton gained traction for his proposal by collaborating with Michael Lombardi, an instructor and manager at the transit system. Lombardi saw an opportunity, because the transit system had hired a consultant to address subway breakdowns. Lombardi and the consultant promoted Tilton’s idea and gained the support of top transit officials.

In 1981, the state of New York authorized a multibillion dollar plan to overhaul the city’s transit system. This helped institutionalize the program which is now known as the Scheduled Maintenance System. The transit authority has extended the program to the bus fleet, and transit agencies in other cities have adopted similar programs.

Lombardi told the Times that in 1979, subway cars broke down on average every 4800 miles traveled. Today they break down every 149,000 miles. Collaboration certainly has created value for the New York City subways. Next month, Michael Lombardi will retire as the senior vice president for subways at New York City transit. By collaborating with Tilton and the consultant, he accomplished more than he ever could have alone.

Collaboration Roundup: CEO private lives, Google collaboration, and Adobe CS3

I’ve been on the road speaking on The Culture of Collaboration a lot recently. Meantime, material for this blog has been piling up, so I’ll share a few items:

There was a fascinating story in The Wall Street Journal on September 5 headlined “Scholars Link Success of Firms to Lives of CEOs” by Mark Maremont. You can read the story for free here. The story describes new research involving how the personal lives of CEOs may impact stock prices of their companies. The theory is that a family death or a recent large house purchase are distractions that negatively affect shareholder value.

Among the studies the story mentions is one by two Penn State professors called “It’s All About Me” which is to be published in Administrative Science Quarterly. The study concludes that narcissistic executives take greater risks, leading to bigger swings in profitability of their companies. You can read the paper by Arijit Chatterjee and Donald Hambrick here.

The Wall Street Journal story hints that a CEO-centric star culture drives many companies. This is shortsighted leadership. It’s no surprise that narcissistic executives expose their companies to uncalculated risks. Too often, star cultures breed shoot-from-the-hip leadership rather than consensus building through broad input. As companies adopt more collaborative cultures, swagger and narcissism become less appropriate and one leader’s distractions are less likely to jeopardize the company.

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Google Docs let people collaborate on documents screen-to-screen. I’ve been checking out the tool recently. The drawback is that it’s not quite real time, but the potential is huge. Google hosts your documents for free, and you and your colleagues can log in and access them from anywhere.

Google has just enhanced the service with the ability to create and collaborate on presentations from anywhere. The capability stems in part from Google’s acquisition in April, 2007 of Tonic Systems. For more on this, check out Clint Boulton’s September 18 story in eWeek headlined “Google Offers ‘Collaboration in the Cloud.’”

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I’ve been meaning to write more about Adobe and its tools. Core customers for such Adobe products as Illustrator, Photoshop, Flash and Dreamweaver are highly creative—and creative people are often collaborative. I’ve been checking out some of Adobe’s products recently. Acrobat Connect is the web conferencing tool that enables screen-to-screen sharing and annotating of Adobe’s other products and other applications. You can read my June 18 post about Acrobat Connect here.

I’ve also been checking out the new Adobe Creative Suite 3, which coupled with Acrobat Connect, lends itself to collaborative design. Using CS3, geographically-dispersed designers can create vector graphics, develop web sites, edit images and layout pages collaboratively. Marketing people can collaborate with designers in real time, annotating everything from brochures to web designs.

Hierarchy Busters Enable Collaboration

Hierarchy is a huge impediment to collaboration. In organizational cultures that emphasize hierarchy, people feel compelled to go through channels. This prevents front-line people from contributing to decisions and also discourages leaders from getting real-time, unfiltered information from the field. Smart organizations encourage collaboration across levels, functions, business units and regions.

I was glad to read in yesterday’s Wall Street Journal that SK Telecom of Korea has taken fundamental steps to reduce the role of hierarchy. Evan Ramstad writes in his "Managing" column headlined “Pulling Rank Gets Harder At One Korean Company” that SK Telecom has replaced the five ranks that employees used to address each other with one rank, manager. You can read the article here (reg. required).

I live in California, where people in business typically call each other by their first names. For somebody to call his or her boss “Director Jones” would seem absurd. But even in Silicon Valley companies with supposedly reduced hierarchies and relaxed environments, trappings of position exist such as triple-sized cubicles. In other regions, hierarchy is more pronounced. People address senior leaders as “Mr. or “Ms.” and they talk of vice presidents in hushed tones as if they might get in trouble for even uttering the names of big shots.

As growth has slowed, SK Telecom has begun encouraging more debate and input from all levels. The idea is to spark more creativity and risk-taking, which are certainly important to collaborating. South Korea’s business culture has traditionally concentrated decision-making with senior executives “to protect their power” as Ramstad notes. Clearly, SK Telecom has realized that, in Bob Dylan’s words, the times they are a-changin’ and that a hierarchical culture was costing the company money.

Other companies should take notice that reducing the role of hierarchy and instilling the culture of collaboration is in vogue—and will create value.

Collaboration and Star Culture

Collaboration requires collaborative culture. That’s the whole point of this blog. The opposite of collaborative culture is star culture, which our collective culture—particularly in the United States—perpetuates. The media is certainly complicit, because celebrity stories draw audiences. Therefore, the media has a vested interest in manufacturing stars—not just Hollywood people, but business leaders, athletes, entrepreneurs, surgeons, chefs and others. Food writers are particularly culpable, and we’ve certainly seen the celebrity craze spread to winemakers.

Now, apparently, star culture is trying to envelop tequila makers. Last Friday, the San Francisco Chronicle ran a short article by Camper English headlined “Next big thing: Tequila bottle signings.” You can read the article here. The story begins, “Further evidence that distillers are the new rock stars…” We learn from the article that Carlos Camarena, owner and third-generation master distiller of El Tesoro Tequila, will be in San Francisco to sign autographs on $185 bottles of tequila at a liquor store.

Clearly, Mr. Camarena is not alone in contributing to the success of El Tesoro. According to El Tesoro’s web site, making tequila begins with the jimador, the person who hand picks perfectly-ripe agaves and separates the pina, the juicy blue core, from the rest of the plant. “Most other tequila producers use an automated system that processes the entire stem,” the web site notes. Next workers cut the pinas into quarters with a special ax. In the next stage, workers use the traditional method of baking the pina quarters for 36 hours and cooling them for another 36 hours. Next workers use a one-ton stone wheel called a tahona to crush the pinas, extracting their juices. There are three more steps.

The point is that many people with a variety of expertise collaborate to make El Tesoro tequila. While I appreciate the marketing benefits of Mr. Camarena signing tequila bottles during his rock star-style tour, this feeds into star culture and sends the wrong message to the public and to El Tesoro team members. Promoting the CEO as a star may produce a momentary marketing bounce, but a collaborative culture sustains greater business value than a star culture.