The Culture of Collaboration

Collaborate to Fix Venture Capital and Innovation Ecosystem

With a severe liquidity squeeze and a withered initial public offering (IPO) market, the venture capital industry and entrepreneurs face incredible challenges. The infrastructure to take companies public has nearly collapsed.

 

“The ecosystem is broken,” Judy Estrin told an audience at the Tech Policy Summit this week in San Mateo, California. Judy, serial entrepreneur and former chief technology officer of Cisco, was referring to the ecosystem comprising venture capitalists, investment bankers, universities, entrepreneurs, scientists, customers and others that has launched scores of innovative and profitable companies including Intel, Apple, Cisco and Google over the last forty years.

 

Judy has become a crusader for innovation, one of the Ten Cultural Elements of Collaboration that I identify in The Culture of Collaboration book. While there have been “exit” opportunities for venture-backed companies in recent years, those exits have been almost entirely mergers and acquisitions (M&A). “M&A is not enough to spur innovation,” Judy insists. Therefore, we must fix the innovation ecosystem and repair the IPO market to regain innovation leadership.

 

In her book, Closing the Innovation Gap (McGraw-Hill, 2009), Judy chronicles the breakdown of the innovation ecosystem.  She argues that sustainable innovation never happens in a vacuum. “It is not just a flash of brilliance from a lone scientist, nor is it simply the result of a group going offsite to brainstorm and play team-building games.” Judy also quotes Danny Hillis, former vice president of research and development at Walt Disney Imagineering, as saying essentially that the key is not only to create the “soup” where people brainstorm, but also to develop a system that translates their ideas into something effective. Clearly, Judy believes that collaboration is key to innovation.

 

Collaboration is also key to fixing the innovation ecosystem. Let’s face it. Greed-fueled star culture helped break the ecosystem. To fix it, we must recruit and promote collaborators throughout the ecosystem. This means funding entrepreneurial teams focused on the fundamentals of building great companies. It also means rebuilding the public trust that companies are rooted in innovation rather than hype. It also means changing expectations to embrace long-term growth over short-term returns.  

Collaboration at Fortune Brainstorm: Green

I came away from the Fortune Brainstorm: Green summit in Laguna Niguel, California convinced that collaboration and sustainability are inextricably linked. Collaboration connects us with a broader ecosystem that creates value for our businesses and also—in a broader sense—for the planet.

 

Fortune Managing Editor Andy Serwer, conference chair Marc Gunther and their colleagues created a thoughtful, compelling forum in which participants not only exchanged ideas but also developed solutions together on the fly. In other words, people were collaborating and creating value.  

 

Informality is key to getting collaborative juices flowing, and the relaxed physical environment helped. The conference room at the Ritz Carlton featured Herman Miller Aeron chairs and coffee tables with small, sleek monitors on which participants could view close-ups of speakers.

 

Here are some highlights of the conference:

 

Traceability in the supply chain is good for business. That was the consensus of a break-out session in which Arlin Wasserman, vice president of corporate citizenship of Sodexo, Inc., the food service and facilities management company, noted that we need a “massive reinvention of traceability and transparency” in supply chains. Jill Dumain of Patagonia discussed how her company’s web site reveals both the good and the bad. Check out Patagonia’s Footprint Chronicles here. Now that’s transparency!

 

Wal-Mart is collaborating with suppliers on a “360 scorecard” detailing social and environmental footprints of products. Leslie Dach, executive vice president of corporate affairs and government relations, insisted that this effort could affect thousands of products. He also indicated that Wal-Mart would build sustainability into every buyer’s job description.

 

Fear of being accused of “green washing” has prevented Tiffany CEO Michael Kowalski from participating in any environmental conference until now. Kowalski described Tiffany & Co.’s efforts over the last decade to short-circuit the trade in “blood diamonds,” which are often mined by slaves controlled by militias and used to finance wars. Tiffany has reportedly removed blood diamonds from its supply chain by focusing on traceability and transparency. Tiffany can now identify the mined source of fifty percent of its products, according to Kowalski.

 

Bill Ford, executive chairman of Ford Motor Company, noted that he has focused on protecting research and development dollars, despite the downturn. This is clearly a longer-term view that’s critical to creating value through collaboration. As I explained in my book, The Culture of Collaboration, Ford has highly-collaborative pockets. Its challenge is to leverage those collaborative pockets to adopt an enterprise-wide collaborative culture. When Bill Ford joined the Ford board in 1988, he was told that he needed to stop associating with “known environmentalists.” Guess he’s having the last laugh considering the growing realization that green initiatives create value.

 

Peter Darbee, President and CEO of Pacific Gas and Electric Company, challenged the state and federal governments to collaborate with utilities in transforming the economy. At the onset of World War Two, the United States migrated from a peace to war-time economy within two years. “We need to do that,” Darbee insisted. “The government needs to get out of the way,” and streamline the permit process so that utilities can build transmission lines in two years instead of eight or ten.

 

Jeffrey Hollender, president and “chief inspired protagonist” of Seventh Generation, challenged participants to create products and services that “restore the Earth rather than being less bad.” He insisted that manufacturers should consider the entire lifecycle of products.

 

In an incredible story of collaborative leadership, Kevin Surace, CEO of Serious Materials, described how he reached out to union leaders after learning of a 6-day sit-in by workers at the shuddered Republic  Windows and Doors plant in Chicago. Rather than waiting to buy assets through the bankruptcy court, he proactively engaged the people who make windows and listened to their concerns. Serious Materials, which manufactures windows which Surace says are 400 percent more efficient than dual pane windows, ultimately bought the plant for $1.45 million and rehired the 250 laid-off workers.

 

Former U.S. President Bill Clinton delivered the conference’s closing keynote with a call to action that federal and state governments and private industry move beyond policy talks and “operationalize” energy efficiency, carbon reduction and other green initiatives.  He mentioned two particularly interesting initiatives that the Clinton Global Initiative is enabling in collaboration with private industry.  

 

Project 2 Degrees developed with Microsoft and others provides online tools that let cities establish a baseline for greenhouse gas emissions, create action plans, track successes for emissions reduction, and share experiences.  Cisco  is investing $15 million to reduce traffic congestion in cities through its Connected Urban Development Program, which uses information and communications technology to monitor emissions. 

 

 “What we don’t have is enough information sharing in real time,” President Clinton insisted.  Real-time information sharing is key to collaboration whether we’re reducing emissions or developing products. So the discussion of green initiatives comes full circle to spontaneous, on-the-fly collaboration.  I make the case in my book that the quest for value creation has forced the deserialization of work. The need for real-time information sharing is further evidence that sustainability and collaboration are joined at the hip.

 

Collaborating out of the Downturn Focus of Blog Talk Radio Interview

I discussed collaboration with Zane Safrit yesterday morning on his hour-long Blog Talk Radio show. You can listen to the show here.

 

When he was CEO of Conference Calls Unlimited, Zane masterfully used blogging as a marketing and business tool. His small company, based in a rural Iowa community, adopted collaborative culture and tools as an advantage in a marketplace saturated with large players. Zane is a super-capable, collaborative leader.

 

Our conversation ranged from common denominators and motivators for companies wanting to adopt collaborative culture and the biggest mistakes companies make. We also discussed the need to replace star-oriented culture and the role of collaboration in an economic recovery.

 

Zane asked me how companies can balance the need for collaboration with the need for consistency, routines and procedures. It’s a thoughtful question that organizations should consider. I explained that it’s necessary to include collaboration in policies and procedures, so that people are consistently collaborative J.

 

Towards the end of the show, we focused more on the economy. Zane asked me about the biggest trends regarding collaborative culture over the next two years. Here’s what I said:

 

People are going to realize what collaboration is and what it isn’t, and I absolutely believe that collaboration will help deliver us from the downturn. We need to abandon the herd mentality. I blogged about this on March 15, 2009 with a call to action. You can read the post here.

 

There’s a misconception that collaboration is about running with the herd. Real collaboration involves constructive confrontation….coming together to hash out issues, make decisions, improve processes and develop products and services. And it’s much broader than companies. It’s about governments collaborating across agencies and departments, with citizens and with other governments. It’s about people working together to create value in our communities.

 

It’s about changing education so that we’re developing collaborators. The more educated people are, the more competitive they are. Our educational system beats collaboration out of us. That’s changing.

 

I’ve lived and worked in smaller communities where many people get jobs right out of high school. They’re used to working together to cook dinner at the VFW or help neighbors repair tornado damage. It’s this type of attitude that we need to nourish in our country, in higher education, in companies, in and among governments. Coming out of this downturn, star culture and internal competition are unaffordable. Collaboration will drive the recovery.

 

“How will that change our economy, culture, country?” Zane asked me.

I responded:

 

It’ll be back to basics…working together to create real value. The mortgage mess, the financial collapse were rooted in artificial value. We gave the keys to the country and the economy to star competitors… the best and the brightest who went to top schools and competed for themselves without considering the bigger picture. Now we need to entrust our companies, governments and communities to collaborators. And we’re going to build long-term, sustainable value.

Abandon Herd Mentality to Avoid Post-Digital Dark Ages

There’s a dangerous—and convenient—misconception that collaboration is about stampeding with the herd. The misconception is convenient, because often people in organizations and neighborhoods figure out which way everybody’s running, and they follow suit. This tendency leads to mediocrity at best and can poison teams, organizations, industries, the economy, and our collective culture.

 

In contrast, collaboration often requires constructive confrontation, one of the Ten Cultural Elements of Collaboration that I identify in my book. Rather than running in a pack, we can—through collaboration—come together in real time and hash out issues, improve processes and create better products and services.

 

Unlike collaboration, herd mentality is choking off innovation and ingenuity, two cornerstones of the collective culture and consciousness particularly in the United States. Running with the crowd created the dot com bubble, the real estate bubble, mortgage crisis, and arguably fed Bernie Madoff’s Ponzi scheme.

 

In much the same way the herd embraced and artificially ran up dot com stocks and real estate and plunged the world into a deep recession, the herd is now embracing the downturn with abandon. Media, legislators, regulators and stakeholders that were complicit in the dot com and real estate bubbles are now condemning the behavior they embraced. It’s easy to pile on, but where were these voices during the run up and creation of these unsustainable bubbles?

 

In San Francisco, every day I see a couple of more empty storefronts on my flight path. And it’s the same story in New York. I was walking up Madison Avenue several weeks ago, and shuttered stores lined many blocks. People I know who eight months ago insisted on following the herd to the latest trendy restaurant are now eating take-out tacos or microwaving macaroni and cheese, even though they can well afford to eat in restaurants. Being cheap now propels the herd, so the herd is feeding the recession rather than a recovery. John Maynard Keynes, the economist, called the tendency to hoard rather than spend the paradox of thrift. His point, while controversial, was that unnecessary savings during a recession ultimately lowers savings because of the decrease in economic growth.

 

Businesses faced with a credit crunch are slashing research and development budgets, cutting the meat rather than just the fat, and jeopardizing their futures. With bad economic news monopolizing computer screens, the downturn is feeding on itself.

 

The period between the fall of Rome in the fifth century and the early Middle Ages in the tenth century is often called the Dark Ages. It was an era marked by cultural decline, ignorance, lack of enlightenment and societal collapse. The course on which we are headed as we follow the herd to avoid risk, innovation and investment is towards what I call the Post-Digital Dark Ages. While fiscal prudence and frugality make good business sense even in boom times, many companies are sacrificing long-term opportunities for short-term concerns.

 

A Chevron spokesperson recently told me that the company has a dearth of people in their 40’s, because Chevron imposed a hiring freeze for ten years in the 1980’s and early 1990’s. The idea was to cut costs, but that strategy provided short-term benefits with long-term repercussions.  The ultimate result is a talent and knowledge gap.  As experienced team members retire, there is a lack of people with long-term institutional knowledge to replace them. Chevron wants to avoid a similar situation in this downturn and will reportedly continue recruiting regardless of short-term economic concerns.

 

Exigent circumstances provide an opportunity to collaborate, think creatively, innovate, and create incredible value. But opportunity must be seized! The downturn is undeniably an exigent circumstance. Rather than succumbing to the herd mentality, we must reject a Post-Digital Dark Ages and engage and challenge one another to define and refine common goals, innovate, reinvent, invest for the long-term, and pave a path towards economic recovery.

 

We now have access to tools and technologies that we could only dream about during previous downturns. Our challenge is to use these tools to strengthen rather than undermine traditional values of innovation and ingenuity. We must harness a range of real-time and asynchronous collaborative tools plus same-room collaboration to enhance real relationships sustainable in person or at a distance. As we build trust, we must strive to improve shared ideas through constructive confrontation and broad input regardless of level, role or region.

 

More broadly, we must change the conversation from doom and gloom to growth and recovery. Let’s change our approach from hibernation and indecision to collaborative action. People are hibernating, because of across-the-board cost cutting and management edicts banning many necessary business expenses. The result is that team members are lying low, unable or unwilling to perform necessary functions. Therefore, management’s attempt to improve balance sheets is actually leaching value out of companies.  Also, we must find and employ collaborative problem solvers who can rethink how we’re doing business.  

 

If we continue stampeding with the herd, we risk the onset of a Post-Digital Dark Ages. Through collaboration, we can ultimately exit the downturn with a more sustainable, long-term focus throughout business, government and society.

 

Virtual Events Becoming Economic Necessity

Companies in many industries are slashing conference, trade show and sales meeting budgets and replacing traditional events with virtual ones. Publishing is one such industry. According to a story in last Monday’s New York Times, Macmillan will hold two out of three of its 2009 sales conferences virtually via web conferencing. This contrasts sharply with the sales and marketing meeting Macmillan held at the Hotel del Coronado in San Diego last month during which participants participated in wine tastings and got massages. 

 

However, it takes more than adopting tools for virtual events to become a collaborative organization. For many companies, true collaboration requires a wholesale shift. Exigent circumstances can raise consciousness for the shift even in otherwise intransigent cultures. Exigent circumstances include industry realignments, disruptive technology, new competition, and economic downturns.

Facing market challenges in the current recession, many companies are getting a wake up call. 

 

Sparked by reduced budgets, many companies are accelerating their adoption or use of real-time collaborative tools to transform their events and meetings into virtual encounters. These tools include virtual worlds, telepresence, web conferencing and videoconferencing.

 

The right tool choice depends on situations and cultures. For external events such as trade shows and job fairs, it’s necessary to create an experience that will draw people to a brand. To recreate that experience virtually, the 3D immersive quality of virtual worlds like Second Life or Qwaq makes sense. Qwaq is geared to business users and combines an immersive experience with web conferencing functionality. So users can work together while sharing applications in a virtual auditorium or conference room. CNN recently ran an interesting story on virtual trade shows. You can view the story here.

 

For leadership retreats, strategy sessions and board meetings, detecting subtleties such as eye movement is critical. Therefore, telepresence fits the bill, because of its quality visual experience and the feeling that participants are sharing the same space.  To replace a data-driven sales meeting, web conferencing makes sense because the focus is on the slides or spreadsheet more than people. For a cross-functional meeting that includes, say, sales and marketing people, relationship time is necessary before plunging into data. In that case, telepresence or videoconferencing is appropriate.

 

For Macmillan and other organizations, creating value through collaboration requires more than holding two out of three sales conferences virtually. So, perhaps Macmillan is considering adopting collaboration more broadly. It’s time to move beyond sporadic, scheduled use of collaborative tools. Value-driven organizations are integrating collaborative practices and tools into work styles and collaborative culture into organizational DNA.

 

In this downturn, the smart money is rethinking how we do business, reconsidering command-and-control approaches, and moving collaboration to the front burner. This will help organizations survive short term and thrive long term.