The Culture of Collaboration

Trust, Transparency and Collaborating with Partners (or App Users)

        My college housemate, an early and frequent Facebook user, recently announced that he’s pulling the plug on his Facebook account. This decision is apparently based on the perception that Facebook has deceived users about how it shares and profits from personal data. Facebook users are essentially its business partners.

        Meantime, the City and County of Los Angeles is suing the business unit of IBM that includes the Weather Channel app. According to the complaint filed in Los Angeles County Superior Court, the IBM unit has “deceptively used its users’ private, personal geolocation data.” The app reportedly has 45 million users monthly.

        The tide is turning against social media services and various apps that fail to adequately protect user’s data and privacy. Both Facebook and the IBM weather unit also serve business customers. “We want to be the place where work happens,” Facebook VP of Workplace Julien Cordorniou has reportedly told ZDNet. In an interview on Weather.com, Michael Rodriguez, head of mobile apps for The Weather Company, an IBM Business, says “the app has your back.”

         These pronouncements sound great but fall flat. The problem is deterioration of trust. Trust is one of the Ten Cultural Elements of Collaboration that are critical to collaboration. I identify these in The Culture of Collaboration book. Both Facebook and the Weather Company are essentially asking us to trust them with our data so that we can collaborate with other users and with the companies themselves.

          Sneaky language, allegedly deceptive practices and hidden agendas destroy trust and therefore inhibit collaboration. Say a firm wants to collaborate with a business partner. Before partnering companies can effectively collaborate, they must establish the rules of engagement which, among other things, spell out the ownership and use of jointly-created intellectual property. If one partner has a hidden agenda, what are the chances trust will flourish and the collaboration will create value? Practically zero.

          Similarly, when we input data into social media and other apps, we are essentially partnering with the app owner. When the word gets out about allegedly deceptive practices and sneaky language in the terms of service, which is the contract between vendor and user, hidden agendas are no longer hidden. Trust vanishes and with it collaboration. Instead of creating value through collaboration, the deception costs a company plenty in reputation, litigation and revenue.

           Because only the vendor writes the rules of engagement or terms of service, there can be no real collaboration or partnering with the user. While negotiating the terms with each user is impossible, companies would do well to seek input into privacy guidelines and other terms from, say, a panel of user representatives. Then something closer to collaboration with user/partners could occur.

           If Facebook had not lost the trust of many users, my college housemate would undoubtedly continue to partner with Facebook by inputting his data. Companies seeking to truly collaborate with customers and business partners seek clarity and transparency.

 

 

Bankruptcy of Purse--and of Culture

Can an organization’s culture portend disaster?

For the answer, we need look no further than some of the most high-profile corporate scandals. Lehman Brothers, Worldcom and Enron— companies that experienced some of the largest bankruptcies in history— used accounting gimmicks which stemmed from bankrupt cultures. Command-and-control, internally-competitive, autocratic, star-oriented organizational cultures breed unethical and—in extreme cases—illegal behavior.

Now Big Law gives us a new don’t-let-this-happen-to-you poster child for embracing the right culture. Leaders of the once top-tier law firm of Dewey & LeBoeuf overstated revenue and used accounting tricks to hide losses and cash flow shortfalls, according to a 106-count indictment that a New York state grand jury handed up last Thursday. If convicted of the most serious charges, Chairman Steven Davis, Executive Director Stephen DiCarmine and Chief Financial Officer Joel Sanders, each face up to 25 years in prison. Dewey filed for Chapter 11 bankruptcy in May of 2012. The alleged financial shenanigans began as billings dipped and clients evaporated during the depths of the 2008 financial crisis.

But Dewey’s problems began long before the firm’s leaders allegedly began their deceit, as I describe in my new book, The Bounty Effect: 7 Steps to The Culture of Collaboration®. Formed in 2007 from a merger of two venerable firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, the firm reportedly employed three thousand people globally at its height. Dewey’s roots date back a century, but it took roughly five years for the firm to come unglued.

Among other cultural defects, the newly-merged firm created a two-tier partnership system in which it treated “stars” differently than other “partners.” After the merger, Dewey began recruiting so-called “lateral partners” rather than promoting from within. These partners received multiyear, multimillion-dollar guarantees. Dewey’s secretive culture prevented the firm from sharing this information with all of the partners. While one lateral partner reportedly had a six-million-dollar-a-year guarantee, other partners received four hundred and fifty thousand dollars a year.

The stars were those who the firm expected would bring in the most business. Dewey considered other partners “service partners,” the ones who wrote briefs and performed or managed the legal heavy lifting. When word of the wide compensation gap spread, the service partners—many of whom had worked for the firm much longer than the newly-recruited “stars”—became resentful. Clearly, star culture had compromised trust and poisoned the organization. And, guess what? Some highly-touted “stars” were unable to live up to their hype, and therefore revenue fell short of what Dewey needed for paying annual compensation commitments to these “stars.”

The merger occurred right before the financial crisis. By the end of 2008, Dewey had more than $100 million in term debt outstanding and available lines of credits totaling more than $130 million with four banks. The firm’s credit agreements required Dewey to maintain a minimum cash flow. To abide by this covenant, the firm’s leaders and others conspired to misrepresent Dewey’s financial performance, according to the indictment.

So brazen were the defendants, according to the indictment, that they created a document called the “Master Plan” which outlined fraudulent accounting tricks. Plus they reportedly discussed the alleged fraud in a series of emails. One of these apparently read, “Can you find another clueless auditor for next year?”

Suppose Dewey had fostered a collaborative rather than command-and-control culture and organizational structure? What if Dewey had shared rather than hoarded information, harnessed broad input into decisions, and encouraged partners to work together both in developing business and producing legal work? The firm may have weathered the financial crisis rather than devolving into apparent unethical and possibly illegal activity.

Dewey is by no means the only law firm with a two-tier partnership system. Nor is it the only firm that embraces a star-oriented, command-and-control culture. Many law firms and organizations in multiple industries and sectors run the risk of financial implosion, because their cultures are bankrupt. The solution, as I describe in The Bounty Effect, is to change the structure of organizations from Industrial Age command-and-control to Information Age collaborative

Collaborative Law

Competition, arguing, and maneuvering defines law as it’s traditionally practiced. Now, though, a collaborative law movement is gaining traction globally. I had a compelling conversation the other day with J. Kim Wright, a collaborative law practitioner who runs the site CuttingEdgeLaw.com. We discussed Kim’s new book, Lawyers as Peacemakers: Practicing Holistic, Problem-Solving Law (American Bar Association, 2010).

 

“We have not in recent history been very collaborative folks. We are the people to avoid in society,” Kim began. I knew instantly this conversation was going to be interesting. Kim was referring to lawyers who, she says, graduate from law school with “no heart and no soul.” Kim had read “Smashing Silos,” a column I wrote for Bloomberg BusinessWeek. And she insisted that law is all about silos. “We are taught to compartmentalize everything.” These silos include specialties and sub-specialties of law.

 

Collaborative law begins with the premise that people work out their differences towards the common goal of resolution rather than compete and fight through litigation. This is different from the various forms of court-ordered and pre-court alternative dispute resolution (ADR) such as mediation, because ADR often begins with the premise that if the parties are unable to resolve their differences, the case will proceed to trial. Mediation, for instance, often involves “shuttle diplomacy” in which the mediator runs back and forth between both parties and points out the weakness of each side’s case in hopes of avoiding a trial.

 

In contrast, collaborative law involves an acknowledgment from both parties that litigation constitutes failure to achieve goals and places a premium on preservation of relationships. Divorce and family law practice has been faster to adopt the shift to collaboration than many other specialties. In such cases, collaborative divorce and family lawyers sign contracts committing to resolve cases rather than litigate. If they fail to settle, the contracts require that the lawyers withdraw from the case.

 

Collaborative law grew out of a movement in Minneapolis developed by Stu Webb and others during the late 1980’s and quickly spread to northern California and beyond. The International Academy of Collaborative Professionals based in Phoenix brings together lawyers, mental health professionals, and financial professionals to resolve divorce and other conflicts.

 

One barrier to collaborative law is that many lawyers embrace tradition. “Lawyers hate to be on the fringe. They’d prefer to die than be weird,” Kim explained, adding that her goal is to embrace the fringe. Kim focuses on spreading collaborative law across specialties including corporate law. Too often, corporate agreements encourage conflict and ultimate litigation.  In her practice, Kim abandons “boilerplate” or standard contract language and instead writes agreements in plain language designed to anticipate and prevent conflict. “When a conflict comes up, we’ve actually already talked about what to do if there’s a conflict,” she notes.

 

Like corporations, lawyers are waking up to the value collaboration creates both for practitioners and customers.