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Disciplined Collaboration

Disciplined Collaboration. Morten T. Hansen MIIC March 2, 2009. The Apple iPod story. iPod introduced in Cupertino, California, in October 2001. September 11 2001. October 23 2001. iPod a combination of existing pieces. Apple as Masterful Collaborator. External 1.8 inch drive (Toshiba)

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Disciplined Collaboration

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  1. DisciplinedCollaboration Morten T. Hansen MIIC March 2, 2009

  2. The Apple iPod story

  3. iPod introduced in Cupertino, California, in October 2001 September 11 2001 October 23 2001

  4. iPod a combination of existing pieces Apple as Masterful Collaborator • External • 1.8 inch drive (Toshiba) • Hardware blueprint (PortalPlayer) • MP3 decoder controller (PortalPlayer) • Codec (Wolfson • Lithium battery (Sony) • Power management (Linear Technology) • Basic software (Pixo) • iTune software (Soundjam) • Interface controller (Texas instrument) • Internal • Architecture • Hardware engineering • Display • Design • User interface • Scroll wheel

  5. iPod a combination of existing pieces Apple as Masterful Collaborator • External • 1.8 inch drive (Toshiba) • Hardware blueprint (PortalPlayer) • MP3 decoder controller (PortalPlayer) • Codec (Wolfson • Lithium battery (Sony) • Power management (Linear Technology) • Basic software (Pixo) • iTune software (Soundjam) • Interface controller (Texas instrument) • Internal • Architecture • Hardware engineering • Display • Design • User interface • Scroll wheel “This was a highly leveraged product from the technologies we already had in place” Rubinstein, head of hardware at Apple

  6. iPod had tight collaboration across three units inside Apple Steve Jobs Rubinstein Software Hardware Design

  7. Fast:Time to market was 8 months! iPod Team Launched iPod Introduced Nov 2001 Xmas March 2001 8 months from concept to introduction

  8. Amazing success: iPod/iTunes a $10bn business in 6 years Growth of iPods sold … .. has become a $10bn business

  9. Sony’s Connect Story

  10. Sony had all the pieces in-house- How hard could it be?

  11. Sony had all the pieces in-house- How hard could it be? “We can do this in nine months. We got the product, hardware, software.” Executive Philip Wiser telling Howard Stringer (U.S. head) in 2003

  12. Hard!Rivalry among 5 groups in Sony in 2003 Sony Music Japan Own online music PC Japan Own music player Sony Music US Own online music Walkman Japan Own music player Sony Electronics US Own online music

  13. Hard!Rivalry among 5 groups in Sony in 2003 “It’s impossible to communicate with everybody when you have that many silos.” Howard Stringer, Sony CEO “Sony has long thrived on a hyper-competitive culture, where engineers were encouraged to outdo each other, not working together” the Wall Street Journal Sony Music Japan Own online music PC Japan Own music player Sony Music US Own online music Walkman Japan Own music player Sony Electronics US Own online music

  14. Connect launched 2004, a flop, takenoff, re-launched, terminated 2007 A Long, painful decline in Sony audio Note: audio sales includes all audio products

  15. Howard Stringer appointed CEO of Sony in June 2005 One of the first steps?

  16. Howard Stringer appointed CEO of Sony in June 2005 One of the first steps? Sony United

  17. Bad collaboration is worse than no collaboration ….. Collaboration Traps

  18. Trap #1. Wrong organization set-up. Collaboration efforts run into a wall. • Example: Sony Connect • Decentralized structure hindering • collaboration • Competition among units • Incentives skewed against working • across the organization

  19. Trap #2. Over-collaboration: Collaboration run amok. “Must be good to collaborate…..” • Example: BP • “People always had a good reason for meeting…You’re sharing best practice. You’re having good conversations with like-minded people. But increasingly, we found that people were flying around the world and simply sharing ideas without always having a strong focus on the bottom line.” John Leggate, CIO, British Petroleum

  20. Trap #3. Over-shooting potential. Upside of Collaboration not as high • Example: Sony buying Columbia Pictures • Idea was to that Sony’s electronics division should collaborate with film-makers on cross-promotions etc. • - Last Action Hero Movie: soundtrack by Sony Music, joint marketing of TVs, video recorders, and the film. • - But upside was far smaller and never large. +

  21. Trap # 4. Under-estimating costs of collaboration. Costs much higher • Example: DNV food case • For the IT consulting division, • probably not the best project • Lots of hassles working across • business units (costing time and • money)

  22. Trap #5. Getting the organizational problem wrong. Mis-understanding why people don’t collaborate. • Leaders mis-understand why employees don’t collaborate better • “We thought the key problem was difficulty in finding knowledge and people in our company, when in reality the key problem is people’s unwillingness to collaborate.” • IT manager, large U.S. company

  23. Trap #6. Implementing the wrong solutions to organizational problems • Leaders put in place the wrong solutions because they mis-understood the problem • “Because we thought the key problem was search, we invested in an elaborate IT and knowledge management system to help people find things in the company. But the key problem wasn’t search.” • IT manager, large U.S. company

  24. Getting collaboration right You must put discipline in collaboration! …Provided you have the discipline Collaboration can get great results……

  25. Disciplined Collaboration ECONOMIC OPPORTUNITY How much value—and where—from collaboration? BARRIERS TO COLLABORATION Find them, tear them down MANAGEMENT LEVERS Tailor solutions to specific barriers, and don’t overdo

  26. ECONOMIC OPPORTUNITY How much value—and where—from collaboration?

  27. Executives need to articulate goals of collaboration in three areas Better Innovation Revenue Growth Improved Operations

  28. Better Innovation Revenue Growth Improved Operations Cross-unit product innovation New businesses by combining

  29. Procter & Gamble master at innovation through collaboration $ 34.99 “New study shows whiter teeth can lead to greater success in work and love” P & G website, 2007

  30. Procter & Gamble master at innovation through collaboration $ 34.99 bleach expertise novel film technology teeth whitening expertise “New study shows whiter teeth can lead to greater success in work and love” P & G website, 2007

  31. Procter & Gamble master at innovation through collaboration $ 34.99 bleach expertise novel film technology teeth whitening expertise “New study shows whiter teeth can lead to greater success in work and love” P & G website, 2007 Fabric & Home Division Oral Care Division Corp. R&D

  32. Executives need to articulate goals of collaboration in three areas Better Innovation Revenue Growth Improved Operations Cross-selling, Re-package Customer service by coordinating

  33. Wells Fargo: best in cross-selling products to banking customers Best in U.S. with 5.2 products per consumer Next goal to go from 5.2 to 8 products per consumer Avg. U.S. banking Customer has 16 financial products

  34. Wells Fargo: best in cross-selling products to banking customers Best in U.S. with 5.2 products per consumer Next goal to go from 5.2 to 8 products per consumer Avg. U.S. banking Customer has 16 financial products One Wells Fargo 80 business units

  35. Executives need to articulate goals of collaboration in three areas Better Innovation Revenue Growth Improved Operations Costs/investments savings by sharing Better decisions by getting input

  36. BP: lots of best practice transfers- example: retail in gas stations BP UK Best practice transfer BP Atlanta Best practice transfer BP Netherlands

  37. BP: lots of best practice transfers- example: retail in gas stations BP UK Best practice transfer BP Atlanta Best practice transfer Much improved: BP Netherlands +10% -20% -26% Working Capital Retail Sales # SKUs

  38. Summary: assess opportunities for collaboration in three areas Better Innovation Revenue Growth Improved Operations Cross-unit product innovation Cross-selling, Re-package Costs/investments savings by sharing New businesses by combining Customer service by coordinating Better decisions by getting input

  39. Assess opportunities: One high-tech company Costs & Decisions Customers Innovation Scale Scale: 100=very high; 1 = very low

  40. DNV assessment of opportunity;large gaps Costs & Decisions Innovation Customers

  41. The Collaboration Matrix:DNV example

  42. BARRIERS TO COLLABORATION Find them, tear them down

  43. Four barriers to collaboration #3. Search Cannot find good help #1. Not-invented here Do not want to reach out # 2. Hoarding Do not want to help # 4. Transfer Cannot work together “wrong chemistry” Ability Motivation

  44. Barrier #1: Not-Invented-Here Insular culture: Interacting inside the group Status gap: Don’t want to cross status lines Not-Invented-Here: People are not willing to reach out to colleagues in other parts of the company to collaborate with them. Norm of self-reliance: Ought to fix your own problems Fear: Do not want to reveal problems or poor performance Motivation

  45. Barrier #2: Hoarding Competition among units in a company leads to less cooperation Time famine: people do not have time to help and collaborate Hoarding: People are unwilling to help and share what they know Biased incentives: rewards for narrow goals means people do not help Fear: people think sharing what they know makes them less powerful Motivation

  46. Barrier #2: Hoarding Competition among units in a company leads to less cooperation Too busy: people do not have time to help and collaborate Hoarding: People are unwilling to help and share what they know Biased incentives: rewards for narrow goals Fear: people think sharing what they know makes them less powerful Motivation

  47. Barrier #3: Search Size: Big and complex companies make searching across it harder Spread out: geographical distance makes search difficult Search: People who look for information and people cannot easily find them. Information overload: too much information makes search harder Poverty of networks: few Horizontal links undermine search Ability

  48. Barrier #4: Transfer barrier No common frame: don’t know how to work together on a project Strangers: People are unable to transfer knowledge from one place to another Tacit knowledge: very difficult to transfer Weak ties: strangers do not transfer knowledge well Ability

  49. Barriers vary by company- Example: DNV Good Bad 169 133 180 194 N=107 companies. “How to Build Collaborative Advantage.” SMR, 2004

  50. Example: Large high-tech company Good Bad 137 72 184 169 N=107 companies. “How to Build Collaborative Advantage.” SMR, 2004

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