31 May 2007

Collaboration generates performance

By Jim Pinto

Today, the pace of business is so rapid that few can predict its twists and turns. Change is sometimes so rapid even long-standing relationships may falter. Yesterday’s valued supplier may become tomorrow’s competitor. Or, large customers may suddenly disappear, victims of rapid technology shift or offshore transfers.

With continued, accelerating change, collaboration is the key. This means the sharing of business information rapidly and effectively with suppliers and customers—and perhaps even suppliers’ suppliers and customers’ customers. Collaboration brings major benefits for all the companies involved.

The Harvard Business Review reports a 5% increase in customer retention can result in a 25% to 95% increase in profits from that relationship. To maximize their return on relationship investments, companies must seek ways to drive additional revenues and profits from existing relationships. This comes through strong collaboration.

To collaborate effectively, employees must work in extended virtual teams comprising colleagues, as well as customers and supplier partners. Just as collaboration between separate departments within companies proved to be very effective in the past, now collaboration must extend beyond conventional corporate boundaries.

Working in multi-company environments, transcending international boundaries, people must establish collaborative relationships. These may be short-term, project-focused or long-term, multi-project planning staff. Strong mutual inter-company benefits will build relationships and yield results. Companies must invest in selecting the right people who can learn how to work with suppliers and customers and determine how to extract the most value in terms of mutual revenues and profits.

An effective enterprise collaboration solution must provide the technical systems links for people to work together in distributed, cross-organizational teams. Effective communications must work across distance, time zones, and company borders, encouraging team members to discuss, analyze, and review information collaboratively.

This kind of collaboration expands the conventional borders of the company. People can utilize the work experience of others in the extended enterprise and learn organizational practices and methods from peers in collaborating companies. Team members can be available from anywhere at any time through a browser. As a result, the team and the companies will grow smarter and add more value every day as they refine and reuse their knowledge.

Expand your horizons, by expanding the borders of your company through collaboration. The question is: Who can your company collaborate with? The answer is relatively simple: Your best suppliers and your best customers. Collaboration increases revenues and profits for all the participants.

Industry experts and businesses that have implemented collaborative techniques claim that collaboration is a key enabler, allowing companies to react more quickly to changes in supply and demand. In the next few years, your enterprise will be collaborative, or it won’t exist.

Related Links:

• A true growth plan: Global collaboration:
  http://r.listpilot.net/c/isa/17n4od9/bu0b
• Online collaboration:
  http://www.networkworld.com/topics/collaboration.html
• Process automation and collaboration: C-Business:
  http://www.web-enable.com/industry/processautomation.asp

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points at www.jimpinto.com/writings/points.html.