Author Archives: Andrew Jacopino

Collaboration? What’s in it for me? (Part 2)

In the previous article I described the benefits and the challenges of being collaborative including the effect of Collaborative Overload described by Rob Cross, Reb Rebele and Adam Grant in their 2016 HBR Article Collaborative Overload.  The question is what do we do about it?

Unfortunately, in the unusual times we live in require all of us to be more collaborative through familiar and established means (e.g. phone calls and emails) to newer means (e.g. videoconferencing such as  Zoom, WebEx, Microsoft Teams, etc. and collaboration tools such as Google G Suite, Slack, Atlassian Jira, Microsoft SharePoint/Teams, etc.).  While many of us collaborate in order to achieve the outcomes expected of us, this is underpinned by the fear of “I have so much of my own work to do but what if I don’t collaborate?”.  With global unemployment leaving entire market sectors and economies in ruin is now really the time to be seen as “uncollaborative” and “not a team player”?  With many working from home and increased availability for ‘catching-up’ increases the likelihood and severity of collaborative overload.  So what is the solution?

As with many things it is about balance.  Balancing the need of the individual to complete their own work (their output) with the collective need to collaborate to achieve the organisational outcome.  It is about setting both individual and collective objectives.  In a previous article (see Inputs, Outputs and Outcomes – Part 1 and Part 2) I discussed the differences between being individually accountability for an output while being collectively responsible for an (enterprise) outcome as one method for distinguishing between these two perspectives.  Here “Enterprise” refers to the collection of organisations and individuals that are collectively responsible for delivering the enterprise outcome.  The enterprise may be tightly defined and managed through commercial documentation, or loosely organised through an unwritten understanding of individual roles and responsibilities in delivering the enterprise outcome.

Just as important as setting and reporting on individual and collective performance is organisations and managers publicly encouraging, rewarding and celebrating those who achieve this balance.  

As way of a sporting example, Article VI(E)(10)(a) of the Collective Bargaining Agree (CBA) between the United States Major Baseball League (MBL) and the player’s union outlines 6 factors that may be considered in making a determination of the player’s value as follows:

  1. the player’s “contribution to his Club (including but not limited to his overall performance, special qualities of leadership and public appeal)” in the preceding season (often called the platform year);
  2. the player’s “career contribution”;
  3. the player’s past compensation;
  4. the salaries of comparable players;
  5. any “physical or mental defects” of the player; and
  6. the Club’s recent performance, which can include “[l]eague standing and attendance as an indication of public acceptance.”

As you can see value here is a balance of individual (player) and collective (Club) performance and over the longer term recognising there may be short-term ups and downs.

Unfortunately, for many organisations, this is rarely the case.

So my suggestion for those wanting to incentivise collaboration is to encourage, reward and celebrate those who achieve this balance by assessing value as both individual and collective contributions. By highlighting both requirements we are making it clear that individual success is not enough; rather success is defined as a combination of both individual and collective success.

To finish my story I started with, the person from my former company was fortunately very collaborative.  He not only succeeded personally but helped others in the company succeed regardless of location or position resulting in a “champion team”; and who doesn’t want to be a part of that!

Collaboration? What’s in it for me?

I don’t know why you play a team sport and not be concerned about making your teammates better and helping your team win games. That’s the only thing that really matters, and if you’re the best player, surely you’re going to have some effect on the game’s outcome.

Larry Brown

Having watched the finals of many sporting events I am reminded of the question of whether you desire a “team of champions” or a “champion team” and how this relates to collaboration.

One approach is to set, recognise and reward individual performance objectives with the expectation that this will lead to the achievement of overall, or collective, performance objectives.  I remember as a new member of a consulting firm celebrating the individual with the highest billable hours for the year and all wanting to be that individual perceived by all as both individually and organisationally successful.  But at what cost?  Was this reflective of overall company performance?  Did the individual help others find and complete their work?

Unfortunately, as highlighted in the 2016 HBR Article Collaborative Overload by Rob Cross, Reb Rebele and Adam Grant, they found roughly 20% of organisational champions don’t collaborate; they achieve their individual performance objectives but fail to assist others in achieving their objectives.  But what is the alternative?

Instead, we can set, recognise and reward both individual and collective performance objectives similar to the much guarded but often described Google Page Ranking algorithm.  Here, it isn’t simply about how often the webpage is accessed, but also examines how other pages are linked to / from these pages.  That is, a relative measure of the usefulness of this page in the eyes of others.  Similarly, many sports such as rugby league and union, Australian Football League (AFL), American football, soccer, basketball, etc. don’t simply measure goals or points, but also track players assisting others in the team.  But how do we identify and reward the top collaborators in our organisation?

Given the move to virtual collaboration there are a range of tools that can identify and track those who are central to the collaborative process.  Indeed a colleague who led a blue-sky research team within a very large organisation stated they had the capability to mine the corporate email and instant messaging system to highlight who had the greatest impact both in terms of formal (e.g. senior managers, executives, subject matter experts, etc.) and informal (e.g. the locally acknowledged ‘go-to’ individual for solving problems) influencing.  So the ability exists.  The question is more whether we (1) want to know who these people are and (2) have the ability to reward them for their role in organisational success.  In many cases this may damage corporate hierarchies with some organisations (and individuals) not be ready for this.  Indeed, former Goldman Sachs and General Electric (GE) chief learning officer Steve Kerr once wrote, “leaders are hoping for A [collaboration] while rewarding B [individual achievement]”.

However, being collaborative is a double edged sword.  Just as we help others and the wider organisation achieves better performance through more innovative approaches, it leaves the helpers significantly less time for focused individual work, careful reflection and sound decision making.  The effect was dubbed Collaborative Overload by Rob Cross, Reb Rebele and Adam Grant.

In the next part of the article, we’ll describe some practical steps of how you can address these challenges and deliver both individual and collective success.

The Key to Successful Collaboration

The continued changes in how we work, both individually (a move to individual contracts sometimes referred to as the “gig economy”) and organisationally (companies focused on their core strengths and outsourcing the rest), has resulted in the critical need to work collaboratively with others.  Whether it be designing a new product, delivering a service or even responding to tender, harnessing the strengths of each participant is critical to collective success.  Unfortunately, simply having the desire to collaborate is unlikely to result in success, especially in new relationships formed for a specific purpose.  Long-term, successful collaboration requires other ingredients to ensure success.

In her article, Collaborating with Someone You Don’t Know, Rebecca Zucker proposes the following 5 questions for starting a successful collaborative relationship:

  1. Do you understand both the collective and individual goals for the collaboration?  By understanding individual and collective goals, we help communicate why we are collaborating.  Without goal alignment, we may end up working at crossed purposes resulting in wasted effort, frustration and potentially failing to deliver our goal.
  2. Do we understand our Individual Strengths and Weaknesses?  Once we have a clear understanding of the goal, it is essential we understand our individual strengths and weaknesses.  This allows the strengths of each participant to be collectively focused on delivering the goal, while mitigating individual weaknesses.  Importantly, and while potentially confronting for some, we need to recognise that the public identification of individual weaknesses is not an attack on the merit or worth of an individual or organisation.  Rather, it highlights individual areas of strengths; the reason why they are critical member of the team.
  3. Have we Clear Roles and Responsibilities?  Once we have a clear understanding of the goal and our strengths and weaknesses, it is essential we define the individual roles and responsibilities including activities, deliverables and timings.  As part of establishing the roles and responsibilities, it is important that we include any prescribed workshare expectations and boundaries to avoid future conflict.
  4. Have we Established our “Ways of Working” together?  While many individuals and organisations will appear similar in their approach and operation, each of us will have specific and unique “ways of working”; that is, preferred ways of collaborating.  For example, some may prefer face-to-face meetings (in person or virtual with the aid of video), while others may prefer written communication via email.  Some may prefer the formality of routine of regular, scheduled meetings with set agenda, while others may prefer to be more organic simply contacting when and where the need arises through calls or instant messaging.  It is not important which approach you use, but rather that each of the participants understands the “way of working” of the others, and that this taken into account when working with each other to avoid frustration and delay, but instead maximises collaboration.
  5. Are we Checking the Health of the Collaboration?  Finally, we need to define the regular, scheduled “health checks” to not only ensure we are all on the right track to deliver the goal, but also the health of the relationship, including giving positive and constructive feedback to each other.  This is important, especially in new relationships or relationships that have formed organically over a period, in order allow each participant to routinely catch-up and highlight areas of both positive and negative feedback.  In my experience healthy business relationships are underpinned by regular and open communications between all participants.

Having seen and been a part of many collaborations, I believe that Rebecca Zucker’s 5 questions are an excellent starting point for both existing and new collaborative relationships.  Indeed, I would recommend all those in collaborative relationships take the time to check their response to each point since addressing each will result in a higher chance of success.  Afterall, that is why we collaborated in the first place!

Happy 2020 Holidays to all the Collaborative Contracting Blog Readers

To all our readers, we hope that despite the unexpected and hard year we’ve all endured, that each of you have an opportunity to have a break and a bit of downtime over the next few weeks.

So sincerely, here’s wishing you all the joys of the season and happiness all throughout the upcoming year.  We have all earned it!

Happy holidays!

Collaboration? Why it’s elementary my dear Watson!

It seems that collaboration is everywhere nowadays.  Whether it is Ed Sheeran and Justin Bieber producing a number 1 single, designer Tommy Hilfiger and Formula 1 driver Lewis Hamilton delivering exclusive clothing lines to Apple putting CarPlay into a variety of cars.  Everyone seems to be doing collaborations.  But are they all as successful?

Recently, I put on my detective cap like the famous fictional British detective Sherlock Holmes to find out whether individuals and organizations are achieving success including whether they are using updated methods to improve collaboration.

The short answer is no, unfortunately, and a change is long past due!

It seems that most practitioners are forgetting that collaboration really is ‘elementary’ but are omitting a couple of important details.  They are still focusing only on both the financial and non-financial benefits. Not much is written in detail about the best ways to collaborate to get desired results.

Isn’t that what we all want?  If we prioritize financial gains only, haven’t we blindsided ourselves?  I made a similar point in my recent article published in the International Association of Contract and Commercial Management (IACCM) Contracting Excellence Journal.

It’s discouraging that although ISO44001:2001 Collaborative Business Relationships Standard offers an extremely well structured approach for establishing and maintaining collaborative business relationships and provides high level guidance on the process, the standard still does not offer much to help readers design a collaborative contract that gets results for all parties.

My experience is that despite the best intentions of an organization and the individuals within it to collaborate, without the motive, opportunity and means to collaborate, the chance of success is unfortunately very low. This becomes clearer if you take a closer look behind three words: motive, opportunity and means.

Motive (the why)

Prior to any collaboration you need a compelling reason for why either buyer or seller needs to collaborate.  Motive reveals why by highlighting the costs and benefits both on an individual basis (e.g. financial reward such as a bonus) and group basis (e.g. reduced costs and improved profitability).

For example, buyer and seller may want to collaborate to mitigate uncertainty in the scope of the commercial arrangement, or to review constantly changing and evolving technology.  This is then reflected in the commercial terms of the contract to ensure that both buyer and seller end up with a fair distribution of risk and reward with the arrangement being perceived as neither too generous nor too punitive.  Moreover, the benefits of collaboration could be linked to personal financial rewards.

Regardless, both buyer and seller should be clear about the reason why they want to collaborate, because a good motive is the cornerstone to our overall collaborative approach.

Opportunity (the what and the when) provides opportunities for buyers and sellers to collaborate through various events, forums and activities such as formal scheduled meetings, supplier forums, innovation or hackathons, etc.

The opportunity to collaborate needs to be part of the everyday culture for both individuals and organizations, but simply having both the motive and the opportunity is not enough to deliver collaboration.  Unless collaboration meetings are formalized as part of our daily, weekly, or monthly working routines, such opportunities will be first to go when schedule and resource pressures occur — and they almost certainly will.

Means (the who and the how) provides detailed guidance on who and how to collaborate when individuals and organizations are brought together through an opportunity.

The means refers to providing the right tools, including policies, guidance and processes so that people will naturally collaborate — assuming they have been given the right motivation and opportunity.

It could be as simple as ensuring the collaboration meetings have specific terms of reference (scope and limitations of collaboration) and standardized agendas. This should ensureeveryone is clear about the roles and responsibilities of each individual and organization.  This includes whether a meeting is co-chaired, whether either buyer or seller has an ultimate decision right — and, if there are disputes, how are these resolved?

The means can be even more complicated.  Examples could be determining the financial arrangements due to changes in scope, realization of risks, or sharing of cost reductions due to the successful implementation of continuous improvement and innovations.

In my experience, especially in very procedural and hierarchical organizations, if the means are not specified, you will not get the full benefits of a collaborative approach.  I’ve summarised this in Figure 1.

collaboration-diagram-1.jpg

Figure 1 : Motive, Opportunity, and Means of Collaboration

So, where does this leave us?

Successful collaboration continues to deliver benefits for both buyer and seller alike resulting in the need for more effective and efficient collaboration in our commercial arrangements.  We need to understand the fundamentals even though various policies and practices including guidelines and standards help us with this challenge.

Accordingly, I suggest that we think carefully about the commercial arrangements, and their underlying collaborative architectures to ensure there is motive, opportunity and means to collaborate.  After all, at the end of the day, collaboration should be ‘elementary my dear Watson!

Collaborative Contracting – An Introduction

In this blog we explore what collaborative contracting is and how collaborative contracts differ from transactional contract approaches.  The term ‘collaborative contract’ is a relatively recent term that has evolved from many decades of research, practice, and experiences with ‘relational contracts’, a term coined by Stewart Macaulay and Ian MacNeill in the 1960’s.[1]  In this discussion, substance is far more import than form and it immediately becomes apparent that there are no substantive differences between relational contracts and collaborative contracts, thus we can treat the two terms as synonymous.

The importance of collaborative contracting should not be understated. As business relationships increasingly demand greater agility and organisations face increasing complexity, contracts that attempt to exhaustively deal with all risks and opportunities are unlikely to be successful. The 2016 Nobel Prize in Economics was awarded to Oliver Hart for his pioneering studies into ‘incomplete contracts’, recognising the significant limits of conventional approaches as follows:

“It may be extremely costly to write a contract that specifies unambiguously the payments and actions of all parties in every observable state of nature.” [2]

Several definitions of collaborative contracting are available and they all place emphasis on parties working together to achieve common goals. The Australian Department of Defence, Capability Acquisition and Sustainment Group Collaborative Contracting Better Practice Guide offers a useful definition by capturing the most common themes of collaboration:

“Collaborative contracting is where parties work together to achieve common outcomes. Collaborative contracts are underpinned by parties working together in good faith, focussing on fixing problems and not blame, managing risk equitably and jointly where appropriate, promoting transparency, and avoiding disputes.”

It is important to recognise that there is no magical threshold by which a transactional contract suddenly becomes a collaborative one, and vice versa. Rather, there will be features and relationships in commercial dealings that lie upon the spectrum of collaborative contracting approaches, with discrete ‘one-off’ contracts at one end of the spectrum[3] and highly integrated alliance contracts or joint ventures at the other end of the spectrum. There will always be some level of relationship or collaboration though in all commercial dealings as observed by Eisenberg:

“Discrete contracts – contracts that are not relational – are almost as imaginary as unicorns”.[4]

We should also recognise that collaboration is not just an activity between buyers and suppliers. ISO 44001 Collaborative Business Relationships highlights the fact that collaboration also occurs within organisations (internal collaboration) and this is equally important to drive the necessary enterprise collaborative behaviours.  Furthermore, collaboration does not just apply to acquisition activities. Collaboration applies to the complete ‘strategic lifecycle’ of organisations[5] which includes sustainment, research and development, and disposal. This latter perspective is of importance since the scope of collaboration may need to adjust throughout the contract lifecycle.

To effectively frame the comparison between transaction and collaborative contracts, we need to explore the features of transactional contracts. Transactional or classical contracts place an emphasis on arms-length relationships, risk allocation (typically to suppliers), a focus on price competition, several liability, and reliance upon litigation to settle disputes. These forms of contract are often best suited for one-off, short term activities that do not require flexibility. These forms of contract also attempt (often unsuccessfully) for completeness, whereby the contract attempts to cater for all plausible eventualities. What then are the features of a collaborative contract?

Whilst the term ‘collaborative contracting’ is partly self-defining, there are several features that often apply to collaborative contracts as follows:

  1. senior executive commitment and strong leadership;
  2. joint decision making;
  3. partnering charters;
  4. equitable risk allocation and sharing (e.g. target cost or gainshare/painshare remuneration);
  5. no blame/no-liability frameworks;
  6. transparency and open book financial reporting;
  7. fair and timely dispute resolution processes;
  8. agility and flexibility; and
  9. shared systems.[6]

A key issue here is that it is not just the contract terms and conditions that contribute to collaborative outcomes but also the broader commercial relationship including leadership, culture, attitudes, environment, and systems applicable to the activity at hand. Focussing on the contract alone will not likely drive the desired collaborative behaviours. In particular, leadership is of paramount importance as identified by the United Kingdom National Audit office:

Every case study ranked leadership as the most important factor in developing collaborative relationships.[7]

When exploring the use of collaborative contracting, it is not necessary to pursue all the elements listed above, noting that collaboration is not a binary construct, collaboration exists across a spectrum. We should never treat collaboration as “all or nothing”.  For example, a transactional or classical contract may adopt some partnering principles as well as timely and equitable disputes resolution process, akin to ‘neo-classical contracts’.[8] The more radical features such as no blame/no liability frameworks would only be pursued for highly collaborative relationships.

As we have seen, driving the right behaviours is not just an exercise in drafting suitable terms and conditions within the head contract. Achieving a collaborative framework requires a far more holistic view to ensure that parties have a mutual understanding of the desired end-states and a shared vision of success. This requires cultural alignment and leadership to drive the right outcomes. The effort and time required to achieve this alignment should not be underestimated.

Future blogs in this series will explore when and when not to pursue collaborative contracting and provide relevant case studies of how collaborating can drive superior outcomes.

[1] Stewart Macaulay, ‘Non-contractual relations in Business: A Preliminary Study’ American Sociological Review 28 (1) (1963), 55-67.

[2] Grossman, Sanford J., and Oliver D. Hart. 1986 ‘The costs and benefits of ownership: A theory of vertical and lateral integration. Journal of Political Economy’ 94(4): 691-719, 695

[3] Ian McNeill ‘The New Social Contract’ (1980).

[4] M. Eisenberg ‘Why there is No Law of Relational Contract’ 94 Nw. U. L. Rev. 805 (2000)

[5] ISO 44001:2017  Collaborative Business Relationship Management Systems – Requirements and Framework (2017) p vii

[6] Adapted from CASG Better Practice Guide ‘Collaborative Contracting’ (2017).

[7] UK NAO Good Governance ‘Measuring Success Through Collaborative Working Relationships’ (2006) p 8.

[8] Ian McNeill ‘Contracts: Adjustment of Long-Term Economic Relations Under Classical, Neoclassical, And Relational Contract Law’, 72 Nw. U. L. Rev., 854-905 (1977-78).