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The Role of Trust in Business Collaboration The role of trust in business collaboration An Economist Intelligence Unit briefing paper sponsored by Cisco Systems The role of trust in business collaboration Preface In 2007, the Economist Intelligence Unit published a paper entitled, Collaboration: Transforming the way business works, one of a family of papers produced since 2006 as a result of ongoing research sponsored by Cisco Systems. The paper reported that there is a widespread imperative to adopt collaborative business models and noted that trust is a critical building block in collaboration. However, those seemingly simple conclusions can quickly become complicated in today’s business world, where the forces of globalisation and the knowledge economy are converging with technology and demographics to change the face of business interactions. The Economist Intelligence Unit and Cisco therefore decided to join forces again to explore the concept of trust in 21st Century business collaboration. The Economist Intelligence Unit’s editorial team executed the survey, conducted executive interviews, and wrote the report. The findings and views expressed here do not necessarily reflect the views of the sponsor; the Economist Intelligence Unit bears sole responsibility for this report. Our thanks are due to all survey respondents and interviewees for their time and insights. © The Economist Intelligence Unit 2008 1 The role of trust in business collaboration Executive summary any bus inesses today extol the concept of to enable 20th Century processes. Collaboration is collaboration, though few seem to define usually focused internally on producing derivatives Mcollaboration in exactly the same way. It is of, or improvements in, existing activities. It is rarely not without irony that the term “collaborators” has, at seen as a total success. times, been used to describe both traitors and team- While value can be derived from many different mates. In current business vernacular, though, the types of co-operative activities, the research suggests focus is on partners. companies may be doing themselves a disservice by Today, businesses have come to see the categorising every such initiative as collaboration. whole world as their domain, and technologies In fact, the research indicates that companies are converging to facilitate communication, so might benefit from a more disciplined approach to collaboration is seen as a way to glean new insights, defining and executing a collaboration strategy. reach new markets, outwit competitors, reduce costs Increased rigour could enable organisations and raise revenues. to attain greater success and value from Research shows the term “collaboration” is used collaborative ventures—and better prepare them to cover the gamut—from projects designed to cut for the increased challenge of collaborating as the costs, increase efficiency and improve compliance business environment becomes more globalised, to those involving working with outsiders to develop communication becomes more virtualised, and new products. Most often, collaboration is achieved the workforce absorbs an increasingly tech-savvy through the use of early-21st Century technology demographic. Figure 1 “Collaboration” is often a misnomer Collaboration involves shared and common goals: “I wonder if we could…?” L Driven by mutual self-interest, opportunity appetite L Often requires specialisation on each side Collaboration L Requires high level of commitment on each side L Requires high level of trust, eg, environment in which L Creates new (not derivative) value proprietary information can be safely shared L Value accrues to each party L Examples: Product innovation; pharma R&D Co-operation involves broad but mandated goals: “We need to…” L Meets business need; often driven by directive L Value may directly accrue only to one party (or neither) Co-operation L Can succeed even if commitment is uneven L Requires only medium level of trust - eg, enough to L Value often derivative (eg, process improvement, share information on “need to know” basis efficiency initiatives) L Examples: Outsourcing arrangements Co-ordination involves narrow goals: “Get this done…” L Driven by directive; little self-interest L Focus more on stemming loss of value than on creating Co-ordination L Team-work helps, not pivotal to success new value L Value unlikely to accrue directly to involved parties L Trust not key to successful completion L Often focused on one-time, short-term goals L Example: Cost-cutting initiatives Source: Economist Intelligence Unit 2 © The Economist Intelligence Unit 2008 The role of trust in business collaboration The research shows that few businesses adequately collaboration and co-operation or co-ordination can articulate the value and need for trust, or share and help companies fashion effective collaborative formalise the critical components of trust; rather, they partnerships and invest in building the requisite level have focused more generically on codes of corporate of trust. governance and ethics. Moreover, few companies give Businesses need to approach collaboration trust a paramount role in internal efforts, though the strategically, and—as with any business strategy— research suggests that trust is far from complete even seek to align people (culture), processes and among people in the same function or organisation. technology with the project goals. In the case of Admittedly—and importantly—the need for trust collaboration, that alignment must take adequate varies among projects and depends on the make-up of account of the level of trust required to improve the the constituents and the goals of the project. chances of success in each form of collaboration (see For example, people who co-ordinate on an Figure 2). internal cost-cutting initiative are unlikely to need to The research shows that those who describe trust each other in the same way as collaborators in themselves as being very good at collaboration two separate companies, working together to develop are more likely to report completely successful a new product (see Figure 1). collaborations, tend to do more due diligence to verify The cost-cutting project will be helped by whether potential partners are trustworthy, and have teamwork, but is essentially a “get-it-done” directive higher standards of trust than those who perceive that is likely to be achieved regardless of who trusts themselves to be less capable at collaborating. whom. Product R&D with outsiders, however, requires However, the dispersion of results suggests that each party to contribute (upfront and on an ongoing few companies are focused on collaboration itself as a basis) time, money, and proprietary information to capability, or on instituting the kind of trust standards fulfil the question, “I wonder if we could…?” These that can speed and ease collaboration, or on properly partners must trust each other. aligning corporate culture, processes and technology Somewhere in between these extremes lies much around the collaborative strategy. of what is currently deemed collaboration—the “we need to…” space in which the goals are mandated and driven by a clear business need and where trust between counterparts clearly helps get the job done. Trust in this domain needs to be higher than among About the survey co-ordinators working on one-time, short-term, finite Of the 453 business executives surveyed, more than goals, but not as high as in the R&D example. three-quarters were located in North America, Europe The term “collaboration” is often used when or the Asia-Pacific region. Just over one-half worked individuals are merely involved in co-ordination or for companies that had annual global revenues of co-operation. more than US$1bn and about one quarter worked for Why does it matter how these initiatives are companies with revenues of US$10bn or more. The categorised? The labels themselves are not important, executives had a variety of formal titles and func- tional roles, but all had participated in a collabora- but labelling every initiative as “collaboration” creates tion effort in the prior year, and nearly 80% described a misnomer that robs companies of the ability to themselves as participants in formal or informal deploy resources efficiently and effectively to create virtual collaboration efforts. the most value. Understanding the difference between © The Economist Intelligence Unit 2008 3 The role of trust in business collaboration Figure 2 Excellence in collaboration requires trustworthy people, processes and technology People Processes Technology L High level of trust in the L Process buy-in is high L Adoption of collaborative tools is Collaboration organisation L Processes reinforce trust (eg, by high and diverse, driven by L Trusting relationships between defining objectives, specific utilities individuals accountability) L Tools reinforce trust, eg, L Belief in shared goals L Processes enable collaborative telepresence emulates more L Eagerness to share information education/communication “personal” interaction L High trust tempers potentially L Tools provide transparency high risk L Institutional trust uneven; trust in L Some collaborative/trust L Provision of/adoption of Co-operation certain groups/teams/individuals processes in place collaborative tools is uneven is high L Buy-in varies so mixed effect on L Tools enable communication, but L Tangible commitment to project trust may not reinforce trust goals L Processes still not focused L Tools offer little transparency L Willingness to share information discretely on furthering
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