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.

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 functional 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

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 trust as needed L Trust may not be enough to outweigh risk

L Trust is not a part of the culture L Few/no collaborative/trust L Few/No tools designed specifically Co-ordination L Little trust is sought or even processes to improve collaboration/trust needed L Processes probably “borrowed” / L Uneducated users can undermine L Mindset is to achieve stated modified from other activities trust with ineffective use objectives L Focus on protecting participants L Tools focus on limiting access L Information is parsed out as directed L Perceived level of risk is high Source: Economist Intelligence Unit

Furthermore, few companies have built high trust project they undertake. levels even within their own organisations, or invested This ad hoc approach not only wastes resources: It in creating trusted individuals—who can, as the makes it difficult for organisations to sell themselves research shows, be powerful agents of collaboration. as collaborative partners, thereby limiting their In short, despite the widespread desire to be ability to exploit the potential of collaboration to “collaborative”, and the concomitant use of such generate unique and discrete innovations, especially buzzwords as “collaboration”, many companies are as the forces of globalisation, virtualisation, and probably recreating the wheel on every collaborative demographics grow.

4 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Key findings

he survey yielded responses from 453 business Figure 3 Collaboration is most often focused on internal executives who had recently participated in improvements and efficiency—especially at the largest collaborative projects. Those respondents, companies T (%) in a variety of positions, companies and industries Annual revenues of $10bn or more around the world, were asked about those projects Annual revenues of $500m or less and the people and organisations with which they Improve internal processes 44 collaborated. Below are the key findings on the state 22 of collaboration and the role of trust. Increase efficiency 42 In regards to collaboration: 25 Lower costs 28 ● Collaboration has become an everyday activity. 15 Improve customer service The only executives permitted to take the survey were 25 25 those who had participated in a project during the Improve product quality past year to achieve a common objective working with 20 18 individuals from outside their immediate group. These Develop a new product collaborators could be customers, suppliers, business 19 30 partners, or colleagues serving other functions in Increase sales 19 their organisation. Of the 471 executives to whom 28 we submitted the survey, 453 met the collaboration Reduce delays/increase speed 18 criterion (96%). 13 Improve compliance 17 ● Collaboration is still used most often to improve 12 Increase margins internal processes and increase efficiency (see 13 Figure 3), especially at large companies. Collaboration 14 Develop outsourcing relationships is less often used to create value by developing new 12 11 products or improving product quality. However, very Recruit/develop employees good collaborators also worked more often than less 8 11 capable collaborators on initiatives such as increasing Research information* margins and developing outsourcing relationships. 5 21

* Research or exchange information about a market, products or customers ● Collaboration is more often focused on working Source: Economist Intelligence Unit with other internal stakeholders (within the function or organisation), but the smallest companies are more inclined to work with external customers and peers (see Figure 4), as are people at companies that see themselves as very good collaborators.

Figure 4 Figure 5 Larger companies are far more likely to be Very good collaborators are more likely to report total “collaborating” with other internal stakeholders success in their collaborations. “How successful was your (%) recent collaboration in meeting its goals?” Annual revenues of $10bn or more (%) Annual revenues of $500m or less Very good collaborators Poor/Moderate collaborators People in other functions (in same or other location) 67 Collaboration complete and completely successful 36 25 People within my organisation, but outside my location or function 11 61 Collaboration complete and fairly successful 27 54 People within my function (in another location) 51 48 Collaboration not yet complete but going well 24 13 External suppliers/other partners 24 43 Collaboration complete but not very successful 33 1 External customers 16 28 Collaboration not yet completed, and going poorly 37 3 External peers (eg, in knowledge exchange) 9 18 Collaboration abandoned; may be revived 23 1 0%In-house R&D team 2 13 0%Source: Economist Intelligence Unit 14 In-house product designers 10 such as shared information. Those who are very good 7 External product designers at collaborating are significantly more likely to say 7 honesty, ethical behaviour, and a willingness to 8 External R&D team exchange information are critical (as opposed to just 6 14 important) when deciding whom to trust.

Source: Economist Intelligence Unit ● Many executives are disappointed with their ● Few people say their recent collaborations were collaborators. Qualities that survey respondents see completely successful, though about half deemed as key to trustworthiness are rarely displayed– by their projects “fairly” successful”. Organisations that organisations or individuals—to the degree that say they are very good at collaborating are more likely they had hoped. However, very good collaborators to report complete success (see Figure 5). Success are more likely to report honesty and integrity in is most often achieved in collaborations focused on collaborative partners. increasing efficiency, improving customer service, and enhancing internal processes. ● Complete trust is very rare—but it often The key findings in regards to trust are as follows doesn’t matter. Very few collaborators totally trust and are explored in more detail, with figures, in the their counterparties (people or organisations), ensuing text: and those who are poor at collaborating trust their counterparties even less. However, issues of ● Most collaborators want first and foremost for trust rarely torpedo today’s collaborations. Most their partners (individuals and organisations) collaborators expect and forgive lapses in judgment, to have integrity (ie, be honest and ethical). They though they are less tolerant of malicious intent. also want tangible demonstrations of good faith,

6 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

● Companies have yet to find or embrace a has become more important now that it’s a global consistent way to measure trust, and “word- world, and we have to take ever more account of what of-mouth” is still the most trusted currency for is happening in other places”. assessing trust in another person or organisation. “The benefits of collaboration have become more However, those who are very good at collaborating obvious to people,” he says, but he concedes that are significantly more likely to conduct greater due the trust element is complex—even for government diligence on trust. employees, who may be collaborating within the confines of mandated codes of conduct and who may ● Trust, as well as project success, appears to collaborate, at the highest level, under the provisions decline as collaboration becomes more virtual. of memoranda of understanding and other protocols. He adds that trust stems, in part, “from ● Few trends emerged in the survey results regarding understanding the other party’s position, and collaboration or the role of trust in any one industry, conceiving of whether there is a genuine opportunity company-size, or regional segment. Rather, the for give-and-take”. He says it is also important dispersion of the results suggests that approaches to remember that collaboration may not always to collaboration and perceptions regarding the need a specific commercial imperative. In citing a role of trust are fashioned on a case-by-case basis. collaborative venture with Norway that began in 1994, In short, collaboration is far from becoming an he says, “That initial collaboration has come and institutionalised strategy with widely accepted gone, but we’ve had lots of really good engagements standards of best practice. in different ways since that time—and not all of them have been formal. Since Australia is geographically Confirming the role of trust remote from North America and Europe, it is vital to in collaboration tap into such relationships to keep abreast of new Anyone involved in business interactions would and developing business trends. And these ongoing say it is axiomatic that trust is a building block of interactions help to maintain trust and confidence in collaboration, but trust is not easily defined. the relationship.” John Dean is General Manager of Enterprise The survey itself demonstrates the link between Connect, part of the Australian government’s trust and collaboration—though not necessarily in a Department of Innovation, Industry, Science and way one might expect. Research. Enterprise Connect collaborates with other Much of the collaboration pursued today endures governments to access their intellectual property or even when the level of trust between collaborating know-how and with other organisations in Australia parties is highly questionable. However, when trust is in pursuing policy objectives. He says, “Collaboration weak, failure is more common.

Figure 6 Success of collaboration vs trust in partnering organisation (%) Complete and completely successful Not yet complete but going well Not yet completed, and going poorly Abandoned; could not meet objectives Complete and fairly successful Complete but not very successful Abandoned, but may be revived Complete trust 26 22 30 9 9 4 0 Little trust 6 50 17 11 11 6 Source: Economist Intelligence Unit

Respondents who said they had “little” trust little trust in the person with whom they worked, more in an organisation with which they had recently than half said their collaborations had not been very collaborated were more likely to say their successful, or were going poorly. collaborations had failed to meet their goals, or had These results show individuals are in a strong been abandoned (see Figure 6). Those who described position to imbue confidence and trust in a their level of trust as complete were more likely to collaborative effort. This suggests companies should describe their collaborations as totally successful. invest in building a cadre of strongly trusted people to However, many collaborative ventures are lead and enable their collaboration efforts. successful to some degree without much trust between Furthermore, while a trustworthy individual may the parties involved. For example, 50% of people who or may not be able to counter wider concerns about said they had “little” trust in an organisation with the credibility of their organisation, it seems quite which they had recently collaborated still described likely from these results that an individual who does their collaboration as fairly successful in meeting its not inspire trust has the power to erode trust in their objectives. And 6% of those with little trust in their entire organisation. That reality behoves companies counterparties said that their collaborations were to ensure that codes of conduct are drilled into the completely successful. organisation right down to the individual level—and It is worth remembering, however, that few that people understand the need to communicate collaborators in the survey are yet collaborating far their own trustworthiness. into the extended enterprise. In other words, most This imperative is especially strong because most of those surveyed are, in fact, dealing with other of the collaborators surveyed are already working with teams within their own organisation, such as people people in their own company, sometimes in their own outside their location or function but within the same function, yet the level of trust is not complete. company. It is likely that many of these collaborations are achieving their goals because the initiatives are Collaborators are often mandated, not because the collaborations themselves disappointed on trust are especially successful. It is important not to discount trust as a nebulous The role of trust is even clearer with regard to concept that is too difficult to pin down. The survey individuals. In cases where respondents said they shows many people look for the same key qualities had complete trust in a key individual with whom when deciding which individuals and organisations to they had recently collaborated, 92% reported success trust, although in practice their collaborators do not in meeting the goals of their collaborative venture, always exhibit these qualities. compared to 45% among those who reported little Ultimately, just 14% said they completely trusted trust (see Figure 7). In fact, among those who had a key person with whom they collaborated, though

Figure 7 Success of collaboration vs trust in key individual in collaboration (%) Complete and completely successful Not yet complete but going well Not yet completed, and going poorly Abandoned; could not meet objectives Complete and fairly successful Complete but not very successful Abandoned, but may be revived Complete 25 40 27 2 4 2 Little 14 14 18 23 32 0 Source: Economist Intelligence Unit

8 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Figure 8 Figure 9 Qualities that suggest trustworthiness in people appear Reliability and commitment are even more likely than less often in practice than collaborators hope ethics to drive trust in corporations, but the reality is (%) disappointing for many % responding quality is important in deciding which individuals to trust in a collaboration (highest (%) % responding quality is important in deciding which ratings—“1s” and “2”s on 5-point scale) organisation to trust in a collaboration (highest % responding the quality was clearly evident in a key ratings—”1s” and “2”s on 5-point scale) person with whom they collaborated (highest % responding the quality was clearly evident in the ratings—“1s”, “2”s and “3”s on a 10-point scale) organisation with which they collaborated (highest Honesty ratings—”1s”, “2”s and “3”s on a 10-point scale) 93 Reliability 82 93 Willingness to exchange information 56 89 Commitment 58 88 Ethical behaviour 70 88 Ethical* 71 87 Shared objectives 66 82 Competence 62 87 Motivation 60 79 Engagement 65 82 Respectfulness towards others 64 78 Well-established and transparent governance 62 76 0%Positive attitude 47 77 Depth of talent 63 73 Ability to do a job well 44 72 Receptivity 61 72 Consideration of others 58 72 Business-model transparency 55 71 Expertise 47 70 Excellence in collaborations of a specific type 64 69 Communication skills 51 69 Discretion 46 68 Intelligence 62 64 Excellence in collaboration in general 66 67 Experience 47 50 61 * Average of rankings assigned to the “ethics of the employees I deal with” Works for a reputable organisation and “ethics of the organisation’s leaders” 33 Source: Economist Intelligence Unit 54 Source: Economist Intelligence Unit qualities pertaining to business risk and value, such as the willingness to exchange information, were also many (58%) said they trusted them highly. A mere 7% much sought after and were most often the source of said they trusted the organisation with which they had disappointment when reality set in. collaborated “completely”, though again many said For example, 89% of respondents said a willingness they trusted them “highly”. to share information was important in deciding whom Notably, while honesty and ethics were high on the to trust in a collaborative project, but only 58% said list when people assessed which individuals to trust, a key person with whom they had collaborated had

shared interesting or useful information in practice Figure 10 Few collaborators completely trust even those within (see Figure 8). their own organisation. Moreover, only 17% said that key person had been “How much did you trust the key person with whom you willing to share such information “very much so” (the collaborated?” Responses from those working with people in the same organisation, but different location or function top rating). Similarly, 82% said shared objectives (% respondents) were important when deciding who to trust, but only 62% said objectives proved to be clearly aligned in Completely 13 their collaborative experience. Highly 57 When deciding which organisations to trust, most Moderately 22 people (87%) said it was very important that the Little 7 counterparty be ethical, but even more people (93%) said the organisation had to be reliable, and just as many said the organisation had to be committed and competent (see Figure 9).

However, many people said the reality proved to Source: Economist Intelligence Unit survey be disappointing. For example, only 56% said the organisation with which they had collaborated proved notes that knowledge networks like Innocentive to be very reliable and only 66% said it proved to be and InnovationXchange (IXC) appeal to participants very ethical. in part because they offer codes of conduct (eg, The disappointment in both people and individuals on confidentiality and ethics) that help them to is especially vexing considering so many people in feel protected (whether or not that protection is the survey, especially in the largest companies, are illusory), as they tap into non-traditional sources of actually describing their experiences in working information, expertise and talent. with other people in their own function. Even those Paul Saunders, Textron’s Director of Enterprise working with people in the same organisation rarely Collaboration, notes Textron employs Six Sigma tools described their trust in counterparties as complete when teams are first organised. For example, GRPIs (see Figure 10). (goals, roles, processes, interpersonal relationships) Peter Sheahan, an author and expert in workforce “make sure we know what our goals are, who is trends and generational change (petersheahan.com), responsible for what, what processes we are going notes that lack of trust within the organisation could to use, and with whom the stakeholders are going to cause knowledge and intellect to lie fallow in a global communicate.” On an ongoing basis, the “RACI” tool— company. In multi-company collaborations, Mr Sheahan Responsible, Accountable, Consulted or Informed— says businesses want to “control” their existing ideas helps to define the role of project participants. and intellectual property as a source of competitive “Most collaboration falls apart when people aren’t advantage, which is consistent with our finding that sure of what their role is, or feel that someone else is collaborators found few people wanted to share overstepping their boundaries, or not pulling their information as much as they had hoped they would. weight—and those situations create conflict, and make The fear of losing control can prevent the organisation it difficult for people to communicate,” says Mr from forming effective connections and leveraging Saunders.Tools like GRPIs and RACI help to formalise and institutional knowledge, according to Mr Sheahan. set boundaries for collaborative projects and establish In his latest book, titled “FL!P”, Mr Sheahan how the collaborative group will work together.

10 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Figure 11 Very good collaborators are more Very good collaborators are more likely to say qualities are “critical” when choosing who to trust. exacting and less frustrated “When deciding which individuals to trust, how important are these qualities?” Responses from those This survey suggests a link between rigorous citing the quality as “critical” (rating the quality “1”) (% respondents) processes and collaborative success: Those describing Among “very good” collaborators themselves as “very good” collaborators set higher Among poor/moderate collaborators standards of trust at the outset and are more likely to Honesty 77 say their collaborative counterparties deliver against 61 Ethical behaviour those standards. 68 Admittedly, the “very good” descriptor is a self- 59 Shared objectives assessment, but as a survey population, this cluster 53 46 shows some distinct behaviours that cannot be Willingness to exchange information ignored. For example, these “very good” collaborators 63 45 are more likely than those who describe themselves Respectfulness towards others as poor/moderate collaborators to make a variety 49 32 of demands when choosing someone to trust in a Motivation 39 collaborative venture (see Figure 11). Moreover, they 28 are more demanding not only in terms of ethics and Consideration of others 37 honesty, but in terms of capabilities (eg, expertise, 22 intelligence and experience), motivation, and “softer” Communication skills 36 qualities, like respect and consideration for others. 21 Positive attitude Textron, notes Mr Saunders, “has got a very, very 40 high ethics culture, so it’s made clear to us from Day 20 Ability to do a job well 1—as it should be—profit is second, ethics is first, 36 14 whether you collaborate with someone in the same Expertise office or across the world”. 42 14 Very good collaborators are also far more likely Intelligence than poor/moderate collaborators to say that 29 11 the willingness to share information is critical Experience 23 to collaboration—the ideal in which so many 8 respondents were disappointed. “Connectedness”* 17 Across the board, very good collaborators expect 7 more from their partners. Very good collaborators Works for a reputable organisation 12 are also far more likely to say people they worked 6 with exhibited in practice the kind of qualities that * Knows many people across functions, and across various levels Source: Economist Intelligence Unit are important when selecting a person to trust in a collaborative venture (see Figure 12). For example, 72% of very good collaborators said a key person with whom they had collaborated had absolutely behaved ethically in practice (ie, the respondent rated them “1” or “2” on a 10-point

Figure 12 Figure 13 Very good collaborators are far more likely to say people Very good collaborators also require more of partnering they partnered with clearly exhibited the qualities they organisations relate to trustworthiness “In deciding which organisations to trust, how important are “Rate a key person with whom you collaborated”; these qualities?” Selected responses from those citing top ratings—“1s” and “2s” on a 10-point scale quality as “critical” (rating the quality “1” on a 5-point scale) (% respondents) (% respondents) Among very good collaborators Among very good collaborators Among poor/moderate collaborators Among poor/moderate collaborators Behaved ethically Reliability 72 70 39 51 Motivated Ethical leadership 61 68 29 54 Was honest Commitment 61 66 33 37 Was experienced Competence 60 60 25 33 Was intelligent Well-established and transparent governance 58 48 21 31 Had a positive attitude Engagement 57 43 23 27 Did his/her job well Excellence in collaborations of a specific type 56 37 14 15 Worked for a reputable organisation Excellence in collaboration in general 54 33 29 14

Showed expertise Source: Economist Intelligence Unit 54 25 Was respectful towards others 53 judging which organisations to trust and are more 25 Shared interesting/useful information likely to say collaboration itself is a critical quality 45 17 in partnering organisations (see Figure 13). Once Was considerate of others again, those higher standards pay off: Very good 44 25 collaborators are significantly more likely than others Shared objectives to say that organisations with which they collaborated 43 17 lived up to many of their expectations about key Was a good communicator 42 qualities (see Figure 14). 8 Source: Economist Intelligence Unit Due diligence can mitigate disappointment scale), compared to just 39% among the poor/ So what are “very good” collaborators? They seem moderate collaborators. Similarly, 45% said their to be individuals who demand much of other people counterparty had most definitely shared interesting or and organisations—yet are rather generous in their useful information, compared to just 17% among the assessments of these others. In short, they seem to less capable collaborators. be at once more vigilant in choosing collaborators Very good collaborators are similarly exacting in and more trusting in their actual collaborations. One

12 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Figure 14 Figure 15 Very good collaborators are more likely to say Very good collaborators are more likely to use a variety of organisations they worked with exhibited qualities processes to verify the trustworthiness of other related to trust organisations “Rate the organisation with which you collaborated”; top (% respondents) ratings (”1s” and “2s” on a 10-point scale) Among very good collaborators (% respondents) Among poor/moderate collaborators Among very good collaborators We get word-of-mouth recommendations from colleagues Among poor/moderate collaborators 76 64 Was committed We meet with companies for in-person vetting 78 73 26 46 Was highly engaged We get market referrals 74 24 69 49 Behaved ethically We go by peer reputation 63 20 64 51 Was honest We visit their corporate facilities to assess their resources 61 33 62 38 Was competent We require and check accreditations/qualifications 58 22 57 39 Was reliable We require a proven history of performance 56 13 49 34 Excelled in collaboration in general We require and check other written references 44 12 30 25 Excelled in our specific type of collaboration We use formal market ratings (eg, S&P) 42 16 26 16 Had well-established, transparent governance systems We have a formal system of trust ratings 33 16 22 5 Source: Economist Intelligence Unit We use a search firm/clearing house to pre-approve candidates 17 thing is clear from the survey: Very good collaborators 12 Source: Economist Intelligence Unit cannot be easily categorised using descriptors like company size, industry or nationality. The approach to collaboration and trust is highly dependent on the assess organisations. Overall: organisation and individual—bad news and good news for companies. ● Getting word of mouth recommendations is The bad news is that companies cannot expect still the most widely used policy for verifying trust and collaboration to exist and grow organically, trustworthiness. For example, 72% of respondents even among those who work at the same function or say they use word-of-mouth from colleagues organisation. The good news is that this is apparently in verify the trustworthiness of individuals an area in which companies can get results from being from outside the organisation with whom they proactive. collaborate; 64% say they use word of mouth to Among survey respondents as a whole, there assess other organisations. was no universally used approach to evaluating the ● Only 5% say they have a formal system of trust trustworthiness of either individuals or organisations, ratings for individuals; 10% say they have formal although there are more mechanisms in place to trust ratings for companies.

● Policies to verify trust are not, as a whole, Figure 16 Breaches of trust rarely end a collaboration immediately widely followed. A few (17%) said all available (% respondents) practices were followed in picking an individual Trust destroyed, project halted to collaborate with recently; 48% said most were Trust damaged, project continues, but new projects doubtful followed. Only 23% of respondents said all the Illegal act (eg, insider trading, embezzlement) 88 available practices were followed in picking an 7 Duplicity (eg, party is deliberately misleading) to benefit themselves organisation to collaborate with; 50% said most 65 were followed. 27 Unauthorised sharing of proprietary information beyond the organisation 63 28 By contrast, very good collaborators are more Duplicity (eg, party is deliberately misleading) to cover mistakes likely than average—and significantly more likely 54 34 than poor/moderate collaborators—to employ a wider Misrepresentation (eg, exaggeration) to benefit themselves variety of policies to verify the trustworthiness of 47 39 outside individuals and organisations (see Figure 15). Misrepresentation (eg, exaggeration) to cover mistakes 34 Furthermore, those policies are more likely 48 to include actual contact, such as meeting with Unauthorised sharing of proprietary information within the organisation 23 people/companies for in-person vetting and visiting 51 corporate facilities to assess the resources available to Failure to produce as promised 15 potential partnering organisations. 53 Accidental misstep (eg, inadvertent leak of sensitive information) Notably, very good collaborators are also more 11 likely to actually follow the policies that are available 34 A missed deadline (eg, late producing what was promised) to them for verifying trust. For example, 30% of very 5 good collaborators said all available mechanisms 31 Source: Economist Intelligence Unit (formal and informal) were followed in verifying the trustworthiness of an organisation with which they recently collaborated. That compares to just 12% of act, were more widely, although not universally, poor/moderate collaborators. condemned. Though one might reasonably expect 100% of respondents to say an act such as Many fail to act on trust concerns embezzlement would torpedo collaboration, the It is striking that many people cannot trust their actual number was only 88%. collaborative partners (people or companies) as much In between these extremes, there are breaches of as they had hoped, but it is even more surprising trust—such as duplicity and the unauthorised sharing that many people believe collaboration can survive a of proprietary information—which elicit varying variety of trust breaches. degrees of immediate reprisal. For example, only 5% of respondents said a missed Again, the individual responses were not clearly deadline (ie, a partner’s failure to produce what they aligned to any one sector, region or company type, had promised) would destroy their trust, and prompt suggesting breaches of trust are very much “in the the project to be halted immediately. However, 31% eye of the beholder”. Very good collaborators tend did say that their trust would be damaged, putting to be more likely than average to end a collaboration future projects in jeopardy (see Figure 16). immediately when trust is breached. For example, 72% Clear-cut breaches of trust, such as an illicit of very good collaborators say the unauthorised sharing

14 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Figure 17 Very good collaborators are most fearful of the business Discerning when trust is needed most risks in collaboration (eg, disclosing proprietary information) The unauthorised sharing of proprietary information “Which of the following actions would pose the most risk to beyond the organisation is almost as likely to you in a collaborative venture?” (% respondents) jeopardise current and future collaboration as an Very good collaborators illegal act. Sixty-five percent of respondents overall— Poor/moderate collaborators and 78% of very good collaborators—say “disclosing Disclosing proprietary information 78 proprietary information” is among the greatest risks 68 posed to them by a collaborative venture. Beyond this, Relying on my partner exclusively 48 the actions that pose the most risk seem to depend in 19 Following procedures that circumvent company practice part on the capability of the collaborator. 46 Other breaches are almost as heinous, such 18 Awarding my partner a financially lucrative contract as duplicity to benefit the perpetrator, but the 26 30 information issue is an important one, as it reflects Disclosing practices of my organisation/function/dept one of the key elements in collaboration: The power 27 18 struggle among stakeholders, which in turn often Letting my partner present to my superiors without me reflects issues of risk and reward. 19 20 Very good collaborators are very concerned about Delegating important tasks to my partner 12 other business risks, such as relying exclusively 19 on a partner (limiting opportunity) and following Source: Economist Intelligence Unit procedures that circumvent company practice (see Figure 17). Poor/moderate collaborators are less likely to be concerned about those issues, but are of proprietary information beyond the organisation more likely to be insecure about their position—for would destroy trust in a collaborative partner, and example, seeing more risk in delegating important prompt them to halt the collaboration. That compares tasks to a partner. to just 63% overall who would act immediately. The perceptions of risk, not surprisingly, have Even very good collaborators do not respond an effect on the actions collaborators are willing to to a breach of trust as aggressively as one might take themselves. For example, the actions perceived expect. However, given the pervasiveness of as high-risk among respondents overall (see Figure internal collaboration (the locus of collaboration for 18) were low on the list of actions collaborators much of the survey population), it is possible that were willing to take themselves—and most would be collaborators lack the option to exit collaborative deemed only slightly more palatable if the potential projects, even when they feel their counterparties value of the collaboration were to double. cannot be trusted. The fact that perceptions of risk and reward clearly This again suggests companies could benefit from play into the way collaboration is executed suggests more rigorous processes for evaluating the level of companies will need to consider how to formalise their trust required for a collaborative project—and for own guidelines for what actions their collaborators fostering a culture of trust internally. Furthermore, are allowed to take. companies need to plot a path of recourse and The growing ranks of Generation Y workers offer formulate exit strategies to deal with abuses of trust. special challenges in this regard, particularly in terms

Figure 18 they felt the cost better matched the value.” What actions were you willing to take in your In a knowledge economy, says Mr Sheahan, collaboration? What if the potential benefits were doubled? “intellectual property (IP) rights are as important as (% respondents) Actions I was willing to take land ownership in the industrial world, and companies Actions I would have been willing to take if benefits were doubled will need to be more explicit in setting their expectations Disclose practices of my organisation, function or department of their employees, especially Gen-Y’ers, if their IP is to 63 67 be protected—at least for long enough for them to Delegate important tasks to my partner 51 obtain some sort of competitive advantage from it.” 56 In other words, Gen-Y attitudes create an even Let my partner present to my superiors with me present 47 greater imperative for companies to align people, 55 processes and technology when it comes to Share resources (eg, assign FTEs to collaborative team) 42 proprietary information. 49 Let my partner speak for me within the collaborative venture Mr Saunders of Textron adds, “You need to reach 30 out to people within the entire organisation and 37 Let my partner operate unsupervised/unmonitored explain to them: ‘This is sensitive data: It’s what keeps 29 31 the company going; it’s what keeps you employed; and Disclose proprietary information so on”. Moreover, education and communication—on 28 32 the accountability of the end-user and the underlying Follow procedures that circumvented normal practices business risks—is far more important than IT fixes. 23 28 As he says, “It’s far more effective to train people on Let my partner present to my superiors alone, without my presence 23 the danger of sending their social security number in 29 an email than it is to insert a filter system that blocks Let my partner speak for me with other outside parties 22 social security number patterns.” 27 Award my partner a financially lucrative contract 14 Face-to-face collaboration is 22 Rely on my partner exclusively superior to virtual collaboration 13 Most collaboration is taking place internally, but the 19 Source: Economist Intelligence Unit survey results provide thought-provoking insights about how well (or poorly) companies are positioned of their handling of proprietary information. Mr to deal with the onslaught of globalisation—where the Sheahan says the Gen-Y approach to digital property need to collaborate virtually will only increase. rights may not seem to be in an organisation’s best The survey shows virtual collaboration is on the interests, but it is simplistic to write off the Gen- radar at almost every company in some form, but very Y’er approach without examining the underlying few have embraced “next generation” collaborative reasoning. tools, such as Wikis, blogs, and social networking tools. Consider the much-trumpeted tendency of Gen- In fact, face-to-face vs. virtual collaboration Y’ers to dismiss and abuse digital property rights, varies greatly. Overall, 17% of respondents said they such as their music downloads. Says Mr Sheahan, worked face-to-face for 70% or more of their recent “Gen-Y’ers just don’t want unrealistic demands and collaboration, and 37% used face-to-face for 50% or restrictions placed on what they do with what they more of their collaboration. buy, and they would perhaps be more respectful if However, no single segment (eg, industry, size,

16 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

region) is more prone to one approach than another, Figure 19 debunking the notion that any one profile has a Project success vs. mode of communication Pearson Significance tendency to collaborate virtually rather than actually. correlation level (1-tailed) Those who describe themselves as very good Project success vs. face-to-face 0.155 .002 collaborators most often assess their collaborations Project success vs. phone -0.117 .014 as “moderately virtual”. Thirty-eight percent of the Project success vs. virtual -0.049 .179 moderately virtual cluster said their collaborative Project success vs. next-generational virtual -0.071 .091 projects are a mix of in-person and virtual initiatives, Project success vs. virtual+next-generational virtual -0.070 .092 and they regularly use established Web- and other Source: Economist Intelligence Unit IT-based tools to help their efforts. However, 26% of the very good collaborators say they are “not at all Dean notes, technology has certainly made it easier to virtual”—ie, they find, manage, and communicate conduct a collaborative initiative once it is underway. with most collaborative business partners via face-to- Mr Saunders says Textron “recommends that there face and telephone interactions and rarely experiment are face-to-face meetings, initially or very early with Web and other IT tools. on, in which the collaborative group can set goals It is face-to-face interactions that typically decline and make sure everyone is on the same page”. “At when a company’s collaborative projects become more Textron, we say, ‘If you can walk over to someone’s virtual, while phone interactions tend to remain a desk first, do that; if you can’t, give them a call; if mainstay. you can’t do that, send them an instant message; Our survey suggests that face-to-face and only then email them’. There are some wonderful collaborations are most likely to yield success technologies out there, but basic human interactions (see Figure 19). The correlation between face-to- have been developed over a far longer period”. The face communication and successful collaboration organisation can also facilitate human connection outcomes is significant at the 0.2% level, and with initiatives like bubble assignments, where people this finding is consistent with other studies which are temporarily assigned to another environment— highlight the challenges of virtual projects. The enabling people to “put the face to the name” and negative correlation between virtual collaboration helping overcome basic communication issues such as and project success is not very significant, but this differing accents. finding, too, is consistent with other studies on virtual Nevertheless, Mr Saunders feels the new collaboration. technologies can be very supportive. “For example, In short, companies positioning themselves to deal telepresence is a live medium, so it can help with globalisation and virtualisation should keep in collaborators to feel more like they are interacting in mind the benefits of face-to-face interaction and the a human sense, and goes a long way toward keeping potential pitfalls of virtual interaction. a group together once the collaboration is under John Dean of Enterprise Connect maintains, “I way.” Instant messaging is another effective tool, he really need to know who it is I’m dealing with—and says: “IM is invaluable, as it enables a quick, effective whether I want to engage with them or not. There are conversation. You can just ping someone and get an a lot of things [such as shared values] that I couldn’t immediate response.” assess without in-person contact.” Actually meeting But technology can also undermine collaboration. the person catalyses the interaction and helps to turn Mr Saunders cites potential problems with email as a transaction into a relationship. Nevertheless, Mr an example. “You tend to read email in the mindset

you are in at the time. If you are in a foul mood when own organisation, and even if the collaborative IT is you read it, you assume the sender was in a foul mood in place. Instilling trust takes specific effort and may when they wrote it.” Things can quickly spiral out of require much “face-time” among the collaborators. control, he says, noting that “situations get more and Workforce demographics are changing, and while more inflamed, as people get more and more angry, most companies are already dealing with technology and the cc list gets longer and longer”. in the workplace, few are prepared to deal with However, he is quick to say that even then, the tech-savvy Generation-Y employees, who may be technology itself is not the problem. “You can set technically prepared for virtual collaboration, but email etiquette and so on, but it is most effective to no more psychologically prepared to build trusted first set goals, boundaries and open communication, relationships than their predecessors. so the technology part can just help you get it done.” Is collaboration among distant partners growing? This report should act as a reminder to companies Absolutely. Will IT make it easy? Perhaps not. Trust that they cannot assume trust will exist and grow is a delicate matter, and it must be nourished with naturally within any collaboration—even within their conversations and smiles, not just emails.

Intellipedia: Trusted Knowledge Manager/Trainer” – a title he social bookmark has your name on it. If we concedes he made up. The social software are going to shift from a collection of collaboration in practice modifier is necessary, he says, because organisations to a collection of users, it starts of the “Rorschach test” that knowledge with a first name—your name, your brand.” management has become: “You ask The system also tracks participation. Governments have a greater reputation three different people what knowledge For each user ID, “The system tells you for bureaucracy than for innovation, but management is, and you’ll get three how many edits you have made, lists all the US intelligence community is certainly different answers. I believe it’s the social your social bookmarks, every page you’ve bucking that trend with its use of Intel- software emergent free-form tools that made comments on, and every file you’ve lipedia – an agency-neutral wiki hosted by are the best way to speed up learning and uploaded.” That information is transparent the Office of the Director of National Intel- connect people”. to all users—and to management. Soon, ligence Chief Information Office. Intel- But despite his commitment to the the system will also be able to display a lipedia allows security-cleared intelligence tools, Mr Rasmussen knows widespread form of “reputational ranking based on officials from the 16 US intelligence agen- adoption requires that the technology participation”—a “badge” based on a 5- cies to research and share knowledge and deliver tangible benefits to users. “Top- star ranking system of how many people ideas. In short, it’s the wiki for spooks. down edicts to collaborate don’t work,” he voted on and tagged content. Admittedly, this venture is unique in says. “You need grassroots support”. In All this information is also feeding into many ways: All the participants are highly the case of Intellipedia, “It saves people the performance-evaluation system—and vetted, and transparency is paramount time. It takes less time to learn something, not just driven by management. There is in the small and elite community of not least because the most up-to-date already a, ‘How well do you collaborate?’ users. Nevertheless, the lessons learned information is always in the wiki, and it section in regular employee feedback, for commercial operations are myriad— saves time getting people up and running and some people have asked management especially the way in which people and when they join the organisation. If your to interpret that part of the appraisal to processes can be aligned to reinforce the mentor before you was a real social book- measure how they contribute to content. power of the enabling technology. marker, all you have to do is hit a button, The tracking tools provide the back-up, and The National Geospatial-Intelligence and read up on things.” the evaluation criteria are now starting to Agency is a large contributor to this new Trust in Intellipedia is built by people make their way into job descriptions. wiki space. At the agency, Chris Rasmussen developing their social network of Mr Rasmussen knows that “Whatever has designated himself “Social Software colleagues. “Every edit, every blog, every you reward, you get more of.”

18 © The Economist Intelligence Unit 2008 The role of trust in business collaboration

Conclusion

s is the case in domestic life, trust in business of potential collaborative partners, and this results in reflects a complex interplay of factors, more fruitful relationships. Aincluding integrity (honesty, ethics), As globalisation and virtual communications move competence (intelligence, capabilities), commitment collaboration further into the extended enterprise, (often supported by demonstrations of good faith), and as the goals of collaboration become more and perceptions (“gut instincts” and fears). extensive, it will become essential for companies to Even though best-practice corporate governance have well-established trust protocols: Setting high has been on the corporate radar for some time now, it collaboration standards, instilling those standards seems that the trust element of governance, despite in the corporate culture, supporting that culture with being so closely linked to ethics, has yet to become a aligned processes, and enabling the collaborative business standard. process with technology. In fact, many collaborators are not as demanding A rigorous approach to establishing trust and of trustworthiness in partners as one might expect— positioning collaboration as a critical capability will nor as they should be. Notably, though, those that enable companies to reap the full benefits of our describe themselves as very good collaborators are globalised, high technology environment. indeed discerning about assessing the trustworthiness

Appendix

In February 2008, The Economist Intelligence Unit surveyed 453 business executives from around the world. Our sincere thanks go to all those who took part in the survey. Please note that not all answers add up to 100%, because of rounding or because respondents were able to provide multiple answers to some questions.

Can you think of one instance during the past year when you What was the purpose of the collaboration? Select all that apply. worked on a project with other individuals from outside your (% respondents) immediate group—customers, suppliers, business partners, or other functions in your organisation—in order to achieve some Improve internal processes common objective? 33 (% respondents) Increase efficiency 32 Yes Improve customer service 100 25 Develop a new product 24 Increase sales With whom did you collaborate? Select all that apply. 21 (% respondents) Lower costs 21 People in other functions (in same or other location) Improve product quality 51 19 People within my organisation, but outside my location or function Improve compliance 45 17 External suppliers/other partners Research or exchange information about a market, product or customers 38 15 People within my function (in another location) Reduce delays/increase speed 37 15 External customers Increase margins 28 14 External peers (eg, in knowledge exchange) Develop outsourcing relationships 21 13 In-house R&D team Recruit, retain or develop employees 14 8 In-house product designers Other 11 6 External product designers 9 External R&D team 9 Approximately what percentage of this collaboration was Other face-to-face, over the phone, and via virtual tools? 2 Total should equal 100%. (Average)

Face-to-face 38 Established virtual tools (eg, email, chat, web conferencing) 32 Phone (including teleconferencing) 30 Next-generation virtual tools (eg, Wikis, blogs, social networking tools, virtual worlds such as Second Life) 5

In deciding which people to trust, how important is each of the following qualities? Rate on a scale of 1 to 5, where 1=Critical quality in deciding which people to trust and 5=Not a factor in deciding which people to trust. (% respondents) 1 Critical quality 2 3 4 5 Not a factor Don’t know Honesty 67 26 4 1 1 0 Ethical behaviour 59 28 9 3 1 Willingness to exchange information 50 39 8 2 0 0 Shared objectives 46 36 12 4 2 0 Respectfulness towards others 35 43 17 4 1 0 Motivation 33 46 17 3 1 0 Positive attitude 32 45 18 3 2 0 Communication skills 28 41 24 6 1 0 Consideration of others 28 44 22 4 1 0 Expertise 27 44 22 4 3 0 Ability to do a job well 22 50 20 4 2 Intelligence 20 43 27 7 2 1 Experience 14 36 35 11 3 0 “Connectedness” (knows many people across functions and at various levels) 13 36 31 13 6 0 Works for a reputable organisation 9 23 28 21 16 3 Recommended by others 8 29 36 15 9 2

How successful was this collaboration in meeting its objectives? In general, how good do you think your organisation (% respondents) is at collaborating? (% respondents) Collaboration complete and fairly successful 52 Collaboration complete and completely successful Very good; we 19 collaborate very effectively 16 Collaboration not yet complete and going well 15 Good 48 Collaboration complete and not very successful Moderate 27 7 Collaboration not yet completed, and going poorly Poor 8 5 Very poor; we Collaboration abandoned before completion, but may be revived cannot collaborate 1 effectively at all 1 Collaboration abandoned before completion; could not meet objectives Don’t know 0 0

Now think of a key person with whom you collaborated on your recent project. Please rate the person in terms of each of the following qualities. (% respondents) 1 Very much so 2 3 4 5 6 Somewhat 7 8 9 10 Not at all Don’t know/Not applicable Behaved ethically 33 23 15 10 3 8 3 2 2 1 2 Was honest 28 21 19 11 5 6 2 1 2 1 1 1 Had positive attitudes 22 22 19 12 8 7 3 2 2 1 0 Was motivated 21 26 18 12 7 8 3 1 1 1 0 0 Was intelligent 20 23 23 13 5 9 3 2 1 1 Worked for a reputable organisation 19 19 16 13 7 11 4 1 2 1 2 4 Was respectful towards others 19 22 21 13 8 10 3 1 1 1 0 Exhibited expertise in his or her field 17 24 23 13 6 9 3 3 1 0 Shared interesting or useful information 17 19 22 15 8 9 4 2 2 1 1 0 Shared my objectives 17 22 22 16 6 10 3 2 1 1 Was experienced 17 23 21 15 8 6 4 5 0 Did his or her job well 15 23 23 13 9 9 4 2 1 Was considerate of others 15 18 22 15 9 11 3 3 1 1 1 Was a good communicator 12 17 17 17 10 13 5 5 3 1 2

How much did you trust that person? (% respondents)

Completely 14 Highly 57 Moderately 22 Little 6 Not at all 0 Don’t know 0

In deciding which organisations to trust, how important is each of the following qualities? Rate on a scale of 1 to 5, where 1=A critical quality in deciding which organisations to trust and 5=Not a factor in deciding which organisations to trust. (% respondents) 1 Critical quality 2 3 4 5 Not a factor Don’t know Reliability 59 34 7 1 Ethics of the organisation’s leaders 56 29 12 3 1 0 Ethics of the employees I deal with 55 34 9 2 0 Commitment 51 37 10 2 0 Competence 42 44 11 2 Well-established and transparent governance 37 39 18 4 1 Engagement 36 46 14 2 1 Discretion 30 38 26 5 0 Business-model transparency 28 44 22 5 2 Depth of talent 23 50 22 4 1 Excellence in collaborations of a specific type 22 47 27 3 1 Receptivity 21 51 24 2 1 1 Excellence in collaboration in general 21 46 28 3 2 Works for a reputable organisation 12 27 29 17 12 4 Size of organisation 4 12 25 27 30 2

Now think of the organisation with which you collaborated on your recent project. Please rate the organisation in terms of each of the following qualities. The organisation: (% respondents) 1 Very much so 2 3 4 5 6 Somewhat 7 8 9 10 Not at all Don’t know/Not applicable Was committed to the project 22 25 23 12 5 7 2 1 2 1 Was ethical 19 23 24 9 7 9 2 1 2 1 1 3 Had the requisite scale for the project 19 19 22 14 8 9 3 2 2 1 1 2 Showed discretion 18 23 22 11 7 12 2 1 1 4 Was highly engaged in the project 17 25 22 12 7 10 3 2 2 0 0 0 Was competent 16 22 22 17 8 9 2 2 2 0 0 0 Was receptive 11 20 27 13 5 15 3 2 1 1 0 0 Excelled in our specific type of collaboration 11 17 23 16 8 13 4 3 1 1 1 2 Had a deep talent pool 11 10 24 17 9 12 5 4 3 3 3 Had a transparent business model 10 17 20 18 10 12 4 3 1 2 1 4 Was reliable 8 24 24 17 6 11 3 2 1 2 2 Excelled in collaboration in general 8 19 20 15 11 12 5 3 3 1 2 1 Had well-established/ transparent governance systems 6 17 23 16 7 13 4 3 2 2 7

How much did you trust that organisation? What formal or informal practices exist in your organisation to (% respondents) verify the trustworthiness of individuals from outside the organisation with whom you collaborate? Select all that apply. (% respondents)

Completely 7 We get word-of-mouth recommendations from colleagues 73 Highly 57 We meet individuals for in-person vetting Moderately 30 58 We go by peer reputation Little 4 53 Not at all 0 We get market referrals Don’t know 1 42 We require and check accreditations/qualifications 40 We require a proven history of performance 33 We require and check other written references 24 We use a search firm / clearing house to pre-approve candidates 17 We use formal market ratings (eg, D&B) 10 We have a formal system of trust ratings 5 Other 3 Don’t know 1

Now think of the same key person with whom you collaborated Now think of the organisation with which you collaborated on on your recent project. To what extent did you follow the formal your recent project. To what extent did you follow the formal or or informal trust-verification practices that exist in your informal trust-verification practices that exist in your organisation? organisation? (% respondents) (% respondents)

All practices followed All practices followed 17 23 Most practices followed Most practices followed 48 50 About half of practices followed About half of practices followed 18 12 Few practices followed Few practices followed 9 8 No practices followed No practices followed 6 5 Don’t know Don’t know 3 2

What formal or informal practices exist in your organisation to In your recent project, what actions were you willing to verify the trustworthiness of other organisations—partners, take—even if you didn’t need to for this particular suppliers and consultants—with whom you collaborate? collaboration—with your collaborative partner? Select all that apply. Select all that apply. (% respondents) (% respondents)

We get word-of-mouth recommendations from colleagues Disclose practices of my organisation, function or department 64 63 We get market referrals Delegate important tasks to my partner 55 51 We go by peer reputation Let my partner present to my superiors with me present 52 47 We meet with companies for in-person vetting Share resources (eg, assign FTEs to collaborative team) 47 42 We require and check accreditations/qualifications Let my partner speak for me within the collaborative venture 41 30 We visit their corporate facilities to assess their resources Let my partner operate unsupervised/unmonitored 39 29 We require a proven history of performance Disclose proprietary information 34 28 We require and check other written references Delegate minor tasks to my partner 23 26 We use formal market ratings (eg, S&P) Follow procedures that circumvented normal practices at my company 16 23 We use a search firm / clearing house to pre-approve candidates Let my partner present to my superiors alone, without my presence 12 23 We have a formal system of trust ratings Let my partner speak for me with other outside parties 10 22 Other Award my partner a financially lucrative contract 3 14 Don’t know Rely on my partner exclusively 2 13 Other 2

Suppose the potential benefits of the collaboration were twice Which of the following actions would pose the most risk to you in what you expected. What additional actions, if any, would you be a collaborative venture? Select up to four. willing to take? Select all that apply. (% respondents) (% respondents) Disclosing proprietary information Disclose practices of my organisation, function or department 65 67 Relying on my partner exclusively Delegate important tasks to my partner 46 56 Following procedures that circumvent normal practices at my company Let my partner present to my superiors with me present 39 55 Awarding my partner a financially lucrative contract Share resources (eg, assign FTEs to collaborative team) 28 49 Letting my partner speak for me with other outside parties Let my partner speak for me within the collaborative venture 25 37 Letting my partner operate unsupervised/unmonitored Disclose proprietary information 25 32 Disclosing practices of my organisation, function or department Let my partner operate unsupervised/unmonitored 21 31 Letting my partner present to my superiors alone, without my presence Delegate minor tasks to my partner 15 30 Delegating important tasks to my partner Let my partner present to my superiors alone, without my presence 13 29 Letting my partner speak for me within the collaborative venture Follow procedures that circumvented normal practices at my company 9 28 Sharing resources (eg, assign FTEs to collaborative team) Let my partner speak for me with other outside parties 5 27 Letting my partner present to my superiors with me present Award my partner a financially lucrative contract 4 22 Delegating minor tasks to my partner Rely on my partner exclusively 3 19 Other Other 1 3

To what degree do you believe the following actions would degrade your trust in a collaborative partner? (% respondents) Trust destroyed, project halted Trust weakened, wait and see Don’t know Trust damaged, project continues, but new projects doubtful Trust unaffected Failure to produce as promised 15 53 30 1 0 A missed deadline (eg, late producing what was promised) 5 31 59 4 1 Accidental misstep (eg, inadvertent leak of sensitive information) 11 34 43 11 1 Unauthorised sharing of proprietary information within the organisation 23 51 21 3 1 Unauthorised sharing of proprietary information beyond the organisation 63 28 7 1 Misrepresentation (eg, exaggeration) to cover mistakes 34 48 16 1 1 Misrepresentation (eg, exaggeration) to benefit themselves 47 39 12 1 1 Duplicity (eg, party is deliberately misleading) to cover mistakes 54 34 9 1 1 Duplicity (eg, party is deliberately misleading) to benefit themselves 65 27 5 1 1 Illegal act (eg, insider trading, embezzlement) 88 7 3 1 1

In general, how much do you collaborate virtually? (% respondents) About the respondents

Our collaborations are not at all virtual (We find, manage, and communicate with most of our collaborative business partners via face-to-face and telephone interactions, and rarely experiment In which region are you personally based? with Web and other IT tools to help our efforts) (% respondents) 16 Our collaborations are minimally virtual (We still find, manage, and Asia-Pacific communicate with most of our collaborative partnerships by face-to-face 34 and telephone contact, though we have experimented with Web and North America other IT tools to help our efforts) 28 30 Western Europe Our collaborations are moderately virtual (Our collaborative projects are 25 a mix of in-person and virtual initiatives, and we regularly use established Web- and other IT-based tools to communicate with partners, and to find, Middle East and Africa expand, manage, and sustain our network of collaborative partners) 6 39 Eastern Europe Our collaborations are highly virtual (We rarely meet collaborative 4 partners in person, and are fast-followers in adopting virtual tools to Latin America communicate with, and to find, expand, manage, and sustain our 3 network of collaborative partners) 15 Our collaborations are totally virtual (We never meet collaborative partners in person, and we are early-adopters of virtual tools to What is your primary industry? communicate with, and to find, expand, manage, and sustain our (% respondents) network of collaborative partners) 0 Financial services 28 Professional services 10 Which of the following best describes your involvement in your IT and technology company’s virtual collaboration efforts? 10 (% respondents) Manufacturing 9 I am required to participate in virtual collaboration efforts continually Energy and natural resources (eg, job description requires it) 8 20 Healthcare, pharmaceuticals and biotechnology I sometimes participate in informal online collaborations 7 (eg, participate in knowledge-sharing effort), but it is not required Consumer goods 19 4 Our company has no real strategy to pursue virtual collaboration Telecommunications 18 3 I am trying to spearhead a virtual collaboration effort now Education (eg, start up a peer network) 3 12 Construction and real estate I choose to participate regularly in virtual collaboration efforts 2 (eg, edit a wiki) Government/Public sector 9 2 I head the company’s strategic efforts to foster virtual collaboration Retailing 9 2 I lead a virtual collaboration effort (eg, head a peer network) Chemicals 8 2 I don’t participate in the company’s virtual collaboration efforts Entertainment, media and publishing 5 2 Transportation, travel and tourism 2 Aerospace/Defence 2 Automotive 2 Logistics and distribution 1 Agriculture and agribusiness 1

What are your company’s annual global revenues in US dollars? What are your main functional roles? (% respondents) Please choose no more than three functions. (% respondents)

Strategy and business development $500m or less 38 39 General management $500m to $1bn 11 39 $1bn to $5bn 16 Finance 25 $5bn to $10bn 11 Marketing and sales $10bn or more 23 17 Risk 17 IT 13 Operations and production 13 Customer service 10 What is your title? R&D (% respondents) 8 Information and research Board member 8 5 Human resources CEO/President/Managing director 6 19 Supply-chain management CFO/Treasurer/Comptroller 5 6 Procurement CIO/Technology director 4 2 Legal Other C-level executive 4 6 Other SVP/VP/Director 6 16 Head of Business Unit 9 Head of Department 12 Manager 17 Other 8

Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper.

28 © The Economist Intelligence Unit 2008 LONDON NEW YORK HONG KONG 26 Red Lion Square 111 West 57th Street 6001, Central Plaza London New York 18 Harbour Road WC1R 4HQ NY 10019 Wanchai United Kingdom United States Hong Kong Tel: (44.20) 7576 8000 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7576 8476 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]