Collaboration Transforming the Way Business Works

Collaboration Transforming the way business works A report from the Economist Intelligence Unit sponsored by Cisco Systems Preface Collaboration: Transforming the way business works is an Economist Intelligence Unit white paper, sponsored by Cisco Systems. The Economist Intel- ligence Unit bears sole responsibility for this report. The Economist Intelligence Unit’s editorial team executed the survey, conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. James Rubin was the author of the report and Dan Armstrong was the editor. Richard Zoehrer was responsible for layout and design. Our research drew on two main initiatives. We conducted a global online survey in November and December 2006 of 394 executives from various industries. To supplement the results, we conducted in-depth interviews with executives from around the world about the level of customer engagement in their company. Our thanks are due to all survey respondents and interviewees for their time and insights. April 2007 Collaboration: Transforming the way business works Three themes for the interactions economy his white paper is one of three published has the power to increase sales and margins enough in 2007 as part of a research programme to transform business models. T that arose from the Economist Intelligence Collaboration will have a similarly profound effect Unit’s March 2006 report for Cisco, entitled “Fore- on business. Broadly speaking, collaboration means sight 2020.” This report highlighted a number of to work together, and our research focuses specifi- important changes to the world economy over the cally on formal collaborative arrangements at work next 15 years. The principal trends identified in the that bridge traditional geographic, institutional, report—globalisation, demographics, atomisation, and functional boundaries. The emphasis on core personalisation and knowledge management—will competencies, the need for corporate agility and have a profound effect on the landscape of major the rise of emerging markets have caused firms industries and the working of the company. to focus on collaboration both within and among In order to build on “Foresight organisations. Collaboration among 2020,” we identified three themes functional groups and organisations that were then developed into sep- will help companies become more arate research projects investigat- productive and innovative. ing personalisation, collaboration Innovation—defined here as and innovation. Each is intended the application of knowledge in a to stand on its own and to fit with novel way, primarily for economic the other two, describing from dif- benefit—is becoming increasingly ferent vantage points the develop- important for companies and government of the interactions economy, ments. Business executives regard it in which customers, suppliers, as a vital weapon in fending off their workers, owners and others go beyond mere transac- corporate competitors. Government policy makers tions to exchange information for mutual benefit. see the need for an innovative environment if their As companies adapt to the new forces moulding economies are to grow. the interactions economy, they will find that person- The three themes are linked in many different alisation, collaboration and innovation will present ways. Firms collaborate with customers in order to great challenges and opportunities. Personalisation create innovative products that can be personalised. goes beyond customisation, allowing the consumer Process innovations can enhance collaboration in to stamp a product or service with his or her own ap- which carefully selected workers from around the plications, preferences and configurations. Technol- world are brought together in teams to improve ogy is particularly adept at enabling a high degree of productivity. The development of the interactions personalisation, as in the case of the downloadable economy is likely to strengthen the links among applications available on mobile phones or personal personalisation, collaboration and innovation and digital assistants. By offering a large variety of pos- heighten their importance, with far-reaching implica- sible products, features and services, personalisation tions for global business. © The Economist Intelligence Unit 2007 Collaboration: Transforming the way business works Executive summary he future belongs to those who collaborate. In environment will drive companies to increase col- the “Foresight 2020” study conducted in 2006, laboration of all types in order to move quickly, work T executives predicted that over the next 15 years efficiently and continue to grow. their markets will become even more global, functions The imperative to collaborate across functions, within their organisations will atomise across geog- geographies and corporate boundaries is the subject raphies and partners, and competition will intensify of this Economist Intelligence Unit study sponsored by from new corners of the world. To succeed in this Cisco. There are four major findings: environment, organisations will need to collaborate l Companies are facing a new imperative to form col- with thousands of specialised players, from customers laborative relationships. and partners to competitors, regional distributors and l Successful collaboration requires a cultural shift university researchers. Firms have traditionally col- which is already well under way. laborated vertically—with suppliers and distributors, l Companies face challenges in measuring and moni- for instance. But the need for agility in a fast-changing toring the benefits of collaboration. collaborative strategy, examines the use came from financial and professional About our survey of technology and collaborative metrics, services, IT, manufacturing and health- and discusses what companies will do to care, pharmaceuticals and biotechnol- In the survey of 394 business leaders collaborate in the future. ogy. About one in five respondents came and over 35 in-depth interviews with Around three-quarters of the or- from telecoms, energy, education or senior corporate executives and col- ganisations represented in the survey consumer goods. laboration experts, the Economist Intel- came from North America, Europe or the Interviewees included high-level ligence Unit sought to gauge the extent Asia-Pacific region. Just over one-half executives from large, publicly traded to which collaboration is being encour- had revenue of more than US$500m and companies in North America, Europe and aged, managed and measured in both about 40% had revenue of over US$1bn. the Asia-Pacific region. They included the private and public sectors. Spon- Survey respondents were senior. CEOs and senior executives from adver- sored by Cisco Systems, the study draws About 25% were CEOs, and exactly one- tising, software, hospitality, consumer on interviews and case studies with half came from the C-suite. More than goods, automotive, pharmaceutical organisations such as Procter & Gamble, two-thirds were senior vice-presidents and manufacturing corporations as General Motors, GlaxoSmithKline, Air or above. There were no respondents well as public-sector organisations. The Products and the Los Angeles County below the level of manager. The most Economist Intelligence Unit also spoke government, all of which have actively common functional roles were general to managers from smaller companies, pursued collaborative arrangements management, strategy and business organisations that provide technology with other organisations. It considers development, finance, and sales and and other services to facilitate collabo- the benefits and obstacles to pursuing a marketing. Most survey respondents ration, and noted experts on the topic. © The Economist Intelligence Unit 2007 Collaboration: Transforming the way business works r organisat Othe ions loca Other tions r funct 1. Senior executives understand that future suc- Othe ions cess depends on collaborating across greater me locatio Sa n distances—physical, cultural and organisational. e functi Sam on There was near-universal agreement among the study participants that collaborative relationships are grow- Self ing increasingly crucial to business success. According to a worldwide survey of 394 executives in November 2006, executives spend at least two-thirds of their time currently working alone, with people in their own functional silos or with people at the same location. But in the next three years, over one-half of executives say that they will spend more time working across Executive expect to spend more time functions, locations and organisations. collaborating with more distant partners Survey respondents said they expect to work increasingly outside their groups, locations and l Despite the promise of technology, there is still organisations. Sixty-three percent said they would dissatisfaction with online collaboration tools. spend more time working with teams in different lo- The need to collaborate is clear. The elements cations. Just over one-half expect to work more with required to ensure that collaborations work are people outside their function or organisation. emerging. What remains to be done—and the focus of These attitudes were also reflected in the interviews leading companies—is to develop formal collaboration with senior executives. Most of the companies inter- frameworks. And despite massive growth in the reach viewed pointed to steady increases

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