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The True ROI of Collaboration

August 27, 2012
at 7:16 am PST

As INSEAD and UC Berkeley Professor Morten Hansen says, “The goal of collaboration is not collaboration itself, but great results.”[1]  Working with many of our customers, we’ve developed a framework for assessing the true ROI of collaboration, and it falls into three distinct categories:

  • Operational ROI allows you to assess how collaboration eliminates or avoid costs associated with running your business. You might cut travel, reduce infrastructure needs, lower bandwidth or energy costs, save on office space and so on. Collaboration tools can replace or reduce the need for many of these types of costs.
  • Productivity ROI refers to savings generated from more efficient processes, accelerated decision-making and reduced cycle times. Collaboration can lead to significant productivity gains in any number of ways, such as optimizing within lines of business or matching your organization’s expertise to opportunities early on.
  • Strategic ROI can be the hardest to measure, but perhaps the most transformative. This kind of ROI occurs when collaboration enables your business to take a giant leap forward in areas like enhancing customer satisfaction and loyalty, accelerating innovation, introducing new business models or entering new markets. These types of changes can also reshape an industry in fundamental ways.

These three types of ROI sometime manifest themselves differently across industries. Here are a few examples:

  • Financial services. With collaboration, banking customers today can use a virtual mortgage lender, make a deposit on their smart phone, and speak to video service representatives who have access to their banking history and can suggest new products based on your personal needs and history.
  • Health care. In health care, telemedicine brings experts together with patients to enhance the diagnosis and treatment processes. Nurses and doctors are mobile and have fast access to information they need. Collaboration can help decrease patient wait times, increase clinical safety and provide better visibility into staffing requirements.
  • Manufacturing. Manufacturing companies leverage collaboration to design products in one country, manufacture them in another and market them in yet another without skipping a beat. Everyone has complete visibility into the process, and the work never stops. It’s a transparent, seamless supply chain.
  • Retail. In retail, collaboration changes the way goods are made and sold. Virtual fitting rooms take time and space out of the equation, as designers review designs and choose fabrics without traveling to Europe and Asia. A process that once took a month can be done in a matter of hours.
  • Government. Federal and local governments use collaboration to enhance public safety, drive efficiency in times of budget constraint and improve the citizen experience with 24-hour access to many services. Police are using mobility and presence solutions to improve public safety. Courts are using virtual trials that include video conferencing technology to save on transportation costs and accelerate the trial process.

Sit down with cross-functional leaders and challenge yourselves to think about how Operational ROI, Productivity ROI and Strategic ROI might look in your industry and in your organization.

What kinds of returns has your company seen with collaboration? Let me know.

Carl

excerpt from The Collaboration Imperative: Executive Strategies for Unlocking Your Company’s True Potential

 [1] Morten Hansen, author, Collaboration and professor, INSEAD and UC Berkeley

 

 

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