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Productivity Gains Through Culture, Visuality, and Collaboration (Part 4): Building a Business Case for Collaboration

August 7, 2012 - 0 Comments

Collaboration is again on my mind as I prepare to board a giant Airbus A380—the largest passenger jet in service today—for the long flight from San Francisco to India via Frankfurt.

I think about the various problems reported about the A380 program. The plane was essentially built in France and finished in Germany. The two locations used different versions of engineering software to design the aircraft’s incredibly complex wiring and electronics. Needless to say, the designs were not compatible, leading to an enormous amount of rework and production delays. This resulted in higher production costs, canceled orders, and billions of euros in lost revenue. It is doubtful that the A380 program will ever be a commercial success for Airbus.

Could more effective collaboration and communications capabilities have prevented this scenario? I think so. In fact, the business case for improved collaboration has never been clearer.

In my previous post, I described two highly essential enablers of increased employee productivity and innovation: extended workplace visuality and pervasive collaboration. In this post, I will address a couple of important questions:

  • How should companies build a business case for collaboration?
  • How should benefits be identified and, more important, quantified?

These questions are particularly critical in these times of slowing economic growth and shrinking corporate budgets.

Developing a business case for collaboration is both an art and science, relying heavily on the experience of the people working to craft it. Typically, very little historical cost/revenue data or other benchmarks are available from a company’s accounting systems to construct a business case. But the process of developing the business case is itself valuable—it will force you and your team to think about your business’ operating model in new ways and help identify what you need to do to drive additional productivity improvements.

Here is a set of guidelines to keep in mind as you construct the business case for collaboration:

  1. Begin by creating a small cross-functional business case team, and ensure that you have representation from your Finance organization. This will go a long way toward creating a business case that is both acceptable and credible, especially in the eyes of senior management.
  2. Develop and align your business case framework with metrics that are used and accepted by your organization. For example, if your organization uses metrics such as “Schedule Performance Index” and “Cost Performance Index” to monitor engineering development projects, then your business case should be aligned with these metrics.
  3. Review the metrics and scorecards in use. Identify metrics that are the most important—especially the ones that senior management cares about most.
  4. Identify the drivers of improvement for each of the most important metrics.
  5. Determine the drivers for which improved collaboration capabilities would be significant enablers. This may need to be done through interviews and surveys of a broad cross-section of employees and experts in your organization.  You will need to define the term “collaboration capabilities” clearly for this exercise. Remember that improved collaboration capabilities make it easier for employees to: identify and find the people with whom they need to collaborate; find and access the required information; understand and focus on the right set of business priorities; share and scale their knowledge and expertise; and spend more time on value-added activities (such as effectively serving customers or designing products) and less time on activities such as rework
  6. Estimate the importance of each driver. The drivers taken together drive a 100 percent improvement in the metric. However, they are not equal, and you will need to put a “percent weight” on each driver. Again, this is done in a workshop setting or by surveying a set of experienced and knowledgeable people.
  7. Calculate the difference between the desired target value of the business metric and the current baseline value (and the “dollar value” associated with this difference). There are a number of ways by which this can be done; your financial or cost analyst can help here.

You should now be able to quantify the impact from improved collaboration capabilities in your area and also identify where collaboration will be important. By taking a range of “percent weights” into account, you can come up with a range for the quantified impact.

This concludes my four-part series on “Productivity Gains Through Culture, Visuality, and Collaboration.” As always, I am interested in knowing about the methods you use in your company.

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