Collaboration is a term we have assigned to the practice of communicating and working in groups, building on each other’s ideas with the end goal of delivering a great product, preferably something new and original.
Doing business in a competitive environment means companies need to become masters of collaboration, and it has been proved that unlocking the potential capacity and knowledge of a group increases that group’s satisfaction level by a factor of 10. As everyone knows, motivation is a key driver for growth.
Assigning dollar value to collaboration
In a study conducted for Google, Deloitte was able to accurately quantify the value of teams collaborating within an organization (versus a non-collaborative culture) by analyzing productivity, profitability, employee satisfaction, product quality and, of course, innovation. Since these are core functions of growth and profitability, it was possible to use them as metrics to assign dollar value to the act of collaborating.
Collaboration in the workplace is reportedly worth $46 billion a year. The research found that the Australian economy stands to lose $9.3 billion on not doing any of the above. According to the Australian Bureau of Statistics, only 36% of Australian companies were innovative in 2012-13, down from 41%. The gap between Australia and the rest of the world is widening by the year, as Asia, Europe and America are avid fans of the collaborative culture.
Companies in Europe and the US are five times more likely to experience a considerable increase in employment, twice as likely to be profitable, and twice as likely to outgrow competitors, solely because because they prioritize collaboration, both culturally and by making the necessary investments in collaborative technology.
Australian businesses are behind in mentality. Their general response to financial challenges is to reduce headcount, but already there are examples of avoiding bankruptcy by doing the exact opposite. Here’s a recent one.
Leading by example
In a fascinating feature story by Inc., we learn how Gravity Payments CEO Dan Price decided to roll up his sleeves and get back to the basics by cutting his $1 million annual salary down to $70,000 while raising the salaries of his employees to roughly the same amount per staffer. This, when things couldn’t have been worse for his company. The reason? To boost morale and infuse a sense of equality – a we’re-in-it-together kind of thing.
Price is not the only example of weathering out gloomy times against all odds using wisdom instead of taking drastic measures. Elon Musk, CEO of Tesla and SpaceX, operates in a similar manner – by investing everything he has in his companies (as opposed to yachts or super models).
Like Price’s experiment, Deloitte’s July 2014 study identified a strong correlation between collaboration and the performance of a given company. Simply put, those that foster collaboration do better, and not by a small margin either.
Driven by a clear strategy, collaboration spurs greater employee satisfaction which, in turn leads to higher productivity, improved product quality, innovation, more revenue, and ultimately more profit. Australia is missing out, and the numbers confirm it.