A Business Case for Collaboration A perspective on

The Value of Relationships Instinctively felt by nearly everyone. Hard to quantify Copyright (c)

The concept of Social Capital The norms and social relations embedded in the social structures of societies that enable people to coordinate action and achieve desired goals. World Bank Copyright (c) 2001 / Site. Scape, Inc.

The concept of Social Capital u Just as productivity can be increased by: è Physical Capital (a screwdriver) è Human Capital (college education) è Informational Capital (database) u Social Networks have value u Social Capital refers to the connections among individuals è Reciprocity è Trustworthiness è Norms Copyright (c) 2001 / Site. Scape, Inc. of behavior Extends beyond economic benefits

Creating Social Capital with Collaboration u Laws of Networking come into play Yes…Laws Copyright

Networks have Opportunity Value u Networks create three different opportunities: è Opportunity to receive è Opportunity to transact è Opportunity to affiliate u If we count the opportunities, we get a rough approximation of the value of a network. Copyright (c) 2001 / Site. Scape, Inc.

Sarnoff’s Law: V ~ N u Tune in / Broadcast u Content dominates. u

Metcalfe’s Law: V ~ N 2 u Connect peers u Transactions dominate. u Basis for the value of the Internet as it has grown the past decade. u Email, monetary, securities, services. Copyright (c) 2001 / Site. Scape, Inc.

Reed’s Law: V ~ 2 N u Group-Forming Networks. u Join / Create Groups u Dominant value is in joint Construction. u Enable and support affiliations among subsets of customers. Copyright (c) 2001 / Site. Scape, Inc.

Doesn’t matter… Given enough scale: u Metcalfe eventually wins… a. N + b. N 2 u So does Reed (dramatically!) a. N + b. N 2 + c 2 N u Even when a >> b >> c Copyright (c) 2001 / Site. Scape, Inc. a. N + b. N 2 + c 2 N

Reciprocity “The mutual or cooperative interchange of favors or privileges. ” If you don’t go to someone’s funeral, they won’t come to yours. - Yogi Berra Come to our breakfast, we’ll come to your fire. - Volunteer Fire Department T-shirt Copyright (c) 2001 / Site. Scape, Inc.

Types of Trust u Thick è Embedded in personal relationships that are strong, frequent, and nested in wider networks. è Small radius u Thin è Rests on a background of shared social networks and expectations of reciprocity. è Large radius u Transitive èA trusts C because A trusts B and B trusts C Copyright (c) 2001 / Site. Scape, Inc.

Types of Social Capital u Bonding è Builds underlying trust, etc. è Psychological support è “Sociological Superglue” u Bridging è Linking external assets è Diffusion of information è “Sociological WD-40” Copyright (c) 2001 / Site. Scape, Inc.

So what? u Societies (and businesses) with dense networks of trust and reciprocity: è Are more efficient è Less opportunity for opportunism, fraud, etc. è Cooperation enhances competitiveness è Information sharing leads to joint gains Copyright (c) 2001 / Site. Scape, Inc.

Why does business care? u Bonding social capital creates a better working environment for employees. u Bridging social capital lubricates business transactions and fortifies relationships: è Firms that embed their commercial transactions with their lender in social attachments receive lower interest rates. è People who transact with friends and relatives report greater satisfaction than do people who transact with strangers. Copyright (c) 2001 / Site. Scape, Inc.

The take-away u Bringing people together has a powerful effect on business productivity. u Creation of groups should be frictionless. u Different groups (size/organization) work together differently. Match tools to the job. u Bridging time may be more valuable than bridging space. Copyright (c) 2001 / Site. Scape, Inc.

ROI example Shell International Exploration and Production u Formed 13 Communities of Practice to enable cross-fertilization of ideas u Resulted in $200 million in savings in 2000 Example: Engineer posted long-standing problem on chemical treatments. This triggered a series of replies that eventually solved this previously “unsolvable” problem. Result: increase of 500 barrels per day Copyright (c) 2001 / Site. Scape, Inc.

ROI example International Standards Organization (ISO 9001) u u Using Forum document management among members worldwide Replaced manual process: copy & mail document, edit and collate comments by hand Results: u Shaved 1 year off development time u Saved organization copying and mailing costs Copyright (c) 2001 / Site. Scape, Inc.

ROI example Camargo Corrêa u Brazilian construction company using Forum for project and document management u Important features: the ability to handle all kind of documents, a powerful workflow solution and an embedded search engine Results: u Cut length of weekly team meetings by more than half u Instant access to all project information u Automatic audit trail of changes and additions Copyright (c) 2001 / Site. Scape, Inc.

ROI example Zinc Aluminum Coaters Association u u u Using Web. Work. Zone to connect geographically dispersed Board Members Replaced annual board meeting with “virtual” board meeting Enables easy and more thoughtful communication among members between meetings Result: saved organization >$20, 000 in flight, hotel, meals, Fed Ex, costs per meeting Copyright (c) 2001 / Site. Scape, Inc.

Summary u Focus on the people, not just the tools u Provide training on collaboration tactics and other “best practices” for maximizing value u Customize our technology so it fits your organization Results: Bringing people together has a powerful effect on business productivity. Copyright (c) 2001 / Site. Scape, Inc.