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Collaboration: Many Firms Are Playing Catch-Up

Posted By David Brousell, September 09, 2014 at 3:05 PM, in Category: Next-Generation Leadership and the Changing Workforce

For a number of years now, manufacturing companies have been trying to act more collaboratively with their employees, customers, and partners. The theory is that by unleashing the creativity of every individual and better ensuring their full participation in the business, innovation will increase, productivity will rise, and the enterprise will become more efficient.

As theories go, few have questioned the soundness of the collaborative idea, or at least the value of a properly-balanced collaborative model. More brains concentrated on generating new ideas or on solving problems would seem to offer a greater likelihood of success in either case, as long as decision-making along the way isn’t compromised.

But theories sometimes don’t match reality. And the reality today in manufacturing companies is that, while collaborative intention is strong and much informal collaborative activity is underway, many companies’ organizational structures haven’t yet caught up with a way of working that is becoming increasing preferred by all of the constituents in today’s manufacturing business eco-system.

This is one of the key findings of a new Manufacturing Leadership survey on Next Generation Leadership in the manufacturing industry. Key findings of the survey will be presented next week to Manufacturing Leadership Council members during a conference call.  (Click here to register: http://bit.ly/WEsUHV).

The survey reveals the broad outlines of a profound change in how manufacturing companies will be organized in the future and how they have to be led differently as a result. Although most respondent companies continue to be organized today in a centralized fashion to one degree or another, a seismic shift to flatter structures in which collaboration is the main operating principle is underway.

This year, about 63% of manufacturing leaders report that their companies have some degree of centralization, with nearly 20% saying they are highly centralized, up several points from last year. Only 18% say their companies have in place today a truly collaborative organizational structure in which traditional hierarchies, such as command and control management forms, have been eschewed in favor of flatter ways of working. Within five years, though, 62% of respondents say they want the collaborative model, up slightly more than six points from the number saying so last year. 

But what’s happening on the ground right now in many companies is that collaboration is becoming a prevalent day-to-day method of operating regardless of the current status of manufacturing companies’ organizational structures. When asked to describe their companies’ relationship to its employees today, for example, 86% of respondents report some degree of collaboration already under way, with just over one-third of that number, 34.8%, saying that the relationship is “highly collaborative and respectful” and that employees are strongly engaged in the day-to-day affairs of their companies.

The big task now before many manufacturing companies is to re-think their organizational structures to align them better with the collaboration already happening on the ground and reduce or eliminate friction that may be occurring between their current organizational model and the growing collaborative model. If they can do so, they may be able to harness the collaborative movement far better than they are today and enable their companies to close the gap between one of today’s most popular theories and reality.

Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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I appreciate and agree with your point about the importance of employee collaboration and the structural problems many companies have. The link between employee collaboration / engagement / loyalty and business success is well document, as you suggest and was the central point of Fred Reichheld’s book, “The Loyalty Effect”. One way to address the organizational problems you mentioned is by making the company’s economics transparent, and empowering the employees to understand and drive improvement. Over the past 20+ years I have seen this common sense approach to business, (often referred to as Open Book Management), consistently improve financial results and the lives of the employees who drive those result in over 350 different companies, from small and medium sized privately held to companies to large companies like Southwest Airlines, Capital One and BHP Billiton. Are you familiar with OBM and if so, what is your perspective?
If you are interested, more information can be found in these Harvard Business Review articles:
Alternatively, case studies can be found at www.openbookcoaching.com. If you would like to discuss this, just send a message to me at bill.fotsch@openbookcoaching.com. Best wishes, Bill
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