Smart Collaboration Boosts Revenues and Profits (and Performance Outcomes for Nonprofits)

Simply stated, collaboration across functions, business units, and geographies leads to better financial outcomes for companies. Let’s consider revenues first, followed by profits. Then we’ll look at similarly consequential performance outcomes for organizations that are not driven by profits.

Revenues

Let’s take a commercial real estate company as our first example. When they provide a single service to a client—say, leasing to a retail chain—that service might generate x dollars: a straightforward fee for service. But what if they can make that service part of a larger property management lifecycle solution, focused on how to optimize a client’s real estate portfolio over time? What if they can offer a solution that necessarily includes planning, finance, leasing, acquisition, disposal, consulting, property management, and more? If that happens, the leasing activity becomes more valuable, because it is integrated with other disciplines to create a differentiated, value-adding strategy.

Stated differently, leasing alone can be viewed as a commoditized offering; but in combination with other disciplines, it becomes strategic. And we don’t mean to pick on commercial real estate leasing here; the same considerations and calculations hold true across a broad range of disciplines. Those disciplines are more valuable when they are integrated, and less valuable when they are freestanding. Capturing that exponential value requires experts from each of those separate disciplines (planning, finance, property management, etc.) to come together in a way that we call smart collaboration.

Figure 1-1 depicts this. It shows rising revenue per customer even as five, six, and seven business lines become involved. Note that as more units collaborate on a client project or product offering, the average annual revenue from that offering (the bars) increases almost exponentially, over and above what each unit would have earned from providing services in a discrete, siloed way (the flatter, hypothetical trend line at the bottom of the graph). In fact, in this company, we saw that revenues were 7.1 times higher for accounts served by three business lines than by a single one. Those customers served by five business lines generated fees 20.4 times higher than those with just one kind of service.

Our work reveals this pattern time and time again across a wide array of organizations, ranging from technology companies and financial institutions to traditional professional services firms like law and accounting. The underlying principles apply to both companies that are international and those that are entirely domestic and that range from very small to giant.¹

Why? Where does the upside come from? It’s not about a simple cross-sell, as in, Do you want fries with that?² Having a broader range of people—executives, product managers, client-service experts, technologists, and finance managers—involved with a client in a coordinated way gives you more information about that client’s needs, priorities, and preferences. If your account teams communicate effectively among themselves (and that’s a big “if” that can’t be left to chance), you can leverage these insights to spot opportunities to support the client (and generate revenue) that your less engaged competitors might overlook.

FIGURE 1-1

More collaborators, more revenues

Of course, some of the new work may be discrete projects or products—in the case of our commercial real estate company, for example, a contract to handle building maintenance for all of a client’s properties in one city. But the big value-add opportunity arises when those individual units bring together their intel—that is, what they picked up in the course of the simple project—and think together about the customer’s more complex challenges. That’s how they start to identify the big questions and answer them in innovative, sophisticated ways.

When you address the bigger, more complex challenges of the sort faced by chief-level officers, you gain access to more senior executives who have broader responsibilities, larger budgets, and more sophisticated needs. And, of course, the more excellent work that you do for very senior executives, the greater your reputation and perceived legitimacy inside the client organization.

That said, you don’t need to be working at the board level for smart collaboration to have a major impact on revenue. One global retail bank we worked with provides a clear demonstration of this phenomenon. Our research uncovered patterns of collaboration that distinguished the highest-performing branches, where different kinds of bankers played discrete roles in collectively generating higher-quality, integrated offerings for customers. In these branches, the frontline bankers used a combination of data, personal interfaces, and targeted outreach to identify customers’ needs and generate interest in the bank’s products. Product specialists then leveraged their expertise to create customized offerings that generated higher value for the customer.

GROWTH THROUGH STRATEGIC PARTNERING

Relationship growth is a long-term endeavor. Not every new piece of business immediately drives big increases in revenues, given that the next opportunity may be with a small product or from a smaller region. What the data shows, however, is that as you expand your product or service offerings within a given client, the revenue grows exponentially. Why? Again, because you become a more strategic partner.

Let’s look at a simple example of DrinkCo, which sells its extensive product line into a global hotel operator. The first sale was to the customer’s “all suites” brand. As DrinkCo’s reputation grew, it started selling into the hotel chain’s premium brand, budget brand, and golf resort brand. Of course, the “acquisition” of each of these new brands brought in incremental and welcome revenue. But more important, DrinkCo’s account leaders started quarterly business reviews with each brand’s executive team in which they discussed strategy and operations, focusing on how the DrinkCo product lineup, distribution, and promotional offerings could better support the hotels’ seasonality and other fluctuations.

With this deeper understanding, DrinkCo deliberately evolved its product. It addressed the unique needs of each brand and meanwhile created solutions across the businesses, which allowed the hospitality group to tap into better data, generate insights, and deliver both cost savings and better guest experiences. That strategic value allowed DrinkCo to not only sell an expanded line of products but also experiment with more innovative offerings that commanded premium prices.

FIGURE 1-2

Outcomes of collaboration within bank branches

After controlling for a host of related variables, including the relative affluence of the neighborhoods and the number of nearby competitors, our analyses showed not only that more collaborative branches ultimately generated significantly higher revenue with those specific products but also that the deeper and broader relationships translated into greater customer loyalty. Figure 1-2 illustrates the difference between more and less collaborative branches.

Not surprisingly, these kinds of outcomes required significantly higher effort and genuine collaboration at the branch level, which presupposes both focus and motivation. Guidelines from headquarters direct the branch manager’s attention toward creating an environment in which employees work together to achieve collective goals: an example of the end-to-end goals we discuss in Chapter 6. The product specialists, who serve multiple branches, play a critical role in spreading institutional wisdom and motivating the front line to make these additional efforts. “The jelly donuts make a difference,” one executive observed. “A mortgage specialist who brings treats to a branch builds stronger relationships with the frontline bankers. It’s the power of the team that ultimately makes the difference.”

FIGURE 1-3

Firm X portfolio: Collaborating for clients

Our analyses show that most companies leave enormous amounts of money on the table when their business units don’t collaborate. Figure 1-3 is pretty typical across the organizations we’ve studied. As we saw earlier, revenues increase dramatically with each additional business unit that joins the mix. The descending lines show that this company serves most clients with just one offering and has fewer and fewer clients as the service offerings broaden (the “long tail” problem). In Chapter 3, we dive into ways to run thought experiments with your data to quantify just how much potential upside is there for you to capture. Everywhere that we’ve conducted this exercise, the resulting number has been eye-popping.

For multinational companies, is cross-border collaboration more lucrative? Generally, yes, because cross-border work is often especially complex and demanding—whether it’s a software company supporting the complex regulatory requirements in myriad countries, a logistics company providing global support to a multinational manufacturer, or an investment bank supporting a multicountry merger and acquisition deal. Realistically, each new region may not provide an exponential revenue bump; as a bank expands internationally with its customers, it may grow from serving only the customer’s London headquarters to serving their far-flung operations around the globe. Winning the Malaysian business will be a smaller victory than securing the UK business, obviously. But by growing with the customer, the bank becomes a more deeply embedded strategic partner.

These kinds of gains tend to be enduring, as well—especially because collaboration generates higher customer retention and customer satisfaction, as we discuss later.

Profits

Let’s move on to profits. The kinds of holistic solutions developed through collaboration create the ability to not only deliver more solutions to existing buyers at your customer but also be more profitable. As you move up the food chain at your customer, work for the C-suite is likely to be the most critical and therefore the most valuable and highest margin. Further, expanding your relationship with existing customers is less expensive (total cost of sales including marketing costs, time, etc.) than landing work with new customers. In other words, this is a win along two key dimensions: higher-margin work with a lower cost of sale.

One senior manager at a consulting firm described it in these terms:

When a board needs advice, I guarantee they’re not asking the procurement department’s permission on whom to hire. Recently some headlines hit about forced labor in a certain country, and my client’s board commissioned a supply chain review that required collaboration across experts from human rights, operations, regulatory, data science, and lots more. We could never have sold this in at a lower level, and the margin was excellent.

Generally, “moving the client to the right” (to reinvoke the results shown in Figure 1-3) broadens the scope of work toward more sophisticated, multiline solutions. Again, this move takes you out of the commodity game and into the realm of differentiated products and services.

Let’s look at a simple example from a tech and data provider we’ll call ReachPro. The company’s core product was data that tracked the effectiveness of marketing campaigns, which subscribers downloaded and analyzed. Most customers used a third-party’s data-visualization software to help them detect patterns in the data. But integrating these two software packages was a cumbersome process, so when ReachPro began offering a data-visualization tool optimized to analyze the data it provided, uptake was dramatic. The new ReachPro tool was easy to use, and it came prepackaged with reports and graphs directly linked to the marketing data, allowing the company to charge a slight premium over the generic products in the market.

COLLABORATION ON THE INDIVIDUAL LEVEL

Our main focus in this chapter is on the corporate/organizational level. But we should also emphasize that engaging in smarter collaboration delivers real benefits to individuals, too.

Check out the results for two senior people inside one organization. They share so many demographic and professional similarities that we jokingly refer to them as “twins”: they hold the same level and role inside the same department of their firm, they’re both men of the same age who joined the company at roughly the same time. Yet their collaborative patterns are very different, as you see in the figure on the facing page.

Every dot represents a peer of the twins (the twins are circled), and the lines connecting them show that those people have worked together on at least one project for a significant amount of time in the year we studied them. Notice that Twin 1 worked with six colleagues this year, three of whom were within his department. Twin 2 collaborated with more than thirty other people, nearly three-quarters of whom were outside his department.

Here’s the kicker: we measured a set of business outcomes for each twin, such as the revenue growth and profitability of clients they led, customer satisfaction, and team health. Twin 2’s outcomes were more than four times better than Twin 1’s.

What our empirical analyses (and those of many other scholars) repeatedly show is that a broad-based network generally helps a person reap many of the same benefits that collaboration generates for organizations: stronger innovation, more opportunities, better financial outcomes, and so on. Of course, these results hinge on a person’s ability to use their network effectively, which is the focus of many of our upcoming chapters.

Because ReachPro was selling exclusively to existing data customers, moreover, the cost of sales was low. Most executives understand intuitively that expanding existing relationships is one of the most cost-effective ways to grow. If companies had a way of capturing the true cost of sales—and many don’t actually track this number accurately—most would find that it requires less time, effort, marketing expense, and risk to convert an existing customer into a one that uses the full breadth of services than it does to woo a brand-new customer of equal size away from a competitor.

The bottom line: collaboration helps companies grow their profits.

Smart Collaboration Accelerates Innovation and Adoption

Many of us were raised on tales of the lone scientist burning the midnight oil, working against long odds and universal skepticism, until he finally had a eureka moment and delivered a brilliant breakthrough to the world. A more recent version of the same story celebrates the single-minded entrepreneur beavering away in his garage, maybe in cahoots with a nerdy friend, and coming up with … the personal computer!

These tales inspire us, of course—that’s what they’re meant to do—but they are less and less reflective of today’s reality. In nearly every domain, two trends work against the freestanding genius. The first is that, by necessity, our individual expertise continues to narrow into ever-deeper specializations. Meanwhile, the complexity of the problems that we’re trying to solve continues to increase. The result is predictable. Research into patent applications over the last twenty years clearly shows that innovation happens increasingly among teams working together on a project.

See Figure 1-4. The average number of inventors per patent has grown steadily, almost linearly, from 1976 through 2020. Meanwhile, the number of patents with as many as seven contributing inventors continues to grow steadily.⁸ Increasingly, breakthrough ideas require collaboration among individuals with diverse ideas and expertise. If the Day of the Lone Inventor ever truly existed, that time has passed.

These trends apply to innovation within companies as well. It’s not enough to come up with a big idea; that idea also has to get to market. After all, innovation is applied creativity.⁹ Organizations need to turn that idea into a product or service offering—often, a task that itself requires cross-silo work—and then bring that product or service to market, which requires further collaboration across multiple functional areas. In this complex sequence, intracompany collaboration increases the speed of discovery, the application of that discovery to products, and the introduction of novel offerings to the market.

FIGURE 1-4

Average number of inventors per patent

In addition, innovation increasingly involves collaboration with third parties along every step of the process of making a discovery and applying it—creation, marketing, production, and distribution. In Chapter 9, we focus on the whys and hows of collaborating with third parties—up to and including partnerships with competitors. Through these kinds of partnerships, diverse organizations bring together their unique capabilities, intellectual property, services, and products to develop a differentiated and specialized solution to target customer needs. Done well, that combination creates more value than the sum of its parts, and it can capture market share faster than traditional product-development approaches.¹⁰

And remember, collaboration is crucial for the kinds of innovation that may have far more impact than traditional business outcomes. For example, Terramera, an agricultural technology company based in Vancouver, Canada, has emphasized innovative collaboration at the heart of its operation. One of the company’s key initiatives is to scale the practice of regenerative agriculture, which, says Terramera, results in wins for consumers, farmers, and the planet. The numbers are dramatic. Regenerative farming is estimated to be 78 percent more profitable.¹¹ It’s better for the environment: every 1 percent increase in organic matter results in as much as twenty thousand gallons of available soil water per acre.¹² Finally, regenerative agriculture results in healthier crops, which yield, on average, 34 percent more vitamin K, 11 percent more calcium, and 15 percent more vitamin E.¹³

Despite the many benefits associated with regenerative farming, it is hard to persuade the world’s farmers to go this route. It requires super-collaboration across many stakeholders to solve this challenge—including scientists, governments, farmers, agronomists, investors, universities, and many more.

To drive home the value, Terramera has brought together experts in computational chemistry, biology, machine learning, and advanced robotics to predict how molecules interact and behave in various states and climates. These insights allow Terramera to recommend how best to improve soil and plant health almost anywhere in the world. They are also essential to helping farmers quantify the value of the transition to regenerative agriculture.

To test and commercialize this technology, Terramera is working with leading experts, including farmers, soil scientists, universities, and agronomists, to get real-time input and feedback, with the aim of training data models that predict the optimal path in the regenerative transition. At the same time, in an effort to rapidly scale this work, Terramera is collaborating with investors and governments to expedite the creation of protocols for carbon credit generation, tools to support and scale regenerative agriculture, and methods to reach more farmers.

Who benefits from all this collaboration-driven innovation? Farmers are enjoying higher farm profits, greater soil health and water retention—resulting in resilience to weather changes—and access to new income streams, including from carbon credits. Investors benefit from their stake in a growing business. Consumers benefit from cleaner, more nutrient-dense food, the cultivation of which leaves farmland in better shape with each passing growing season. Society and the planet benefit from a reduction in pesticide use and a drawdown of carbon from the atmosphere into soil, where it builds and enriches soil health—which in turn presents the opportunity to begin turning back the clock on climate change.¹⁴

Smart Collaboration Enhances Customer Loyalty and Retention

Customer satisfaction is a natural outgrowth of the deeper engagement, faster innovation, and better solutions that smart collaboration helps to deliver. For example, Jane Ashton, former president of the US division of a global telecoms company, recalls how her division’s work to embed collaboration led to a significant uptick in the company’s net promoter score (NPS)—the most widely used metric to evaluate the loyalty that exists between a provider and a customer:

We were running global sales channels for technology, life sciences, and the remaining hodgepodge of customers we lumped into “business services.” Each division operated in a silo, with no sharing or learning happening across the groups. Our NPS scores hovered in the 30s.

---

When I became president, we launched a culture-change initiative to improve how we worked with each other and with our customers. We started having conversations that built on each other, seeking others’ opinions, challenging, and even interrupting in the spirit of exploration, finding ways to improve our team, and serve our customers better. I paired people up across divisions for peer coaching. We built a healthy spirit of challenge and collaboration to bring best practice to customers. And our NPS scores started climbing. After two years, they nearly reached 60, which for us was a historic high.

This telecoms company’s outcome was no fluke. We’ve interviewed hundreds of buyers across a broad array of roles and industries: from a Fortune 50 company’s chief technology officer who purchases hundred-million-dollar cybersecurity solutions to the general counsel of an African drinks manufacturer to the operations manager who sources facility maintenance services for a major retailer. In those conversations, we consistently heard that buyers believe they are better served when their suppliers are better at collaboration.

Not surprisingly, satisfied customers stick around longer—and that outcome is not just a feel-good reflection of a chummy relationship. As an account executive at a global civil engineering firm told us, “Generally, clients find it relatively easy to swap out individual mono-line suppliers with a similar replacement from a competitor. But finding substitutes for multiple services, especially if they are tightly integrated, is way harder.” Over time, a self-reinforcing cycle emerges: the broader the team serving the client, and the more integrated the solutions, the higher the barriers become for a client to consider switching to a new provider.

One accounting firm reviewed its relationships with its three hundred biggest clients and uncovered a surprisingly large correlation between collaboration and client loyalty. Of those clients served by a single partner, roughly three-quarters said they’d consider moving their business to a competitor if their relationship partner left. In contrast, among those served by two or more partners, 90 percent said they’d remain loyal to their existing accountants. Figure 1-5 illustrates this point.

Across most industries, the more areas (product lines, regions, partners) that serve a given client, the more likely that client is to become “institutionalized”—embedded, as it were, across the organization, rather than narrowly connected through a single touch point. This substantially reduces the risk that the client will, or even can, make a change.

Does this lesson sound obvious? We would agree—except that in so many of the cases we’ve looked at, a company’s key clients are buying only a single service or product, which means that the loyalty of those clients is suspect, at best.

FIGURE 1-5

“If your account executive departed, would you seek another provider?”

Have you reviewed the relevant data in your organization? What’s eye-opening for most executives is that the majority of their customer relationships are controlled by a single team—and in many cases, by a single person. Figure 1-6 shows the recent distribution for the US client base of three major, well-regarded international companies.

These lessons apply well beyond professional services. State Street Bank’s engagement with its investment-management clients provides a clear example of collaboration boosting customer retention. To investment managers, State Street provides a broad suite of operational services: custody, accounting, fund administration, data management, analytics, reporting, and trading. By increasingly integrating those services and offering them as “integrated solutions,” the value to the client—and the stickiness for State Street—goes up. Mono-line competitors, even if they have a better price on an individual product, struggle to displace State Street. “Sure, I might save $100,000 by switching to a different accounting provider, but in terms of our overall spend and relationship with State Street, that’s a drop in the bucket,” said the chief operating officer of a global investment manager. “And I would have to integrate that accounting tool with everything else State Street does for me—whereas today, they handle it.”

FIGURE 1-6

“Across your customers, what proportion is served by one versus multiple senior people?”

Again, a broad relationship gives you deeper insight into the customer and increases the likelihood you will be seen as a strategic partner relative to other possible providers. This buys you time when a challenge arises. As an executive at a consumer products company said, “I’d always give my strategic partners the chance, multiple chances, to fix something before I make a change. That’s not the case with a smaller, less strategic vendor.”

To summarize, bringing the full suite of services in a deeply collaborative way is key when it comes to institutionalizing clients. The broader those relationships are across different service lines, departments, or geographies, combined with integration that makes that suite of capabilities difficult to replicate, the more likely the client is to remain with the provider.

Smart Collaboration Promotes Greater Efficiency

I don’t have time to collaborate.

This is one of the most common explanations we hear for why people decide to stick with standalone, non-collaborative approaches to work. And we are quick to agree that there’s a grain of truth underlying that blanket statement. The truth is, collaboration incurs startup costs—including, for example, the time it takes to build your network of trusted collaborators and the time it takes to learn your customer’s business well enough to tackle complex problems outside any single contributor’s expertise. Again, it’s true: you have to devote the time that’s needed to get past those startup costs.

The unwelcome news is that most of the tangible benefits of smarter collaboration—such as increased revenues and profits and higher customer satisfaction scores—accrue slowly. So at the outset of the collaboration, the costs are very likely to outweigh the benefits. At this point in the process, if someone complains that collaboration is inefficient, they may well be right. The good news is that these startup-phase costs drop over time as people gain experience. Eventually, the lines cross and collaboration begins to pay off. At that point, you don’t have time to not collaborate.

Take the case of software development. Typically, software developers write their code and then someone else tests it and provides feedback, and the coder makes edits in response to that feedback. San Francisco–based Pivotal Software takes a different and more collaborative approach.¹⁵ It invests heavily up front to train its developers to code in pairs. Rather than following the linear approach just described, the paired coders work simultaneously in parallel on the same code. Seeing each other’s work more or less in real time, they learn from each other and catch issues as they go. The ultimate output arrives more quickly and has far fewer bugs.

Another powerful example comes from Roche, a 122-year-old biotechnology company with ninety-four thousand employees in more than one hundred countries. Tammy Lowry, global head of talent innovation, shares an example of radically streamlining the drug development process through more effective collaboration:

The average time to get a drug from discovery through FDA approval had been twenty-one months. Every minute of that time, you don’t have a drug in the market that could be helping patients. We set ourselves a goal of radically shortening that time.

---

In Roche, the development-through-approval process was owned by three different siloed groups. At each handover from one part to another, there was a very controlled approval stage-gate process, with people scheduling formal meetings, creating presentations, meeting again, etc. It wasn’t a fast process.

---

We piloted a different approach: cross-functional, cross-organizational teams that from the beginning work through every step of the process in collaboration. We got the right people involved from the beginning, working together and accelerating everything. We eliminated artificial organizational boundaries, stripped out the bureaucracy, and removed all the siloed approval processes. The new process reduced the time to FDA approval by 50 percent.¹⁶

Efficiency matters in the nonprofit world as well. Anyone who has written a grant application knows that the efficient and effective use of resources is a key criterion for grant providers.¹⁷ As Jeff Raikes, the former chief executive of the Bill and Melinda Gates Foundation, puts it, “Simply, we have to help people do more with less.”¹⁸ And that efficient use of resources can quite literally help save lives. Professor Melissa Valentine of Stanford University found that nurse and doctor teams collaborating smarter in a hospital emergency department improved patient throughput time by 40 percent.¹⁹ This obviously matters to the patients who need treatment as soon as possible, and it is also good for the hospital. Past the startup costs, collaboration creates that kind of efficiency.

Smart Collaboration Facilitates Transparency and Risk Management

Rogue actors, regrettable employee turnover, cyber threats: companies today face an unprecedented array of risks, ranging from the merely damaging to the truly existential. In many of those situations, effective collaboration is essential for mitigating risks—and even for preventing future exposures.

Let’s start with a major headline-grabber: the rogue employee. We’re thinking, for example, of the celebrated case of the London Whale, which led to losses for J.P. Morgan of more than $6 billion. How did it happen? Due to a lack of oversight and collaboration between managers in risk, audit, compliance, and the investing team, traders were able to engage in speculative and risky derivatives trades that were not in line with the bank’s investment strategy.

Although such intentionally bad behaviors are relatively rare, they’re on the rise—and when they do occur, they can be fatal.²⁰ The good news is that this kind of aberration simply can’t arise in a highly collaborative environment, in which colleagues engage in open dialogue and invite input into their work. Transparency lowers the risk of illicit rogue behavior by wrongdoers.

Stepping back from rogue actors, collaboration across an organization is crucial for helping to reduce risk before, during, and after a major event. All three of these stages require internal collaboration from top to bottom—from boards and executive management through the line workers—and across silos. Meanwhile, external collaboration is also essential, because including outside advisers who have cross-industry expertise can help you identify your blind spots.

Many organizations, and particularly those engaged in financial services, have started conducting “premortems.” These analyses start with the end state: What could happen in the future that would create a major shock to our organization? Typically, members of the C-suite kick off the process by working with subject-matter experts to imagine a set of catastrophic events, then use reverse engineering to consider the conditions that would get them there. In this kind of scenario-building, cross-functional expertise is vital. Also valuable may be engagement by board members, whose experience in a range of companies, industries, or geographies may help unearth complex interactions that can create systemwide risk.

Ultimately, this broad-based, senior learning gets pushed down to the business-unit level. When it does, leaders throughout the organization can make the necessary adjustments to prepare for the future.

Looking at present-day risks is all about identifying small problems before they become bigger problems. A cross-functional team, in many cases led by a chief operating officer, works to create a culture in which the organization learns to become open about issues. It’s rarely easy. “You’re fighting human nature,” observes risk expert James Lam. “When there is good news, everyone’s willing to talk about it. But when something bad happens, people try to just quietly fix it. You lose transparency, which means you lose the chance to lower risk.”²¹

Collaboration in this stage means surfacing risks and working across silos to analyze them and find ways to mitigate them. Why? Because risks rarely exist within a single silo. For example, losing one customer seems like a small loss. But if you don’t understand that the departed customer left for a new competitor whose technology is fundamentally more advanced and cheaper to use, then you will fail to see that your company is stalled on the tracks and the train is fast approaching.

Finally, there’s the collaborative “postmortem” stage, which is probably the most common way of bringing different brains into the risk-analysis process. One common practice is creating a loss-event database. By cataloging all losses, cross-functional teams can analyze them for patterns, assess the outliers and potential black-swan events, and conduct root-cause analysis to understand the drivers of losses. The objective, as Lam explains, is to “really understand how we make mistakes, how we suffer losses, and use that insight to shape risk mitigation strategies going forward. This requires deep cross-functional collaboration.”

For example, one global bank started cataloging all losses above $10,000. The team involved soon found that analysis so valuable that they dropped their cataloging threshold down to $5,000—a remarkably small sum for a bank that generated more than $100 billion in revenues in 2020.

One more time: risks can, and must, be managed. Increasing your internal transparency is an important contributor to that effort—and collaboration fosters transparency.

Serving All the Bottom Lines

The bottom line? Smart collaboration is good for the bottom line, no matter how you define that bottom line.

For many people, the most important outcome of smart collaboration is that it can help organizations achieve a higher purpose. In August 2019, 181 CEOs from the Business Roundtable redefined the purpose of a corporation as being to promote not only shareholder returns but also equity and social justice. Focusing on a broad range of stakeholders—employees, suppliers, and communities—the Business Roundtable emphasized the positive role that corporations can play in society. “Major employers are investing in their workers and communities,” said Jamie Dimon, CEO of J.P. Morgan, “because they know it is the only way to be successful over the long term.”²²

Delivering on that vision will require organizations to work within their walls to develop their people and create opportunities through increased diversity and inclusion—and at the same time, to work outside their walls with customers, suppliers, and communities. Whatever else happens, the bottom line will surely benefit from smart collaboration.