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In earlier articles, I introduced two pathways by which digital technologies transform organizations: They enable the splitting of work over time and distance, and they make work thought-driven, not muscle-powered. While each pathway individually demands specific changes in leadership attributes, together they demand an enhanced commitment to collaboration, well beyond the banality of win-win.
Banality of win-win? Thoughtful executives, when asked about win-win, often give rueful smiles while admitting that the term has been reduced to a meaningless buzzword. Everyone grandly announces that they always seek win-win solutions. In reality, they usually seek victories that don’t excessively annoy their counterparts. In other words, “win/no-lose” is often a more apt description.
Jean-François Baril, the chief procurement officer at Nokia Corp. in its heyday in the early 2000s, knows about the eye-rolling the phrase can inspire. He told me that after arriving at Nokia, he proposed a new framework to an executive at another global company, terming the proposal a win-win. The gentleman replied, “You know what win-win means to me? It means Nokia wins the first time and Nokia wins the second time.”
Baril sympathized with this wariness, noting that the average businessperson’s commitment to win-win does not forsake the right to abandon this belief when faced with adversity. Baril told me that the approach of most executives to collaboration has much in common with the attitudes of emperors of old: Tactical moves to demonstrate that though they are stronger, they are also magnanimous; but when faced with real pressure, they return quickly to exerting total control over relationships.
The digital world demands a change in Baril’s evocative description of the current state of affairs.
Effective Solutions Require Integrating Many Bases of Expertise
When work is distributed over time and geography, no executive has a complete picture of unfolding events, and he or she may never have it — at least not on a timely basis. This challenge has its roots in the very structure of an organizational network: As the number of network nodes rises linearly, the number of possible interactions among them explodes. Moreover, the possible interactions among network partners can take three forms: flow of information, flow of goods or services, or flow of money. While links between any two network nodes may not involve all three types of interaction, a lot can happen simultaneously that is beyond the visibility or control of any single executive.
I make this point in my executive education classes by telling the story of a manager in a global company who made a highly consequential — and incorrect — decision about the timing and quantity of product flow. She came to the wrong decision because she hadn’t been privy to changes in money flow among network members with whom she had no contact. (A topic for another day: How should this manager’s performance be evaluated?)
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The second pathway by which digital technologies transform organizations, which specifies that work is increasingly thought driven, suggests that no single person — including a boss — is smart enough to have insight into every aspect of a decision anyway. People represent different functions at any given node of a network, and people at different nodes of the network have access to different information and knowledge. Effective solutions typically require integrating these different bases of expertise. In my 2008 book, The Spider’s Strategy, I related the story of how a 10-minute fire at a Philips Semiconductors Inc. factory in 2000 catapulted Nokia to the top of the cellphone industry. At a time when there was no surplus semiconductor production capacity available worldwide, Nokia’s ability to turn the looming disaster into a complete victory required bringing together knowledge from multiple functions of multiple companies in its global network.
The Digital World Presents Rich Opportunities for Collaboration
In the digital world, the two pathways make otherwise unobtainable intellectual property available for use — such as when 14 companies, including five Asian, five European, and four American businesses, collaborated on the design, funding, and manufacture for The Boeing Co.’s 787 aircraft. Collaboration reduces the risks associated with major investments: Not long ago, for instance, individual film production companies produced movies, while now, from Hollywood to Bollywood, a veritable gaggle of them come together to produce each one. And partnerships enable the creation of services that otherwise wouldn’t exist, as when airlines form networks, such as Oneworld Management Co. Inc., based in New York, to ensure that each airline’s customers can be seamlessly handed off to select partners who provide negotiated levels of service.
These examples suggest oft-overlooked realities of the digital world: Companies tend to compete not as individual entities, but as members of networks. And network-based competition makes collaboration a strategic necessity, not merely a tactical choice. Collaboration is essential for getting work done, not merely for reducing the marginal cost of doing so.
Win-Win Solutions Should Be Pursued Strategically
We must rescue win-win from its banal buzzword status. To do so, we must first accept three facts about relationships among companies that compete as members of networks:
- Not every encounter between two parties merits a win-win solution. Win-win is a strategic choice, not an inviolable ethical norm. Inter-network competition can be hard-edged, with huge stakes. Consider Boeing and its competitor, Airbus SE: When Airbus wins, Boeing will lose, and vice versa. Win-win has no role here. Conflating win-win with ethics simply sets standards that can’t be achieved and devalues its role for situations where it can be indispensable.
- Among the companies that make up a network, every party isn’t equally important. This is an important caveat. Consider the Boeing collaboration again. A Japanese company created the carbon-fiber technology that made the Boeing 787 feasible; its arch competitor worked with Airbus. Some companies that worked with Boeing on the B787 also worked with Airbus, and some provided their intellectual property transactionally to both companies. Some provided capabilities that Boeing could have readily obtained from others. Some contributed risk-bearing capital. Given the range of roles, even when win-win is possible, it is not necessarily essential: Believing that Boeing should have win-win relations with every partner is living in a fool’s paradise.
- For a network to succeed, the organizations that make up its core must look for win-win solutions. If they don’t, sooner or later, envy, greed, and distrust will cause the network to weaken and wither away.
A simple two-part question, answered with brutal honesty, is sufficient to decide who should be considered a core member (“partner”) of a network: Would you be hurt if they left the network? Conversely, would they be hurt if you left? When the answer to both questions is an unqualified yes, the parties concerned should make a concerted effort to achieve win-win outcomes.
In the digital world, the responsibility for assuring a network’s health must lie at the highest levels — with CEOs and their boards — because they can see more of the network than anyone else. Practically, what can they do? Nothing focuses a CEO’s attention more than what the board wants, and nothing focuses an organization’s attention more than what the CEO wants. So when a company delivers good performance, the board should, by all means, congratulate the CEO. But right after, it should ask, “Did our good fortune come at the expense of our partners, or did they, too, benefit because they are working with us?”
Thoughtful executives who aspire to leadership don’t have to wait for the edict to come down from on high. They can apply these lessons immediately, at their own levels, considering themselves as CEOs of their own domains. Words matter: If executives believe in win-win, they can start by considering where win-win is truly applicable, and stop asking for it elsewhere.