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A new dynamic occurs when organizations make the paradigm shift from “me” to “we.” This is when they move from independence to interdependence.When an organization has increased its PQ enough to understand that its success depends on the partnership’s success, it integrates the partnership into the culture. It is now “the way things are done around here.”

The more skilled the partnership is in using the Six Partnering Attributes, the better the relationship between members becomes. As we saw in Part Two, these attributes are portable—that is, you can use them in many different settings. When employees learn to improve their PQ on the job, they’ll use these skills not only between themselves, but also when working with customers and even in their personal lives. Employees show higher morale and cultivate better relationships when they communicate effectively. These elements lead to increased productivity. Since business relies on relationships, customers will continue to support organizations with which they’ve built a good relationship. The organization wins in many ways.

Operating leverage is the idea that companies can make more money from each additional sale if they do not have to increase fixed costs to produce more. In general, operating leverage refers to the fact that a lower ratio of variable cost per unit to price per unit causes profit to vary more with a change in the level of output than it would if this ratio was higher. So operating leverage is a function of fixed unit costs and output. The benefits of operating leverage unfold when business picks up. Then the existing workforce, plant and equipment can produce more without additional costs. Profit margins expand, and profits boom. Obviously, the profit of a business with a high degree of operating leverage varies more, everything else remaining the same, than do those profits of businesses with less operating leverage.

Greater variability of profits, of course, means that the credit risk is higher. Conversely, with a lower level of operating leverage, the business shows poor growth in profits as sales rise, but faces a lower risk of loss as sales decline.