August 29, 2009 Leave a comment
From the home office in Boston, Massachusetts…
Observations on technology and business from someone who should know better
August 29, 2009 Leave a comment
From the home office in Boston, Massachusetts…
August 28, 2009 5 Comments
California has several big issues that need to be tackled. Our state budget seems to perpetually be in deficit mode, with drawn-out battles for resolving the red ink. The education system, once a shining jewel in the world, now produced some of the low test scores in the country. The state infrastructure must be upgraded to handle the ever-growing population. Our prisons are sagging from overcrowding. Water sources need to be improved for the higherpopulation combined with predictable periods of drought.
So Governor Arnold Schwarzenegger established a novel approach. Let Californians weigh in with their ideas for how to fix the problems the state faces. He set up MyIdea4CA.com, where anyone can tweet their suggestions. So what does the wisdom of the crowd think will help?
Yes, it turns out state leadership has been missing a golden opportunity. Legalize pot, and things improve immediately! Or at least our perception of the problems mellows. Forget wisdom of the crowd. It’s buzzdom of the crowd.
Here’s a list of the most popular ideas as of Friday August 28, 2009 at 6:30 am:
In the screenshot, and further down the list, there are some more serious ideas proposed. So all hope is not lost in the fumes of a big joint. But you have to admire the persistence of the “legalize dope” crowd. Multiple ideas, multiple votes, top of the leaderboard.
Reminds me of a recent New York Times story detailing a similar effort by President Barack Obama to elicit ideas from Americans.
The White House made its first major entree into government by the people last month when it set up an online forum to ask ordinary people for their ideas on how to carry out the president’s open-government pledge. It got an earful — on legalizing marijuana, revealing U.F.O. secrets and verifying Mr. Obama’s birth certificate to prove he was really born in the United States and thus eligible to be president.
I fundamentally believe that crowdsourcing works. For instance, our stock markets are a great example of collective wisdom. They provide amazing value in terms of aggregating the opinions of large numbers of people.
Yes, crowdsourcing works. Just be mindful of the crowd from which you’re sourcing.
August 27, 2009 5 Comments
IBM recently launched its Smarter Cities initiative. Part of its overall SmarterPlanet project, Smarter Cities is an effort to find solutions to the problems that will occur due to our ever-increasing population growth in urban centers around the world:
In 1900, only 13% of the world’s population lived in cities. By 2050, that number will have risen to 70%. We are adding the equivalent of seven New Yorks to the planet every year.
This unprecedented urbanization is both an emblem of our economic and societal progress—especially for the world’s emerging nations—and a huge strain on the planet’s infrastructure. It’s a challenge felt urgently by mayors, heads of economic development, school administrators, police chiefs and other civic leaders.
IBM has the smarts and global heft to be a major voice in innovating solutions for the problems that urban population growth will bring on. And of course, it doesn’t hurt that there will be government expenditures to make sure we’ve got the infrastructure ready.
IBM CEO Sam Palmisano laid out three fundamental changes to global urban areas:
As part of this initiative, IBM (in conjunction with Spigit) is running a series of prediction markets that you can participate in. The objective is to tap the collective wisdom of people around the world. Here are the prediction markets for which they’re seeking your perspectives:
If addressing these issues is something that interests you, check out IBM’s SmarterCities Predictive Idea Markets.
August 24, 2009 5 Comments
In his keynote at the Spigit Customer Summit, Gary Hamel said that something that caught my attention: democracies don’t suffer famines. Hearing this, I was intrigued and did some research.
Amartya Sen, winner of the 1998 Nobel Prize in Economics, made this empirical observation:
One of the remarkable facts in the terrible history of famine is that no substantial famine has ever occurred in a country with a democratic form of government and a relatively free press.
Why? In a paper from the John F. Kennedy School of Government at Harvard University, Sean M. Lynn-Jones puts forth two reasons:
First, in democracies governments are accountable to their populations and their leaders have electoral incentives to prevent mass starvation. The need to be reelected impels politicians to ensure that their people do not starve.
Second, the existence of a free press and the free flow of information in democracies prevents famine by serving as an early warning system on the effects of natural catastrophes such as floods and droughts that may cause food scarcities.
Isn’t that powerful? Simplifying things, I distill those two reasons into these: (i) organizational responsiveness, and (ii) distributed trend detection.
Both of which describe the realm of what Enterprise 2.0 is about, albeit without the life-and-death issue of starvation. That in itself is interesting enough. But when you try to apply those findings to companies, you realize they don’t quite mesh with today’s corporate governance models.
You, the reader, probably say “duh” to the observation that corporations aren’t democracies. But to consider the benefits of organizational responsiveness and distributed trend detection, it’s important to understand a crucial difference between democracies and corporations. The diagram below shows the corporate governance model:
In the context of making organizations more responsive, and distributing trend detection, where does that happen? It’s the employees. They’re the ones on the front line. They’re getting creative to solve issues everyday. They hear things from the market before most do. They want to make a difference and see their companies progress.
This is the equivalent of the voters in a democracy. The ones who are experiencing issues firsthand. But employees aren’t empowered to change their organizations. That’s the C-Level suite: CEO, COO, CFO, etc.
The C-Level suite lives a life of leading employees, and listening to the Board of Directors. Well listening, and leading, the Board. And the Board serves at the pleasure of shareholders.
In this model, shareholders look at company results and estimate future overall growth in revenue and profits. Fail to hit the numbers, and they put pressure on the Board. Board feels the pressure, and begin to question the C-Level suite. C-Level suite makes changes, and/or is replaced.
Notice that train of actions – it’s not the feedback from employees that drives changes. It’s a look-back at the results by shareholders. This isn’t to say that C-Level executives do not listen to employees. But the structural governance model sets the pecking order for who and what gets attention.
As someone who went to business school, I’m a firm believer in the accountability to shareholders governance model. Capital is scarce, and its efficient allocation across the economy is valuable for ensuring generally sufficient supplies of products and services needed by the population.
But that doesn’t mean the C-Level executives can’t change the way they manage to improve the prospects of their companies and returns for their shareholders. As has been pointed out before, companies are experiencing unprecedented levels of volatility in markets today. Sources of industry change come from multiple directions, and their speed of invasion is much faster.
Maintaining a model of listening only to their senior executives, their Board and their shareholders is becoming a risky strategy for CEOs. It means listening to people whose interests are certainly in seeing a strong, healthy company, but whose capacity to provide early trend detection and problem-solving creativity is limited. Shareholders aren’t in the trenches of your company’s operations. The Board of Directors is made up of C-Level executives from other companies, who need to worry about their own operations.
Gary Hamel discussed W.L Gore as a model of a company where employees are much more a part of the corporate governance model. From Fast Company in February this year, here’s a quick update on W.L. Gore:
Gore has spun a fortune from constantly reinventing the polymer polytetrafluoroethylene. In its 50th-anniversary year, the $2 billion-plus private company is on pace for record revenues and profits, thanks to a number of clever new products with a lot of potential.
An article in Sales and Marketing Management noted that employee teams help to hire new staff members, assist in determining each other’s pay, and pick their own leaders. Crazy eh? But note the same article says this:
An almost eerie optimism radiates through the hallways at Gore, which is best known for its Gore-Tex lining for weatherproof jackets, and which remains a private company despite its size, in order to protect its culture from outside interests.
Ouch! Here’s a company that exemplifies a governance model of innovation, encourages employee innovation and distributed market intelligence. And it has to stay private to protect this culture?
My sense is that the Enterprise 2.0 movement in general is a vanguard toward improving the way companies are managed. Being a public company, used to a top-down order of things and paying a lot of money to outside consultants to understand the market, is hard to change overnight. But companies can begin to improve the way they engage their employees and leverage their vast, distributed know-how and creativity. There is a wide spectrum of how far companies can take this. The key is to begin understanding how new approaches can work in your organization.
Enterprise 2.0 as a movement, not a technology, is quite promising for enabling companies to improve their overall strategies and operations.
Alternatively, we can continue to do things the way we always have, with a limited set of decision-makers and market intelligence gatherers. As seen with the increased rate of companies gaining and losing positions in industries, this model is becoming less reliable.
Remember, there’s a reason democracies don’t suffer famines.
August 22, 2009 1 Comment
From the home office at the World Track Championships in Berlin…
August 18, 2009 21 Comments
Last week at the first-ever Spigit Customer Summit, I had a chance to listen to Gary Hamel live. He delivered the keynote for the event, “Inventing Management 2.0.” If you’re a reader of Gary’s blog or his books, you know he’s a big proponent of empowering employees and changing management paradigms. See his 25 Stretch Goals for Management in the Harvard Business Review from last February for a great overview of his thinking.
In his speech last week, he did not disappoint. In fact, he provided a distinct rationale and call to action for companies to embrace the Enterprise 2.0 movement.
In his presentation, there were two distinct graphs that really drove home the point that it’s time for new ways of managing companies. I’ve put them together below:
On the left, a conceptual chart outlines something many of us instinctively feel. The pace of change in our world is increasing. As Gary Hamel noted, year-to-year volatility in company earnings have been increasing exponentially the last 40 years. Those changes are manifestations of what we all experience. I thought he put it well when he said:
What a company did in the past is now less predictive of its future.
Business Week in 2004 ran an article that nicely demonstrated the acceleration of change. It included these points:
On the right, the chart provides the major innovations in company management over the past 150 years. Current management systems reflect philosophies that were developed in an earlier era of greater stability. A quick primer on the different management ideas (note – cannot find information on McCollum):
Taylor: Frederick Winslow Taylor advocated: “It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.”
Sloan: Former GM CEO Alfred P. Sloan revolutionized the management of corporations through numbers: “Sloan oversaw the use of rigorous financial and statistical tools to profitably manage GM’s far-flung empire.”
McGregor: MIT professor Douglas McGregor developed Theory X and Theory Y: “In Theory X, management assumes employees are inherently lazy and will avoid work if they can. In Theory Y, management assumes employees may be ambitious and self-motivated and exercise self-control.”
Deming: W. Edwards Deming was a professor and statistician credited with revolutionizing post-war Japan’s manufacturing: “Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces.”
The point Gary Hamel drives home is that our business and economic environment has irrevocably shifted toward higher volatility and accelerated change. The sundering of companies from healthy industry positions to crisis mode in relatively short order demonstrates the need for updating management philosophies.
My own term for this is the “post-establishment age”. In prior decades, change was slower, and companies could count on inherent advantages that helped them maintain their established positions. As Gary Hamel noted, protections came in the form of regulatory frameworks, monopolies (e.g distribution), capital access and other ways.
These protections continue to erode in our modern, WTO-governed society. The web and digitalization of content and processes are making it easier than ever for new ideas to be tested. Consumers have access to more information than ever. Social media ensures more people know about new companies and products more rapidly then ever.
Old protections are falling, while change and industry disruption is accelerating. What can modern companies do to manage in this new environment?
Gary Hamel prescribes two strategies for companies in the post-establishment age:
Adaptability is a critical strategy. It means that companies pivot as they learn new information about their markets, competitors and changes in customer behaviors. As noted in a recent Wall Street Journal article noted, companies can try more ideas faster and less expensively than ever:
Technology is transforming innovation at its core, allowing companies to test new ideas at speeds—and prices—that were unimaginable even a decade ago. They can stick features on Web sites and tell within hours how customers respond. They can see results from in-store promotions, or efforts to boost process productivity, almost as quickly.
Gary Hamel then notes that senior executives continue to have a monopoly on strategy. This essentially makes companies dependent on a handful of executives’ ability to adapt to change.
Yet employees are probably the earliest to know when something is changing. They also are faced with situations where they must come up with solutions. It is in this environment where companies will find their sources of adaptation. In an article for the Harvard Business Review, 25 Stretch Goals for Management, Gary Hamel included these two goals:
12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
In the post-establishment age, these strategies are what distinguish leaders from those that will go through another disruption.
The cornerstones of Enterprise 2.0 include greater information visibility, tapping the emergent knowledge of employees and increased collaboration. Those are the foundational elements. Use them to create a company of higher adaptability and distributed innovation and decision-making.
As Gary Hamel concluded in his keynote:
“You can’t build a company that’s fit for the future unless it’s one that’s fit for human beings.”