22 June 2006

Traditional strategies to improve efficiency are failing in the Knowledge Economy.

It is really amazing and sad (and frustrating for some of us who can see the light) how much Company Boards concerned with cutting costs while sustaining growth can repetitively miss the most effective way to do this in the Knowledge Economy we leave in: leveraging the organizational Knowledge through the development of a knowledge-sharing culture to foster creativity and innovation.

Traditional means of cost cutting are increasingly reaching their limits and sometimes even become counter-productive. For instance, the still somewhat popular engineering tools designed to map, understand and control organizational processes – to eventually simplify/standardise them to cut costs and improve efficiency - are all failing to meet their objectives. They at best provide a partial understanding of what is really going on, and at worse end up being themselves more complex and costly to manage than what they are supposed to represent. The key problem of these tools is that they miss a vital part of organizational processes: the human aspects (social, political, hierarchical, geographical, knowledge, skills, competences, etc…).

Another example of a management tool usually not adapted to the Knowledge Economy is MBO or Management By Objectives. When managers’ performance is evaluated solely on annual objectives, they will naturally tend to focus their attention and efforts on these objectives and not be concerned with anyone else’s. In other words, MBO can have adverse effects on collaboration. Of course, there are ways to alleviate this problem such as including a knowledge-related objective for each manager. Assuming it is measurable, this objective would however probably drive the only knowledge-related activity a manager will carry out effectively, so not vey productive from a KM point of view.

Cost-cutting is still too often synonymous of redundancies, recruitment freeze, modest salary increase, low (or no) bonuses, etc… Of course, who is making the most sacrifices and suffers the most: the workforce (the human capital). The problem with this is that it affects negatively what is increasingly the most important asset to an organization: its people knowledge and experience. Instead of sending the message that their very existence is a reason for lower margins, they should be asked and given the suitable environment to actively and creatively work out ways to cut costs and/or increase efficiency/effectiveness with same resources. A suitable environment means enabling a knowledge sharing culture.

Peter-Anthony Glick

02 June 2006

Business Intelligence for simulating the future

Chris Caren (Microsoft’s general manager of Office business applications) had recently this to say about Business Intelligence:

The latest three trends are:

1. BI products are usually considered as too hard for everyone to use and too expensive to roll out to as many people as one would want to.

2. Standardising onto one or two BI product lines that can serve all the needs of different types of user.

3. A change in the way people are thinking about BI: from a report-centric, historical view of the business, to a metrics-centric view – involving dash-boards and scorecards – of where the company is heading.

I believe these three points are all valid and important but the last one is the key to success. The first two are more about technology, the last one is first about a change of approach and a change of objectives. It implies the realization that successful organizations will be the ones that focus on simulating the possible future rather than analysing the past.

Peter-Anthony Glick