About The Wisdom of Crowds

In his book “The Wisdom of Crowds – Why the many are smarter than the few”, James Surowiecki makes - indirectly but nonetheless powerfully - a very good case for Knowledge Management or the leverage of individual and collective knowledge. Simply put this way, that the many are smarter than the few is hardly a contentious statement. After all, a croud of say 1000 individuals should be smarter than only 500 of this same croud most of the times. You have more minds available to solve a problem/find an answer. However, what Surowiecki means is that a croud of 1000 can be – with the right conditions – much smarter than the sum of its parts even when it acts/decides in a completely uncoordinated way (meaning each individual acts/decides in isolation from the others). In fact, such a group can be (and Surowiecki gives plenty of examples) smarter than the even best experts in a particular field! The three conditions for this group wisdom to materialise according to Surowiecki, are that it must be diverse, independent and decentralized. On diversity, Surowiecki writes (chapter 2, part III): <<The fact that cognitive diversity matters does not mean that if you assemble a group of diverse but thoroughly uninformed people, their collective wisdom will be smarter than an expert’s. But if you can assemble a diverse group of people who possess varying degrees of knowledge and insight, you’re better off entrusting it with major decisions rather than leaving them in the hands of one or two people, no matter how smart those people are.>>This can be hard to believe but Surowiecki then makes the case for this point very well and I cannot find any reason to disagree with him. On independence, he writes (chapter 3, part I): << First, [independence] keeps the mistakes that people make from becoming correlated.[..] One of the quickest way to make people’s judgments systematically biased is to make them dependent on each other for information. Second independent individuals are more likely to have new information rather than the same old data everyone is already familiar with. The smartest groups , then, are made up of people with diverse perspectives who are able to stay independent of each other. >> I would think that this condition is in theory much less contentious than the first one on diversity. However, the problem with true independence is that in practice, it is rather difficult to obtain. Often, decisions in a croud are made sequentially with each individual influenced by his/her predecessors.Therefore, Surowiecki advises that <<If you want to improve an organization’s or an economy’s decision making, one of the best things you can do is make sure, as much as possible, that decisions are made simultaneously (or close to it) rather than one after the other.>> On decentraization, he writes (chapter 4, part II): << [..] if you set a croud of self-interested, independent people to work in a decentralized way on the same problem, instead of trying to direct their efforts from the top down, their collective solution is likely to be better than any other solution you can come up with. [..] Decentralization’s great strength is that it encourages independence and specialization on the one hand while still allowing people to coordinate their activities and solve difficult problems on the other.>> However, Surowiecki then cautions that : << decentralization’s great weakness is that there’s no guarantee that valuable information which is uncovered in one part of the system will find its way through the rest of the system.>> He then asserts that for a crowd of any kinds to allow << individuals to specialize and to acquire local knowledge [..] while also being able to aggregate that local knowledge and private information into a collective whole, [..] [it] needs to find the right balance between the two imperatives: making individual knowledge globally and collectively useful (as we know it can be), while still allowing it to remain resolutely specific and local. >> Well, well, isn’t this where/when Knowledge Management should come in? In fact, for all intent and purposes, this is a definition of KM I am satisfied to work with in an organizational setting: any intentional and managed changes or activities with a conscious objective to facilitate/enable what is highlighted in blue above. But it then highlights a fundamental reason for organizational KM to have so often failed to deliver: the lack of management recognition that collective knowledge in practice is indeed always valuable, with the potential to be very often correct and effective. Leveraging knowledge is then not just about realizing (and doing something about it) that each employee’s knowledge is valuable (and that’s already hard enough for most senior managements) but that the collective knowledge of the whole or groups of employees is even more valuable. I think that a cultural shift is needed here for this realisation to become the norm rather than the exception. This shift has already started with the ubiquitous nature and global reach of the World Wide Web enabling huge crowds to influence decisions directly or indirectly (eg. Obama’s election). This shift now needs to enter the board rooms en masse. According to Malcolm Gladwell, “the tipping point” (see his book with this title) should be reached when between 10 and 15% of board rooms will have formally acknowledged the value and power of individual and collective knowledge. I can safely predict this will happen even if I cannot say when.

Heathrow T5 opening fiasco continues to haunt travellers minds!

Back in April, I wrote about Heathrow irport Terminal 5 opening fiasco. I explained why I believe that on the part of British Airways, it was mostly due to a lack of training and lack of user acceptance testing of all the new systems and procedures. I also deduced from this that BA probably had an authoritative management style, a very hierarchical structure, and a corporate culture that didn't allow individuals at the bottom of the pyramid to voice concerns and constructive criticism in an effective manner. Later on, I watched amazed on BBC TV news , BA's CEO Willie Walsh acknowledging that his company's management did anticipate a difficult T5 opening, but that it was decided that the costs of delaying it would be greater than the potential costs of a failed opening! The costs directly attributed to the fiasco was estimated at £16m, already a big sum. However, I wonder if Mr Walsh and his team did account for this: Virgin sales are up thanks to T5 troubles

Insightful Knowledge

I am currently reading the very interesting marketing book "Creating Market Insight. How firm create value from market understanding", written by Dr Brian Smith and Dr Paul Raspin (Wiley edition). I will surely write a few posts about this book but I'll start here with their definition of an insight in a business context: For knowledge to be considered insight, it must pass what the authors call the VRIO test. Knowledge must be << · "Valuable": Does this knowledge enable the firm to respond to environmental threats and opportunities? · "Rare”: Is this knowledge currently held only by the organisation and not by its competitors? · Not easily Imitable: Is it costly or difficult for other organisations to obtain or develop this knowledge? · Organisationally aligned: Is the firm organised, or can it be organised, to exploit this knowledge? >> The authors do not mean that non-insight knowledge isn’t useful of course. But they attempt to differentiate knowledge that is merely useful from knowledge that is insightful. I think it is an interesting framework but I am not convinced about their definition of valuable knowledge: “Knowledge is valuable if it enables us to change something, rather than maintain things, and that change is valuable to either the customer or to the firm.” Although the authors approach this from a marketing point of view, I really struggle to agree with the notion that valuable knowledge must imply change. The authors themselves acknowledge that “the value test is a contentious and difficult one to apply t to a piece of knowledge.” One problem with this view is that it risks to prioritize in the mind of managers all the ideas and projects that imply change. Ideas and projects to improve existing activities would not be given enough attention and resources. But often it is such improvement that sparks the creation of new knowledge, that in turn will lead to a “valuable” change. In other words, a change providing competitive advantage does happen in an improvements-rich context that cannot be completely dissociated from the change. So without a good dose of “useful” knowledge, the “valuable” knowledge wouldn’t be created at all, let alone lead to an insightful change. Furthermore, stating that the change must be valuable to either the customer or to the firm does not help at all to define valuable knowledge, since any piece of knowledge that isn’t meeting this characteristic cannot even be considered useful to the firm! I think the problem with this definition of insightful knowledge is the use of the word “valuable”. I cannot yet put my finger on it but there should be another way to define what the authors had in mind without the too simple differentiation through subjective value. When I think of something, I’ll post it here.

Knowledge Management in ITIL v3

Read this very clear and insightful white paper from Peter Dorfman (dated May 2007):http://www.thinkhdi.com/hdi2008/files/ITIL3.pdf I agree with nearly all of it. Let me highlight one of Peter's concluding point: <<For end users, ITIL 3 is an opportunity to get KM onto executive radar screens, maybe for the first time.Managers who have tried to promote KM adoption may see this as a golden moment to advance a personal objective, and they may be right.>> This is absolutely correct but based on my experience, I would not advise IT Managers to seek the implementation of a KM specific software solution that would somehow sit on top of or alongside the Service Desk Management system. You will not succeed in making 1st and 2nd line technicians switch to a different tool to record or search for valuable knowledge.KM must be integrated with all the other processes (Incident/Request/Problem Mngt, etc...).To succeed, it must become part of the technician's normal activities to resolve issues or satisfy requests. As always, KM is first about people, culture and processes well before being about tools! And ITIL v3 actually does emphasize on this, and this is maybe one reason why it does not litteraly consider KM as a separate support process.

5 real life examples to make the case for KM in a sales environment

”[..] an organization is nothing more than the collective capacity of its people to create value” (Louis V. Gerstner, Jr., former CEO of IBM) Consider the following five simple scenarios based on real situations I have witnessed during my time in the Richemont Group. I must stress that I expect these to be relevant today to a majority of retail Organizations, and not only in the luxury sector: 1. “Reinventing the wheel.” The Logistics Manager of a regional distribution centre believes that he could greatly improve his team’s efficiency during inventories with the use of about 5 barcode readers. He contacts the IT department for advice since the idea will be to interface with the main IT system. When the stock controller is consulted, she decides that barcode readers would be too expensive if they were to be used also for boutique inventories (you would need at least 20 readers). Since laptop PCs are used in boutiques, it is decided that they would also be used for the distribution centre, against its manager’s preference. It then turns out that if laptops are adapted to boutique stocktaking, they are not practical in a warehouse: too heavy to carry around the aisles and with much less autonomy on battery. The Logistics Manager asks the IT Manager if he could find out from his counterparts what has been implemented in other regions. Logistics Managers have very little contact with one another so rarely share ideas and experiences. The IT Manager finds out that in another region, they did implement a cost-effective barcode reader solution and have even used it in some boutiques. A corporate discount is maybe even possible for the readers. By reinventing the wheel we might improve it, but is it worth the costs when all that is needed is a regular wheel? 2. “Knowledge is Power so retain it.” A wealthy American businessman enters a jewellery boutique in Tokyo. He intends to offer a present to his wife for their wedding anniversary in 2 weeks. He happens to be a regular customer at the 5th Avenue boutique in New York and does tell the Japanese sales executive Yukino of this fact. He is presented a selection of items but cannot decide, and then remembers that he had bought a bracelet for his wife two years ago. “My wife loves this bracelet and it would be great for her to have a matching necklace”. “Yes, sir, which bracelet was it?” Yukino ask. “Oh, unfortunately I cannot remember its name. Could you find out for me? I bought it in New York”. “I’m afraid I cannot do this. Would you remember the type of bracelet?” “Are you telling me that you cannot check on your system?” “Yes sir, we only have access to sales made in Japan”. “This is not very useful is it? Could you call the 5th Avenue showroom then?” “Well yes sir, I could try but with the time-difference, we’ll have to wait for this evening. Would you come back tomorrow then?” “I’m not sure to have the time. I’ll call you tomorrow morning and if you have the details I’ll try to find a moment”. In the evening Yukino calls the 5th Avenue showroom and ask for the manager who happens to be on a day off. The assistant-manager is busy with a customer and the sales-executive who picked up the phone does not believe to have the authority to give such confidential information. She takes the details and says that the assistant-manager will call back. Yukino waits until late after closure but no one calls back. The next day, Yukino is lost in apologies for not obtaining the details of the bracelet. “I am not impressed!” the American tells her. “I was really expecting such a prestigious Brand to provide better international services. I have to tell you, I feel like shopping around for something else as a result.” Knowledge is power and even more now than ever. However, if organizational knowledge is retained and not shared, is the organization as a whole really gaining any lasting power from it? 3. “Everybody is replaceable.” The Merchandising Supervisor of a regional distribution company is offered a new position in another country. Her effectiveness and efficiency as well as a great personality have won her a very good reputation with her peers within the Group. She has 10 years of experience in her current job and has progressively put in place a number of techniques and has mastered a couple of specific IT systems. Her manager is however soon concerned: how can she replace her supervisor without affecting the department’s performance? The supervisor leaves in 3 months and her unique assistant only has 1year experience and has had very little involvement in about 50% of the supervisor’s activities. As for the Manager, she would also need to learn quite a lot from before the supervisor’s departure, and of course, she is already very busy with her own tasks. The Manager decides that the supervisor’s specific activities should be shared between herself and the assistant. The supervisor offers to spend long evenings to write up some step-by-step procedures. After a month, the Manager recruits someone who first needs to be trained on relatively simple but time-consuming tasks, in order to free up the assistant for spending time with the supervisor. By the time the supervisor is on her last day, a significant amount of her knowledge has not been passed on or written down. The IT department is even called in to assess if they will be able to help with the usage of one specific piece of software. As a result, in the following months the Merchandising department struggles to maintain a satisfying level of productivity. Everybody is replaceable, yes but at what costs? 4. “This is the way we do things here.” Harrods, the London department store, is redeveloping its jewellery department this summer. A new boutique design of a jewellery Brand with a unit in this department is implemented for the occasion. Unlike before the late 90s, the local retail staffs as well as other departments (e.g. IT) are now involved in the process. However, at that stage it is about adapting the design to the local specific constraints and needs. There is a very tight schedule imposed by Harrods but the deadline is to be met. Along the way, some design details are identified as being impractical. The functional aspect of the design seems to have been overlooked in favour of the aesthetic. For example, the IT equipment required in the retail area is not sufficiently integrated and facilitated. The beauty of a desk with no cable management will be spoiled by the laptop sitting on it and its power cable running from it. In peak times such as Christmas, the 5 or 6 sales executives (instead of 3 or 4) will each need quick access to a laptop but only 3 are catered for in the design. This will result in laptops being used on top of display cabinets so not really aesthetic but customers cannot wait for sales staff to queue up for a PC! The same boutique design is to be used for many boutiques worldwide. Some of the very same functional flaws are reproduced again and again as no feedback from all the actors in the first project was formally obtained. It is reasonable to assume that each department builds on past successes and is expert in its field. However, wouldn’t each project of a particular department benefit from the proactive input of all other stakeholders? 5. “Making mistakes is fine, this is how you learn.” It is the first day of the month and as usual, each regional IT department completes and checks the End of Month process for the Group’s bespoke operational system. In Holland, the IT Manager identifies a problem: the new Group standard stock-valuing module recently implemented generates incorrect totals. He investigates and soon finds the program at fault. While he has his programmer start to work out the exact problem, he sends an email to all his counterparts in the other regions using the same system, to warn them first and also ask if anyone had already detected this problem. He quickly gets an interest from most of them but more importantly receives a response from his Spanish counterpart telling him that they faced a similar issue the month before but thought it was specific to the Spanish version of the bespoke system. The good news is that they corrected the problem and documented it. The bad news, it was written in Spanish. What is then decided due to the urgency for the Deutsch End of Month procedure is for the Spanish and Deutsch programmers to work jointly by phone (in broken-English). After several hours of collaboration, a Deutsch version of the solution is setup and tested and the End of Month procedure can be re-ran and completed 24hrs late. During that time, the system was not available to users for normal operations so the impact to the business was significant. We should note that when it first happened on the Spanish system 30 days earlier, their system was unavailable for 2 days. Learning and innovation depends on a culture encouraging risk-taking and therefore making “mistakes”. However, shouldn’t this imply that we all collectively learn from these “mistakes” and avoid making them twice? These situations all have in common a lack of knowledge sharing. They are all avoidable but the top-management first need to recognize the value of each individual’s knowledge and define and implement a strategy to leverage it.

Sustaining an Innovation Culture

James Todhunter did it again. He wrote a very good post to list the following "5 pillars of sustainable innovation culture":

• Executive Leadership
• Skills Development
• Innovation Infrastructure
• Network for Innovation Mentoring & Facilitation
• Internal Promotion

The first one is indeed the most important as it is a prerequisite to the other four. I would add "Recognition & Reward for innovation". People need to be encouraged to innovate, so processes must be in place to formally and fairly recognize and reward the innovators, no matter how small or localized the innovation is (so long as it contributes positively to the organiozation's performance).

The British Airways T5 fiasco (update)

See my previous post as I have added some info (and read the interesting comments as well).
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British Airways Heathrow Terminal 5 training fiasco

You must all have read about this project “go live” failure. It was due to a combination of problems but the central one was a lack of training!

Amazing, it was a high profile and expensive project requiring state of the art technologies and methods in all areas (architecture, logistics, ICTs, security, construction, etc...) forgot to effectively deal with a key component: the people that will have to work in this new place!
The lack of training was not just for one group of people and not just for one system or activity, it was found wanting all over! From hundreds of staff not finding the staff car park entrance to check-in staff struggling with the IT system, from security personnel being taken through new procedures in the morning in front of passengers to crews and ground staff getting lost in the huge building, it was as if everyone was expected to learn by trial and error by themselves.

The costs to BA alone are estimated at £16m! With a fraction of this money, they could have financed the most advanced training program ever conceived, with virtual reality technologies for example (maybe with a T5 sim in Second Life).

Now, why is this related to Organizational Knowledge and Knowledge Management?
Formalized training is an essential building block for leveraging organizational knowledge.
What this fiasco tells me is that British Airways is very unlikely to have a knowledge sharing and cooperative culture. It is very likely to boast a command and control (and shut-up) culture. Not only the necessary knowledge transfer was not provided but many warning bells were not given the attention they deserved. Some middle managers and staff representatives did warn of the lack of training weeks before the opening. A large simulation was also apparently attempted with staff but it didn’t go as planned, and instead of scheduling another one, it was assumed to be sufficient. I will even go further in stating that such a training-related project failure would never happen with a knowledge-driven organization with a participative culture, simply because the human element would naturally be given the importance it requires.

UPDATE: I found this article from the Telegraph that informs us that the £16m loss might mean that the BA staff will not get a annual bonus in May! If this happens, that would be another indication of a command & control culture where management can make the worse mistake and have the employees pay for it.
The article also mentions the possible strike action by the pilots and that "they are also understood to be planning to write a letter to major shareholders next week calling for a change of management. The letter to Government ministers, the CBI and City institutions will accuse Walsh of arrogance, mismanagement and bringing the British Airways brand into disrepute." Oh dear, never mind a cultural issue in BA, it seems to suffer a heated and tensed atmosphere about to blow-up!

Anyone wanting more detailed information about what happened on the opening day, I recommend Michael Krigsman's article on ZD Net.

On having a “fostering innovation” culture

As I have repeatedly written on this blog, continuous innovation requires access to knowledge. So an organizational culture conducive to knowledge sharing will foster innovation as a direct result. James Todhunter (CIO of Invention Machine Corp.) wrote an article just published in CIO.com titled: “Fostering innovation culture in an unpredictable economy”.

I am not sure what he meant by “unpredictable economy” as no economy has ever been predictable. “Knowledge economy” would be more relevant (and maybe what James had in mind) to relate to the current economy where knowledge (intellectual capital) is increasingly the most valuable asset for businesses, so the intangible taking over the tangible. 

 However, James Todhunter’s view that an innovative culture must be initiated and supported from the top of the organization is spot on: <<[..] It starts at the top. The most common reason cited for why innovation workers feel their organizations fail to have an innovation culture is a perceived lack of management commitment. Organizational culture is created from the top down. In order to create a culture that supports repeatable innovation success, management has to make its commitment to innovation clear and unambiguous. [..] It starts at the top. It really is that simple. Management has the power to set the tone and drive the culture. Managers who avoid taking responsibility for driving the innovation culture by using the “adoption must be a grass-roots thing” crutch, will always be met with failure and left wondering why they can’t achieve their repeatable innovation goals. Culture begins and ends at the top. To create a value-driving, sustainable innovation culture, you need only make it so.>> 

I have constantly in this blog supported the idea that a sustainable fostering innovation culture (or knowledge sharing culture) can only be built with a honest top-down approach. In other words, it needs to be a strategic initiative. I know that many supporters of the social Enterprise 2.0 gaining momentum see it as an alternative to the top-down approach. They believe that if a large part of the people at the base of the organization start collaborating and sharing knowledge and adopting new (cheap or free) tools to do so, and if they increase productivity as a result; it will force the whole organization and its management to embrace these methods of working, this in turn forcing a culture change. 

Of course, people at the fringe of organizations will find benefits in adopting new collaborative technologies at a personal level first then within their team or department, as long as these technologies are answers to needs identified by them to do their work more efficiently and/or effectively. However, for these adoptions to force a company-wide culture change by themselves is not at all a given outcome. This might happen in some contexts but probably only in organizations where the current culture only needed a spark to turn into a knowledge sharing culture. In the majority of organizations where the culture is predominantly of a command and control type, matching my list of 20 syndromes I challenge the bottom-up approach to succeed on its own! Anyone aware of such a successful cultural change, please speak up. 

What has happened in numerous occasions and will continue to happen, is for organizational cultures to be transformed with the impulse and leadership from the top (Buckman Labs, IBM and BP are only 3 of the most famous ex. of such cultural transformation). If we consider Google, surely one of the most innovative companies these past few years, its ground-breaking open culture was initiated by its founders, so therefore a top-down leadership. 

Enterprise 2.0 will not drastically change the balance of power and responsibility: Especially since the Enron scandal! The boss remains the boss and if he/she wants employees to stick to their job descriptions and wants remuneration and recognition processes to reflect this fact, no clever technology will fundamentally change this and Enterprise 2.0 initiatives will remain localized and accessory to standard business processes. Now, is wanting to change the culture sufficient for a leader to succeed in this endeavour? Probably not. No matter how good a leader you are, you cannot simply tell people to start sharing knowledge and be innovative for everyone to do so overnight!

James Todhunter gives a list of 6 methods for effectively fostering an innovation culture: 

 · Invest in your people. 

· Reward the behaviour you want. 

· Invest in infrastructure to support sustainable innovation. 

· An important part of the innovation infrastructure is the framework to leverage knowledge – both the knowledge within your organization and that which is external to the enterprise. 

· Promote the value of innovation. 

· Practice innovation in everything. 

This is a good list and with a very good chance of success if followed. I would however like to add one method that should actually be the one to start with: Lead by example! Don’t count on people to do what you say, even if you reward them for it. It will surely be more effective if you start by doing it yourself: be open, share you knowledge, show off your own creative or innovative ideas (and you might then realize that special rewards are not as necessary as expected).

Knowledge Management in IT Service Management

ITIL (IT Infrastructure Library) v2, the now internationally recognized framework for IT Service Management, was published in 2000 and at the time only implied knowledge management in IT service delivery. Obviously, managers involved in implementing ITIL based services (like myself btw 2003 and 2007) would consider and attempt to cater for the required knowledge capture/retrieval/sharing/reuse. Here is a very good article written in 2003 about such a Manager (Michael McGaughey, Service Management Framework Architect at TXU, the leading energy retailer in Texas) who was concerned with incorporating KM in the IT service framework he was designing. I will reproduce here only these 2 key sections: << [..] knowledge management goes back as far as human memory. It evolved onto stone tablets, books, file cabinets and sticky notes. But knowledge management in the IT world has always suffered from a lack of context, a lack of a problem that KM is clearly designed to fix. Service management may be the answer. IT service management demands a customer-centric view of IT. It helps the company's IT department achieve three fundamental goals: Achieve customer satisfaction, exceed customer expectations and manage customer perceptions. "The service management framework lives and and breathes with knowledge," said Michael McGaughey, Service Management Framework Architect at TXU, the leading energy retailer in Texas, which serves five million customers in North America and Australia. "There's a lot of knowledge used across the process silos." >> And: << Knowledge management as an IT concept has a lot to gain from working within an IT service management framework. One of the factors that led to the development of its identity crisis is that knowledge management offers very little in the way of a value proposition by itself. The value it offers is in making other processes better. >> I really like this last paragraph. It has indeed been KM’s main issue in particular with organizations top-management, even though I would say that today with the help of Enterprise 2.0 technologies, KM can deliver value by itself. Last year, ITIL v3 was published and I was very pleased to find out that in this edition, KM was formally taken care of as a Service Transition concept. I was even more pleased to see that it also included cultural change management! So now, IT departments are expected to formally assess and deal with the cultural change that a new service management implementation can initiate or even require! This was long overdue I would say.

"The Google Enigma"

I found a very good article with the same title as this post by Nicholas G. Carr on Strategy-business.com (thanks to a post by Bertand Duperrin). Nicholas warns of the hype around Google’s model to foster innovation and the belief that it is the direct reason of its amazing success. But it could very well be more the product of its success instead of the cause as Nicholas writes. Nicholas message is not to ignore Google’s example but to be careful not to assume that the Google way is necessarily the one to follow for all businesses and in all contexts. I would like here to highlight the following two passages, both found in Nicholas’ conclusion. The first one gives the two key examples of Google strategic initiatives that businesses should reflect on seriously and use as benchmarks: “Google’s use of powerful computers to collect and make sense of the operational and customer data flowing through the Internet and other networks provides a window into the future of many industries. And, on a related note, the company has created simple but useful systems for sharing information within and between teams, a challenge that has frustrated many firms.” So, in other words, this is about knowing better your customers to serve them better and about effective and efficient internal knowledge sharing to leverage your human capital (what I’ve been writing about since my first post on this blog!). The second passage is what, according to Nicholas Carr, Google does teach us: “Above all, Google teaches us, through both its successes and its failures, that smart companies — the ones that are not only consistently innovative but consistently profitable — exhibit three qualities. They hire talented people and give them room to excel. They measure progress and results rigorously and make course adjustments quickly. And they remain disciplined in their work and their spending, curbing the instinct to do too much at once.” I don’t think that this is this is the only lesson on strategy we can retain from Google’ success, but I agree with Carr that it all relies first on hiring talented people and then making sure to continuously leverage this human capital.

What should Web 2.0 mean for Luxury Brands ecommerce strategies?

[NOTE: I had written this article back in 2006 but could not publish it then. I can now do so and it is still very much relevant 16 months later!] 

It is bizarre how an acronym so widely used as “Web 2.0” can lack an unanimous definition. What most experts tend to agree on however is that Web 2.0 is made up of at least two key concepts (as noted by the journalist Phil Muncaster in ITWeek 02/Oct/06 issue- http://www.itweek.co.uk/ ): “Improved user experience and collaboration. The democratisation of information.” The latter concept refers to the fact that information becomes ubiquitous and relatively easily and cheaply accessible by potentially anyone.

Democratisation also implies virtually no control over this “open” information. Companies cannot control what is said about them and about their products. They cannot even hope to read all this information relevant to them due to the shear amount involved. The former concept is I believe even more specific to the Web 2.0. It relates to the fact that the web users are increasingly expecting a positive and memorable experience while visiting a site. By “experience” is meant: as user-friendly as possible, as interactive as possible and as unique as possible. In the case of ecommerce sites, this will be on top of the Web 1.0 criteria such as reliability, overall performance, competitive product prices and efficient and effective integration with back-end delivery and CRM systems. As Phil Muncaster concludes in his article: “So whether you believe all the hype or not, Web 2.0 is changing the way users behave, retailers react and enterprises interact with their staff and business partners. Those who fail to embrace it will probably be left out”. 

So then what does this new environment entails for the luxury products companies launching ecommerce initiatives? 

As for all other companies, it means both an opportunity and a challenge. An opportunity since the Web 2.0 should enable companies to better satisfy their customers by being more in tune with what they expect and desire. A challenge because of the relative difficulty to get it right first time using emerging Web 2.0 technologies (such as Ajax, Mashup) and because of the growing concerns for the Web security and privacy issues. 

I would however infer that the luxury market companies are particularly well positioned to seize the opportunity and take on the challenge. The reason is that these companies are already by nature in the business of providing customer-centred, differentiating, memorable, even unique experiences to their customers. I believe you can make a parallel between: 

· The individualized experience expected when we enter a Cartier, Louis Vuitton or Gucci boutique compared with the standardized experience expected in a Tesco or Wal-Mart superstore; and 

· our expected experience on the Web 2.0 compared with the original Web 1.0. 

Ecommerce customers of luxury companies will expect and value a Web experience as differentiating as purchasing in their high street shops. Therefore, these companies’ ecommerce websites must be highly innovative and take full advantage of the Web 2.0 context. This is totally in line with the following statement I made in my earlier post “Customers increasingly demand more personalized products and services” in Dec/05 : “This new competitive environment indicates that luxury Brands should focus on bridging the gap between them and their customers through co-creation of value with the customers”. 

The basic principle is to build this personalized experience through collaboration with the customers, which happens to be the other Web 2.0 key characteristic! 

Luxury goods companies need to first realize that they must and can be as exclusive on the Web as on the high street. They then need to engage in a sincere and continuous collaborative process with their customers to not only deliver what they seek, but to surpass their expectation.

A great little KM story

Found on CIO.com this great little knowledge sharing story in a context where it was least expected (among retail sales staff used to compete with one another): "Around the holidays in 2000, a Giant Eagle deli manager hit on a way to display the seafood delicacy that proved irresistible to harried shoppers, accounting for an extra $200 in one-week sales. But uncertain of his strategy, he first posted the idea on the KnowAsis portal. Other deli managers ribbed him a bit, but one tried the idea in his store and saw a similar boost in sales. The total payoff to the company, for this one tiny chunk of information, was about $20,000 in increased sales in the two stores. The company estimates that if it had implemented the display idea across all its stores during this period, the payoff might have been $350,000. Previously, "there was no tradition of sharing ideas in the store environment," says Jack Flanagan, executive vice president of Giant Eagle business systems. Seeing the bottom-line benefits of sharing knowledge propelled the employees over their initial misgivings, spurring them to try and out-hustle each other on having the best suggestions, rather than the usual metrics. "Now they're competing in the marketplace of ideas," says Russ Ross, senior vice president of IS and CIO at Giant Eagle. "It became a 'Look What I Did' showcase. Everyone wanted to put something in there," says Brian Ferrier, store director of Giant Eagle's South Euclid, Ohio, supermarket. " This is a typical example of a user-initiated quick win that made a whole KM solution become effective. It does seem so simple and common-sense, doesn't it? But why such simple and common-sense concept be so hard at implementing? "

“Forming an ‘inside-out’ company is the secret to innovation in business”

On the PA Consulting website, I found this very interesting news article dated April 2007. It is about a research by Dr Carsten Sørensen of the London School of Economics (LSE) and PA Consulting Group (PA). This is the part I must highlight: “[..] The research found that IT is the enabler for innovation across the whole business. What we are starting to see is the forming of the ‘inside-out’ company, where interactions and relationships with stakeholders actually shape strategy rather than are subject to it. The research concludes that we are approaching a tipping point, where technology will be cheap enough and intuitive enough to make collaboration as valuable a source of innovation to the business as computation has been a source of efficiency. Technology is changing the way we interact and customers (business and consumer) are demanding a richness of dialogue. [..]” First, I am pleased to see that this confirms what I wrote on the knowledge-driven organization back in 2005, and more recently in Jan 2007. Then this article does correctly make the link between the need for a change in the organizational culture and the introduction of new technologies facilitating collaboration. It is implied that you need both in order to foster value-generating innovation throughout the organization. I spotted the following culture-related change in the article: * Organisations that see their customers and their staff as sources of untapped potential and ideas * unlocking this pool of innovative talent will require collaborative management and not traditional command-and-control-style management * interactions and relationships with stakeholders actually shape strategy rather than are subject to it * senior executives are taking a more facilitative than directorial role, acting as a catalyst or ‘lightning conductor’ for innovation wherever it may evolve * this new outlook on innovation and technology has changed traditional management models towards a new ‘collaborate and control’ model * You do not have direct command-and-control anymore. You are working far more across virtual teams. Teams that are brought together just for specific projects. * The trend towards networks and away from hierarchies and the user empowerment that this entails is changing the way we interact. Executives are seeing a similar phenomenon in business, with users across the organisation demanding that businesses are more reactive to their needs and being willing to take responsibility for improving their working environment. * In order to identify the strategic value of IT it is necessary to employ the technology in developing relationships, listening to customers, and engaging them actively in the production of innovative services Good stuff! The culture change described here is the kind that would do away with the cultural barriers to knowledge sharing I have been repeatedly writing about (mainly here, here, here and here). A few more high-profile articles like this one and I might be able to rest my case...

Great synthesis of KMers' current thinking

On 22nd Jan, I informed you of Colleen Carmean's PhD work on new practices in design and support of shared knowledge environments, and that I was proud and delighted to be in the shortlist of KM specialists asked to participate in her research. 

Well, Colleen has now completed the synthesis of all the participants inputs and has now posted it in a wiki for all to see. Read it! It's truly a great summary of the current thinking of KM specialists on the following 6 key concerns: 

 1. INHERENT CHARACTERISTICS of effective emergent learning environments 

2. Fostering INDEPENDENT, AS-NEEDED KNOWLEDGE ACQUISITION 

3. Fostering SHARING, COLLABORATION and NETWORKING of organizational knowledge 

4. Fostering better expression and sharing of TACIT KNOWLEDGE 

5. Potential TOOLS or PRACTICES for finding, creating and encouraging organizational knowledge 

6. GREATEST PRIORITY in creating a more effective digital workplace I must agree with it all as I was given a chance to revise it before publication. 

 You can post comments here as Colleen reads my blog or here is her site.

The importance of culture when implementing new technology

Thanks to Bertrand Duperrin, I found out that only 6 days ago, Peter Evans-Greenwood (Cap Gemini CTO in Australia) posted on his company's very good "CTO blog" his thinking on the importance of organizational culture when implementing new technology and in particular Enterprise 2.0. Do read it. It is totally in line with my last post.

Finding the right person to help with a problem

Here is a basic but hugely rewarding problem to resolve: “Finding and contacting the right person (or group) within an organization to help with a problem”. The problem can be anything that can benefit from the input of someone with a relevant expertise. How do you do this in an Enterprise 1.0 environment (in other words, in most organizations today)? Well, all too often you simply don’t bother trying! Why? Because you know it’s likely to cost you more resources (usually time) than you are prepared to invest, and where there is no certainty to succeed (in finding a useful soul). Furthermore, even if you did take the trouble to search and eventually find someone, there is then no guarantee this person will have the time to help you quickly enough ) or even want to help you!). So it is often easier to instead choose one of the following 3 alternatives:

• Work out the solution to your problem yourself with the people you already know and work with. In other words, you probably will reinvent the wheel.
• Seek external help and usually have to pay for it. Might be faster and more effective than doing it yourself but will probably be more expensive.
• Leave the problem unresolved and maybe find a (less efficient/effective) way around it (trust me, this option is chosen more often than you would think).

Why is it typically so difficult and taking too long to find someone with specific knowledge within an organization? For at least these 5 reasons:

• Knowledge-sharing is not part of the corporate culture, so people are not expected and not expecting to help outside their “normal” job/responsibilities (see my list of traits of a culture not conducive to knowledge-sharing here and here)
• Lack of adapted collaboration tools (Web 2.0)
• Lack of “Who has done what” or “Who knows what” repositories (and not just “who’s who”).
• The larger the company, the more difficult it is.
• The more geographically dispersed the company, the more difficult it is.

Now, this should mean that if you deal with the first 3 points above, you’re on your way to solve the problem. Yes, this is the way forward and this is what Enterprise 2.0 initiatives are supposed to do. HOWEVER, the most important point is undoubltedly the first one. If people don’t want to share/help (for different reasons) it won’t matter what bleading-edge tools you will give them access to, they won’t use them at all or not for the reasons you would like them to (of they use them because they are told to do so, you won’t get the ROI intended).

So I am suggesting that Enterprise 2.0 = Web 2.0 + a cultural change.

Also, I now think this cultural change must be initiated from the grassroots, from the people on the front lines in the organization, and not directed by the top-management. My position on this has somewhat evolved since my first post on PKM . Instead of stating that traditional KM (management-lead) must come first and then allow PKM to support it, I now believe that the opposite has more chance of success. You should encourage PKM (user-lead initiatives) and then formalize at a company level the most popular solutions (my reading of “The Mashup Corporation” book on SOA has something to do with it). This is also Google’s successful business model to focus on satisfying the user, as opposed to Microsoft that focuses on satisfying the Management. In the long run, Google’s model will win it and Microsoft will need to adapt or die.

“Three dozen knowledge sharing/collaboration barriers” compared with my “cultures not conducive to knowledge sharing”

I have recently been made aware (on ActKm listserve) by Shawn Callahan of one of his blog post dated 03/09/06 and titled “Tree dozen knowledge sharing barriers”. Shawn was commenting on an article written by Andreas Riege (with the same name as the post).

I thought that it could be interesting to compare Andreas’ list of barriers with my list of 16 “not conducive to K sharing” cultural traits.

First, I excluded the technological barriers as these are not directly linked the organizational culture.
From the remaining 29 barriers, I manage to make 15 of them correspond to at least one of 12 of my traits. So they were mutually confirming each other.
One barrier can actually be linked to nearly all of my traits: “Existing corporate culture does not provide sufficient support for sharing practices”.

This left the following 4 cultural traits not addressed by Andreas’ list:

2. Focus on short-term objectives: the “no need to share knowledge since once objectives are met, it wont be needed anymore” syndrome.

11. Job Description framing: The 'No-one's paying us to have a wider vision' syndrome.

13. Only money talks: The 'those so-called stakeholders aren't actually funding anything directly, so they're not real customers' syndrome.

15. Modesty resulting from lack of encouragement: the 'who am I to teach others, of course they know' syndrome.

From the 14 barriers not linked to a cultural trait, I identified only 4 that each warranted a new cultural trait in my list. Here are the 4 new traits with the associated syndromes:

17. Dominance of explicit over tacit knowledge sharing:
The 'we only truly value what is written down and validated' syndrome.

18. Lack of social networks:
The 'only networks supporting business processes are important and encouraged' syndrome.

19. Lack of knowledge management strategy and sharing initiatives into the company’s goals and strategic approach:
The 'Intellectual Property is the only Intellectual Capital that is worth managing strategically' syndrome.

20. High internal competitiveness within business units, functional areas, and subsidiaries:
The 'we only share knowledge within our team since everyone else is potential competition' syndrome.

So that makes now 20 traits of organisational cultures not conducive to knowledge-sharing.

If you identify one missing, please let me know.

I suppose I must thank you all...

Sorry for a bit of self gratification but I had to tell you about this.

I have been approached recently by Colleen Carmean, a PhD candidate at Capella University, researching new tools and practices in informal, just-in-time, self-regulated learning that contributes to organizational knowledge and effective business practices.

Colleen asked if I was interested in contributing to her research. I accepted with pleasure but what I really had to mention here on my blog is the fact that her research started with a selective analysis of Knowledge & Learning related sites (http://cmcarmean.googlepages.com/tappingknowledgeintheblogosphere ).

Colleen explains on her site:

“The study tapped into the Blogosphere's version of both popularity and peer review to determine trusted "experts" who are writing about:

• organizational knowledge
• organizational learning
• just in time learning
• informal learning
• emergent learning. “

Starting with 885 sites, Colleen ended up with a list of the 24 most trusted sites and guess what? This site you are reading now is among them!

So I must thank you all, regular readers of my blog, for your encouraging support.

Colleen then writes to define her objective:

“it is the intention of this study to gather knowledge on effective design and support of environments for shared knowledge via collective inquiry by community-identified and connected experts. How we can best design and support emergent learning in the creation of organizational and shared knowledge?”

I wish Colleen success for her PhD and no doubt I will write again about it.

Peter-Anthony Glick

It was about SOA all along! Chapter 7

[Continuation of my commented reading of Andy Mulholland’s book: “Mashup Corporations. The End of Business as Usual”].

Chapter 7 is about the “typical” barriers to implementing SOA throughout an organization. The authors added this chapter in the 2nd edition following a suggestion by Avrami Tzur (VP of SOA at HP). I will start by saying that I was a bit disappointed with this chapter: it does literally focus on the specific resistance to SOA without considering the probable more generic reasons for this resistance. But maybe it’s me again expecting cultural issues to be mentioned everywhere! At least, this chapter has the merit of existing. I am sure Avrami was far from being the only one noticing the need for addressing this topic after reading the 1st edition of the book.

This chapter deals with the fears and needs of technologists - used to a “develop and control” centralized infrastructure – that are being asked to adapt to SOA and the flexibility, openness and informality that comes with it. These fears and needs would typically raise questions such as:

• How do I know what services are available for me to use?
• How do I know exactly what each service does?
• What happens when a service I am using is changed or upgraded?
• What happens when I have to debug an application based on services?
• How does the new world of services fit and interoperate with existing IT systems? Etc,…

Five rules are then proposed to encourage adoption of SOA:

• Use visibility to reduce fear, build trust
• Put it in writing
• Extend existing management processes to SOA
• Support new pattern of collaboration
• Provide incentives for SOA adoption
  

The authors do introduce these rules as enablers of communication and knowledge sharing. I agree. However, if your organisation has a command and control culture where knowledge sharing is not the norm (I take you back to my 16 traits of such a culture) following these 5 SOA adoption rules won’t be enough. But maybe it could be argued that a “command and control” organisation would not initiate a SOA in the first place (now that could be a topic for a lively debate).

The authors do explain that the << adoption of SOA do reflects an evolution in the skills and systems of a company >> ( I would like to add that it reflects an evolution in the organisational culture as well). This evolution is made of 3 stages: Integration, Architecture and finally Operations. I finally noted that successful SOA adoption will rely on 3 groups of people: the Enterprise Architects or designers, the Providers or builders of services, and the Consumers of these services.

It was about SOA all along! Chapter 6

[Continuation of my commented reading of Andy Mulholland’s book: “Mashup Corporations. The End of Business as Usual”].

Chapter 6 is about “Internal IT” or the effect the SOA transformation can/should have on the internal IT department/functions. With the help of a meeting with all the managers of the fictitious company Vorpal’s IT department, it explains that a SOA does not only support the informal edges of the organisation but also the formal transactional hub. What unifies it all are “the processes that flow through the business” and link “the informal processes at the edge” with “the more formal controlled processes at the hub”. It is therefore important (in order to successfully become a service-oriented organization) to adapt the company’s functional structure. The functions must mirror the key business processes that SOA has formalized.

The authors then suggest a new structure for Vorpal’s IT department. Below are the original (standard) structure followed by a new service-oriented structure:

Old:
End-user support
Development
Infrastructure (CTO)
ERP
Engineering
New:
· Composition (about defining the common services)
· Services Creation (about development of the services)
· Disruptive Innovators (about the creation of new services)
· Consolidation (about the link with the core systems)
· Services Repository (about keeping track of all the services available)

The authors do make it clear that this is only a suggested structure and that each organization would adapt it to suit their needs.

And then reorganizing the IT department around SOA is only a start. The whole organization structure should be reviewed. For example, I can see new cross-functions between sales, marketing and public relations departments: Services to a specific customer group could benefit from having a function (an individual or a team even) pulling resources from these 3 departments to better satisfy these customers no-less specific needs.