Establishing a culture conducive to the state of ‘Flow’ and self-actualisation

In my previous article, I suggested that organisations should aim to establish a working environment conducive to their employees reaching their Ikigai.  Well others have made similar suggestions and maybe the first one to do so in a constructive way was MihalyCsikszentmihalyi  who in 1975 introduced the concept of “Flow” or the “state of concentration or complete absorption with the activity at hand and the situation”.   At work, this state is attained when an individual gets the right balance between challenge and skills.   I will conjecture that someone who has reached his/her Ikigai at work – a sense of purpose and constant motivation – is much more likely to be in a state of flow on a regular basis.  And equally, the more someone is in a state of flow at work, the more likely he/she is to reach Ikigai.

The diagram below shows the 8 mental states in terms of challenge and skills levels according to Mihaly’s flow model:

I intend to read Mihaly’s seminal work “Flow: the Psychology of Optimal Experience” but based on his Wikipedia page, it would seem that he has provided clues for leaders on what kind of working environment would maximize the chances for employees reach the state of flow.  In addition to the challenge-skill balance, Mihaly suggested another eight component states needed:

. Merging of action and awareness: To be completely absorbed in the task at hand.

. Clarity of goals: A clear purpose and good understanding of what to do next.

. Immediate and unambiguous feedback: Continuous feedback to adjust our actions and to always know how well we are doing.

. Concentration on the task at hand: Avoiding distractions to focus on the task at hand.

. Paradox of control: An absolute sense of personal control exists, as if there is no limit to what we can do.

. Transformation of time: Time is distorted and either slows down or flies by.

. Loss of self-consciousness: Being so involved in the activity that do not care to protect our ego.

. Autotelic experience: Being in Flow is an intrinsically rewarding activity so the activity becomes an end in itself, done for its own sake.

So in what kind of working environment or culture would such self-actualisation flourish?

For Rishad Tobaccowala Chief Growth Officer at Publicis Groupe, the first condition is for employees to be “allowed, encouraged, and helped to align their passions and skills.  They are then motivated to learn, take chances, grow, and communicate in ways that benefit not only their careers but their organizations” (Restoring the Soul of Business, 2020, p.46).

Rishad then provides a couple of required cultural characteristics:

•       Encouraging authenticity to help people work in their own minds so that their passion for work ends up motivating them to become experts

•        Awareness of the intersection between passion and comparative advantage between colleagues in order to funnel people into jobs and tasks that place them in this intersection.  

Another key factor for being in a state of ‘Flow’ or self-actualising is a strong sense of purpose or meaning for the activity(ies) at hand.  As Rishad explains (p.44) meaning is best conveyed through stories and they should aim to:

•        Increase skills and competence through continuous learning

•        Offer more chances to innovate through new connections

•        Make better “emotional” communicators to motivate and empathise.

For leaders aiming to initiate a working environment conducive to the state of flow and self-actualisation, it starts with adapting the recruitment and internal career management strategy.
Do you hire people for what they know or what they can know?

As Mihaly Csikszentmihalyi explained in his Flow model, if an individual’s activities does not challenge his/her skills enough, he/she will be in a state of apathy, boredom or relaxation at best.  Clearly not in a motivational state. 

In his book “The Wealth of Knowledge” (2002, chap. 11, ‘A new culture: Developing a knowledge perspective’) Thomas Stewart refers to the talent development process of ‘Stretch’.  The attributes leaders should look for are: Ability to learn, self-initiation, propensity to collaborate, humility, confidence – the ability to connect thinking to action and vice versa - and “intellectual linking” - the ability to connect an idea or experience to an opportunity or problem.  <<All are fostered by making sure leaders [..] have “stretch” assignments to build learning into the job.  P&L responsibility and autonomy are the most important elements of stretch>>.

An organisational culture conducive to self-actualisation must be also a culture conducive to collaboration: A less hierarchical, flatter and relationship-rich environment where knowledge siloes are things of the past, and ‘interpersonal trust’ replaces rigid and overpowering organisational structures.  Such a culture is the antithesis to the obsolete culture defined by my 20 cultural traits not conducive to knowledge sharing.

A purposeful workforce

I was introduced recently to the Japanese concept known as Ikigai, in the context of how each of us can identify his/her own professional “true purpose” or career sweet spot as illustrated at the centre of the diagram below.

 

Ikigai can describe having a sense of purpose in life, as well as being motivated. From an organisational point of view, the ideal should be an entire Ikigai workforce.
Is this an utopia or is it achievable?

I will argue that organisations should at least aim to establish a working environment conducive to each employee attaining his/her Ikigai.

Back in 2005, I had published a Human Capital Formation diagram adapted from Nick Bontis and Tom Stewart.  I quickly realised the correlation between both concepts if I updated this 15yrs old diagram:

IKIGAI	Human Capital Formation
What we love	Employee satisfaction
What we are good at	Value generation
What the world needs	Employee motivation
What you can be paid for	Skills/competencies

 

An organisation should therefore aim to increase employees' satisfaction, motivation and commitment, as well as facilitating for them to acquire new skills and leverage their competencies.  The diagram above gives at the top a (non-exhaustive) list of levers an organisation can pull to achieve this.  

Scaling up with social media: luxury brands have a natural advantage.

Jeremiah Owyang recently did a presentation on how companies can scale up with social media technologies.  Do read it.  His starting observation is that customers (let alone prospects) will always outnumber a company's total workforce (let alone the ones formally responsible for customer relationships).  Since social media puts companies in "direct" contact with a growing number of people, they are in danger of counter-productive social media initiatives leaving most customers or prospects frustrated for lack of response from the company to their queries/issues/concerns.

Jeremiah suggest 3 good strategic solutions to this problem:
<<

• Using all the voices in your ecosystem (the Rings of Influence) not just being the only ones to talk.
• Develop more customer to customer technologies that leverage your customers to do your marketing, sales, and support.
• Invest in Social CRM systems, while immature now, they will eventually help companies respond in real time –and maybe even anticipate customer need.

>>

 Reading this, I realised it was confirming my position that luxury goods and services companies are the best suited for an effective social media strategy: their ratio "number of customers/number of employees" is by nature the lowest!  So, they can realistically connect with a large number of customers by involving all their employees for instance.  Luxury brands can be more in control of what is being said about them in the socialsphere than FMCG brands. 

A hint that Burberry is on the right track about social media integration

 In my last post, I wrote that I didn't know of a retailer that is yet offering a fully integrated multi-channels experience.  I have however just discovered that Burberry's own social media site www.artofthetrench.com might indicate that they are on the right track towards this full integration.  The site allows a Facebook account connection (in fact imposes it) before uploading your own trench coat pictures.  This of course does not mean that Burberry will implement this type of integration on its ecommerce site but it's a start.

PS. I am not suggesting that a Facebook account should necessarily give you access to all ecommerce sites! Social media is not just about Facebook for a start, and a social media strategy should not be application dependent anyway.  If the technology might still need to be defined, the goal is clear however: offering an integrated and consistent multi-channels customer experience and follow each customer as a unique individual through all channels.

Loyalty cards are about customer knowledge, next step: integration with social media

Despite its recent loss of market share, Asda continues to argue that its lowest price policy is a better strategy than its main rivals’ loyalty card schemes.  I think they are wrong but not with respect to prices but because of the valuable customer data they are not collecting.  Asda simply does not “know” its loyal customers.

In Retail Week May 28^th 2010 edition, there is an interesting article about customer loyalty: “Loyalty cards: the bedrock of future success?” 

 <<[David Roth (former B&Q marketing director, now chief executive of the Store WPP)] observes: “The world is going to divide between those who can organise and make use of their customer data and the others, who will wake up in five or six years’ time, outmanoeuvred. The person who owns the data, owns the customer.”
But he maintains that loyalty schemes are primarily a means to an end and will not on their own make a retailer successful.  He says: “Gaining customer loyalty is about a lot more than a scheme. The value proposition will be important.”
For all the interest in loyalty and the success of some programmes, they will never be a panacea for retail’s ills and typically cannot answer one vital question. As [James] McCoy (Yougov SixthSense research director) says: “Loyalty schemes can tell you what people are buying - but not what they’re not buying. As well as whatever they are spending at one retailer, they might be spending another £40 a week at Lidl, which you have no idea about. The challenge is to find the data you don’t have.” >>

David Roth and McCoy are absolutely correct.  In the FMCG sector, loyalty schemes will increasingly be a necessity for commercial success but will not be sufficient by themselves to ensure competitive advantage.  Competitive advantage will first come with what is done with the information collected at the till.  Tesco Clubcard is a perfect illustration of this: I am a Tesco customer and I receive at home personalised mail including discount coupons for products that I am likely to buy based on my purchase history.

However, the true Holy Grail of competitive advantage is not in the customers’ purchase history data, it is with the knowledge of what they want but cannot find or afford, what they might buy if they were made aware of it or if it was conditioned differently, what they buy with the competition, etc…  The most valuable customer knowledge will not come from transactions at the till but from engaging with customers to get them to tell what their needs and wants are.  Luxury goods retailers have known this for centuries and have always valued and leveraged the in-store customer knowledge obtained by the salesperson through the conversations with his/her “loyal” customers.

So FMCG retailers will need to engage with the customers registered in their loyalty scheme.  Since they will have to do this through all channels, it will require a holistic approach to customer identification: So this means one account per customer for all channels.  This might seem obvious but I have not yet come across a single retailer (from FMCG to luxury) with such a pervasive integration strategy.  For instance, all retailers with a Facebook page do not integrate the Facebook account with the ecommerce customer account: This means no systematic way of tying up a customer’s comments on Facebook with his/her online (let alone offline) purchase history.

<<Tesco is one of the most advanced of retailers in its ability to mine customer data and use it effectively and, notes Shore Capital analyst Clive Black, has put its scheme at the heart of its business, rather than run it as an add-on.>>

Similarly, in the next few years, retailers will gain competitive advantage from putting social media and all customer interactions at the heart of its business, rather than run it as a an add-on.

How will luxury Brands be creatively different with ecommerce?

Read Fadi Shuman’s (Pod1) very informative article about ecommerce in the luxury market. 

Fadi might be correct that “2010 will be the year that the majority of [the luxury] brands jump on the e-Commerce bandwagon”.  The latest purchase of Net-a-Porter.com by Richemont supports this statement.  But I have yet to be convinced that these same brands have worked out a way to reproduce on the web what made them different on the high street: uniqueness, exclusivity,  high quality, dream-making image, personalized customer services, refined and luxurious stores, best store locations, etc… As Marci Ikeler (Publicis) puts it in her excellent slideshow I referred to in a previous post :

“How do we use the web to tell a luxury story?” Or “How do we recreate the sensorial experience of the brand online?”

 Fadi refers to Faberge and its site with a very exclusive access or the ecommerce pioneer Burberry’s use of social media for an interactive approach around its catwalk shows.   Marci does provide other examples or innovative online initiatives from several luxury brands but we have yet to see the same level of creativity and innovation with their ecommerce. 

I have checked out several (ok not all of them, but let me know if I missed one that contradicts my point and that will be the exception that confirms the rule as we say in France) of the oldest or more recent luxury brands’ ecommerce sites (Cartier, Burberry, Prada, Louis Vuitton, Dior, Dunhill, Gieves and Hawkes ) and all of them failed for me at the first main hurdle, well before making the first purchase!  And this is a key feature of a luxury brand store: the special experience starts with the shop windows and continues throughout your visit of the store through primarily excellent customer service, even if you end up buying nothing.  Before leaving you might have exchanged a lot of valuable information with one (or more) sales staff.  You might have given for example your contact details, your preferences, your sizes (for clothes).   You might have been told specific details about products of interest, what is in stock, what is about to arrive or about to run out, what is very popular, etc…  I am assuming here that you are a new visitor to the store, not yet a customer of the brand. 

Now, what did I mean by stating that the luxury brands failed this first hurdle related to the pre-sale experience?  Well, let’s start with the fact that for most of the sites I visited and browsed the products available to purchase online, my visit has only contributed to the website analytics but the brand does not know I – as a specific person – visited its site.  This is simply because my credentials were to be requested only at the purchasing stage.  Worse, in most cases even though I was willing to provide my details, there was no way to do this without buying something!  Gieves and Hawkes, Dunhill and Louis Vuitton did cater for a pre-sale registration.  However, in both cases the benefits of doing so are limited and lack creativity.  Typical facilities available once registered are:

• Create and share your personal wishlist
• Expedite the check-out process
• Receive special updates and promotions
• Modify your account details at anytime 
• Check the status of orders
• Recording alternative addresses
• View past orders

These are basic services that most non-luxury sector ecommerce sites have been offering for years.  Luxury brands should do much better to create a more personalised and special online experience. 
For instance, once logged in I would expect a personalised experience wherever my web browsing takes me within the brand’s online world.  So my account should follow me around so that I do not need to log in/register again on different pages.  Of course, another benefit could be a personalisation of the content on each page based on my preferences (I have other ideas but wont give them out for free!).

For example, Gieves and Hawkes has a Corporate Blog on its site.  This is good but unfortunately, even though I was logged in on the main site, I would have had to enter my credentials again in order to leave a comment.   This lack of integration is not just about a lack of user friendliness, it does also highlight a lack of or poor multi-channels and multi-media CRM strategy.  In the luxury business, knowing your customers well and your customers to know you well is so vital for competitive advantage that it is starting to defy belief why luxury brands are following on the FMCG brands footsteps rather than lead the way.

Brands need an online social media strategy

Jeremiah Owyang  is right, a Brand should not “throw away” traffic on its corporate site by inviting visitors to join the Brand profile on Twitter or Facebook or other social site without a well thought strategy.  It is a bit like sales associates of a high street shop telling visitors on their way out: “We invite you to visit us at our small corners inside most department stores”.  This might seem to be sending the positive message “we’re present in these locations” but it might lead to the visitors buying at other Brands also located there as well as not coming back to the original store!  The same as sending a visitor of your Brand website to twitter where he/she will receive twits from many other Brands, is likely to lead to another Brand attracting more of his/her attention, and not have him/her visit your site again!

A Brand does typically spend much much more on its own website than on its social networks presence (if it has one) so if not careful, doing so might mean actually losing these visitors as potential active fan of the Brand, to become at best simple passive observers of some Brand-related activity.


However,  I am not convinced by Jeremiah’s matrix on the Evolution of Social Media Integration and Corporate Websites.  Or rather, I do not see it as a “must follow this path” for all Brands.  Let’s just take the last stage for example: “Complete integration between corporate site and social sites”.  I can think of most of the Brands in the luxury goods sector that would not benefit from such an integration.  This would lower the Brand name status too much to the level of just another network relation such as a friend on Facebook.  The Brand would risk losing its exclusive image, its capacity to generate and fulfill dreams.  Luxury Brands would need to maintain this image online and a complete integration with social media would make this difficult. 

Marci Ikeler from Publicis has a very good presentation on slideshare  “Digital strategies for luxury Brands”. 

Digital Strategies for Luxury Brands

View more presentations from Marci Ikeler.

She mentions the successful examples of Gucci on Facebook and MAC on twitter, both of which support the Brand image instead of “cheapening it”.  I noted this statement supporting Jeremiah’s first point: “The most successful luxury digital campaigns are fully integrated with a larger digital strategy and align with the brand’s values”.  But do not confuse this with a complete integration of the Brand’s website and social media!

You must read the chapter 10. Use digital to convey exclusivity (slides 43 to 45).  It shows 2 examples of exclusive social networking, illustrating why complete social mass media integration will not be beneficial for all Brands.

Enterprise 2.0 is not a game anymore, it's serious business

Another good post from Bertrand Duperrin following the Enterprise 2.0 Forum in Paris on March 17th/18th.

His bullet point list of conclusions is good news for everyone (like me) promoting the uptake of E.2.0.

I will highlight the following 4 points:

• It’s not a game anymore. Now projects are global and carried by the top management. That’s the end of social bubbles disconnected from reality. Companies think global and pilots are not made to test but are the learning stage before global rollout. I really appreciated Claire Flanagan’s approach that set a time limit (5 month) instead of limiting the number of users what allowed her to quickly get a critical mass (nearly 30 000 users) with an opt-in policy.
  
• Tools come second. We talked a lot about management, culture, governance. 90% speakers did not even mention the name of the platform they used and, in fact, the question is elsewhere (even than there’s always the same usual drudge in every conference). The best example comes from Danone where the “networking attitude” program was launched in 2003. It’s all about management and behaviors. Management 2.0 without web 2.0 tools. Tools came only when the behavioral dimension was natural in people every life in the workplace.
  
• There’s no “one size fits all” adoption model. Each company has to define its own way depending on its culture and on local cultures.
  
•  Support from top management. That’s been known for ages but it’s clear that a bottleneck appears when top managers are not active sponsors. I don’t mean being benevolent from a distance (”ok…let’s go guys…I’m watching you play..”) but being able to understand the change, make it theirs and imagine them, their staff and their behaviors in the future, be comfortable with it to be an active sponsor.

I (and many others) have been writing for years now about the importance of a strategic consideration, visible top management leadership, conducive corporate culture, adapted management behaviours and internal processes for the successful introduction of knowledge-sharing tools in an Organisation.  Looks like business leaders are finally getting the message. 

TCS KM maturity model and implementation methodology

Tata Consultancy Services (TCS) have defined a simple KM maturity model and a KM implementation methodology (SIGMARG)
Their maturity model for an Organization is as follows:

1. Initial - Organization has no formal processes for using organizational knowledge effectively for business delivery.
2. Intent - Organization realizes the potential in harnessing its organizational knowledge for business benefits.
3. Initiative - Organization have knowledge-enabled their business processes and are oberving its benefits and business impacts.
4 - Intelligent - Organization has matured collaboration and sharing throughout the business processes that results into collective and collaborative organisational intelligence.
5. Innovative - Organizational knowledge leads to consistent and continuous process optimisation giving it a business edge.

If the speed at which an Organization go through the stages will vary greatly, the authors do stress that an Organization must go through these stages in this order and they are "no shortcut" to the innovative level, and they are absolutely right.  A young company with the right leaders might start at level 3 but would need to go through level 4 before reaching 5. 

Having said that, what is important to understand here is less the number of levels and their definitions, but more the fact that a KM strategy cannot be underestimated and will involve a difficult journey requiring strong leadership, committed resources and patience.

The authors are also correct in identifying the 3 main building blocks (or "pillars") of Knowledge Management:

• People and Culture (the "soft" pillar)
• Technology (the "hard" pillar)
• Process (the "glue" pillar) 

A KM strategy must be concerned in taking these 3 pillars through the 5 stages of maturity. 

Minimal information is given about the SIGMARG implemenation strategy (for obvious reasons) but you would expect it to rely on a set of benchmarking tools to assess the current state of the 3 pillars, followed by a roadmap of how to take them through the maturity levels.  For the most important (in my view) pillar "People & Cutlure", my list of cultural traits not conducive to knowledge-sharing could be such a tool to assess the corporate culture for instance: the more of the 20 traits relate to your Organization, the deeper it is stuck at level 1.  I would expect a level-5 Organization not to have a single of these traits.
The next pillar in importance is the Process pillar.  This is primarily to ensure that KM is embedded in all business processes and not considered as an additional activity on top of the regular daily activities.  This is not a simple endeavour and will require process re-ingeneering.  Ideally, the Organization needs to become process-based instead of function-based.
Then only comes the technology pillar to facilitate the cultural and process changes by making them pervasive and time-resistant.

W.L. Gore & Associates: A workplace that epitomize the corporate culture conducive to knowledge-sharing I keep bragging about

Check the full news article on the W.L. Gore & Associates website but here is the extract that made my day:

[..]
In addition to its diverse innovations, Gore is known for its unique, team-based culture and flat management style. President and CEO Terri Kelly said Gore remains true to its core values, even in the face of challenging business conditions.
"We recognize the importance of fostering a work environment where people feel motivated, engaged and passionate about the work they do," she said. "In difficult economic times, the true values of an organization are tested, and I am proud to say that our associates have rallied together to make the company stronger than ever. Our culture promotes an incredible level of ownership and entrepreneurship. It encourages associates to channel their talents and interests to produce a continuous stream of innovative, high-value products for our customers."

[..]

How many more successful example like this one do most leaders need to be convinced that this is the right type of corporate culture in the Knowledge Economy?

Are the consulting firms partly to blame for the fact that only a relatively small minority of companies have adapted their internal culture to the knowledge intensive economy?

Last month (Dec 09) I posted this question on Linkedin:

Are the consulting firms partly to blame for the fact that only a relatively small minority of companies have adapted their internal culture to the knowledge intensive economy?

In so few companies are collaborators incentivize to internally share freely their valuable knowledge (and rewarded for it). I would think that if consultants were to start advising "en masse" their clients about the benefits of such cultural change, "knowledge focused companies" could become the norm, not the exception.  This question concerns only the companies that do call in consultants (however, the others do get to learn of successful cases so could benefit indirectly). I am assuming also that most consultants would be aware and agree about the knowledge sharing benefits but maybe this is being optimistic. As for the competitive advantage of a knowledge focus culture, I believe it is not an assumption but a fact.

This question received 16 answers.  About 5 disagreed with the suggestion that consultants have to share the blame for the lack of organizational knowledge-sharing.  A couple seemed “neutral” on this point.  So, a majority seemed to agree.

I particularly liked how Nerida Hart put it: <<I think that what is happening is that the 'big' consulting companies only tell their clients what they think they want to hear - rather than - guess what guys you have a massive cultural problem and it won't matter what I write in the final 'report' - unless you want to address these issues nothing will change.>>

As the best answer, I chose Nicole Marchand’s:

<<Thanks for raising a subject that I really believe organization should all practice. Here is my take!

There are a few issues here that I believe contribute to the lack of buy-in, to adapt a knowledge focus culture. Are consultants responsible? As mentioned above, I believe it is a partnership between the consultant and the CEO but most importantly success is proportional to the leadership commitment to implement such an initiative. The lack of involvement at the senior level has proven to be a barrier in building a knowledge focus culture. Commitment from Senior Management is not restricted to the allocation of resources but also requires them to champion the initiatives, model the desired behaviour through the enhancement of their own learning, participation in the collaborative process, in essence; the promotion of knowledge sharing through concrete actions and consistency. Knowing that, I am honestly curious to know if senior leaders are willing and capable to commit to that extent. Could this be part of the lack of collaboration to implement such an initiative?

Another factor, because knowledge is an intangible asset, the business requirements to produce a return-on-investments and cost/benefit factor is often a huge challenge and tough sell. KM (knowledge management) practitioners need concrete evidence both qualitative or quantitative including a special place in the organizational financial statement to enhance the value of this intangible asset. (that will be my next question!) Experts report that 80% of organizational knowledge lies in the head of individuals, a fact worthy of attention.

A knowledge focus culture is a newer way of doing business. If leaders and managers keep thinking that water cooler conversations are a waste of productivity and not part of sharing knowledge and building trust and relationship, its implementation will be difficult. It requires a change in mind-set and behaviour and yes trust.

Implementing a knowledge focus culture takes considerable time, effort, energy and resources, it is the consultant’s responsibility to enhance the value of knowledge management, provide an accurate and informed assessment of the present knowledge manipulation situation, present a solid implementation plan and educate leaders on its present status and benefits. The success of the execution though, at the end of the day lies in the hands of the leaders. According to Bossidy & Charan (2002), “no company can deliver on its commitments or adapt well to change unless all leaders practice the discipline of execution at all levels” (p. 19).

There are many other factors affecting a successful implementation but I have hope I have managed to bring a contribution to your question. >>

My position is also that the responsibility is shared and successful cultural change depends on a partnership between the leader(s) and the consultant(s):  “…it is the consultant’s responsibility to enhance the value of knowledge management, provide an accurate and informed assessment of the present knowledge manipulation situation, present a solid implementation plan and educate leaders on its present status and benefits.”  The leader then makes it happen.  However, I believe that only a minority of consultants initiate this change unsolicited.  The consultant should not wait for the leader to ask them “help initiate a knowledge-focus culture”, as he unlikely knows that this is indeed what the organization needs to gain competitive advantage in a sustainable way.

Could it be that knowledge-focused companies less need to call on consultants? Since these companies make much better use of their human capital by leveraging internal expertise and talents for creativity and innovation, maybe they can do away with consultants for most problem-solving situations.   I do not want to initiate another conspiracy theory but what if many consulting firm partners are aware of this and consciously refrain from spreading too quickly the knowledge word?

Leverage the knowledge in your company by first transforming it into a "service" based organisation

[I recently realised that when I wrote this short post 11yrs ago, by "process" I actually really meant "service" based organisation.  I now replaced 'process' with 'service'] 

I am increasingly a supporter of the principle that it is more efficient and increases the chances of success to leverage organisational knowledge with a stealth approach, meaning not in a direct open way, but indirectly and without advertising it as THE objective. The less a company’s culture is conducive to knowledge sharing (see my list of corporate culture traits not conducive to knowledge sharing) the more this principle should apply.

In the majority of organisations today, performance is measured and rewarded functionally usually at department levels. This generates departmental silos where knowledge is at best hoarded for internal consumption.

But when performance is measured only through formally defined intra-departmental services, managers and staff will naturally focus on supporting the services as efficiently and effectively as possible. For each cross-company service, this will mean sharing all the relevant knowledge between all the individuals/teams/departments directly involved in the service and therefore responsible for part(s) of it. A service-based organisation naturally breaks down departmental silos: if a service fails, all participants fail.

So, in other words, re-ingeneering an Organisation’s operations and structure around clearly defined cross-company business services is an effective indirect way to foster value adding knowledge sharing.

Social Media: overhyped fad or essential tool?

Attended an MBA Association event last night: Social networking for business – overhyped fad or essential tool? Speakers: Mireia Fontbernat, Paul O’Nolan & Paul TannerLocation: Strand Palace Hotel In a few words, the speakers confirmed what I already knew or suspected: No one has a clue where online social media is really taking us (and these 3 speakers were no exception). It is not about having a crystal ball but about having a clear understanding of the effects that these social tools have on our societies, and what their generic objectives are. When the telephone was starting to spread around the world many years ago, one could understand the effect on the society (connect everyone synchronously and speed-up information flows between individuals) and foresee an end-game (everyone being able to call directly anyone else from anywhere). You can't do that for social media today.Maybe it's because it is too soon after the first of these tools were created. But that is my point actually, we need more time to make real sense of it all. In the meantime, if it is important to embrace this online social world, it is no less important to be wary of potential pitfalls. For instance, the more you interact with this world, the more it knows about you. So, for a start, what you need to really keep private, don't put it online (but these pitfalls were not really addressed at the event yesterday either, it was more about what you can effectively do today for your business or for yourself). I think that what can be said today of the effect (benefit!) of social media is that it transfers power of influence to the individuals, and by extension to communities of individuals.Each of us has potentially the power to influence comparable to politicians or journalists. Recently, Ashton Kutcher (Demi Moore's husband) managed to reach 1 million twitter followers before the News network CNN. I am certainly influencing many more people with this blog than through my physical networking. What does this mean to businesses? Well, it can be summarized like this: Your company can choose not to know about its customers through social media, but your customers will certainly learn a lot about you online and it won't always be nice stuff! And that, they did illustrate it well at the event last night. So embrace online social media yes, but not in haste and choose the right tools for the intended audience and purpose.

The Cultural challenge (for outsourcing companies)

After their successes with outsourcing services, Indian IT Services firms are growing their consulting business. In Europe, and in particular mainland western countries like Germany and France, one of their key challenges is to convince European executives that they have acquired internally enough “local” culture to provide adapted services. 

 This is only a matter of time and the first Indian firms to achieve this will build a strong competitive advantage. Andreas Floth from PA Consulting Group, the international management, systems and technology consultancy, said back in 2004: “The growth of ‘nearshoring’ in Central and Eastern Europe offers exciting opportunities in Western Europe for provision of IT development and business process outsourcing. Their standard of IT literacy and expertise is very high, and both supply and demand of IT knowledge in the acceding countries will increase steadily. ‘Near-shore’ outsourcing also appeals to cautious CIOs who want to maintain control over IT assets. However, service providers must improve significantly to meet expectations.” 

Three years later, we can say that the Indian consulting firms have taken on board this competition threat. In fact, some of them have started recruiting and opening up support and technical sites in Eastern Europe, bringing with them their technical skills and experience. However, success is not just about technologies and how to implement them. It is also about a deep understanding of the customers and their business, social and political environment. 

According to Gartner Indian offshore service providers face three big challenges if they hope to be seen as equals with traditional European providers (all consulting firms with a long history in Europe): 

 1. “European Providers Enjoy Entrenched Mind Share Traditional European local or multinational providers enjoy greater mind share among European buyers. Their long-term presence and investments have demonstrated a commitment to each of the European countries and have underlined a European strategy. Until recently, with the exception of the U.K., many European companies believed the Indian providers had an opportunistic approach to Europe. By increasing local hires, the Indian companies will take the first step on a long, slow path toward gaining European buyers' trust and confidence. A growing number of providers are starting to demonstrate capabilities that will help organizations look beyond cost savings to achieve other benefits, including access to scarce skills, resource agility, productivity gains, process improvements or innovation.

 2. European Companies Are Reluctant to Publicly Acknowledge Offshoring Continental European buyers' reluctance to acknowledge their use of offshore services does not help providers that want to leverage their success to win more deals, particularly when they are trying to gain traction in certain industries or countries. This silence about the use of offshore services also disguises the extent to which companies use offshore resources. Some continental European companies have signed deals with traditional service providers for offshore services, so that it is not obvious to the market that they are moving work overseas. Many traditional service providers have decreased their European operations in favor of increased offshore delivery capability. Some offshore providers, therefore, are justified in claiming that they are the local employers of the future as they scale up their local network of skills. 

 3. A Large Labor Pool Can Become Unwieldy Indian and traditional providers are building scale offshore, in India and elsewhere. For the Indian providers to continue their strong growth, they must move away from labor-intensive methods of responding to strong demand. Effective operations in the future must also be able to offer process automation, including repeatable solutions and utility delivery models, or these providers risk building up an unsustainable and unwieldy resource pool.” 

The second and third challenges are more concerning the outsourcing activities (not the topic of this article but nevertheless important). The first challenge about mind share however is also valid for the consulting business, in fact even more so I would say. 

In the same article, “Gartner advises Indian offshore service providers to establish local (onshore and/or nearshore) delivery capabilities, not just sales offices. This is because buyers will seek consulting and delivery capabilities that understand their local markets and business environments, in addition to being able to address language and cultural issues. 

Indian offshore service providers must plan early to adapt their delivery model, taking into account nuances like automation of processes, more repeatable services and solutions, utility delivery approaches and true innovation.” Unless you don’t mind taking 10+ years to get there, this local delivery capability means local recruitment among consultants and professionals with a significant European professional and cultural experience. These “locals” will help for: Winning contracts. 

European executives need be comforted by the client-facing sales team that their consulting firm has the competences to deeply understand the given business. Having around the table a team of Indians looking and sounding like they’ve just landed from Mumbai might not do the trick. Delivering successful projects with greater chances to exceed customer expectations. With top class knowledge of best practices and technical skills, a team of Indian consultants would probably manage to meet most project objectives (and usually with very competitive prices). However, in order to go beyond these objectives, the team would benefit having at least one member with local and specific knowledge of the customer’s business, social and cultural context. 

It is important to realize that it is not only about the culture of given countries, it is ideally also about a specific market and/or organizational culture in line with the consulting firm’s strategy. 

If for example a consulting firm intends to provide services to the large food retailers (like Carrefour, Tesco and Asda) it needs to recruit professionals and consultants with relevant retail experience (i.e. worked for one of these retailers). Managing a chain of supermarkets in Europe carries specific cultural traits that would not be immediately assimilated by an Indian consultant with an Asiatic food retailing experience. I will illustrate the importance of cultural differences with the reverse example of one of these European retailers (Carrefour) that had to adapt to the Chinese market for a rather odd but nonetheless important cultural habit: the Chinese grocery shopper likes to touch and smell fresh food before buying, and not only fruits and vegetables as in most European countries, but also rice, fish and meat! It is extremely unhygienic but Carrefour had to adapt their shop design and packaging practices or not sell these products. This is of course an extreme and easily identifiable market specificity but more insidious differences could have no less significant impact on a consulting project.

The knowledge challenge (for outsourcing companies)

[Below is an article I wrote in Nov 07 for a now defunct Indian website. I stand by it even more today].

For Indian outsourcing providers, their business is evolving towards securing partnerships for innovation with their customers. It is therefore no longer only about cost-savings and taking on non-core activities. Now here is a challenge for them: How to go about obtaining enough specific internal knowledge from their customers in order to produce relevant value-adding innovation? 

The reason why this is a challenge is that most organizations today still fail - or don’t even attempt - to build a knowledge based culture where knowledge sharing between all their employees is the norm. If a customer’s key representatives only share knowledge and experience with their colleagues when they have to, why would they share more freely with external consultants? 

In my experience, consultants usually obtain more information on a specific issue than internal managers, but that is usually due to their – justified or not - “impartial” and “more objective” status. It is also because employees are told to assist the consultant in any way they can because… hem… they are not cheap. But this actually only reinforce my point: For a true value-adding cooperation between an outsourcing firm and a customer organization, you cannot rely on people sharing knowledge only because they are told to do so, you need much more willing and systematic involvements. 

To truly understand the issue, one must realise that the type of partnership that we are talking about here is of a new breed. It is not the classic consulting time-bound project with consultants walking in, gathering information, analysing it, developing then submitting a solution, and finally walking out. What is suggested here is a long-term relationship requiring systematic access to relevant information and sharing of knowledge and experience between the customer and the service provider. 

Innovation does not happen in a vacuum but is very context-dependant. Furthermore, innovation is nearly always the product of collaboration between individuals/teams/companies. Ok, so what is my point then? I do not claim to know all the consequences of this problem (I count on you all reading this to help out). I would only suggest this: Outsourcing firms should steam ahead offering new collaborative services to their most “knowledge focused” customers. With them, there should be no problem in co-generating innovation and value. However, with the other customers still stuck in, pre-Knowledge economy, pre-Web 2.0 era with Industrial Age management methods, my advice is either stay clear of making too many promises, or alternatively first offer to assist them in transforming their organizational culture and foster knowledge-sharing. 

To support the second option, I will quote a report on the recent KM India 2007 Summit : 

<< Comparing the current Knowledge Management (KM) movement with the Quality movement of [the] 80s, noted IT entrepreneur and Chairman & Managing Director of Mindtree Consulting Mr Ashok Soota said, "Knowledge movement is the next important movement. It is like the Quality movement of past. CII and industry will promote this like we did with quality movement." The Summit is being held in New Delhi from Nov 14-16. Highlighting the importance of KM in today's corporate world, quoting management guru Peter Drucker, Mr Soota said, "Today there are no poor countries, only ignorant countries! The same is true of companies." >>

Innovation is a priority, so why not KM?

A recent Boston Consulting Group report shows that 64% of companies consider innovation as one of their top 3 priorities. This is less than the 72% in 2006 but still high in the current difficult economy. That is good and understandable but then why is Knowledge Management not a priority as well as a result? You cannot foster innovation throughout a company wihout effective and efficient knowledge sharing processes. Apple, Google and Toyota took the top 3 spots of the most innovative companies. Unsurprisingly, these 3 are regularly at the top of the global Most Admired Knowledge Enterprises (MAKE). In the 2008 ranking, they were in the 7th, 2nd and 4th place respectively. In fact, 9 of the 20 global MAKE companies last year are among the BCG top 50 innovative companies including 5 of the top 6 ! These organisations have understood that innovation does not only sit in the R&D labs, it is to be fostered everywhere. Innovation implies effective collaboration between individuals, teams, deparments and companies, and effective collaboration implies in turn effective knowledge sharing between all these actors. All these companies above invest heavily in knowledge management and would typically have managers with formal KM responsibilities. But then why is it that the companies with such formal and significant KM are still such a minority? What will it take for leaders to realise en masse the importance of KM?

Getting the right information to your retail customers at the right time, or how to make them loyal to your brand

In these very challenging economical times, retaining your customers is a must to survive now and thrive when things improve. For your customers to repetitively shop in your stores (on the high street or online) means for them one or both of the following conditions:

· It is to them the most practical or ‘lack of choice’ (ex.: “I shop at your supermarket because it is the closest to my home”).
· It is the brand that best fits their needs and/or wants at that moment in time.

You could of course consider the first group of customers as a bonus but they should be nurtured too as the practical reason for their custom could disappear and them with it (like moving house). The key for making either type of customers (“for practicality” or “by choice”) stay with your brand long term, is increasingly to provide them with the right information at the right time and in the right place, and this through all the market channels you make available to them. For instance, when online, a customer is virtually always one-click away to choose a competitor. I am not referring here only to ecommerce situation but to any web browsing situation to obtain information about your brand/company, starting of course with your main informational website.

In retail, you not only need to be consistent between your various channels but you need to integrate them as well. So it is not just about consistency in products and pricing, but also for example about enabling a customer who purchased online to be able to collect and return in store if he/she wishes to. And this type of seamless (to the customer) integration is not just an information systems problem. For instance, the manager of the store where the products purchased online are collected, will not welcome the transaction if the sale isn’t allocated to his store some way or another! So if only your online store gets the sale, you will de facto create internal resistance and unnecessary competition that ultimately could affect the customer (a solution by the way here is to have the sale shared by both channels).

Providing customers with the right information at the right time and in the right place implies understanding their likes and dislikes, their needs and wants. In the luxury goods sector, this knowledge on customers has historically been obtained by the sales associate on the shop floor during the process of a sale. When you buy a £,000+ product or service, you have time to chat about yourself and the reasons for your purchase (and you often want to) but when you are buying a pack of beer, a pair of socks or a bottle of shampoo, you usually don’t want to spend more time than necessary. Well, this is changing and primarily thanks to ecommerce. When you want to buy a shampoo or a pack of beer online, you must first register your name and contact details at the very least, so you have provided the private information that the retailer would not have obtained on the high street – except if you had used a “loyalty” card. So retailers can track customer behaviour online but often fail to do so on the high street which makes it difficult to leverage the integration of the different channels to market. Loyalty card schemes have been thought of the solution but too often fail to deliver the desired outcome because:

- Too many customers don’t bother signing up to the scheme (for various reasons but often simply because they don’t consider the associated discounts significant enough).
- A majority of customers will view it only as a discount scheme (“when I shop here, I might as well use the card and get the discount points as a bonus”) but their repeat visits do not depend on it.
- Most of the competition have a similar scheme so it does not constitute a significant USP (large number of customers end up with all your competitors’ loyalty card in their wallet).

A loyalty scheme needs to be about loyalty, not only about discounted repeat purchases. So this takes us back to the subject of this post: “true” loyalty can be achieved when the customer has access to and is given the right information at the right time about your product and services. “Right” information means as individualized as possible. A customer is really only interested in the products and services that concerns him/her. So for ex, a customer who never drinks alcohol wouldn’t care less about a promotion on wines. And it is not as simple as thinking that such a promotion should target only customers with a history of wine purchases. Our non-drinker customer could easily have once bought a bottle as a one-off gift for a friend.

My point here is that the goal for retailers should be to have reliable and relevant knowledge of their customers in order to provide them in return with the right information at the right time.
This effective knowledge of your customers will of course rely on sales history based information obtained with traditional “loyalty schemes”. But crucially, to obtain a true USP with this knowledge, a retailer will have to find and master other sources of information. Social networks are one such source, with examples being online communities. Examples of retail focused websites taking full advantage of this are the customer reviews based sites like www.toptable.com or www.yelp.com. Retailers need to engage with these indirect sources of customer information and use them as models for implementing social networking solutions directly engaging with their customers (or potential customers).

I will not list here all the possibilities (and I don’t know them all anyway) for retailers to improve their deliveries of effective information to their customers. Obviously, many great ideas are still to come. What is certain is that the retailers that will consider this challenge strategically and be among the first to surpass their customers’ expectations, will lead the pack when the economy recovers.

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.

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).

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).