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).