October 19, 2006

Webcast: Competing on Analytics

The AMA is hosting a complimentary webcast on Tuesday, October 31, 2006:

Competing On Analytics: Move Faster, Accomplish More, and Avoid Mistakes by Learning From The Best

Like never before, marketers today are being held accountable for their impact on the corporate bottom line. Quantifiable results matter more than ever as marketing initiatives are conceived, executed, and eventually evaluated.

PRESENTERS:
Professor Tom Davenport, Babson College (that would be me!)
Anna Carbonara, Moderator, American Marketing Association

Capital One, Procter & Gamble, Amazon and other leaders pioneered this data-driven approach to marketing. If your marketing organization is like most, you've already begun a similar move towards leveraging data and analytics. Like most, you're probably also facing the same challenges faced by the early adopters - finding and retaining qualified staff, aligning with shifting business priorities, and satisfying the (seemingly) endless demand for analysis, for example.

What you will learn:

- What data-driven marketing is (and isn't)
- How marketing visionaries are using analytics for competitive advantage
- What specific tactics these early adopters believe are essential to their success (and what they'd do differently next time)
- How you can personally succeed as a marketer during these tumultuous times

Who Should Attend:

- Business-to-business and business-to-consumer marketers at all levels, up to and including CMO's and Vice Presidents of Marketing
- Information technology professionals, particularly those in fields involving collaboration with marketing colleagues

As some of you may have noticed, I've been rather busy. This webcast is a good way to catch up.

I hope to see you there. Register >>

Posted by Tom Davenport at 12:14 AM | Permalink | TrackBacks (0)

October 03, 2006

One Way to Stifle Creativity

Some years back I wrote what I thought was a pretty good little article about the origin of a knowledge group at a well-known consulting company. It told the story of two young guys who thought it might be useful to collect proposals and reports from successful engagements and make them available for research and reuse. When their boss rejected the idea, they went ahead anyway, working on weekends, pulling a couple of discarded computers out of a storeroom, soliciting contributions from people they knew, informally spreading word about the resource they had created. A few months later, a consultant used some of the material they had gathered to win a big contract. Demand increased. The bootleg system was eventually legitimized and grew into a sizeable knowledge center.

The article was never published. The company executive whose approval I needed admitted that the article was accurate but said he didn’t want the public to get the impression that things happen in such an informal, ad hoc way at the company. Although he didn’t say so, I think he was also uncomfortable about casting disobedience in a positive light.

I think the fiction he wanted to maintain—that all decisions are carefully deliberated at the top and carried out by those below, that nothing happens by accident—is a damaging one. To the extent that leaders tend to believe it, it stops them from seeking and learning from the innovative ideas and practices that bubble up in odd corners of their organizations. To the extent that they present themselves as the sole source of company wisdom, they stifle the creativity of the people who work for them. (Why bother if leaders won’t listen and then take credit for ideas that survive in spite of their opposition?)

By way of contrast, I think of a story from the early days of Hewlett-Packard. David Packard responded to an engineer who had disregarded an order to stop working on technology that turned into a successful product by calling a meeting of engineers and presenting him with a medal for “extraordinary contempt and defiance beyond the normal call of engineering duty.”

Posted by Don Cohen at 03:26 PM | Permalink | Comments (1) | TrackBacks (0)

October 02, 2006

The Rising Tide of Knowledge Populism

I’ve recently thought about writing a book, or at least a few well placed articles, on the subject of knowledge populism, of which evidence is all around us.

Like political populism, which flourished in the US mid-west at the turn of the 20th century, the knowledge populism we see is surely a tricky subject-containing elements both malignant and glorious. It is a natural outgrowth of the world-wide democratization of knowledge and information that is roiling our world in so many ways.

In doing some reading for this subject for a dual talk Tom Davenport and I are doing later in the month, I found some books for you all worth commenting on.

The first is Infotopia, by Cass Sunstein who is a law school professor in Chicago, and is also what I’d call a "public intellectual" i.e. someone willing to talk on subjects outside the technical details of their field, someone actually worth listening to. This book is quite good – it’s short, interesting, and with a real knowledge perspective. Its main theme is the need for deliberation - space and time to deliberate. Sunstein is particularly interested in how many users using the web have the potential to create valuable new knowledge.

Another interesting tome, is by Yochai Benkler, yet another law school guy (this one at Yale – what’s with these guys?). This book is called The Wealth of Networks and is sub-titled How Social Production transforms markets and freedom.

I’m not at all sure about the power of his argument concerning freedom but his arguments about social production are cogent and interesting - if a bit dry and based on neo-classic economics - which is tidy but not real. The book, like Sunstein's, is well written and is also really about knowledge.

We are winning the race, fellow knowledge practitioners!

To butress this last point take a look at a World Bank report, released just a few months back called Where is the wealth of Nations? Measuring Capital for the 21st Century.

While the bank researchers still conflate knowledge with human capital, at least they now acknowledge it as a powerful source of intangible wealth.

We have come quite a ways in this regard. Take a look at any economic reckoning of wealth just a few decades ago and there was no mention of any intangibles whatsoever. Now if we can only get accountants and finance people to see the light!! They will if they have Baruch Lev as a professor but he can’t teach everybody!

Posted by Larry Prusak at 10:28 PM | Permalink | TrackBacks (0)

June 06, 2006

Attention Bloggers!

I haven’t written a blog entry in a while, but apparently a lot of people have. I heard in a presentation today that there are (as of May 30th, 2006) 28,592,813 blogs, and 43,109 new blogs in the last 24 hours. Hmmmm. One could argue that this is too many. As I pointed out in my first entry for the Babson Knowledge blog, the key issue is the imbalance of information in the blogosphere and the amount of human attention available to attend to it. It’s far easier to write a blog than to get anyone to read it. This imbalance leads me to believe that a couple of major changes need to take place in individual and organizational information environments.

One is the automated mining of textual and unstructured information. We’re finally getting a handle on how to get value from structured information. But most organizations don’t have a clue about how to mine blogs, emails, instant messages, presentations, and so forth. We don’t have time to look at all of this stuff to see if it’s interesting and relevant to us, so we will have to have systems that find the good content and serve it up or summarize it for us. It is individuals that read and take action on unstructured information, so we need to address this issue at the individual level.

Some of this mining will be automatically intuited by an intelligent system based on stuff we’ve looked at in the past, and perhaps on how we’ve rated it. But, of course, we’ve been hearing for a number of years that such “machine learning” will improve our lives. Thus far and for the foreseeable future, we’re going to have to help our computers with some personal interventions. In particular, we’re going to have to get better at specifying what information we care about.

Most of us are pretty haphazard about what information we need and want to see. We click mindlessly through the blogosphere. We read whatever free magazines publishers are willing to send us. We read whatever emails appear in our inboxes or on our Blackberry screens. One prominent GE executive admitted to me—without much sheepishness—that the only articles he reads are those that other people attach to his email messages. This is not a well-designed personal information environment!

Someday it will all be better. I’ll be able to say to a computer something like the following:

- I like and want to read/hear/view content about the Boston Red Sox, analytical competition, attempts to improve the performance of knowledge work, case studies about knowledge management, process management initiatives that employ IT, Julie Bowen (a somewhat obscure but lovely actress) and so forth.

- I don’t want to receive stuff about dining hall schedules at Babson College, regular meetings that I have never attended in the past, marketing messages from IT vendors, movies that are badly reviewed, hockey, Britney Spears, and so forth.

Of course, it’s the “and so forth” that kills us. We know some things we definitely like and don’t like, but we’re always afraid that we’re missing something important, and we’re afraid to rule out sources and topics because there just might be something valuable there. I’m hoping that technology will help us out in this regard—noting that you haven’t looked at the last 42 RSS feeds from a particular blog, so maybe you should stop pretending to be interested in it—or that you seem to be clicking on a lot of sites about real estate in Palo Alto, so should I feed you more of that? Between all of us working a little harder at figuring out what we want, and a bit of help from intelligent software, we’ll eventually get to an attention-preserving environment that still keeps us well-informed.

Posted by Tom Davenport at 12:21 AM | Permalink | TrackBacks (0)

April 05, 2006

The KM Benefits of Having a Higher Purpose

I don’t have statistics to prove it, but anecdotal evidence suggests that people working at organizations devoted to missions other than (and arguably higher than) making money share knowledge more readily than employees at companies that emphasize the bottom line.

My colleagues and I have looked at knowledge programs at the World Bank, NASA, the navy, and MITRE, among other entities devoted to reducing poverty, advancing science and space exploration, and contributing to national security. Although these organizations have their share of territoriality and competitiveness, their missions do seem to encourage people to share knowledge and cooperate more readily than they would without a sense of a shared worthy purpose. My conversations with experienced NASA project managers suggest that knowledge sharing happens most fully and readily when project leaders keep the value and excitement of their shared mission in view and appeal to that inspiring goal to help resolve disagreements and overcome crankiness and suspicion.

There is a lesson here for for-profit companies. Knowledge workers are unlikely to devote time and talent to knowledge management activities if the only articulated purpose for those efforts is to save money for the corporation. The CEO and CFO and major stockholders may be inspired by those dollars, but most employees aren’t. In many cases, though, profit-making companies can also legitimately invoke a higher purpose to support knowledge sharing—perhaps scientific discovery or the public benefits of their products or services or even pride in the quality of work accomplished. Pharmaceutical companies, for example, are unquestionably profit-making ventures, but most researchers are driven (and driven to seek and share knowledge) by the goal of discovering drugs that cure diseases. For them, profits are a byproduct of a scientific and humanitarian achievement.

People who are proud of their work are more likely to offer what they know to people they think of as colleagues in a shared journey toward a worthwhile goal.

Posted by Don Cohen at 06:10 PM | Permalink | TrackBacks (0)

March 27, 2006

Building Your Company's Innovation Portfolio

Innovation is back in style. Many companies that had been cautious over the past several years and primarily focused on cost reductions are now turning their focus to innovation. There is ample evidence of this orientation. For example, 87% of senior executives in a 2005 survey said that generating organic growth through innovation is necessary for success in their industries, and 74% planned to increase spending on innovation in 2005.1

Yet the mere desire for more innovation won't make it happen, and many organizations have poorly-managed approaches to innovation. In particular, they have too narrow a focus on innovation, and address only the product innovation domain. They do not manage an innovation portfolio in terms of how they source, fund, monitor, and assign responsibility for innovation. As a result, they will continue to have weak innovation results. In the 2005 study mentioned above, only 49% of the surveyed executives were satisfied with the financial returns on investments in innovation. In another 2005 analysis, there was no correlation between spending on innovation and the overall financial performance of organizations.2

In order to construct and manage an innovation portfolio, an organization must identify the types of innovation that are important to it, the key steps in the innovation process, and the primary responsibilities for managing it. Then it can begin to create a more formal approach for managing a broader, more comprehensive innovation portfolio. I'll describe each of the elements of such a portfolio.

Types of Innovation
What are the possible types of innovation that organizations can and should pursue? Unfortunately, most organizations focus only upon product innovation. In a 2003 study of companies' innovation sourcing strategies, two other researchers and I discovered that product innovation was far more likely to be addressed than any other type. 70% of the executives surveyed in the study said their organizations pursued product innovation, whereas the next most common responses (service and process innovation) were being pursued by only 20% of respondents.

Product innovation is certainly important, and in some ways it offers the clearest economic payoff for innovation. Companies create products, take them to market, and sell them to customers. Yet there are important arguments for going beyond product innovation alone. First of all, an increasing proportion of sophisticated economies are based on services—over 70% in the United States, for example3. Secondly, even in product markets, customers often buy products not just on the basis of the product's characteristics, but on the business model and processes by which the product is sold, and the services offered after the sale. Finally, companies are much more likely to produce effective and economically valuable products and services if they have innovative and high-quality management approaches.

IBM illustrates both the predominance of product innovation, and the emerging rise of other innovation domains. For several decades the company has vigorously pursued product and component research at its corporate laboratories such as Watson and Almaden. Despite the fact that half of its revenues derive from services, only in the last year has the company officially recognized services innovation as part of its innovation portfolio, creating the Services Research group at its Almaden Labs.

What does service innovation mean? For companies such as IBM offering business services, it means the development and testing of new ways to deliver services such as e-commerce, and new ways to help organizations change their cultures and processes. For organizations such as Bank of America that serve consumers, service innovation can mean identifying and testing new approaches to serve customers at the branch or point of sale.4 For a company that performs detailed building services such as ServiceMaster, service innovation might take the form of industrial engineering-like attempts to streamline movements and reduce wear and tear on workers and equipment. Of course, just as product innovation takes a somewhat different form in each company, so will service innovation.

Organizations are increasingly prospering from a combination of product and service innovation. Apple's iPod, for example, would not have been nearly as successful without the availability of the iTunes content downloading service. When IT companies such as IBM and Hewlett-Packard announce new products, there is often a need for services to install, implement, maintain, or extract value from them.

Process innovation can take place in product or service firms. It usually involves either internal business processes, or those involved in delivering products and services to customers. Process innovation can involve revolutionary or breakthough improvement in broad, cross-functional processes (sometimes called business process reengineering),5 or can also entail continuous or one-time improvement in smaller processes, as in Total Quality Management or Six Sigma initiatives. Some companies focus their process innovation efforts in some areas more than others. Dell Computer, for example, is more oriented to manufacturing and supply chain processes than to any other type. Others, such as Raytheon, have a broad corporate program that addresses all processes with one approach (Six Sigma in Raytheon’s case). Most organizations should have a portfolio of process innovation initiatives underway at any given time, including both breakthrough and incremental innovations where necessary.

Managerial innovation involves the exploration and adoption of new approaches for managing people, technology, and other strategic business resources. There have been hundreds of new management ideas over the past several decades, yet most organizations are woefully haphazard or faddish in how they adopt and embrace particular ideas. Just as product innovation usually involves researchers and engineers, and process improvement has specialists such as Six Sigma "black belts," managerial innovation is usually driven by a type of individual called an "idea practitioner"—someone who identifies appropriate new management ideas and shepherds them through implementation.6

Business model innovation may be the least well known of all the innovation domains. Business models are an organization's fundamental logic for going to market and making money. Business model innovation is critical because it is directly tied to an organization's economic fortunes. The concept became popular at the height of the e-commerce explosion, when many companies explored online business models for the first time. But e-commerce isn't the only form of business model innovation that companies can explore. Any company offering an expensive product for sale, for example, could explore the possibility of selling the same capability as an on-demand service (as many computer firms, including IBM and Hewlett-Packard) are currently doing.

Clearly there are other potential innovation types in addition to these, such as store design, architectural, and packaging innovation. Not all of these will be appropriate for all organizations at all times. Clearly some forms of innovation are going to be more important to a particular firm than others. However, a broad portfolio of innovation domains is desirable.

Additional Information:
1 Boston Consulting Group, "Innovation 2005," online at www.bcg.com
2 Barry Jaruzelski et al, "Money Isn't Everything," Strategy + Business 41, Winter 2005, p. 57.
3 James Brian Quinn, Intelligent Enterprise: A Knowledge and Service-Based Paradigm for Industry. (Free Press, 1992)
4 Stefan Thomke, "R&D Comes to Services: Bank of America's Pathbreaking Experiments," Harvard Business Review, April 2003.
5 Thomas H. Davenport, Process Innovation: Rengineering Work though Information Technology (Harvard Business School Press, 1993).
6 Thomas H. Davenport and Lawrence Prusak, What's the Big Idea? Creating and Capitalizing on the Best Management Thinking (Harvard Business School Press, 2003).

Posted by Tom Davenport at 11:38 AM | Permalink | Comments (3) | TrackBacks (3)

February 04, 2006

You Know You Compete on Analytics When...

1. You apply sophisticated information systems and rigorous analysis not only to your core capability but also to a range of functions as varied as marketing and human resources.

2. Your senior executive team not only recognizes the importance of analytics capabilities but also makes their development and maintenance a primary focus.

3. You treat fact-based decision making not only as a best practice but also as a part of the culture that’s constantly emphasized and communicated by senior executives.

4. You hire not only people with analytical skills but a lot of people with the very best analytical skills—and consider them a key to your success.

5. You not only employ analytics in almost every function and department but also consider it so strategically important that you manage it at the enterprise level.

6. You not only are expert at number crunching but also invent proprietary metrics for use in key business processes.

7. You not only use copious data and in-house analysis but also share them with customers and suppliers.

8. You not only avidly consume data but also seize every opportunity to generate information, creating a “test and learn” culture based on numerous small experiments.

9. You not only have committed to competing on analytics but also have been building your capabilities for several years.

10. You not only emphasize the importance of analytics internally but also make quantitative capabilities part of your company’s story, to be shared in the annual report and in discussions with financial analysts.

These points are from my January 2006 HBR article- "Competing on Analytics."

Posted by Tom Davenport at 12:03 PM | Permalink | Comments (3) | TrackBacks (2)

January 23, 2006

Organizational Knowledge and “Higher Modesty”

I recently had a conversation with Bob Sutton of Stanford about Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management, the new book he and Jeffrey Pfeffer have written. Among the reasons Bob gave for why leaders and managers make decisions contrary to available evidence is what he calls “confirmation bias.” That’s the tendency to notice and believe information that supports your existing beliefs and ignore or discredit information that contradicts them. James March makes a similar point when he notes how frequently managers make decisions first and ask questions later, doing analysis to “prove” that the decision makes sense.

It’s a common, powerful human behavior: most of us pay more attention to news, events, and opinions that seem to confirm our ideas than to evidence that those ideas may be wrong; most of us look for reasons to justify what we’ve already decided we want to do. And we live in a culture that values certainty more than doubt, especially in our leaders.

But the dangers are obvious. We all knows stories of leaders who confidently drive their organizations over a cliff, ignoring warnings and evidence of the dangers ahead. “SSW”—Swift, Sure, and Wrong—is an acronym used in some medical schools to describe confident, disastrous decisions in medicine. Less dramatically, organizations miss opportunities and are surprised by challenges because confirmation bias keep them from seeing important information. In a knowledge economy, being blind to essential knowledge is clearly a problem.

It is difficult but possible to do something about it. Bob Sutton cites IDEO, an industrial design firm that, he says, acts with knowledge while doubting what they know. I’m aware of one CEO who asked a knowledgeable outsider to send him an email whenever he saw him doing something stupid. We can make conscious efforts to be skeptical about confirming evidence and open to evidence that tells us we may be wrong. We can listen to the people on the fringes of our groups and organizations, rather than dismiss them because they are “different.” We can try to have a bit of what the early 20th century writer Edmund Gosse calls “higher modesty”—the willingness to question one’s own deepest beliefs that Gosse considers an essential characteristic of great scientists.

Posted by Don Cohen at 05:46 PM | Permalink | Comments (8) | TrackBacks (1)

January 09, 2006

The Knowledge Technology Trap

Again and again during the two dozen interviews I’ve conducted to figure out what we’ve learned from a decade of knowledge management experiences, practitioners said, “Knowledge management projects focused mainly on technology will fail,” or words to that effect. No surprise there. From the early days of KM, thoughtful commentators talked about the human and organizational elements of knowledge work and the need to balance technology, process, and culture. Everyone heard stories of failed technology-driven projects—“knowledge bases” ignored by intended users, unreliable and abandoned expertise locators.

But some of the same practitioners who expressed this supposedly obvious truth said that the point had to be made again and again to prevent their organizations from falling back into the mistake of depending on technology to make knowledge sharing happen. Companies still invest in mainly technological fixes to knowledge problems and, when those fail, they do it again, pinning their hopes on some improvement or other in the software.

Why?

Part of the answer is that the human element is complicated and subtle. When you buy hardware and software, you at least know what you’re getting for your money. Investments in relationships and behaviors are harder to see and measure. Also, and despite all the talk about the old factory-model of the organization dying away and the importance of “our people” in the knowledge age, I think many leaders still want to think of their organizations as efficient machines and people as part of the equipment who “should” adjust themselves to the rest of the mechanism without pampering or a lot of talk about “culture.”

In the U.S. at least, a sheer love of technology may be an even more important factor. We have a long history of believing that the next technological marvel will eliminate drudgery or hunger, cure disease, make us happy. The social, political, and environmental problems of the last half century may have weakened our faith in redemption by technology, but the longing for simple, mechanical solutions remains strong. It’s reflected not just in the love of technology, but in the belief underlying the whole self-help industry—the idea that a pill, a mantra, or a machine can make us slim, beautiful, rich, and happy.

This persistent search for the silver bullet (or the silver bullet point) is a kind of tribute to American optimism, the belief that we can make ourselves, our companies, and the world better if we find the magic formula. Too bad it’s not true.

Posted by Don Cohen at 11:19 AM | Permalink | Comments (3) | TrackBacks (0)

January 05, 2006

Lesser-Known, Must-Read KM Books for 2006

There are quite a few good books about KM and related practices that never receive much publicity and consequently are rarely seen by practitioners and have little impact on practice.

For those of you with a taste for theory and a little patience, however, there is much of value in these academic tomes. Here are some recent ones, all read by yours truly (I don’t watch TV or talk too much on planes so I get some reading done).

Knowledge, Institutions and Evolution in Economics by Brian Loasby. This is a very well written book by an economist(yes, some of them can write and even write well about knowledge). Loasby' lectures are focused on how knowledge as embedded in organizations can best be understood as an evolutionary phenomenon. He is right, too.

Architectures of Knowledge : Firms, Capabilities, and Communities by Ash Amin(an economic geographer, and Patrick Cohendet, an economist). This is a very good book, original and full of insights on the spaces of knowledge and learning to be found in society and in organizations. The chapter on "The Spaces of Knowing" is worth the price of the paperback edition, by itself. The book is very "cross-disciplinary" and rewards frequent reading (especially if you fly often).

Complex Knowledge : Studies in Organizational Epistemology by Haridimos Tsoukas. He is an abstract thinker and organizational theorist and these are his collected essays on knoweldge and learning. Tsoukas is quite influenced by complexity theory (but not in a silly or superficial way) and is a great believer in sense-making a-la Karl Weick [Sensemaking in Organizations, Making Sense of the Organization, and Managing the Unexpected: Assuring High Performance in an Age of Complexity]. Don’t miss the chapter entitled "Do We Really Understand Tacit Knowledge." It’s the best one in the book.

Finally, for those of you with a taste for theory grounded in cases there is a very good introduction to KM by Donald Hislop entitled Knowledge Management in Organizations: A Critical Introduction. This is far more then just a text for MBAs, etc. It’s a critical synthesis based on much reading and observing. Not always sympathetic to our more simple practices, it’s a great text to give to someone new to the subject who is smart and can't stand most business books (Sue Newell's Managing Knowledge Work would be a great choice too).

All of these books are new and can easily be found on Amazon or Barnes and Noble. There are other such tomes around that I'd be happy to discuss if anyone is interested. Let me know and have a great 2006!

Posted by Larry Prusak at 02:50 PM | Permalink | Comments (1) | TrackBacks (0)

December 26, 2005

Was Drucker Wrong?

OK, I will confess that this entire posting was originally motivated by self-interest: I checked the Amazon sales rank for my book Thinking for a Living, and found that it had fallen over the past few days from the respectable levels it occupied for the first couple of months it was out. Most authors, of course, are semi-obsessed by their Amazon rankings; I get less so with each book I write.

But the apparent fact that my tome is not going to compete with Who Moved My Cheese at the top of the best-seller lists made me wonder just how important it really is to make knowledge workers more productive and effective.

I also had a chat a few days ago with a Wall Street Journal reporter who is researching an article on knowledge worker productivity. He asked me if the subject is important. I said yes, and mouthed the old Peter Drucker chestnut that “making knowledge work productive is the greatest economic challenge of this century.” He asked, “Well, was Drucker wrong?”

Mon dieu! How could he possibly ask such a question, particularly since the great man only passed a few weeks ago?

In order to quickly deflect such a heresy, I spewed out a few more clichés, such as “Knowledge workers are the key to growth and innovation in their organizations,” and “Unless our knowledge workers are the most productive and effective on earth, their jobs will flow to the parts of the world where they do it better.”

Then he asked the killer question. “Are companies doing anything about this?” Again, I spouted the names of a few companies that have actually attempted to make life better for their knowledge workers: Intel, Capital One, Novartis, Cisco…OK, it’s a pretty short list. If improving knowledge worker productivity is so important, why aren’t more companies doing something about it?

There are some good reasons, i.e.:
1. It’s hard.
2. It takes a fair amount of up-front investment.
3. Knowledge workers, like Greta Garbo, like to be left alone.

But these seem insufficient as rationales for doing little or nothing to make knowledge workers more successful at work (other than providing them with their very own legal copy of Microsoft Office, a PC, and a telephone with voice mail). I am frankly puzzled why more of this isn’t happening. If you know the answer, you will be giving me (and the world) a great holiday present if you feel generous enough to share it.

Posted by Tom Davenport at 05:16 PM | Permalink | Comments (10) | TrackBacks (2)

December 03, 2005

The Backlash to Process

It was inevitable, I suppose. After several decades of largely positive palaver about the power of process, a backlash is beginning to emerge. Several journalists and bloggers have begun to argue that process is injurious to organizational health and innovation.

Erin White of the Wall Street Journal, for example, reported on September 19, 2005 that companies are beginning to become disenchanted with Six Sigma and process management—particularly where innovation and new product development processes are concerned.

On John Hagel’s blog, he and John Seely Brown argue that "for the past couple of decades, the primary focus of IT investment in the enterprise has been to standardize and automate business processes. Over the next couple of decades, the real opportunity will be to amplify practices by supporting collaboration on demand – helping people both within and across enterprises to connect more flexibly and richly with each other around real business needs."

In a somewhat silly blog entry entitled “The End of Process,” Socialtext's Ross Mayfield argues that, “Because of constant change in our environment, processes are outdated the immediately after they are designed (sic, but you get the idea).” He goes on to say that connected knowledge workers can simply organize their own groups and processes at will.

First let me say that the devotees of process don’t have much to fear.

Process isn’t going away, at least for the vast majority of situations to which it’s been applied. For any sort of structured work activity, processes are the key to efficiency, quality, and efficient use of IT. For business activities like manufacturing, order management, accounting, and customer service, to eschew process is to eschew performance.

But the process malcontents do have a purpose and a point. It’s actually healthy to have a debate about how much process orientation to have in business, and where it should be applied. The idea that the same approaches to process management worked well for all businesses and all activities within them was never a good one. Of course, it’s just as nutty to argue that we don’t need processes at all as it was to argue that process was good for everything. The hard-core “enterprise engineers” and the advocates of self-organizing work are equally unhelpful.

The backlash to process generally focuses on the negative implications for innovation. This is both wrong and valid. It’s wrong when applied to process innovation. Companies that do process management right can certainly incorporate opportunities for participation by those who do the work, and continuous innovation in the process. Just ask Toyota, which has mastered both processes and process innovation.

But process critics are valid when the focus their attack on applying process to product and service innovations. We can call these activities processes, and we can try to impose structure on them. But innovation activities in business will always be less structured than other business domains, and harder to measure and automate. If we impose too much of a process orientation on these activities and people, we’ll either drive down the level of innovation or get frustrated. Cisco, for example, is a very process-oriented firm, but it has relaxed some of its orientation to process in its new product development activities.

The key to establishing a balance, as John Seely Brown and several of his former colleagues at Xerox PARC have argued for a while, is to mix process with practice. Process is an abstract structure for how work should ideally be done; practice is the day-to-day way in which work is actually done. Process involves respect for methods, measures, and organizational attempts at improvement; practice involves respect for smart people and localized decisionmaking. Process without practice is unrealistic; practice without process is chaotic.

In structured business activities such as manufacturing, we need more process and less practice; in less structured knowledge work domains like innovation, we simply need less process and more practice. To admit that a mixture is necessary, and to work at determining the appropriate balance, is the only reasonable approach.

Extreme arguments in either direction are counterproductive at best.

Posted by Tom Davenport at 04:45 PM | Permalink | Comments (3) | TrackBacks (1)

November 28, 2005

Personal Knowledge Management

Most interventions to improve performance in business are at the organizational or process level, but it doesn’t have to be that way. We can also improve individual capabilities. Ultimately, knowledge worker performance comes down to the behaviors of individual knowledge workers. If we improve their individual abilities to create, acquire, process and use knowledge, we are likely to improve the performance of the processes they work on, and the organizations they work for.

Individual knowledge work improvement initiatives have two attributes. One, they are directly focused on improving performance of knowledge worker employees as individuals, not as members of a larger group. A CRM program for customer service workers doesn’t qualify, because a number of people in that function would use it, and the system is not (or at least rarely) customized to individual needs. Secondly, individually-oriented initiatives are targeted at improving some skill or capability, rather than instituting a new process. Once again, giving knowledge workers a new piece of hardware or software—say, a personal digital assistant or cell phone—wouldn’t qualify, but teaching them how to use these devices effectively would.

I became persuaded of the virtues of improving knowledge worker capabilities at the personal level when working with the Software Engineering Institute at Carnegie-Mellon. As you may know, the SEI is famous for its “Capability Maturity Model,” an assessment tool for software engineering processes. It evaluates firms or business units on their overall approaches to software development. But Watts Humphrey, the developer of the CMM, had another key insight. He realized that it was taking too long for many organizations to move up through five stages of the CMM, and began to think about what might accelerate the process. He concluded that if organizations were to develop team and individual-level capabilities in addition to those at the organizational level, they would probably improve much faster.

SEI’s research has borne out this hypothesis. Companies employing the “personal software process” and the “team software process” have been known to move from the lowest to highest levels of software development maturity in about a year—versus an average of close to ten years for this journey using only organization-level approaches.

Just as in software development, there are generic knowledge worker skills that almost everyone employs, and could benefit from improving. What do all knowledge workers do? They read and write, of course, and our educational systems do a pretty decent job of inculcating these skills. Even that doesn’t stop some assiduous knowledge workers from taking courses in speed reading, business writing, or the like. No doubt more of this should be done.

Knowledge workers also spend a lot of time in meetings. Most organizations, of course, don’t do a very good job at helping their employees run meetings effectively. A few, like Xerox, have organization-wide programs focused on maintaining a high quality of meetings. However, there are plenty of written materials and educational options for people who want to learn more about meeting management, so I won’t say anything more about it here.

Increasingly, however, knowledge workers also process information—on paper, in telephone conversations and voice messages, and electronically. This subject is much newer than reading, writing, and meeting, and there is relatively little information available about how to do it well, or how organizations can help their knowledge workers do it well. In my recent book Thinking for a Living, I report on three research efforts to better understand this subject. Two were undertaken by a group of companies seeking to understand information work; both corporate and individual-level research projects were undertaken by this group. The report from that project can be found here.

In the same chapter I also report on more detailed interviews of individuals who claim to be very effective in the own personal information and knowledge management. I think this is a fast-rising topic, and we will be hearing much more about it in the future.

Others who have written about it online include Dave Pollard, a former CKO from Ernst & Young and David Gurteen, a long-term web guy and blogger on KM.

Posted by Tom Davenport at 07:11 PM | Permalink | Comments (2) | TrackBacks (2)

November 12, 2005

Farewell Peter Drucker

I see by today’s New York Times that the great Peter Drucker died yesterday at 95. All knowledge practitioners are in his debt as he was the very first theorist and writer to raise the issues of knowledge worker, knowledge productivity, and the entire subject of the role of knowledge in the economy with executives. Some economists and even sociologists had raised some of these points but none had even a fraction of Drucker’s clout and influence with management.

What is also interesting, though also very sad, is how just how little has changed in corporate practice in spite of Drucker’s polemics, philippics, rants and analyses. The Times mentions how he often stressed that firms need to look beyond profitability to remain healthy, how organizations need to see workers as assets not costs, that decision making needs to devolve to the workers who actually know what’s going on, and many other notions believed fervently by me and you but still rarely if at all practiced in large and medium sized firms.

With all the sales of his many books, his crystal clear prose, his immense learning, and his accessible style, did much change in American corporate practice because of him?

Posted by Larry Prusak at 11:52 AM | Permalink | Comments (2) | TrackBacks (0)