The problem with knowledge economy : it does not exist !

December 14, 2011 By Leave a Comment

Summary : Enterprise 2.0 or social business initiatives aim at crafting organizations that fit what we call the knowledge economy. And that’s quite hard…for one reason. The knowledge economy does not exist. Knowledge work and workers do. Not the economy. What’s missing ? A global environment that would help its blooming, its take-off rather than forcing enterprises to make industrial decisions on matters that are not industrial. Education, law, tax system, accounting has to be rethought from a new angle. In the meantime, anything undertaken by organizations will be bricolage : it will need lots of efforts for marginal or even futile results regarding to the deep transformation challenges that are at stake.

When we talk about new organization or management approach, about the tools that support new ways to communicate or collaborate we often use the knowledge economy as a justification. Moving from an industrial to a knowledge economy means a deep change of context and responses of a new kind from businesses. That’s an obvious fact and none of the current social business or enterprise 2.0 expert has coined anything new : there already was an abundant literacy on these new forms of organization while most of os where still learning writing and counting at school. If we take the technology side apart, any old book from Peter Drucker could be a best seller if published today with the same texts and a socially fashionable title.

So knowledge economy is there and both organizations and people have to deal with it. But what do they do it so slow, with so much reluctance, fears and doubts ? Why can’t we see this draught, this collective march that happened when the world faced its last similar evolution ? The answer is easy : because the knowledge economy does not exist. Not because it’s a dream kept alive buy a few passionate and lunatic people but because it’s not a concrete reality, foundations on which we’ll be able to craft the future.

A field was not enough to craft the agrarian economy. A factory and some steam or electricity did not found the industrial economy. There were organization models designed for the factory. Labor laws evolved to lead the change. Financial mechanisms were set up to make the requires investment possible, what made industrial economy grow. A factory did not made the industrial economy but a set of rules, practices, mechanisms did. They turned a need and an opportunity into reality.

So, what’s about knowledge economy ?

One swallow doesn’t make a summer and a knowledge worker does not make a knowledge economy. Knowledge work exists. Knowledge workers too and they represent each day a bigger part of the working population. They are the resources that may help to build a sustainable growth for the future. But that won’t happen unless some requirements are met.

As a matter of fact, even if the potential exists it’s poorly exploited. First because businesses don’t do everything possible to make the most of it…but that’s an easy pretext. Businesses  also are  looking for sense, for reasons to do things. They don’t find these reasons because they are operating in an environment that did not change that much during the last 50 years. Consequence : they struggle to reinvent their model, to reinvent themselves. Evidence  is those that success, that find the way of a new durable growth, are those who made choices that were both “obvious” regarding to where the world is heading and crazy according to the current environment in which they operate.

What’s missing to craft the appropriate environment ? [Read more...]

Filed Under: Economy & New Models, Enterprise 2.0 & Social Business, Management & HR, Society, strategy Tagged With: , , , , , , , , , , , , , , , , , , ,

What personal business model in the new economy

December 8, 2011 By 1 Comment

Summary : Beyond enterprise 2.0 and social business, there’s a major change in value creation models. Unfortunately, in  these models that are still in preparation, it’s hard to determine causal relationships between participation in value creation and getting the fruits from one’s participation. Participating in these new channels is now an option for people looking for qualitative rewards. But if, tomorrow, such activities become central in our lives and incomes there are new remuneration models to be found for people who will mainly rely in their participation in this new economy. The will to help others and participate will be replaced by personal business models logics as well as new recognition and remuneration systems in a world where value creation will involve less and less formal contributors and more and more informal ones.

People talk a lot about social business, enterprise 2.0 or similar concepts to refer to new ways to organize work, new relationships between people and between people and their work. But that’s only the smallest part of a global transformation that impacts the whole economy, a transformation that need to be taken into account if we don’t want all the efforts made at a micro level to change the way people work to be irrelevant with the economic structures that exist at a macro level.

Taking into account the deep change of the nature of economy and the relationships between players (not only economic ones) does only not mean  stating that the world is changing and urging people and organizations to change. That’s what has been done for years and we have not admit that was not enough. It’s about aligning the macro context with the new nature of economy, to make efforts that are undertaken at a micro level bear fruits.

We’re heading towards new value creation models that don’t adapt very well to manufacturing and taylorian ones that have been set up to help things in the past. I already mentioned the accounting side of the problem…and that’s only a part of the issue.

Today, value is created through information sharing, connecting people and knowledge, in a networked and decentralized way. In fact…not exactly. To be more precise, this decentralized and connected world works in the background of the economy we know, making it work faster, better, even in a more balanced and responsible way for those for make the most of its new potential. This background activity works both inside and outside enterprises, bridging both worlds. On the other hand, this background world need to make sense for people involved in to work well. They need to know in which way it could be beneficial to them. It’s very well explained in this McKinsey post, titled  “the second economy“.

If the “first” economy, the one we know and see in our everyday lives, works according to well known logics and rules for what’s about people’s contribution to value creation and and what they get from it (even if the balance of the system is more and more questioned), there’s no such thing for the second economy. It relies on the invisible, voluntary and often unsolicited work of lots of people, in either their personal or business lives. The problem is that it creates value and improves competitiveness for the visible economy while there is no remuneration model for participants who created value for others. [Read more...]

Filed Under: Economy & New Models, Enterprise 2.0 & Social Business, Management & HR, Society Tagged With: , , , , , , , , ,

From services management to enterprise 2.0

October 20, 2011 By Leave a Comment

Summary : the shift from the old manufacturing model to a service one is key to the future competitiveness of lots of industries. Rather than adding a layer of service at the point of contact with customers, it’s about reinventing businesses, value propositions and the way it’s executed. It’s easy to understand that the paradigm shift needed for this revolution is very similar to the one needed for enterprise 2.0. And is surely more understandable for lots of organizations.

 

A couple of weeks ago I discovered and read with a lot of interest Du management au marketing des services : Améliorer la relation client – Développer une véritable culture de services (in english from services management to services marketing – Improving customer relationship – Developing a culture of services) by Benoit Meyronin and Charles Ditandy. You may wonder what is the link with the topics I usually discuss on this blog. In fact it’s quite about the same thing but seen from a different point of view. It’s even possible to consider that the ignorance or misunderstanding of some issues related to services management is a real barrier to enterprise transformation, to the paradigm shift that is needed to rethink old manufacturing models and turn them into a services model and prevents from drawing all the organizational consequences.

As am matter of fact, as the book says, the key question est about implementing a culture of service within organizations. Let’s start with a quick aside. There are many ways to define a culture of service. A first one applies to people in their day to day actions and behaviors, most of all when facing customers. The second one is more global. It’s about execution but, also, the way things are seen, thought and designed. The first can come without the seconde but is only to dazzle customers. It makes employees embody a system, a policy that as no structural and operational reality in organization that don’t question themselves. It prevents value creation through services. Pratically speaking, when organization add a service layer on an old industrial/manufacturing model without trying to reinvent the whole, it’s like putting some polish on the customer interface. It has no impact no the delivered value and even less on the perceived value. In such a context, services are a cost that is easy to cut instead of being a value lever.

In short, adding a service layer to a system designed with an industrial/manufacturing approch costs money while rethinking the model as a service one makes organizations make more money. Examples are numeros in our day to day lives. I’ll spare you my usual and favorite digression on the airline industry (which really need to understand this !) but the book is full of examples from many industries (hotel, transportation, car parking…).

Take a minute to think of what “selling mobility” vs “selling cars” means for a car manufacturer. If the old car selling model survives, the “mobility” option costs a lot because it’s layer added on the system. If mobility becomes core, it’s differentiating and helps to create more value. That’s the path that’s followed by lots of car manufacturers. In B2B industries, tire manufacturers have stopped selling tires to airlines for years : they now sell a number of landings and take-offs.

In the end, here are a couple of examples of what a service culture means, taken from the book. [Read more...]

Filed Under: Books I read, Management & HR Tagged With: , , , , , , , , , , , , ,

Enterprise 2.0 and ROI : beyond numbers it’s about meaningful arbitrations

April 7, 2010 By Leave a Comment

The debate on the ROI of Enterprise 2.0 is far from its end even if I often have the impression that avoiding the question is a common easy answer. Either the “we don’t care” or the ‘it’s different, you can’t understand” answers don’t satisfy me.

When an enterprise is asked to invest energy, time, money, it’s legitimate to want to know what it will get in return. More precisely :

- if their will be any return

The answer is obvious : yes

- if this return will be a vague “better something”, nebulous and unseizable or if it will be measurable in a way or another, in a un unit that would not be too eccentric (money for instance…)

Here, my answer would be double. There are things that have a direct impact on opeations and thant can be measured and quantified. For instance the lenght of the innovation or sales cycle, the time saved by avoiding micro-coordination…

There are things that are not measurable by themselves but impact things that are. This is clearly demonstrated by Strategy Maps.The idea is to implement the mechanisms that will ensure that what’s invested to improve intangible will actually impact value creation. In brief, make sure that everything is conherent with the investments and that the way work is done is aligned with that in order investments are made profitable (it’s seldom said but businesses usually don’t suffer from a lack of talent or innovation…only a lack of coherence that impacts the whole value creation process, preventing processes to harness talents and innovation potential).

3°) If this return can be foreseeable in a mechanical and linear way.

Here, the answer is : no. In the other hand, between the exact prediction and the “we can’t predict so let’s five give up” I think there’s a long work to be done by searchers and specialists to be done. Without this work that will help to implement relevant measurement and predicition means, the risk is high to see managers piloting businesses with indicators that have nothing to do with the current reality, the way operations are done and the matter that is processed.

That said, there’s another side of the issue that should also be tackled. Basically, being sure that the investment will bring some benefits should be enough to start a project, regardless of the quantifiable predictability of the benefit. The latter matter when the point is not to choose between doing and not doing but arbitrate the choice between two possible investments. In this case it’s obvious that the chosen one will be the one with the highest return so both possibilities have to be comparable what implies being predictable.

[Read more...]

Filed Under: Enterprise 2.0 & Social Business, Society Tagged With: , , , , , , , ,

Your knowledge helps you more than your productivity

September 9, 2009 By 3 Comments

I’ve always had an ambiguous feeling about productivity. In the one hand, doing more or faster with the same amount of resources is a significant improvement. In the other hand, with hindsight, we have to admit that productivity continuously increased these last decades, that whenever a hard time everything is done to increase it even more, but despite of that, companies don’t seem to have improved their overhall financial performance. We also have to add to this the fact that, a time when enterprises rely not on machines or peopeale repeating endlessly the same tasks but on people managing information and solving problems, thinking that any business can run a 100m run in zero seconds is hare-brained.

Months ago, the idea came to me that productivity has to be rethought in order to shift from a mechanical concept to a human one, an from something that could be improved at the individual scale to something that has to be improved at a collective, systemic scale.

I’ve been neglecting this issue untill I came across this article that remembered me of it. Please have a look at this meaninful chart stolen from it :

Image 2

Despite an ongoing improvement in productivity, ROA collapsed on the same period. Why dit it happen ?

According to the article, it’s due to a total disconnect between enterprises et their current environment. Till now, businesses used to increase their size to create more value. Today, in an interconnected economy, value is not created anymore by increasing size but by multiplying information flows. The difference between the most and the less performant companies can be found in their participation to knowledge flows, both internally and externally, dynamics relying on social software. Focusing on “traditional” productivity only benefits to clients, not to the enterprise that doesn’t create more value.

In brief, the good old scalable efficiency is not enough anymore and companies should now focus on scalable learning.

The gap between the potential of any company and the benefit drawn from it is doomed to increase unless companies decide to take the most of their digital infrastructure supporting  knowledge flows and actively participate to these flows, both internally and externally with other businesses, and implement a voluntarist innovation policy.

Performance improvement will require the adoption of a logic of exchanges and innovation within ecosystems which is the only way to significantly improve things. It will make possible for anyone to improve one’s own performance through a creative problem solving process which implies the ability to connect among peers inside and outisde the organization. Contrary to the previous century when things used to come from the top, these new dynamics will be driven by people.

All that takes us back to a well known topic. The only way to bring a real and perenial improvement is to take the most of both knowledge capital and digital infrastructure. If not, the gap between investment and results will become wider every day.

Filed Under: Economy & New Models, Knowledge & Information management, strategy, Web & Usages Tagged With: , , , , , , , , , , ,

Lessons from a crisis and the behavioral economics

August 26, 2009 By 6 Comments

A year ago, the world entered a crisis that didn’t let it unhurt. A crisis I won’t call economic or or financial since I think the disease was deeper. Anyway, many people understand that, this time, we’ll have to be more creative than in a past and not rebuild things as they were. But we still have to draw all the consequences of this crisis, even if they makes us uncomfortable, because keeping our eyses closed is the best way to face an even more critical situation in the upcoming years.

Among others, there is the failure of one core credential the economy has been built upon for decades : the rationality of economic players. What made us model everything as indicators and forecasts that could not be wrong. Clients were predictable. Employees too. The price of raw materiels, interest rates, shareholders… everything was writen. Modeled. Under control.

So we were all elements of a complexe mathematical function which was guaranteeing us endless growth and enrichment.

And everything collapsed. We knew (or should have known) that nothing is rational on earth. Easy to say. In the future we’ll have to take irrationality into account in all business and economic decisions if we don’t want the same causes to have the same effets. Of course, uncertainty can be reduced…but not removed. That’s  what we used to forget.

In one word, as writen in this HBR article, businesses now have to pay more attention to their employees, customers, partners. Not only because it’s positive for business, but also because it’s the only way to avoid making huge mistakes anymore. This is about behavioral economics.

Surveys showed that the whish for rationalization, that is often embodied by an increased control, makes people cheat and is an obstacle to collaboration. They also point out (but is it a surprise) that a discontented customer looks for revenge toward the enterprise, regardless to the cause of discontent Businesses can’t afford anymore saying “it doesn’t matter” because the price to pay is immeasurably more important that the cost of a lost customer, whatever is prejudice is and even if it’s only subjective. Some could see crowdsourcing as good way to improve things : if things are not predictable, listening is a good means to lower uncertainty. In the same way, no one is sure that customers will accept a new product as predicted by surveys. Involving them in the innovation/design process can reduce uncertainty.

Cheat and revenge seems to be the consequence of not taking people and their irrational ity into account. And the price to pay is high.

One can found that depressing or demoralizing, but it’s a part of our economy from now on. According to the author, business will have to get the right capabilities to face it. It may be long and uncomfortable regarding to acquired habits. It means listening to people and an ongoing experiment system A new way to embrace marketing and customer relationships, but also employee’s motivation.

Who said that value chain and processes has to be socialized ?

Filed Under: Economy & New Models, Enterprise 2.0 & Social Business, Management & HR Tagged With: , , , , , , , , , ,

Too big to last ?

August 5, 2009 By 1 Comment

Is the myth of the “critical size” close to its end ? The concept of enterprise always comes with the concept of “growth”. Growth of the turnover, but also growth of its size. Today’s big companies count tens or hundreds thousand employees. But, at a time when performance is not only about the net force obtained by adding up hands but about the ability to make brains interact together, does critical size become a weakness ?

Today, some voices are rising to say :

- current efficiency issues are caused by inappropriate size. That’s because enterprises are not as good as making people interact as they were at adding up hands 30 years ago, that they were forced to find on financial markets the growth they could not get at the operational level.

- once companies have reached a certain size, their impact on economy can be dramatic and their failure could cause a systemic threat to the whole system.

In short, we’re shiftting from a context where size was reassuring to a context when it may mean incontrolability and risk.

Can we think that a constellation of partners would be more efficient that the current mastodonts ? That businesses should lose weight and organize a their value chain with external partners ? An extreme application of value chain 2.0 ? Anyway, we still don’t know how Coase’s theorem will apply to our new born knowledge economy. No one knows what future will look like but it’s not irrelevant to think that value chain socialization will bring a new form of enterprise, more designed to hunt in packs than for solitary tracking because of their lack of agility. Or, maybe, some cleaver CEOs will manage to make  make elephants dance..

[Read more...]

Filed Under: Economy & New Models, Management & HR Tagged With: , , , , , , ,

Investment or consumption : sounds like “déjà vu”

February 19, 2009 By Leave a Comment

In many countries there is an intense debate to know if governments should stimulate economy by boosting investment or consumption.

It’s about two clearly different approaches : in one case you try to limit the effects of the crisis and their impact on household (and so on enterprises as a side effect), in the other you try to build the foundations for a perenial restart, helping enterprises to build the futures.

Logically, when people and enterprises suffer what’s needed is to calm the pain down. But it prevents from dealing with the deep causes. If the causes are targeted, it helps to build better tomorrows but the effects will came later and in the meanwhile it hurts.

There is no miracle solutions. In an ideal world, people would prepare the future when everything’s all right and keep resources to kill the pain when it will come. In the real world, nothing is done when things are right (of course…since there’s nothing wrong so why change), people refuse to see the limits of the current situation et when things collapse so much resources are needed to fight the pain that nothing is left to deal with the deep causes and think long term;

That’s not without making me think of what happens to enterprises. An obsession for short term that makes them focus on local miracles when a global approach would be needed. By not looking further than the end of their noses, enterprises can only be affected without being able to anticipate. Nursing without really fighting the disease.

Criticizing people is a too easy thing ; if they act this way it’s becasue it’s what they’re asked to make them focus on what’s immediate instead of the core of things. So when something unforeseen happens (and unpredictability is the very nature of today’s economy, one of the key characteristics of knowledge economy) they can only react because anticipation is not in the management DNA.  And the resources that are used to react are not available anymore to anticipate when things become more calm. Endless recuring process.

This propensity to be permanently off-beat is one of the causes of wild fluctuation economics and enterprises experience regularly. It’s called cycles. The good news is that a negative cycle always ends one day. The bad news is that so do positive cycles.

consommation, court terme, crise, investissement, long terme, relance

Filed Under: Economy & New Models, Management & HR Tagged With: , , , , , , ,

Boards in the mist

February 11, 2009 By Leave a Comment

Boards have to be mobilized in order to make the right decisions to survive the crisis. Nothing new. But according to this essay from McKinsey, it’s far from being that simple.

Three reasons are put forward

• Boards follow unchanging procedures and ritualss. Defines shedules on a yearly basis, documents  and agendas fixed many weekds ago.

It may seem absurd that people who make strategic decisions are traped into such straitjackets but this is facts. With all the consequences we can imagine on adaptability.

• Interaction modes that are not constents with the purpose. Boards are the place for consensual discussions, members only validate what has been done in preliminary works. It’s in no way a place for brainstorming and reflection from which anything innovative will emerge.

It seems that the only conflictuous point in a board meeting may be power. Not strategic issues.

• Many board members are not in touch with what’s going on in the economy. They are more comfortable with “preservation” strategies, waiting for things to solve themselves rather than with trying to take the initiative.

As a result, they will find themselves struggling to withstand tough conditions and badly positioned in the new environment.

Conclusion : board have to get rid of received ideas, to learn to think differently in order to find the means for strategies heading to the future instead of to become ossified on the present. Unlike halves-strategies.

Filed Under: Economy & New Models, strategy Tagged With: , , , , , ,

Logic without good sense leads to catastroph

October 26, 2008 By Leave a Comment

Two weeks ago  I attended a graduation ceremony. In such events I often find speeches boring, but this time I was really interested to ear the message that would be delivered to youn managers/entrepreneurs who will need to find their way in the business world in a time of crisis.

Finally I liked the way things were said, wih lucidity. I left with the title of a book I should buy and a very meaningful quotation : “logic without good sense leads to catastroph”.

What’s logic ? It’s what allows to draw certain consequences from established facts, most of times upon an experience based reasoning.

Good sense ? It’s what makes possible for people to realize that something obvious isn’t that obvious, that a good a priori choice will have negative effects, that avoiding complexity isn’t always a good thing. And that, sometimes, logic has its limits.

Logic is reassuring. It puts things into systems, into equations and gives us certainties about what the future will be. It’s consecrated bread for companies. We earned so much this year so if we do the same the same year we’ll earn as much money. A salesperson had such figures this year, so he’ll do at least the same next year. This way of doing things always worked…so it will work again. If an option matches such scoring criterias it will increase our performance…

Good sense tells us logic does not always work. Examples : the 100m world record is improved by 1/10 second every year. Logic tells us one day people will run the 100m in zero seconds and will break the sound barrier. Good sense tells us it’s impossible. Logic tells us a salesperson car improve his performance by 10% a year. Good sense tells us one day he’ll reach a ceiling unless you are ready to  assume one people would be, one day, able to generate the equivalent of French GDP by selling peanuts at the corner of the street.

Logic, when applied to performace, makes us want to brings everything back to a linear function. So companies make promises and built models based on that. Good senses makes us say performance is rather a curve which asymptotic character is often forgotten. It tends with more and more difficulties to something but never reaches it. Do you remember when you studied functions limits in methematics class.

The two functions seem to coincide during a long time, during decades. Sometimes the performance curve can even be better than what’s expected. But the day comes then they cross each other, split. And what happen then ? [Read more...]

Filed Under: Management & HR Tagged With: , , , , , , , , , ,
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