The problem with knowledge economy : it does not exist !

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...]

The future of business starts at school. Still a long way to go

Résumé :despite enterprises know they need to change the way they work, they make very slow progress at undertaking a deep change process. The unwieldiness ot their organizational structure is not the only reason to that. People have become the slow factor of change and not only because people don’t like to change. Change implies to re-learn many routines deeply rooted into our minds. If habits are learn young and get rooted over time, we are forced to admit that our education system is key to provide enterprises with a human capital that meet their needs if we don’t want to enter a loose loose game where enterprises struggle to make profess and people lose their added value and their ability to find a job. Enterprises operate in a global context in which they don’t own all the levers and it’s getting essential to build educational systems that favor the learning of collaboration, creativity, mastering a knowledge intensive environment…as well as a proactive attitude toward the emergence of new jobs for people who’ll need to be “oneself entrepreneurs”. Both society and enterprises need new behaviors relying on new values. What means an education system that promotes and teaches them…

Note : This post is mainly bases on my knowledge of the french system but there’s no doubt part of it also applies in many other countries. Those who’d like to know more, laugh or be scares may enjoy this article and all the links it provides.


Despite the fact a wide consensus exists on the need to reinvent the operation and management model, everybody knows it’s far from being easy. In such approaches, people are the slow factor. Their reluctance to change is often mentioned as the main cause but that’s only the visible part of the iceberg. Most of the change process is about unlearning, forgetting wrong reflexes and habits. That’s true for people who’ve been in the workforce for decades but also for the younger. The reason is well known : the “human software” is being programmed from the early years and habits learned young get so deeply rooted that it’s hard to change them afterwards. Contrary, with time, it’s getting harder to acquire new behaviors, most of all when they are the opposite of what has become a part of our unconscious.

In 2006 I wrote on the bad habits we were taught at school, explaining why the damage was already done before people enter the workfoce. Unfortunately, I have not seen any kind of improvement coming and the few smart initiatives are too isolated while we need a critical mass of people sharing the same mindset.

Let’s review some key points.

• Collaboration

I won’t repeat what I wrote in the above mentioned post. But if people are taught young that “one only learns alone”, “knowledge and ideas have to be kept for oneself”, “others should not know what one thinks or does”, it’s easy to understand how they’ll behave once adult. Ok, when we become older, group work is sometimes required by professors. But it’s too late. Rather than thinking together, share and elaborate a common vision, we only divide tasks up according to what each one is better at and the result of the all the individual work is gathered and stacked up instead of being melt. The final result is the sum of all individual skills, never more, what is not what collaboration is about. Of, course, groups form depending on people’s level…a group of good pupils or students will never allow a less talented one to be burden.

• Learning and understanding

In a knwoledge economy, learning, knowing for the sake of knowing is not enough. We need to understand things, make knowledge ours, be able to understand the context to reuse things later, adapt them. That needs exchanges, explainations, discussions, what are the opposite of our model. Of course, writing pages and pages during classes (most of time, nothing more that what’s in the books) may help to learn. But not to understand. Conversations ? Professors know, pupils listen. And the first is infallible so the second should not ask any question implying a answer like “I’m not sure” or “I need to check”.

In the same way, people able to understand the complexity of our world should not be focused on one only discipline, they need of broader understanding of things and their context. Understanding the world, finding relevant models by learning from the past without making the same mistakes needs some historical, economic, geopolitics backgroup…even for future scientists or people willing to spend their lives working with numbers. Our model makes the young starts specializing too young and overlook lots of matters that would help them understand the context around their major.

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Investing in people ? Are you kidding ?

Summary : the knowledge economy rely on people as an efficiency and growth driver. That’s a given. To ensure the competitiveness of businesses in the future, new operating models, frameworks and practices will be needed. That’s understood but not easy to implement. Investing in human and the frameworks that will ensure that the best use will be me made of their skills in the production process is a nonsense, most of all regarding to business and accounting indicators that were designed for other value creation models and lead businesses in the wrong direction. Knowledge accumulation and sharing, collaboration, frameworks based on trust which is essential in this context makes no sense regarding to rules that need change if we want to build a suitable environment that will favor business and employees’ development.

In a previous post, I mentioned that an economy relying on the intensive use of knowledge was, before all, a system relying on accumulation.

- knowledge accumulation : before being reused, knowledge should be shared, so made accessible so be formalized. In other words, if we take the example of an enterprise social platform supporting the way work is done, it will take time before a critical mass of knowledge can be found in the platform to make anyone found a reason to go there to take what they need and even bring their own knowledge.

- trust accumulation : trust is at the center of collaboration frameworks as well as of work models relying on knowledge sharing and exchange. But it can’t be ordered and only come over time, as people interact more and more the one with the other. Trust applies to lots of things : relationships between peers, with one’s manager and subordinates, with the enterprise as a cultural entity, trust in the tools one has to use, trust in the organization and work model. When anyone does not trust one of this elements, the whole system collapses.

- reputation accumulation : reputation is a kind of accelerator for trust because it says a priori that someone is legitimate, skilled, nice to work with, based on peers’ experience, before one starts to investigate to know if one is worth being trusted. It’s not the solution to everything but helps things to start and even accelerates them. But, like reputation, it takes time to build one’s internal reputation on any professional matter.

Let me add one more thing. Such a system also relies on combining. Combining knowledges, expertise and ideas that need to be continuously combined and re-combined to make decisions and solve problems in complex contexts that need a multidisciplinary and transverse approach. Since all these resources are embodied, are stored in people’s brain, it’s also about combining people and their work in an adhoc way, out of static and rigid structures.

Accumulation is nothing new. It was already there in the industrial economy we’re about to leave. It was about the accumulation of tangible capital. The cost for businesses was impressive but they were able to rely on rules that made it easier to follow the economic revolution that was on its way. Amortization with one this rules. Smoothing costs made investment possible. It’s only an accounting trick that made the spending acceptable on the balance sheet, keeping it nice-looking while lot of money was spent to prepare for the future even if the final cost was strictly the same. The only purpose was to make things acceptable without preventing businesses to invest for their future.

That’s the same with combining. When a department buys a machine they won’t use alone, their is a mechanism that makes sharing acceptable : the allocative key. Here again it does not chance anything to the price but makes resource sharing acceptable.

The economy we’re entering, usually called the knowledge economy, needs, to create value, an intensive use of intangible capital made of people, knowledge, relation or social capital that is key to agile and continuously evolving work. [Read more...]

Enterprise and business first, 2.0 and social second

Summary : Enterprise 2.0 and social business when they become, as it often happens, their own goal, struggle to convince businesses of their significance. The reason is simple : beyond soft and qualitative benefits, the quantitative aspect is often overlook while, in the end, the enterprise has no other purpose than producing tangible wealth. This being the very basis of the concept of enterprise, there’s a need of reconsidering the social phenomenon regarding to this goal. Benefits of these new approaches are obvious in terms of value creation provided the changing nature of our economy that relies more and on people, knowledge and accumulation processes is taken into account. In this context, social and 2.0 speed up the processes that allow the accumulation of knowledge, relationship capital, trust and even reputation. This leads to a conclusion : pushing change in organizations which plan and value creation model does not take this factor into account won’t be more than a pleasant distraction. Organizations need the courage to bring the matter back to its real level where it has to be tackled : the value creation and business model one.

An increasing number of people are working through the world on transforming their organization into a social business or enterprise 2.0. In fact, this is partly wrong. In most cases it’s about making organizations adopt enterprise 2.0 or implement it where it’s possible (even in competition with the current organization), what is not the same thing. I’ve often said what the concept of adoption means to me, easy but fragile replacement for a real reflexion on sense and alignment, so I’ll change and mention this brilliant post from Oliver Marks where Oliver reminds us that “adoption is for kittens”.

Things happen this way for many reasons. Sometimes the people in charge are so passionate that 2.0 and social have become their one and only goal. The rest does not matter as long as many people use the wonderful tool that come with and form communities, regardless to the real business value of these communities. Sometimes the project is managed at a too low level of responsibility, sometimes with a poor sponsorship, so the person in charge does what he/she can with the available means, the provided support and the existing risk of doing too much. We all know what happens in such situations. If, in the first case, it’s only an excess of passion (and passion makes people blind), what causes the second (and may also apply to the first) is that there is no consciousness of the context in which people are operating. Enterprises are enterprises before being 2.0, business is business before being social. If organizations take no benefit from change in the context of reaching their goals, they have no reason to change.

If social and 2.0 forget the reason why enterprise exist, they become their own goal and are, at best, useless. The two above-mentioned cases are perfect evidences : when confined in a stooge role or added to the existing organization without being integrated in real business operations, social/2.0, even adopted, brings nothing. If the enterprise plan is not coherent, aligned with what social can bring, few progress will be made. Of course, many enterprise plans and discourse mention these points but it seldom means that the core of the organization is changing. Instead it’s often a nice making-up on things what don’t fundamentally change.

Don’t you find exasperating that too many discussions and event on the future of business are focused on how such or such technology spreads ? It seems that more and more people do. This revolution is presented as the remedy to all the things businesses suffer from in this early XXIth century. If I compare to this excellent post by Umair Haque, the problem is bigger and the cure needs a deep change of DNA. As a matter of fact most of the businesses that are mentioned in the most aren’t “2.0″ in the traditional meaning. They integrated this paradigm in their corporate plan, their value creation model instead of just trying to make people change the way they work. In this context, social and 2.0 are an important part of tomorrow’s enterprises, but not the only one. But, when applied to good old plans without taking into account new realities at a higher level, they won’t help to avoid the placebo effect.

So…what’s the goal of an enterprise ? [Read more...]

The risk of an internal social bubble

Summary: Is there a risk of an internal bubble caused by the 2.0 and social trend ? Not a vendor bubble, but a bubble that related to the value of internal projects. Why ? : After years of efforts, of investments, the benefices drawn from the projects, even when tangibles and real, are to small regarding to the investments that were made. The reason is simple : new practices are often seen as surface behaviors while they actually contribute to improve the intangible capital of the organization. This has a direct consequence : the organization did not change the way it operates to make the most of this capital, to make this improvement scalable and, consequently, a global investment often produces local results only. The risk of  seeing internal financiers or even employees that didn’t get much from the investment loosing their motivation and retiring from the social thing is actual.

With the coming wave of IPOs that will concern lots of web 2.0 businesses and, most of all, social networking services, many wonder if a bubble is forming. A legitimate concern when looking at some numbers and business models, but it will be rather like a necessary clean-up than the crisis we saw a decade ago. Businesses learned, investors too and, contrary to this time, there are users on the web who are either real customers or products, depending on the business model.

But what about enterprise social players ? Except one remarkable exception, IPOs are far for enterprise social networks players (at least for pure players…the older ones having been public for a long time already). But this is not the matter here. Or only a part of the matter. As a matter of fact, the valuation of these businesses highly depends on the value they generate at their client’s. That’s where things get tougher because they’re not fully responsible for the use that’s made of their product.

That’s where the real question lies : after years of investments in software, in time, in energy to deploy projects that have a great impact on how employees use their time, the time will come when those who paid will ask for account. What was the money used for ? Can tangible improvements be seen ? Even if we forget the tradition ROI model, there will be lots of cases where, beyond activity indicators (provided 50% of the activity don’t come from community managers and advocates), it will be hard to show anything tangible, measurable or even assessable. Or, at least, nothing that will be worthy of the cost (don’t forget there a lots of hidden costs in this kind of projects due to the  uncomfort of the ones, the time wasted by others, frustration, loss of motivation, internal conflicts etc…).

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Information should go from tool to tool. End users shouldn’t.

Summary : Even if there are lots of discussions on new ways of working and the tools that will make it possible, very little attention is paid to the matter that’s being worked and the reason why it’s worked. Employees, who need to gather knowledge, information and people from many tools, still don’t have any melting pot to do their work. As a matter of fact and contrary to the usual way of looking at it, tools and people need to articulate and follow each other around the matter employees are working on rather than scattering the matter between tools. The problematic people are working on is unchanging while the rest varies. What matters is to organize the mobility of objects in the context of work rather than the mobility of employees around tools.

When discussing the way people work (or should work), we use to focus on the organization of work (usages and management), tools (collaborative, participative etc…) but seldom pay any attention to the objects people work on. Thinking that work is all and only about adopting new tools and practices may be too simplistic if no one cares about what needs to be handled, gathers, put together, transformed in the context of work. These things may be of so many different kind that I’ll use the very generic word of “object” to call them. This word also seems very relevant in the context of a concept that is more and more talked about and is really key to understand what employees need to get their work done : “social objects”.

To get their work done, people need to find, enrich, improve, modify, put together, alone or in a collaborative may, “objects” as various as a “case”, a person, a file, a feedback, a procedure etc…in fact nearly any form of information available in the organization, This is one more evidence of the changing nature of work that is more and more about putting knowledge and people together and in context.

The biggest issue in change programs is not always to make people work this way. In fact they’re already doing so,  juggling with many tools and the information they contain, trying to be the middleware between all these things. The problem is that they’re given new tools that are supposed to fill some shortcomings but no attention is paid to how to pu all these new tools and info together. So the amount of useful and usable information can endlessly increase while users are still unable to make the most of it. And the reason is quite simple to get : users are equipped to handle objects in the context of the tool that “owns” them and not in the context of their work. [Read more...]

Optimizing the value of time

Summary : time measurement is a permanent concern for any organization because it’s tightly connected to productivity : the less time needed to perform a task the more productivity and, so, the less costs. That’s not sure at all in the knowledge economy where time and value are loosely tied. If time measurement is not a relevant indicator anymore, the focus has to be put on created value and not necessarily by increasing work intensity which is not key for knowledge worker but rather by working smarter.It will need, among other, to push information depending on its relevance in a given context and a better information sharing, what is the “informational” version of economies of scale.

 

How many times did we hear, while asking employees to change anything in the way they work and collaborate, comments like “we don’t have time” or, from their managers, “how much time will it take to them ? I don’t want them to waste their time”.

The reason ? Time is easy to measure and, once done, costs are easy to infer. In fact…it’s not that easy. What was true decades ago isn’t anymore. While the nature of work is evolving and people have to perform many tasks in parallel, trying to know how much time was needed for each of them is counter productive. What I often explain by “it never takes a lot of time but it takes time often”. While we’re being asked more and more to collaborate, be available to help others, all these activities are seldom taken into account. The consequence is that the role of a given person in getting a result often remains unknown but, even worse, that this person may be blamed for collaborating or helping others.

So, even if we keep up measuring time because we haven’t found another better right now, it’s now obvious that it’s not a relevant indicator to measure the performance of a person, a team or the whole organization.

Let’s also add that if time is not relevant anymore to track costs, it’s not relevant either to track value creation because it’s not proportional with time anymore. In the knowledge economy a lot of value can be created in 10 minutes by solving a problem or having an idea while days can be spent to do something that’s key in a global project but has few value per se.

Recently talking about organizations that want to move away from email to other tools, I heard :

- “they say employees are spending too much time in emails”

- “And they think they’ll spend less time in social networks ?”

That’s true. On the other hand, if the amount of time spent remains the same and, so, its cost don’t decrease, its value can be increased. Like it’s often said, an information send by email is only accessible by its receivers, if shared it becomes a part of the informational capital of the organization, can be reused and make other people save time. An information may be sent to someone who don’t need it while someone else may need it to perform a valuable task.

So, the question is not time measurement but how to optimize its value.

Some ideas ?

• Make people focus on what create value. Making a decision relying on information creates value while searching information to make a decision is a waste of time. It can be made possible by “analytics” that will suggest relevant content and people as well as robots based on “Watson-like” technologies. By the way, it’s impressive to see how many organizations say they have a sharing problem while, before all, they have a search problem.

• Multiply the value of time by making what’s been produced reusable. It will need sharing mechanisms “in the flow of work” as well as generalized capitalization practices.

• To be completed with you own ideas…

Enterprise 2.0 and the measurement hypocrisy

Managers use to say that one can’t manage what is not measurable. We can also add that businesses don’t undertake things they can’t drive. So the conclusion is that businesses don’t unertake anything if they can’t measure the result. It may be a statement of the obvioux but it’s always worth reminding it. Talking about social media, how many projects were left in the waiting room due to the lack of measurable impact. “You know…connect people, share information etc… is very nice, but it’s hard to demonstrate the impact”.

Then let me add a third adage of my own invention : there is not a thing that is harder to measure than those one dont’ want to measure.

Please remind that a social software projet has to be measured at three levels : activity, alignement of contents and business purposes and use of the contents and new “connection practices” to improve organizational performance.

I won’t write again what I wrote in the above-mentioned post, but if a social software project, whatever its nature is, does not bring any change to a few and clear business metrics, that means that either the tools are used on a wrong way or that is was implemented regardless to sense and alignement.

Let’s state it once and for all : everything can be measured. Sometimes in a simple and easily identifiable fashion, sometimes with more complex tools when it comes to back by figures intangible things. All the same, many tools exist to measure how people feel about such or such things, sometimes by conducting surveys, and it’s up to project managers to decide to use them. That’s the way to know if people find things are going better, if knowledge is more accessible, if they feel more engaged, if they find that a better access to their colleagues helps them doing things better and faster, il they think discussions makes the corporate message easier to understand…. For all the rest, direct and quantitative indicators exist.

Knowing that, we may be able to say that, depending on the project, we can measure the impact of social software through business indicators or (sometimes with…) surveys (for what is about subjective feelings…especially in the communication and HR field) and that the issue is closed. Unfortunately it’s not. Not because things are not measurable but because people don’t want to measure them.

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Your knowledge helps you more than your productivity

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.

When does the value of a “social object” have to be measured ?

Let’s be clear, I’m talking about value, not about ROI (although the one is a part of the other) and about “social objects” in the large sense of the word : everything that can exist on a social platform, when using social software. It may be a content, an information specially generated, an information shared from elsewhere, a mark given to any contribution, the contribution to a collaborative work…but also the time taken to do so, the attention mobilized while the person may have had something else to do at this time etc…

Behind the everlasting discussions about ROI stands, before all, the question of the value. Does what is done have value, and what value ? In which ways an information and the time needed to publish it can have any value ? You’ll notice that it turns the ROI question not into something about tools and contents but into something wider made of tools, contents, resources and …the context in which the information is used.

That is a point that is often forgotten : it’s the context that determines values, it’s its limiting factor, more than the intrinsic value of the information itself. An insignificant information may be very valuable at a given moment for a given person even though thousands people will have nothing to do with it. On the other hand, a capital information have no value if nobody uses it. It takes us back to a reflection I’ve had a long time ago about strategy maps : intangibles have no intrinsic value but their value depends on how it’s used.

Talking about an enterprise context, let’s make it clear that “value” means the ability to turn information into money.

So the point, not that trivial, is to know when value has to be measured.

[Read more...]