Enterprise 2.0 does not tolerate halve measures

Summary : many organizations have undertaken a transformation process. Each one is moving forward at its own rate, according to its ambitions and fears, to what seems possible and what they don’t want to tackle. But for what results ? As we may fear, a recent McKinsey study shows that such programs don’t tolerate half measures.. As a matter of fact, organizations that tackle organization issues and business processes make much more out of their projet than those who stay with the soft, community based and out of the flow of work approach. Even worse, the latter not only don’t progress but slowly regress as lack of sense, of alignment and coherence discourage even the more engaged zealots.

I’ve been observing many organizations on they journey to new forms of organization, no matter if it’s called enterprise 2.0 or social business, and the least I can say is that some of my early convictions are being reinforced day after day. Don’t worry, this is not about any outstanding disruptive concept or awesome discovery, but only common sense that can apply to any project. But, on the other hand, the only outstanding thing about this is the fact lots have believed and made others believe that so basic principles would not apply here for such a long time. A little but like if Boeing or Airbus started designing a new aircraft saying “for this one we’ll consider that gravity does not exist”.

In other words

1°) It’s easy to start with small shiny projects and end with a nice end result even it if means to make things more attractive that they actually are.

2°) Counting on passion and keen interest help doing this easily. But the further you’ll want to go, with a greater ambition and and wider scope, the more a rational approach focusing on operation efficiency will be needed.

3°) If we compare the progress curve with a hill to climb, a time comes when passion and interest aren’t enough. Even if they can conceal the lack of work on sense and alignment at the very beginning, adoption logics show their limits one day or the other. Something more is needed to climb the last mile.

3°) Talking about sense and alignment means making this new operating model logical, understood, coherent in the context of work. Making it structural. This can’t be done without rethinking management practices and making business processes evolve, what’s been a taboo for a long time even if things are slowly changing.

4°) Making a break in the middle of the journey is not possible. No one can say “I’m going to this point but not further…I don’t want to handle such or such kind of issues”. At this point the comparison with a hill is quite relevant : who stops on the middle of the way does not stay immobile but regresses. As a matter of fact, even the more engaged zealots are returning back on earth, tired of swimming against the current, adoption behaviors that go against the very nature of their organization and even against their own interest. So they end in letting things go.

In short, one can install any software, fall into the community illusion, thinking that making people participate in addition to their work in above the the flow communities will be enough. If nothing is done to proceed to the newt next, interest and motivation will decrease because of lack of coherence, direct benefits.

I’m even ready to bet that many of yesterday and today’s so-called successes will be only souvenirs in one or two years. When the community bubble, disconnected from the reality of operations will burst, when programs relying only one people’s willingness and passion will fail and, with them, window-dressing projects.

Guess what ? It’s more or less the conclusions of a recent McKinsey study. What does it say ?

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Enteprise 2.0 : real benefits for whom makes efforts

McKinsey recently issued a new report in the line of what they already published these last months. It’s about the benefits enterprises can take from enterprise 2.0. After having focused on what makes successs possible, McKinsey is now starting to evaluate concrete beenetids. As often, I’d say that those who are closely following the “E2.0 state of the art” won’t learn anyting new here but will the the confirmatin of what manyt experts already wrote on this subject. The main interest, once again, is the McKinsey label that will help internal evangelists to convince skeptical managers.

I let you read the report, there is nothing to add to it. Just let me bring a few insights.

- some enterprises see significant benefits. That’s an essential point without which all our arguments are pointless.

- enteprises that see the more tangible benefits are located…in India, then in North América, Europe and Asia being left behind. I don’t know India at all but this ranking is the evidence that culture really matters in adoption and change processes.

- the most obvious benefits are about access to knowledge and experts. This seems to be consistent with process socialization and problem solving as a routine

- benefits are more easy to emerge in companies that generate more $ 1 billion revenue. Certainly because large businesses are those that developed the more structural inertial throughout decades, so the place where there are the most wasted or unemployed resources. Another explaination coild be that large businesses often explore new things long before small and medium ones, so they begin to see benefits first.

- in order to see benefits, social media have to be fully integrated into worklows and people’s daily activities. I would not like to be seen as endlessly repeating the same things, but I’m convincend that this point is largely neglected. Enterprise 2.0 is not about bringing conversations into the digital workplace without any link with daily tasks and activities but to focus on these activities. Implementing such a project without asking the question of rethinking what people are doing in their daily routine, to bring some existing information flows to new medias is a guarantee of failure (or of no success). Neglecting this point causes situations when community managers push information, hoping someone will read it, waiting for (rare) reactions to come, wondering why conversations don’t start. This is very far away employees’ actual situation, who have nothing to do with conversational communities that don’t help them in their day to day job. 75% companies who see tangible benefits integrated social medias in people’s “day to day work”. Don’t try to find anywhere else what is the difference between success and failure (or maybe we don’t have the same defintion for success).

- making executive use social media tools is essential. Logical since we’re talkong about daily business tools. There are fields where community managers can’t replace those who have an operational legitimacy. If have more insights on this subject, which I’ll share in a future post.

- 2.0 projects go beyond the enterprise’s walls. There is no internal or external logic anymore but a an “extended company” scope from the start : employees, partners, clients are concerned. That confirms the social CRM trend and a new scope for stakeholders.

- to my surprise, innovation is not one the domains where significant benefits were seen, even if it has been one the enterprise 2.0 discourse’s cornerstone from the start. Do we have to make the conclusion that the 2.0 approach is not relevant to innovation, that open innovation logics are very hard to implement because of their internal impact ? Maybe non-specialized approaches, tools and adoption methodologies are not enough ?

- this report left me unsatisfied. Ok there are tangible benefits, but we may expect to know more, how do they materialize, how they are measured…

To  be continued…

Will you have to throw your marketing outside of the window ?

McKinsey recently issued a report entitled Managing beyond web 2.0 which is about constraints businesses are meeting in a connected world. Those who relied on the title to pounce on it may have been very disappointed since it’s more about the realtionships between businesses and their ecosystems than about internal management issues. But that’s not because I didn’t found the title relevant that the content wasn’t worth. Those who are used to the subject may not learn lots of things but the McKinsey stamp will attract conservative people that are often reluctant to web 2.0 things and will help others to provide their superiors with a document that will be considered as a more trusted source than a blog.

The starting point is known by everyone. In a world that gets more interconnected everyday, consumers do things on thgeir own that are totally out of marketing people’s control and do not always please them. They make their own opinion on a produc, give pieces of advice the one to the other, share their positive and negative feedbacks, propose ideas to improve products or to conceive new ones. Consequence : some say nice things about a product, passionate communities are forming. But the opposite also happens.

The truth is that marketing depts do not control what’s said about products anymore. Worse, people don’t listen to marketers anymore. Hence the consequence (hastily ?) drawn by the report : marketing is being replaced. Consequence : rather than keeping pushing messages, businesses should listen. That’s not without reminding me of the community management debate. Those who are passionate about this issue should read how Xavier Comtesse revisited the value chain, taking into account the 2.0 paradigm and the concept of “consumActor” (detailed here) and very well illustrated by this chart.

Valuechain20

I won’t add anything about ideagoras, crowdsourcing and similar things that have already been discussed a lot on this blog and all over the web. But it’s obvious everything is converging. One more example of business socialization.

McKinsey proposes a pragmatic model judiciously called LEAD (listen, experiment,apply,develop). By the way, it does not bring anything new to the abundant litterature on the topic. More, it has already been implemented by many businesses (P&G for instance). At the end, by pointing at marketing’s weaknesses, it’s the need for a re-invented innovation that’s highlighted.

Beyond my disagreement on the title, I don’t thing that the conclusion that has to be drawn from the report is the pointlessness of marketing. Marketing only has to be rethought regarding a value chain that should be coherent with today’s business context and highly involved in innovation processes (and idea sourcing) which are the the fuel that will power companies in the upcoming years. This is the needed shift from a logic of local push to a global pull one.

As for the conclusion that suggest businesses have to get prepared for web 3.0 I let you make your own opinion. Nobody knows how the future will look like, and since businesses are only starting to understand how to embrace web 2.0 without mistakes and unnecessary worryings, I find the injunction irrelevant, premature and superflous.

This document is not about internal issues. But drawing its consequences in terms of management would be an interesting exercise…and I’m sure McKinsey have its ideas about that.

Socializing your decision making process

A good example of process socialization is about decision making. A few weeks ago I read this interesting paper from Olivier Sibony (Associate Director at McKinsey). Since the article is in French I hope Google Translator will provide you with a good english translation.

What is it about ?

Making the right decisions is key to be a successful business. Nothing new here. But Olivier Sibony provides us with interesting numbers.

. Between those who have used the analysis tools the most advanced and recognize those who were far away, the performance gap is important: 2.7 points in return on investment between them. But those who have followed a process of rigorous and objective decision showed a much higher performance: the gain is 7.3 points ROI ! In other words, there are three times more to gain by using a method of decision-making!

The impact of a good decision is obvious and its ROI clear enough to justify enteprises invest in what makes it possible. It would seem obvious that the solution is to be brought by analysis tools and the definition of relevant indicators. Nothings social here. At first sight…

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McKinsey identifies 6 key sucess factors for enterprise 2.0

McKinsey recently issued a report on enterprise web 2.0 projects which identifies what they think being the six success factors for such projects. Before reading what follows, I suggest you to read what they were saying about that a few months ago in order to get some distance.

Context

Companies has been trying to optimize their transactional processes (ERP, CRM) for a long time. Now, we’re getting close to the end of what these logics can bring and the next challenges are about collaboration and participation. In this approach, many businesses tried to import web 2.0 tools within their organization, hoping they will “de facto” bring the same resultats as those we can see on the general public web. Most of times they failes, for two reasons. The first is the uncomfort of managers toward the potential risks implied by the needed changes. The second comes from the fact managers don’t know how to encourage and make possible the form of collaboration that can create value. Whatever, companies will persist and this market will experience a significant growth in 2009.

According to me it’s a classical analysis of the current situation and issues what does nothing but confirm what many experts have been saying for years. What is good it that somethings things are most likely to be heard when the come with a McKInsey logo.

Technically speaking I would make a reservation about the first chart of the report. According to me web 2.0 is also about transactions, but a different kind of transactions than those that were taken into account before. Maybe it would be useful to qualify more this evolution of the nature of transactions to have a better positionning for this kind of project.

For what’s about companies’ perseverance, I think it’s unavoidable. After having focused on optimizing processes, new performance pools have to be found elsewhere and, I as wrote earlier, the current crisis is more about management and business models than purely economic. So, finding new ways of operating in alignment with tomorrow’s business models is strategic.

Second reservation : in their web 2.0 tools chart, all of them are postionned as being broad communication or creation tools but social networks which appears as being about social graphing. I think we have to get rid of the common general public vision of social networks to make them used to collaborative and intelectual proximity analysis. Their purpose may not be to link people but link people through information and information through people.

Whatever, here are my thoughts about this 6 success factors.

Quoi qu’il en soit McKinsey a identifié six facteurs de succès pour réussir les projets web 2.0 en entreprise. Je vous laisse lire le rapport pour prendre connaissance de leurs analyses, voici le regarde que je porte dessus.

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Taking the most of intangible assets creates strong competitive advantage

A glance at McKinsey’s to read one of their latest production : “Using Power Curves to assess industries dynamics“.

A survey based on  150 companies revenue shows that performance doesn’t follow a bell curve but a “power curve” that shows that most companies in a given indistry are above the average. What, said differently, means that few leaders take the biggest part of he revenue and only leave crumbs to the others. Said my way it means that many companies are failing to keep up, what is not an issue in a context of growth when it’s always easy to make feasts with lots of crumbles but is worrying in the current times.

One interesting point of the survey, even if thinking it explains everything would be naive, is about the exploitation of intangible assets in a given industy. In this case the curve is more pronounced than for industries using more conventional assets.

Power curves are also promoted by intangible assets—talent, networks, brands, and intellectual property—because they can drive increasing returns to scale, generate economies of scope, and help differentiate value propositions.

This survey is sectional. I would have liked to know what makes the diffrenece inside a given industry, that’s to say if the impact of intangible assets was likely to be as imporant in “tangible assets” oriented industry  where immaterial capital would have (or not) a major role if it was more taken into account.

Enterprise 2.0 : success comes from organizational approach

This is what to conclude from this McKinsey Survey (by the way, it confirms what I’ve been thinking for years) that tries to bring us a view of the state of the art in enterprise 2.0 adoption. At first sight I really didn’t like the title “building the web 2.0″ enterprise because it would suggest tools are central in organization. Fortunately, their survey shows it’s really the opposite.

First conclusion : bringing web 2.0 within the enteprise is not a fad but a heavy wide-range trend : internal, external, variois tools, wide perimeters of experiment. Second conclusion : promises are not as easy to be delivered than many thought.

It’s not a suprise for me and it matches what I observed. Two kind of companies are emerging : those who had a tool-centric view and thought the rest will follow, and those who used tools as pieces of an organization change process. [Read more...]

Enterprise 2.0 : the time when Mr McKinsey, The Geek and Mrs Smith seat together

One of the biggest issues encountered in the the first “enteprise 2.0″ projets and, globally in everything that aimed at changing in any way the people work according to current issues, was the fact the interested parties where all going in their own direction without taking the others into account. Some thinking the others would naturally know where to go, some thinking they weren’t heard by the others.

It seems that this time will soon be over, if I rely on my own observations and that whe can read between the lines of the Hype 2008 Gartner report on “web and users interations technologies“.

As a matter of fact, McKinsey, the Geek and Mrs Smith decided to talk to each other.

What I am talking about ?

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Organizing for value

One more interesting report at McKinsey’s : this one is titled : “Organizing for value“. You will learn that

- the traditional divisional structure is not relevant to create value

- companies will have to fav our long term value creation instead of focusing on achieving short terms objectives.

- in order to  do that they’ll have to identify “future” value

- this implies a thiner granulity in organization and decision making

- where companies used to have 4 or 5 divisions, 50 “value cells” would to a better job.

Quite interesting because this new awareness of the “short-term mitake” will help justifying, financially, adequate organizational answers. The fact decision making is moving closer to the ground, in smaller structures which are now considered as value creator, that they were not in a wider structure in which their purpose may not be profitable, is also the proof things are (slowly) going the right way.

Interesting Report on IT depts role in value creation

The CIGREF (french big companies CIO club) issued and interesting report co-writen with McKinsey. Although it’s writen in French, [ now availabe in english] I would like to share some points with you. And, if ever you know someone who can make a quick translation for you I think it’s really worht.

- IT doesn’t impact directly value creation

- value doesn’t reside in tools but in their use

- as a result, IT depts don’t have to provide people with tools, hoping it will meet their needs and they’ll manage to do something efficient with it, but have to fulfill people’s needs.

- IT depts can’t create value by themselves and on their own, they have to co-create it with business managers.

- by the way, IT’s impact on value creation has to be measured by business indicators and not by IT ones.

That reminds me of the debate on enteprise 2.0 ROI which, according to me, in neither soft nor qualitative but can be well and truly measured through the performance of the business processes it supports. For example, the report quotes a case study from AXA ( a big insurance company) where results are measured through Balanced Scorecard indicators which reminds me of my series about strategy maps.

If this reflection can apply to all IT issues, it’s obviously relevant when discussing social sofware issues.

Whatever, the end of the “one size fits all” logic is coming closer et the time when IT depts role will be to provide people with the tools that match their needs instead of providing a standardized offer which makes IT people feel comfortable but doesn’t help people to be efficient in their day to day job. No more “try to do what you can with what we give you” but “Why can I do for you ? What are your needs ? Fopr what purpose ? ” instead !

It inspires me another reflextion on the very notion of goal. If we consider the IT activity is a goal in itself, the current way of doing things is logical : rationalize costs, tools, providing one unified offer. But if we consider it has to serve corporate performance as a whole, measuring its efficiency according to its own results is contrary to any business efficiency approach. By the way, it takes us back again to the discussion on “local optima vs. global maximum” that companies will soon have to deal with. But we’ll be discussin that further in a few weeks…

However that may be, the report can be downloaded here.