If it matters measure it. If it’s new build a new frame of reference.

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Summary : When the world and the economy are transforming, the existing frames of references on which be base our thinking and decision making become obsolete. To adapat to their current and future context, organizations not only should have the vision of what they want to become but also implement it in their employees’ day do day work. Not superposing two opposite models in order to let change happen without daring changing the existing but replacing the one with the other. It only makes sense when employees are provided with tools and indicators that favor and reward actions that are aligned with the new model and not with the old one anymore. It also helps to measure the impact of change and measure how far they’ve been. That seldom happens in enterprise 2.0 projects because of a lack of reflexion on new frames of references. Fortunately, examples coming from other fields shows that when one really want to do things well and deep, change is possible and measurable.

A couple of weeks ago I was invited by Danone to talk about their social responsibility program, what made me learn a lot, believe it nor not, in terms of organizational transformation and had many things in common with enterprises 2.0 approaches. How possible is that ? Read what’s coming in the following lines.

Like many enterprises, Danone has understood that the environmental question will be key in its business. It’s already a cultural fact that is not new at all (remember that Antoine Riboud, Danone’s former CEO, used to say that the responsibility of the enterprise did not end at the facilities’ doors…30 years ago) and new an economic fact. There are many chances that, in a near future, carbon will be monetized, so managing it efficiently leads to a competitive advantage.

How did danone do ? First by stating it in its corporate values and project, long before it becomes a trendy topic. Anyone who has a few contacts with Danone knows that concepts such as double project ou triple bottom line are known by everyone and are a share concern. Such an approach need to be embodied and the discourse has to be turned into action. So Danone established a “Nature VP” so the environmental concern has currency at the very top of the organization. But, since Danone is a business and that there is an economic reality behind all that, that people need to change the way they understand and feel what added value means in such a context, they even established a Nature CFO. The logic is obvious : we’re entering a world when things that used to be secondary are becomming essential. So they need  to be integrated into the value calculation system so what was a cost in the previous vision becomes an investment and an opportunity in 2012.

So they invented “green Capex”, some very concretes things to implement to translate this vision and awareness into business. Looking for ROI on a 3 or 5 years scale to take time to learn and not give up too early. But there were no relevant indicators to do that. So they could have come to the conclusion that it was not measurable, what could have lead to the consequence we all know : the project would have become a dead body because no one would have been able to see its impact or one’s personal contribution through one’s decisions, not even the interest of changing one’s thinking and decision making model.

So Danone worked on designing new models allowing to measure the impact of their business in terms of carbon and its short and long term financial consequences. They experimented it on the field, tried to make the most of new data, made an empirical job then tried to model. The organization tried to measure what matters, since it matters. That’s as simple as that.

It also helped to make something else possible : reducing the carbon footprint is now a part of executive’s evaluation and reward system. So everyone, at his own level, in his business unit, in his field is concerned.

But they still were trying to make sense of it for more and more employees. It means that anyone should understand his own role, impact, contribution to the project. It also means that, when facing two possible choices, one making sense in the old paradigm and the other making sense in the new one, they people should make the right one without fearing to put their performance at risk and sacrifice their bonuses.

So Danone co-innovated with SAP to integrate this new model in their business tools, in their production management system. It was all about putting the new model at work in employees’ day to day lives, in the flow of work and avoid schizophrenia. No contradiction here anymore : there’s a single model, a single vision and not an ideal one set on the top of an old operation model that has nothing in common. All indicators, measurement tools, tools supporting processes takes it into account. SAP brought the technology and Danone its knowledge and IP.

Anything in common with enterprise 2.0 projects ?

We can see that the key success factors are quite the same

• Something deeply rooted in the corporate values.

• A project aiming at changing the model and not making two opposite models coexist.

• High level sponsors that won’t run away when change will become too impacting.

• Implementing the new model in the heart of production flows

• If a relevant frame of reference that brings sense, coherence and alignment does not exist, do what’s needed to build a new one.

• Be fully aligned : people work as they’re measured

• Don’t think about technology before it’s needed and limit its role to what’s essential. As Danone’s IT people said “IT should understand how the vision of the business will impact our systems in the next years”.

But are organizations making such efforts for the projects we’re talking about ? No. Obviously because such projects are not seen as transformation ones or corporate level ones. The top of the organization is sometimes informed, sometimes it initiated things, but is seldom deeply involved. Such projects seldom pay attention to production flows either, nothing is done to change the way decisions, arbitrations are make and adding communities to the existing organization is often seen as good enough. And, most of all, nothing is done to improve frames of references, value measurement, defining what’s a cost and what’s an investment in a world that has nothing in common with the one the current frames were designed for, thinking of externalities, long term impact. Of course it needs to break some old assumptions dow, challenge what we used to think was right.

Would danone have been so successful if they have started with their ERP program ? No. Would internal and external communities have been enough, stating that “producing a lot of carbon + green communities too offset = change”. Not at all (in fact these communities exist but were not “created”, they exist because of the corporate DNA and Danone only offered them a digital place to meet). What if each unit has started to invent its own management system, frame, ERP without any coherence at the scale of the organization ? Failure. And if the “carbon objective” have not been included in the way execs are measured and rewarded ? Failure. And if the IT was thinking about tools instead of trying to understand how to adapt their offer to the corporate vision of business ? Failure.

Should I add more…or is it clear enough ?

The truth is that the “care bear approach” to transformation projects is still too heavy. Change without changing. Step back when people may be too annoyed. No economic sense is made of the project. The focus is on willingness and passion without paying any attention to the need for rationality. The structure of the organization is kept untouched. Behaviors have to change but evaluation systems still promote the behaviors that should disappear. No impact on operations because nothing is done to improve the production system…even when it happens by luck, nothing is done to measure what really happens. In short, everything is done by halves and everyone is surprise that the promise is not delivered.

After all, “like father, like son”. Danone is already very advanced in Social Business (both “social business” : the “2.0” one and the social and environmental one), without any surprise. They started from the corporate project and values, worked on the human side, on HR, behaviors and management for a couple of years before starting to do anything with software. “Networking Attitude” is one of their management cornerstone, a training and change program, a value that’s assessed when people are hired. It’s one of the only company where I saw the software coming years before the project, where HR took the lead and told IT what was essential in terms of adoption, sense, integration in the workspace…so the IT could deliver more than a tool : a valuable service.

Two more points other companies should learn from :

– in this co-innovation project with SAP, Danone invested its IP, a unique asset that’s the result of years of work on the impact of C02 on their value chain. That did not make any problem to them : what matters is to go fast, create a competitive advantage and stat ahead. No sharing this IP with SAP would have caused delays, even failure. And if other organizations ask SAP for a similar system it’s OK…Danone will stay ahead because they moved first. As Danone’s speaker said “what matters is not the copyright but the speed, the ability to influence and change practices”.

– at the beginning, according to the well known “aim the moon, even if you miss it you’ll find a star” adage, Danone stared with foolish objectives. In 2008 they wanted to reduce their carbon footprint by 30%. It was a very high objective so people understood they had to be ambitious, try new ideas, make the most of any opportunity and not content themselves with “good enough”. Result : as 2012 is beginning the 30% are about to be reached !

Lot of work ahead…