Cloud Citizen

What if you had a socially constructed operating manual that reliably delivered sustained strategic superiority?

Of all the thinking exercises a company goes through, the most important concerns that which sustains the competitive advantage that keeps its customers loyal and prevents them defecting to rivals.

So, if a company’s strategy is its life-support system, the most important question any business must answer every day is, is our strategy working?

It is said that a strategy must become an organisation’s way of life, but of course this is so only if the answer is yes.

If your own life depended on it, you probably wouldn’t buy a life-support system that didn’t come with an operating manual. So, why wouldn’t you aim to develop one that provided a better way of building more robust, responsive strategy for your business?

Likely as not, in any business, to achieve any of the array of possible favourable outcomes, effective strategy formulation will no longer be a one, two or three-man job, because the world is changing and the tools are here to enable a better job to be done collectively.

A company must develop a way of giving shape to its strategy that makes sense from the sum of the intelligence and experience available to it, not just a sub-set.

By engaging social technologies in this pursuit, many minds may make lighter work of developing new opportunities, because each has a perspective and critical sensitivities no other shares. But, collectively, they will only transform the scope for better strategy formulation if their understanding of the context in which they are making their contribution is common and shared.

As that is not the case in an overwhelming majority of companies, this is likely only to happen best when organisational learning, focused and directed for this purpose lies at the core of effective strategy formulation.

Community learning is a powerful force. There is energy to be tapped here, and common purpose and interest, because it protects livelihoods and provides opportunities for personal growth.

More importantly, when everyone is learning together, the most compelling purpose for applying that growing intelligence is to focus on strategy, because the articulation of strategic need paints a shared destiny and reveals the competencies on which the future organisation must itself be built.

As it is the stone on which the attainment of factors critical to success will be built, the explicit recognition of required competencies will come to shape the organisation itself. It will focus the learning of the learners.

Given a new, shared sense of where it is heading, the organisation has many new choices.

What delivers operational excellence to the business but does not deliver explicit strategic advantage may no longer need to form a core part of its operation. That which is not strategic may be achieved and managed in other ways, perhaps even outsourced.

Better knowledge and awareness improves focus on what matters most.

Much less a document than frame of self-constructed understanding, the operating manual for developing better strategy is built through the active engagement of precisely those sensitivities and insights that enable the organisation to learn from itself, that keep it in business and grant it the strongest possibility for sustained strategic superiority.

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Social business re-engineering: what is your strategy?

Over many years, companies have made major investments in technology to give their businesses a distinctive edge, a new competency that competitors find it hard to match.

Now, rather than the implements themselves, it may be the way which in certain instances cheap, generic tools of shared, social creativity, paid for by subscription, are used that provides the competitive advantage. As Michael Dell claimed for his Dell Computer back in 1998, some may be able to substitute intellect for inventory.

The tools place emphasis back on the inventiveness of human beings working together and their combinations of unique competencies that are valuable, rare, and difficult to imitate, and can not be substituted by other resources.

The social technologies and the flow of human capital that is their currency will unleash a wave of change within organisations and the way work is done, the like of which we have not seen since, as Harvard Business school professor Gary Hamel put it in mid-2011, the pyramids were built.

Hamel suggests one of the next major waves of innovation will be in management itself. His The Future of Management remains essential reading on this subject, despite having first been published in 2007.

It looks as if we will see the age of social re-engineering and the evaluation of a new ROI, the return on intellect, or on innovation or imagination, take your pick.

It is clear that not everyone will benefit from this.

The 2009 movie, Transcendent Man, about technologist and inventor Ray Kurzweil, suggests that as we build the next technologies with the ever-improving tools of the present, progress is exponential and may lead to humans encountering the “singularity”, an age in which humans and machines find integration and humans may be able to live forever. He puts this date at 2045.

Clearly, better enabled and more effectively enabled teams of human beings will contribute to this acceleration, which will influence the ways in which companies select and reward their teams. Effective knowledge contributors are likely to be high on their pick lists.

Nevertheless, how your workers are engaged, what they know and how that information is brought together in the creation of sustainable businesses which have the potential for creating competitive advantage is likely to become a defining differentiator.

Achieving the organisational agility future competition will demand is in large part about removing factors that impede it and reinforcing those that enable it.

The future differential is likely to be found in how distinctively a company can fashion its human response to keep it ahead. Currently, however, rigid hierarchy, in a world that favours networks, geography and 20th century management models are the major obstacles in many mature organisations wrestling the challenge of nimbleness.

Social technologies enable people to come together to dream up ways of doing a better job. How this is done itself creates a new kind of competency.

They make a team of committed people better attuned to spotting opportunity and they can help to facilitate a state of permanent and ready inventiveness.

Within any business, there are many layers of intelligence that remain unused and much game-shaping tacit knowledge to be drawn on which has to date has been underexploited.

When many organisations continue to retrench those with long-established workplace knowledge, this may come to be valued more highly when socially constructed knowledge itself is valued at premium.

This blog and the conversation it aims to become part of focus on organisational activities that can lead to new future states for businesses that wish to stay abreast of the change.

It looks at innovation as enabled by a collaborative "Enterprise 2.0" approach to its management. Enterprise 2.0 presupposes that an organisation’s forces for innovation can be more effectively harnessed, even across distance, by stimulating the creative collisions of tacit knowledge and insights of those who work within an organisation.

It looks at agility, and the future being about networks of competencies coming together in endless new and unprecedented reconfigurations to create and capitalise new learning and knowledge.

It talks about the need for purposeful organisational learning that ensures opportunities to share and learn are built steadily through networking the insights of those who do the work, where it happens.

One purpose of such learning will be to identify both ways in which work can be done better, where businesses are weak or vulnerable and to focus insights at the interface of change itself.

This has some profound learning for management, but once organisations find this is good for business, it will drive further exploration in every field of commercial endeavour.

And because all business models are vulnerable to the forces of time, it will expose those whose duration is up, just as part of the natural cycle of creation and destruction always has done.

Hierarchies are out, learning networks are in, so it’s time to get with the new ways of doing things. For some, it may prove easier said than done.

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Social technology in the workplace: Ten principles guiding the value of social knowledge creation in building organisational capacity

Business models have a life cycle: they age, become redundant and die. It just happens faster these days.

Indeed, as Harvard Business School professor Gary Hamel says in The Future of Management (2007), sometime over the next decade your company and its model will be challenged to change in a way for which it has no precedent.

The change is coming everyone’s way, so you might like to contemplate the following.

1. The only truly sustainable business is one that is always competitive, always learning and agile, no matter what changes around it; those with the best social internal feedback loops for what is happening around them are likely to be the most responsive to the factors demanding change in the way they do business.

2. Insight borne of the tacit knowledge of workers is the source of all business breakthroughs. The capacity to harness it and employees’ inventiveness repeatedly in building a stronger business will be tomorrow’s critical differentiator between competitors.

3. Tomorrow’s most successful organisations will build human capital by ensuring that the sum of their people’s intellectual capacity is engaged and geared for continual knowledge development and business improvement in the face of inevitable market disruption. The internet is dangerous, it’s never wise to bet against it.

4. Social technologies provide channels through which an organisation’s internal conversation can be cultivated to build learning and unleash new thinking and inventiveness across the enterprise.

5. Effective social knowledge creation strategies will drive the value of these channels in building organisations’ resilience and responsiveness to change: the most important thing is to have a strategy.

6. Social knowledge management can invoke new learning when and where it matters most and has the greatest impact, and that is where the work is being done and change is experienced first-hand. Much of this may presently be invisible to leaders.

7. Knowledge can be triggered and new learning built by seeding the conversation at these interfaces to stimulate discussion and capture insight. Because it is real-time and direct, this may be the most potent workplace learning opportunity we’ve yet seen.

8. When the conversation that guides social knowledge management becomes a driving creative business force, it will reshape the organisation itself and inform decisions about who gets hired and for what they are rewarded.

9. In companies that outperform the change that confronts them, the conversation that drives effective social knowledge creation will become an increasingly important, differentiating resource and a target for more focused management attention and investment.

10. The evaluation of companies’ effectiveness in harnessing social knowledge management’s forces for change will become an important barometer of organisational well-being and of future prospects for investors and analysts alike.

So far, we’ve seen the tools of the social media revolution manifest most publicly as Facebook pages and Twitter feeds. Tomorrow, their forces will be transforming the way knowledge is shared throughout the organisations in which we work.

This change will be fast and thorough. How prepared is your organisation? Are your business models robust? How effectively will your strategy unfold in the face of fundamental, discontinuous market change? Let me show you a strategy to strengthen your business against what is coming.

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Engage, elicit, edit: The why of editing for strategy

In any business, there is a surfeit of ideas which can be applied to advance the organisation, but typically if they are not gathered in a methodical fashion, they go by the wayside.

Similarly, there is a stock of tacit workplace knowledge, which, if never translated into action, gets lost as those who hold it leave the organisation or their enthusiasm to share it isn’t encouraged.

Yet it is in the meeting of these ideas and knowledge that lie the seeds for innovation and corporate advantage.

The tools now exist to bring this knowledge out into the open, for it to be shared and to be fashioned into workable learning.

When driven for purpose, and with care, the social conversation within the organisation will become the vehicle by which the company advances to make strategic gains.

The problem is that unless it is given editorial shape and form and directed toward the explicit purposes of advancing the organisation’s learning, it will underperform its potential.

In most instances, it will be completely wasted.

It is extremely hard to concentrate and learn from material that hasn’t been edited with the learner’s needs in mind.

And learning that isn’t rigorously documented and made available, permanently, tagged and indexed for searching and reference organisation-wide will suffer the same fate.

Strategic learning overcomes these problems because its job is to apply strict editorial processes that make sense of the disparate strands of contribution.

More importantly, it drives the conversation to engage others in its purpose with the explicit mission to accelerate learning.

And in doing so, it provides the opportunity to intervene with additional external materials driven with purpose to stimulate engagement, reflection and discussion on the topics on which the organisation needs most to focus and to learn.

Strategic learning is a dynamic process, whose work is never complete because each leap of insight is exponential and designed to build on the last.

Done well, it will shape what the organisation becomes and who it hires, what they contribute and how it continues to learn.

But, most importantly, it focuses organisations on what they must get right, if they are to achieve the agility repeatedly to outperform their competitors and overcome the challenges of adverse market circumstances.

What is Enterprise 2.0?

The term “Enterprise 2.0” was coined in 2006 by then Harvard Business School professor Andrew McAfee. Its proponents advocate the use of Web 2.0 tools - blogs and wikis, and so on - as vital channels for unleashing creativity and innovation within organisations.

The traditional barriers to innovation result when people with ideas are hindered by distance or hierarchy, or simply by not knowing who is whom, who is qualified, interested or accomplished in what, or even that each other exists.

Yet through blogs and wikis, McAfee and his supporters proposed, an organisation could open up and enable those within to identify and reach each other and thereby capitalise on the talent, wisdom and “human capital” – the specialised sum of personal knowledge – of those within the firm, wherever it could be found.

Enterprise social technologies, McAfee and others argued, create the sort of structured platforms that foster innovation by reducing the internal barriers faced by would-be innovation creators. And they could be effective in capturing precisely the “emergent” organisational learning that results from change.

Enterprise 2.0's applications for driving organisational learning, agility, adaptability and sustainability are many. These ingredients and their wellspring – the underlying, under-used tacit knowledge to be found in a majority of workplaces – are inseparable, but also the juice fuelling the future’s most creative, responsive and inventive enterprises.

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Social re-engineering: what is your strategy?

Over many years, companies have made major investments in technology to give their businesses a distinctive edge, a new competency that competitors find it hard to match.

Now, rather than the implements themselves, it may be the way which in certain instances cheap, generic tools of shared, social creativity, paid for by subscription, are used that provides the competitive advantage. As Michael Dell claimed for his Dell Computer back in 1998, some may be able to substitute intellect for inventory.

The tools place emphasis back on the inventiveness of human beings working together and their combinations of unique competencies that are valuable, rare, and difficult to imitate, and can not be substituted by other resources.

The social technologies and the flow of human capital that is their currency will unleash a wave of change within organisations and the way work is done, the like of which we have not seen since, as Harvard Business school professor Gary Hamel put it in mid-2011, the pyramids were built.

Hamel suggests one of the next major waves of innovation will be in management itself. His The Future of Management remains essential reading on this subject, despite having first been published in 2007.

It looks as if we will see the age of social re-engineering and the evaluation of a new ROI, the return on intellect, or on innovation or imagination, take your pick.

It is clear that not everyone will benefit from this.

The 2009 movie, Transcendent Man, about technologist and inventor Ray Kurzweil, suggests that as we build the next technologies with the ever-improving tools of the present, progress is exponential and may lead to humans encountering the “singularity”, an age in which humans and machines find integration and humans may be able to live forever. He puts this date at 2045.

Clearly, better enabled and more effectively enabled teams of human beings will contribute to this acceleration, which will influence the ways in which companies select and reward their teams. Effective knowledge contributors are likely to be high on their pick lists.

Nevertheless, how your workers are engaged, what they know and how that information is brought together in the creation of sustainable businesses which have the potential for creating competitive advantage is likely to become a defining differentiator.

Achieving the organisational agility future competition will demand is in large part about removing factors that impede it and reinforcing those that enable it.

The future differential is likely to be found in how distinctively a company can fashion its human response to keep it ahead. Currently, however, rigid hierarchy, in a world that favours networks, geography and 20th century management models are the major obstacles in many mature organisations wrestling the challenge of nimbleness.

Social technologies enable people to come together to dream up ways of doing a better job. How this is done itself creates a new kind of competency.

They make a team of committed people better attuned to spotting opportunity and they can help to facilitate a state of permanent and ready inventiveness.

Within any business, there are many layers of intelligence that remain unused and much game-shaping tacit knowledge to be drawn on which has to date has been underexploited.

When many organisations continue to retrench those with long-established workplace knowledge, this may come to be valued more highly when socially constructed knowledge itself is valued at premium.

This blog and the conversation it aims to become part of focus on organisational activities that can lead to new future states for businesses that wish to stay abreast of the change.

It looks at innovation as enabled by a collaborative "Enterprise 2.0" approach to its management. Enterprise 2.0 presupposes that an organisation’s forces for innovation can be more effectively harnessed, even across distance, by stimulating the creative collisions of tacit knowledge and insights of those who work within an organisation.

It looks at agility, and the future being about networks of competencies coming together in endless new and unprecedented reconfigurations to create and capitalise new learning and knowledge.

It talks about the need for purposeful organisational learning that ensures opportunities to share and learn are built steadily through networking the insights of those who do the work, where it happens.

One purpose of such learning will be to identify both ways in which work can be done better, where businesses are weak or vulnerable and to focus insights at the interface of change itself.

This has some profound learning for management, but once organisations find this is good for business, it will drive further exploration in every field of commercial endeavour.

And because all business models are vulnerable to the forces of time, it will expose those whose duration is up, just as part of the natural cycle of creation and destruction always has done.

Hierarchies are out, learning networks are in, so it’s time to get with the new ways of doing things. For some, it may prove easier said than done.

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Conversation as organisational capital

Six key points to summarise what follows:

• All business models will ultimately collapse if they are not managed to adapt to change
• Effective social knowledge management will be the key to continued business agility and competitiveness
• Companies are vulnerable when they don’t know what their employees know and can contribute to improving a business
• Employees are typically engaged less than effectively in strengthening the businesses of their employers
• The health of the conversation that underpins the sharing and building of organisational knowledge must be managed well
• That conversation should be steered and injected with timely materials to stimulate productive and focused new learning

The social conversation is key
Absurd as it may seem right now, in the immediate years to come, decisions of how to invest in the quality of the conversation taking place in an organisation may become among the most important a company’s management will make.

Riding on the back of technological progress, the application of social tools and enabled networks of individuals will focus the sharing of ideas at great speed.

This will build new organisational learning, which will itself in turn accelerate the pace of discontinuous, disruptive, competitive change.

In the face of such change, all business models are ultimately vulnerable. The question is not whether your own will collapse, but when, how and by whom it will ultimately be proved to be fallible. So, how you manage your organisation’s conversation and the human capital it builds and embodies will shape what your business becomes.

It will inform your understanding of what is changing around you, the risks you take and how you respond. And it will determine the nature and extent of the organisational learning and knowledge you either cultivate or forfeit.

How you manage the conversation will also influence who you hire – or who else you engage in it which will then feed back directly into the quality of the organisation’s conversation as a whole because the health, vitality and effectiveness of every node on the network will affect its dynamics and overall learning potential.

Knowledge may be the only resource not depleted but grown through use and sharing.
That knowledge is built by sharing means that social knowledge management will become a primary force used in engineering smarter companies, and the platform on which the most agile and responsive businesses will be sustained. It is a new form of internal communication.

So, here are some principles for thinking on the value of the social knowledge management strategies to be applied in any workplace.

Imagination and tacit workplace knowledge are the source of all business breakthroughs but also under-utilised forces in a majority of organisations. All companies contain much more knowledge than they ever put to use.

The problem is that the dots are rarely joined up well between the decision makers who need the knowledge and those who hold it, especially when they are separated by hierarchy or distance, or by not knowing who is who.

If a strategy fails, it will typically be a result of this gap.

But because it is tacit, not explicit, without exploration, no one knows what knowledge is not being used or what is available.

The relentlessness and unpredictability of change means no business can afford to waste a jot of intelligence because the rate at which companies learn and their employees share and build unique knowledge may be their only way to carve out a sustainable advantage.

In organisations distributed by location, potential innovation creators who once could not identify each other or communicate now can because social technologies can break down the barriers to such collaboration and innovation.

Innovation most commonly results and is built through learning from collisions with others from diverging disciplines and with different worldviews. But beyond the knowledge that their hires can fill a given slot on the organisation chart, most employers don’t know what their people know, who they know, or what else they can bring to their work.

They don’t know who can or will collaborate, and how, or of the full range of ways in which an enhanced contribution can be harnessed.

For their part, employees can’t contribute fully if they are never exposed to better information about the company they work for, or are never engaged effectively in building the strength of the critical success factors on which its prosperity depends.

Contribution and opportunity are stunted when information and knowledge is neither forthcoming nor sought. But the opportunities lie in this critical gap because it is the key to success in confronting change.

No one can predict where important learning will come from, until they get busy on building it. So, how you engage your people and what you ask them to think about will shape what you get back.

This means that what is injected into steering the conversation to provoke new thinking matters too, as nothing is more effective than triggers for learning pulled at the right time and in the right place.

And there is a critical right place: it is where the work is being done and where the face of relentless change is being encountered.

This is a great opportunity for creating an altogether improved, more effective workplace.

As Harvard Business School professor Gary Hamel says in The Future of Management (2007), sometime over the next decade your company will be challenged to change in a way for which it has no precedent.

Only more minds more sharply focused on the critical issues facing a company will deliver an organisation better equipped to respond to such tumultuous change.

The agile business you want can be built out of the conversation you run, and how that conversation is built for effective social knowledge management will be critical.

But how do you execute? What you need is a plan and a strategy, and that is what I offer.

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McKinsey and Web 2.0's payday

In a piece published in December 2010, entitled, The rise of the networked enterprise: Web 2.0 finds its payday (registration required), management consultancy McKinsey concluded a report on its survey of top United States companies on the subject of Web 2.0 in workplace integration with these words.

"Overall, we found that respondents at 27 percent of the companies in our survey reported having both market share gains against their competitors and higher profit margins. That kind of performance clearly makes these companies profit consolidators in their industries, with earnings growing faster than the rest. Highly networked enterprises were 50 percent more likely to fall in this high-performance group than other organizations were. This finding suggests that the fully networked enterprise could become the benchmark for more vigorous competition in many industries.

Moreover, the benefits from the use of collaborative technologies at fully networked organizations appear to be multiplicative in nature: these enterprises seem to be “learning organizations” in which lessons from interacting with one set of stakeholders in turn improve the ability to realize value in interactions with others. If this hypothesis is correct, competitive advantage at these companies will accelerate as network effects kick in, network connections become richer, and learning cycles speed up.

Going forward

The imperative for business leaders is clear: falling behind in creating internal and external networks could be a critical mistake. Executives need to push their organizations toward becoming fully networked enterprises. Our research suggests some specific steps:

• Integrate the use of Web 2.0 into employees’ day-to-day work activities. This practice is the key success factor in all of our analyses, as well as other research we have done. What’s in the work flow is what gets used by employees and what leads to benefits.
• Continue to drive adoption and usage. Benefits appear to be limited without a base level of adoption and usage. Respondents who reported the lowest levels of both also reported the lowest levels of benefits.
• Break down the barriers to organizational change. Fully networked organizations appear to have more fluid information flows, deploy talent more flexibly to deal with problems, and allow employees lower in the corporate hierarchy to make decisions. Organizational collaboration is correlated with self-reported market share gains; distributed decision making and work, with increased self-reported profitability.
• Apply Web 2.0 technologies to interactions with customers, business partners, and employees. External interactions are correlated with self-reported market share gains. So are internal organizational collaboration and flexibility, and the benefits appear to be multiplicative. Fully networked organizations can achieve the highest levels of self-reported benefits in all types of interactions."

 

McKinsey may be be right about everything all the time, but this is pretty good evidence that it's time to get busy on knitting the tools of social technology into every business's organisational learning and innovation processes.

 

Can you help with research for my book?

The social media business story of the time is much less how Australia’s companies use Facebook and so on in promotions aimed at consumers than it is of how we are on the lip of great change as a consequence of the tools’ application within those same organisations' workplaces.

That social technologies are going to turn inside out the way we work is hardly in dispute. The more important question is how quickly they will do it, how fast management teams get it - and which ones never will.

I’m a business journalist and postgraduate management researcher and I’m calling out for help with a book I am writing describing how social tools are being applied in the pursuit of management “agility” in the workplaces of Australia. Provisionally, it is entitled Australia's Inventive Organisations.

I am going to be networking the effort and I want good stories, tips, leaks and provocative interviews. I want to know the ways in which companies are struggling with their responses to the pressures social media exert on their organisations. I am seeking examples of the best and the worst.

I am happy to conduct interviews on or off the record. I will guarantee confidentiality if you have a good story to tell or lead to offer but seek to preserve your anonymity.

If we are to propel the story, it must engage, provoke and be social – and shared and discussed.

So, who’s interested?

Investors should be, for one, because this is about the future agility of the management teams and workforces they’ve put their money into. Big, listed companies with their resources and potential collective intellectual horsepower may also be those with the most rigid and inflexible cultures and least able to adapt. But there will be surprises.

Future leaders, likewise, will find opportunity in what they discover about competitors’ inability to cope with this wave of change.

Please email me if you have material that can help to build this narrative. Thank you.

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Facing up to the learning challenges of social technology

So far we’ve seen companies sit up and take notice of social technologies largely because they are curious to understand how they can exploit them as new paths to customers.

This is a scrum they’ve heard about and they are being advised that they can’t be left out. Expertise is being built to capitalise on the opportunity.

What’s been less documented is how companies are going to use the tools of the social media to build capability and agility within. When we’re all increasingly connected via a growing array of devices for a much greater proportion of our time, organisations will look like very different places. When the environment changes, companies have to go with it.

What has possibly been lacking, or shared at least unevenly, is the understanding of the potential the social technologies, coupled with appropriate strategies for securing attention and engagement, represent as internal tools for learning and advance within those same organisations.

If you fish around this site, you may find several references to Harvard professor Gary Hamel, author of The Future of Management, in which he postulates that the next key wave of innovation will be in management itself.

Academics such as Hamel and fellow former Harvard professor Andrew McAfee believe social technologies will transform work in the most profound ways we have never seen. (Hamel was even quoted recently as saying this is the first opportunity to reconfigure work since the pyramids were built.)

But with the tools will emerge a need for organisations of unprecedented responsiveness and agility. To that demand, the use of those tools themselves will be the only appropriate response. They will become the primary mechanisms for organisational adaptation and learning.

I’ve been working on a model that delivers this, and I’ve been surprised to find what new terrain it is for many organisations. But at least these days, even if they are not active participants, most people now understand what the social media are.

The 20th century saw the development and success of the modern industrial corporation through the scientific management and measurement models of theorists such as Frederick Taylor. Taylor is attributed with suggesting that the output of workers could best be managed by measurement and setting targets for their physical labour. But he advocated that those same workers should leave their brains at the door.

The 21st century, however, sees the arrival of the opposite: a whole new industrial order in which agile, service-oriented organisations become the centrepiece of the economy.

Leading management theorists have been anticipating the need to understand what it might take to manage the necessarily agile organisations of the coming age.

In this world, change will be rapid, discontinuous and unpredictable and the effective engagement of workers’ brains and inventiveness will be the only thing that keeps companies in business. And it will be up to businesses to manage them wisely, to keep their learning appropriate as new challenges emerge.

This, and to some degree, its impacts for investors, is where this site will focus, because it’s here that the respective qualities of competing management teams will reveal their fitness for a faster-changing world with an appetite for much flatter, leaner organisations.

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Two top management academics on the importance of tacit knowledge to organisational learning

The social technologies provide the best possible of opportunities for constant, rapid organisational learning we have yet seen. A company that isn’t getting busy on how to use them in learning as fast as its environment is changing, if not actually itself setting the pace of that change, might be looking at a short, disrupted future.

The two following excerpts from leading management academics support the need for organisations to get busy on creating the circumstances under which fast learning and breakthrough thinking can be fostered by exploiting a company’s reserves of tacit knowledge.

Although these pieces are both only a little over 10 years old, neither writer foresaw the potential of the social technologies to accelerate so dramatically the speed at which such work could, or needed to be, undertaken between individuals making up even highly geographically distributed workplaces.


Ronald Mascitelli, 2000

Tacit knowledge lies below the surface of conscious thought and is accumulated through a lifetime of experience, experimentation, perception, and learning by doing.

Managers who can tap into this vast pool of creative energy can elevate the innovative capabilities of their teams well beyond the incremental and mundane.

The ultimate goal is to establish a generative atmosphere for breakthrough innovation, in which divergent thinking, improvisation, and artistic creativity merge with the practical demands of the product development process.

Far less is known about the process of breakthrough product innovation, in which connections are made between technologies and markets that cannot be traced to a seamless lineage of existing knowledge.

In a sense, breakthrough innovations have "missing links" in their evolution; a sudden non sequitur that brings together disparate technologies and unanticipated needs.

Evidently, there is some capacity within highly innovative minds that enables the bridging of intellectual chasms and the merging of seemingly unrelated pools of knowledge.

These leaps of creativity are perhaps the least understood aspect of product innovation, yet they provide the greatest potential for sustainable competitive advantage.

Innovations that are unique, original, and unexpected are far more valuable from a competitive standpoint than innovations that are predictable, incremental, or mundane

The ability to create new and valuable breakthroughs offers firms an unambiguous competitive advantage.

Although such original thinking may manifest itself in a variety of ways, its source is always the same: the creative power of the human mind.

Evidently, it is not the quantity of intelligence, but rather the type of intelligence, that determines a propensity for breakthrough innovation.

From experience: Harnessing tacit knowledge to achieve breakthrough innovation, Journal of Innovation Management, 2000


Chris Argyris, 1999

Learning is defined as occurring under two conditions. First, learning occurs when an organization achieves what it intended; that is, there is a match between its design for action and the actuality or outcome. Second, learning occurs when a mismatch between intentions and outcomes is identified and it is corrected; that is, a mismatch is turned into a match.

Organizations do not perform the actions that produce the learning. It is individuals acting as agents of organizations who produce the behavior that leads to learning. Organizations can create conditions that may significantly influence what individuals frame as the problem, design as a solution, and produce as action to solve a problem.

On Organizational Learning, Wiley-Blackwell, 1999

How much do uncommunicated ideas cost your organisation?

If communication is the circuitry that connects all organisational activities, rewiring a business to perform in new ways is no small task. But riding the waves of change that lie ahead as organisations pass through the transition to a more collaborative mode of execution is going to demand new communication competences on the part of leaders.

Managers of organisations that make a success of releasing new products and services know they must first generate and then cull a long list of ideas to find tomorrow’s stars. Keeping the pipeline topped up is a serious commitment to the future of the business. Some of these ideas may be disruptive to the status quo.

Likewise, as competition intensifies, competitive advantage will in any business depend on making sure that not a shred of the intellectual capital their enterprises embody goes to waste anywhere across its operation. Capturing every worthwhile idea from wherever it originates will be key. For most, this is likely to demand that new communication strategies are adopted.

Therein lies a barrier to growth and a weakness in many contemporary organisations: worthwhile value-creating or cost-saving ideas simply get lost when those who hold them are unable to penetrate hierarchy or gain access to those who most need to know of them. The result is flattened morale and motivation.

How well a company recognises and rewards the value of its individuals and their insights goes a long way to building its culture and morale – and potential.

In coming years the ability of any company to engage workers more effectively than its rivals in developing the quality of the ideas on which it runs will be the ticket to releasing the flow of intellectual capital that delivers advantage.

Collaborative tools can go a long way to changing the dynamic of communication and delivering an improved idea flow in the workplace, but organisations need to deploy strategies which give them their best chance of success.

As we can see from parliamentary politics, in communicating ideas, a louder voice does not equate with a better product. Special attention must be paid to ensuring those working in organisations who have ideas and possibly smart plans to realise them are found and encouraged to step forward. This must be a deliberate strategy.

Business communication may be challenging in the knowledge economy, but enhancing its fluency in one more definitively based on collaboration will become a new and critical managerial competency.

The transition to such new ways of conducting business must draw on a well-placed and considered communication strategy.

So what is yours? Would you like to see one?

With innovation in management, the new century can begin

By the time Australia’s fast-broadband network arrives, we’ll already have seen another wave of Joseph Schumpeter’s “creative destruction” sweep across its industrial landscape.

This will have been fuelled in part by the passing of a recession, which will hopefully be a long way behind us by then. We will also be well into a movement of “accelerated sustainability” initiatives whose public pressures will change the ways in which organisations act in respect of the environment. (As its champion, I write about this at Accelerated Sustainability.)

The more important aspect of this latter movement will be that it is predicated on the widespread use of what are today known as Enterprise 2.0 tools, but which by then will simply be known as tools, whose technologies will change the shape of work itself.

The adjustment to these tools’ use could be as damaging for some organisations as recession itself, as their successful implementation requires new ways of thinking about management.

As in other waves of technological change over the last 20 years or so, organisations will find that getting ahead of the tools themselves is not just a matter of buying them, dropping them on workers’ desks and hoping they will use them appropriately. To date there has been little evidence that user adoption in the workplace works quite like that. We must only witness some of the failures in implementations of enterprise resource planning systems to see this.

Where change is involved and imposed from the top, workplace users tend to stick to the processes and procedures for getting the job done that they know best. But what does work in effecting successful change - and the academic literature of IT, HR and operations management is crammed with evidence to support this assertion - is for users themselves to become part of the design of the change.

Yet, culturally, bringing workers onboard in the early stages of planning change remains anathema in many workplaces. Managers like it that way. But, when markets and customers demand faster change and collaboration is the only way it can be delivered, this is where the change we are likely to see will be most evident.

Waves of creative destruction are propelled by better ways of doing things. They lower costs, introduce new efficiencies, and improve effectiveness and reach to better satisfy customers. They break the mould of what passed before and in so doing reshape and typically reduce the influence of incumbents.

It is sometimes observed that looking backwards the way we perceive the passing of decades and the coming to force of the new one happens sometime after its actual chronological passing. The 1960s, it is said, really began with the arrival of the Beatles in 1962-3, and not at the end of 1959.

Thus, although we are now more than a decade into the new century, only now may be about to begin letting go of 20th century modes of management. Innovation, as United States management academic Gary Hamel contends, aided by collaborative technologies, can at last find its way into management itself. This will be no small task.

The early adopters and winners in the new age won’t be who we expect and by the time fast broadband rolls around, we’ll likely be buying from and working within a whole new generation of innovative and collaboratively driven enterprises whose adoption of the tools of the web will be utterly pervasive.

For organisations not born and bred on this diet, this might be a difficult change to swallow.