Continuing with my weekly series on questions for which you cannot google the answers.
What one word connects the following:
As usual I shall wait a few days before giving you any clues.
Introduction
Last week I spent some time looking at the Social Enterprise through the lens of The Big Shift. Responses, in terms of comments, suggestions, retweets, Likes and +1s were heartening, and I am grateful. Thank you.
Today I’m going to continue with that perspective, this time drilling down into the subject of collaboration. A classic gymword. [A gymword describes something that many well-intentioned people aspire to do, but one that very few actually achieve in practice].
John Hagel, John Seely Brown and Lang Davison spend quite some time on this subject, which I will try and summarise here. [If you’re already au fait with their thinking then please skip the next section].
Collaboration in the context of the Big Shift
As stated last week, the Big Shift is driven by advances in digital infrastructure and the evolution of public policy. As a result, barriers to entry have fallen away sharply, competition has intensified, the pace of change has accelerated. This has meant that one of the cornerstones of “firm theory” in the past, that of the experience curve, has been dislodged, weakened, brought into question. A scale player no longer has an advantage just because of the past ability to operate at scale: advantages now accrue based on what the firm can do, not on what the firm has done. The authors develop this point into an argument that we need to move away from experience curves to collaboration curves. Experience curves were about the past; they containerised historical experience and explicitness and sought to extract value by repeating that experience in military fashion; and, in consequence, marginal utility diminished over time while marginal costs increased, and a classic diminishing-returns model ensued. Collaboration curves, on the other hand, are about the future; they seek to containerise tacit knowledge, the ability to learn, to adapt, to evolve; value is created by making the company better at learning. Now I can hear some of you saying “Okay so someone’s discovered Peter Senge and thrown in a bit of Ken Ohmae, big deal. What’s so new about this?”. I think there is something new in this, and the newness comes from finding a way to integrate the learning from the work of people like Howard Rheingold and W Brian Arthur (and more recently, Clay Shirky) on virtual and electronic communities, on learning, on increasing-returns models. Most importantly, Hagel, Seely Brown and Davison spend time looking at how to scale out collaboration by inspecting and extrapolating models based on decades of empirical data. Which then leads on to an understanding of best practice for organisations built around flow, and an exposition of creation spaces where the learning can take place and be disseminated. Creation spaces have three prerequisites: people, the interactions between those people, and the environment where those interactions can be captured, enhanced, disseminated, refined, extrapolated.
The underlying themes are common to most aspects of the Big Shift. A move from stocks to flows. Experience curves were about stocks; collaboration curves are about flows. Documents and files are about stocks, feeds and streams are about flows. There’s also a move from push to pull, but with a focus on scalability as well. The shift from canned and militarised experience to active and continuing learning has its effect in many other ways; knowing how becomes more important than knowing what. There is also a deeper, implicit shift from processes with high degrees of integration, standardisation and repeatability, to patterns that are less military, less repeatable, less vertically integrated, more loosely coupled.
How the Social Enterprise enables this Big Shift-based collaboration
The Social Enterprise, even in its simplest form, is designed to respond to the Big Shift, as shown below.
[Admit it. You were about to say that’s the longest list of buzzwords you’ve seen without the word “leverage” in it.]
Actually things are a lot more serious than that. The list above is not really about buzzwords. If we behave like they’re buzzwords, we have a fate worse than death awaiting us. We will continue to live in a world where e-mail and document attachments dominate the space that would otherwise be taken up by true collaboration. We need to understand what the terms mean, why they’re important, how to embed them in our day-to-day operations. So let’s look at each phrase in turn and try and figure out what it means in a work environment.
Built around flows, not stocks: One way of understanding the distinction between stocks and flows is by looking at the fates of Kodak and Polaroid. Kodak pretty much defined film, understood everything about film, hired the best people who knew about film. They had all the patents, the tools used by prior generations to protect and extend the value of past experience. They had the scale. They had the skills and the customers. They understood how to be on the right part of the experience curve. They even knew how to predict the future by inventing it: they held many patents in digital photography. Enough about Kodak. Let’s look at Polaroid. Market leader, defined and dominated the instant photography space. Scale, skills, customers. The whole nine yards.
Two companies. Two market leaders, dominating their experience curves. Vulnerable to diminishing returns, exacerbated by the complacency that comes with dominance. Unable to learn quickly enough, unable to adapt quickly enough. Now remembered for a slew of patents that are probably in the pockets of trolls. Because there are still some who believe in stocks, not flows.
Let’s look at a third company. Instagram. A company that appears to be about making the digital photographs that Kodak helped invent look like the instant photographs that Polaroid helped invent. A company valued not on the stocks of its knowledge and experience and patents, but on the flows implicit in the social and mobile nature of their customer base. Valued on the relationships it has with its customers, and on the relationships enabled between them.
Flows are part of networks, not hierarchies. Places where network effects can be obtained, where increasing-returns models can be seen to apply. The core of the Social Enterprise is in the network, the connectivity, the connections. Connections that extend beyond the enterprise, into the supply chain, through the distribution networks, all the way to the customers and the products. Networks across which conversations flow, cutting across the silos of the organisation, straddling the boundaries, allowing the tacit knowledge at the edge to be exposed. Here are some of the characteristics of flows:
Underpinned by foundations of trust: Collaboration curves have increasing-returns characteristics partly as a result of network effects. The more people belong to a network, the more valuable it becomes. When this is applied to collaboration, both within as well as beyond the enterprise, networks alone are not enough. Customers have, in the main, lost faith with large institutions: government, healthcare, finance, education, big business… exceptions are rare. The Social Enterprise addresses this in two ways: openness and transparency within the enabling environment (as evinced in the Cloud Principles here) and customer-controlled management of entitlements.
Theorists have spent time articulating the differences between systems of engagement and systems of record, and the risks of these two classes of system coming together. If collaboration is restricted to systems of engagement then all you have is conversation, not collaboration. For value to be created, artefacts from systems of record need to be made available within the flow of conversation, while keeping in place the privacy and confidentiality structures inherited from the systems of record. The Social Enterprise is structured in such a way as to preserve the entitlement models as the artefacts migrate into the flows.
Collaboration involves sharing. Sharing involves vulnerability. Making oneself vulnerable is hard to do unless there is an atmosphere of trust, a secure environment, where the participants are known and where access is transparent and consistent.
Designed to facilitate learning and memory: People learn by doing. Sometimes they learn faster by discovering what doesn’t work, by “making mistakes”. We live in a privileged generation. We have had the power to make mistakes for aeons; although some will say that modern blame cultures and nanny states have reduced that ability, it is still possible for us to make mistakes. We have had the power to learn from our mistakes for a very long time, even if we haven’t always exercised that power. We’ve had the power to share that learning for centuries, ever since we’ve learnt to communicate.
But when it comes to making that sharing persistent, archived, searchable and retrievable, we’re in new territory. When it comes to making that sharing available to people who can comment on it, critique it, amend it, improve it, we are in pioneering territory.
In the same way as trust is needed to overcome feelings of vulnerability, the availability of persistent archived retrievable communications plays a very important part in making collaboration happen.
It replaces institutional memory.
Work is often done in teams, even though incentive and reward systems continue to deny that at every opportunity. It is puerile to talk about collaboration while having reward systems that militate against collaboration. When people work in teams, individual sacrifices lubricate that process; this is often referred to as “taking a bullet for the team”. The incentive to “take a bullet” was high at a time when job tenure was high and mobility was low: institutional memory existed throughout the team; when someone did the bullet-taking, everyone else remembered when the need arose. Today, in environments of higher mobility and lower tenure, this is less true. There may be no one left to remember you took a bullet. So it’s important to have a mechanism that replaces the carbon-based memory with silicon-based alternatives.
Making discovery easier: The networked non-hierarchical nature of the social enterprise, with its accent on flows and on learning, and with its foundations of trust, attracts talented people, in what the Big Shift calls the Power of Pull. You can read more about it in the eponymous book the authors wrote, following their research into the shift. But it’s not enough to attract the right resources. You need to be able to find them. Which means the Social Enterprise has to do three things: (a) make it easy to find what appear to be the right resources (b) have some way of being able to differentiate those resources in terms of skill set and ability and (c) do all this quickly and effectively.
Social Enterprise tools do this in a number of ways. Firstly, good search tools are available. Secondly, when a resource is proposed for a particular situation (it could be an answer to a question, a file that’s been uploaded, a name added) the network has the opportunity to vote on that proposed resource. When there are multiple resources in play, this helps differentiate between the resources. And finally, the more evolved social enterprise tends to have tools that allow performance-related feedback.
Subscriber-based: E-mail has been the bane of collaboration, an unfit-for-purpose tool that has often been used to accentuate and enhance division and discord rather than collaboration. Yet for most people it is the standard tool of collaboration. This may have been so to begin with: a time when e-mails were short, when formality was conspicuous in its absence, when mail lists did not exist, when the cc and bc buttons didn’t exist, when there were no attachments. The first problem with e-mail is that it’s publisher-driven, the power is in the hands of the sender. As a result, enterprises often have to deal with two quite different types of spam: the type that comes from the outside; and the type that originates within the firm. Collaboration requires trust. Sending someone an e-mail and copying their boss in is not a good way to engender trust. Sending someone an e-mail, copying their boss in, and not telling them they’re copied in, is an even poorer way to engender trust. Moving people off addressee lists and adding others at will, opaquely, is also no way to engender trust. Yet these practices (using cc and bc and editing recipients in order to fragment conversations) are common in enterprises. Mail attachments are also notoriously dangerous, given their predilection to have versioning problems. “That’s not what my copy says.” “Ah, I sent a new document out ten minutes ago”… such conversations should never be needed. The social enterprise, based around networked conversations persisted in a single place with only one version of “attachments” available to all, helps get around all this. And since you only see conversations related to people you choose to follow, the spam levels are easier to manage.
Filtered by the network: I’d stated earlier that collaboration curves exhibit network effects as more and more participants join. This can appear to cause a new problem: since everyone’s a publisher, the risk of information overload appears high. But this is actually a fallacy in a subscriber-driven world. You choose whom to follow, and that constrains the flow that gets to you. If you miss something, your own network will ensure that it gets repeated, RTed, Liked, +1ed. When multiple options are presented, your network will help select the best option. When you’re under time pressure for an answer, the human-powered scale of the network tends to resolve complex issues faster than most machines. Carbon is underrated. It’s about a lot more than just footprints.
Making use of collective intelligence: Increasing complexity in the world we live, greater propensity to change, faster changes. These are now taken for granted, and they describe a new environment, with new challenges. These challenges are so disparate, so varied, that often no one person has the necessary skills and ability to meet the challenge. The ability to parcel large volumes of work into individual-sized pieces is relatively new; the ability to allow humans to self-allocate those pieces is newer still; we now have abilities to act collectively in ways we’ve never really had before. Soon, problem-solving in the enterprise will be about knowledge-work triage; which people are the best at classifying or categorising incoming issues; how the right resources are attracted to solving the problem; how the institutions learns from that process and embeds the learning for the future.
Simplifying pattern recognition : There was a time when end-to-end control was common in the delivery of products and services. Any colour you like as long as it was black. Any phone you like as long as it was black and bakelite. Any computer you like as long as it was grey and Microsoft. This is no longer true. The bring-your-own mindset is now everywhere; people use different devices, different connections, different signing in procedures; they shift time and place and use a slew of payment methods. As a result, the historical model of there being a small number of highly standardised and repeatable processes no longer holds true; companies spend their time handling exceptions. The Social Enterprise is built around being able to use cognitive surplus to deal with this issue; the whole case-handling approach of modern customer service is more about patterns than it is about processes.
Triggering beyond the tacit: the role of serendipity: The Social Enterprise, by its very nature, allows tacit knowledge to be exposed, to come to the fore. But that alone is not enough. Because the network is non-hierarchical, because everyone and everything is a node on the network, people operating in adjacent spaces tend to have a sideways view into what is going on with their peers. And this allows some sort of sixth sense to be developed, the ability to view routine things from new perspectives. And that in turns triggers a serendipitous learning, one that comes from the conjunction, and occasional collision, of disparate disciplines.
Extending beyond the enterprise: Phrases like cost centre and profit centre may mean a lot to accountants, but we can’t afford to get lost in them. The last time I looked, revenue was based on someone outside the company paying for something that was made inside the company. This has never changed. So when social enterprises are built, it’s important that the network is inclusive of partners, supply chains and customers. As the saying goes, there are always more smart people outside the company than inside the company. It is reasonable to phase rollout of networked connectivity, but value is only really obtained when the customer is able to communicate with the company.
These are just some of my thoughts when considering collaboration in the context of the social enterprise and the Big Shift. They represent work-in-progress, views that I expect will be refined by your comments, your criticisms, your recommendations and suggestions. All of which I look forward to receiving.
Name the odd one out and why.
Those of you who’ve been attempting the Friday Question know the rules. There aren’t any. Use whatever means you have to find the answer. My job is to try and construct a question whose answer cannot be Googled at the time I set it. Sometimes the question is pictorial. Sometimes it’s in text. I will try to construct them in audio and video as well, sometime over the summer.
David Baines
Introduction
I think it was about three years ago that I first came across the Shift Index; I’d been reading about it in the blogosphere for a while, somewhat idly, my natural curiosity aroused; John Hagel, John Seely Brown and Lang Davison had begun to share their findings in public, and I’d found them intriguing. [I’d already become a big fan; I’d come across JSB via The Social Life Of Information a decade earlier, and met the two Johns a number of times while they were working on The Only Sustainable Edge, particularly when they shared some of their learnings at an early Supernova. [Shout-out to Kevin Werbach: We need more Supernovas!]. Fittingly it was at a later Supernova (2009) when I had the chance to spend time with John Hagel, both on stage and off, and I began to understand the sheer enormity of what they’d been working on.
The Big Shift is a monumental idea, which then spawned the Shift Index, which in turn gave rise to The Power of Pull. If you haven’t done so already, you should read about the origins of the Big Shift in their blog (after all, it is chronological); you should also spend time understanding how the Shift Index is measured, and why it’s important; and you should read the book The Power of Pull.
The ideas contained in the publications cited above may not be familiar to some of you. I shall therefore try and share them here very briefly, so as to provide you with the context for the crux of this post. [Sometimes, when I seek to summarise, I find it hard to avoid being influenced by other, related research. So if my summary has overtones and tinges of Carlota Perez, please forgive me. Similarly, if you see strains of Cluetrain waft into earshot, mea culpa. Forgive me. These things happen.]
The Big Shift and the Shift Index, summarised (my words)
There’s been a material, long-term shift in the nature and structure of business, whom we conduct business with, how we conduct that business. The shift covers many trends we have sought to document, understand and analyse: globalisation; demographic changes; the evolution of the digital infrastructure, of mobility, of ubiquitous connectivity; partnering, outsourcing, offshoring; open platforms and innovation; social networks, relationships and interactions; collaboration, co-creation, crowdsourcing and collective intelligence.
It’s been hard enough to bring these apparently disparate trends into one unifying narrative. It’s been even harder to quantify the impact of the trends, particularly when seen as a coherent whole. The Big Shift is the narrative the authors give to this whole phenomenon, and the Shift Index is their way of measuring the impact of the shift. As a result of the shift, competitive intensity has increased considerably over the years, and return on assets has fallen sharply over the past five decades or so. Companies that want to succeed must learn to innovate “institutionally”, taking advantage of the tremendous advances made in digital infrastructure, transforming themselves from focusing on “scalable efficiency” (operating cost reduction) to “scalable learning” (reducing the cost of adaptation and change).
The Big Shift is characterised by three “waves” of fundamental long-term change. The first wave sets up the foundations, leveraging the digital infrastructure and where appropriate the significant shifts in public policy that have eroded barriers to entry, participation and movement in most arenas. This accelerates change and intensifies competition, moving the source of economic value of companies from knowledge “stocks” to learning “flows”; static, codified knowledge is replaced by distributed tacit knowledge and collective intelligence, and, more importantly, the ability of the firm to generate new knowledge, to disperse that knowledge, to iterate it and learn from the iterations. The second wave concentrates on these flows and the ways they can be facilitated and amplified.
These two waves are necessary, but by themselves are not sufficient to deliver the radical performance improvements needed to respond to the Big Shift. The third wave is about that response, how institutions will have to learn to innovate at institutional level, truly transform themselves from the foundations outwards; how they will move from scarcity-thinking to abundance-thinking, from diminishing-returns models (based on knowledge stocks and experiences) to increasing-returns models (based on knowledge flows and learning); how the environments and participants and techniques necessary for this will manifest within and beyond the enterprise boundary.
The Shift Index therefore consists of three sub-indices, related to each of these “waves”: the Foundation Index, the Flow Index and the Impact Index.
Relationship between the Big Shift and the Social Enterprise
Marc Benioff’s vision of the Social Enterprise is nearly a year old now, and at salesforce.com (where I work) we’re learning about the meaning and extent of that vision with every customer engagement. While every engagement is different, the core principles remain the same: connect your staff and your partners; connect your customers, your products and your distribution; do this across public and private networks; ensure everything you do is in the context of a common, holistic view of the customer.
Once this framework is established, companies can transform the way they engage with the customer: how they communicate with each other, how buying and selling takes place, how service is provided, how marketing is carried out; they also transform the way they work: how they collaborate within the firm, with partners, across distribution networks and with customers. As more and more companies become “social enterprises” we’ve been learning about the common elements as well as the distinctive differences.
I’ve had the privilege of observing what’s been happening across a range of customers, contexts, geographies, cultures and markets. And, as you would expect, I’ve sought to apply a series of lenses to those observations. Not surprisingly, one of the first lenses I chose to apply was that of the Big Shift. I felt I understood the Big Shift, that I believed in it. I also believed that the Social Enterprise was an idea whose time has come, particularly when I saw the kind of impact it was having on the market. So it behooved me to reconcile the two ideas.
Which is where this post is leading.
The concept of the Social Enterprise is underpinned by the cloud: a public digital infrastructure based on open standards, scalable and elastic. In effect, it represents the Foundation “wave” of the Big Shift.
The core of the Social Enterprise is connectivity, bringing about collaboration and co-creation; customers, staff, partners and products are all connected, using common “language”, facilitating the transformation of the organisation from experience-based to learning-based, from stocks-based to flows-based. In effect, this represents the Flows “wave” of the Big Shift.
The construct of the Social Enterprise is institutional innovation: innovation in engagement, in sales, in marketing, in service, in product engineering and design. The scalability and flexibility of the infrastructure, combined with the ease of identification and access to the right resources at the right time, allow the enterprise to find areas of high growth potential simply, effectively and affordably.
The networked character of the Social Enterprise means that innovation takes place at the edge of the organisation, where customers and partners come into contact with staff; processes are created, repaired, eradicated by people who use them every day, who derive value from them every day. When areas of high growth potential are identified, the cost of building products is kept low because of the cloud infrastructure; you can rent the compute, storage and bandwidth needed; using internet-quality development processes, product launches take place quickly; using social media monitoring tools, feedback loops are effective and meaningful.
The Social Enterprise is a self-reinforcing process where growth opportunities are identified close to the market and in conjunction with partners and customers, where the right people and information is made available at the right time and in the right place, where experimentation is economically sustainable, where true learning takes place, where the quality of the feedback loops is unsurpassed. It works well for existing products as well, not just by reducing the cost of change, but by allowing exception handling to take place using the power of connected communities, within and without the enterprise.
Maybe I’m a hammer, and I see everything as a Social Enterprise nail. If that is the case, I’m sure you’ll tell me, call me a shill, whatever. But I’ve had time to think about this. I’ve spent years trying to understand the Big Shift and the Power of Pull, and studying their manifestations. I think I can see, with some clarity, the emergence of institutional innovation across the customer base; the construction of creation spaces; and the gentle growth of collaboration curves based on increasing-returns models.
Maybe I’m a hammer, and I see everything as a Social Enterprise nail. But from what I see, there is every likelihood that companies choosing to become social enterprises are setting themselves up for radical upward shifts in performance.
That’s how I will know that the Social Enterprise represents the requisite response to the Big Shift, when I see performance levels skyrocket.
It’s early days. Many firms are still grappling with wave 1, and are confounding themselves with tautologies like the “private cloud”. It doesn’t matter if your cloud is Public, Private or Pink. What matters is who else is sharing your costs. If you’re the only one sharing your costs, then you’re also the only one kidding yourself.
It’s early days. Some firms have moved into wave 2, with a few finding it hard to create an environment of sharing. Often the constraints are technical, driven by the vertically integrated suites of the previous generation rather than the open platforms, ecosystems and federation principles of the new generation. Mistakes will be made, but learning will take place. For some it will be too late.
It’s early days. A few firms are moving into wave 3, really looking to raise performance levels radically and rapidly, transforming their DNA into one of institutional innovation and learning, with the right environment, techniques and participants in their creation spaces.
They are the ones that will succeed. Others may achieve those levels as well, but the odds against them increase every day….. the pace of change is punishing.
I love Joi Ito. I’ve known him for some years now, and I’ve learnt to spend time thinking about what he shares, in person or in print. He has a habit of framing things in ways that teach me, that challenge me.
Kevin Marks is also someone who I have a lot of time for. Known him for years, enjoy working with him. [We worked together at BT, we’re working together at salesforce.com]. He too makes me think. Regularly. Polymaths like him are rare. @accidentallight and @parkparadigm come to mind, two others I’ve had the honour of working with.
So when Kevin recommended-via-tweet something Joi had said which had not hit my radar yet, I had to find out more.
Which led me to this submission by Joi to Steelcase 100. It’s so short I feel I can’t really quote the lot, you should follow the link instead. But the first sentence says it all for me:
One hundred years from now, the role of science and technology will be about becoming part of nature rather than trying to control it.
Becoming part of, rather than trying to control.
In essence, this is what I was trying to say in The Kernel For My Blog, way back in 2005. I was using the words “connected” and “channelled” to try, somewhat clumsily, to describe what Joi has stated so elegantly. By “connected” I meant “being part of” and by “channelled” I meant “being controlled by”. I’m so glad I now have better terms to use.
What Joi says about science and technology for the next 100 years is very meaningful for business over the next 10. Why do I say that?
To paraphrase Joi in a different, yet related context:
I think the role of the enterprise will be about becoming part of the wider community rather than trying to control it.
So much of “business” has been about pursuing efficiency, scale and “exponential growth” at the expense of our customers. We have rewarded those who invent technologies that control our customers in some way. This is clearly not sustainable.
We must understand that we live in a complex system where everything is interrelated and interdependent and that everything we design impacts a larger system.
My dream is that 100 years from now, we will be learning from our customers, integrating with them and using science and technology to bring them into our lives to make everything we do not only zero impact but a positive impact to the natural system that we live in.
That’s what I believe Marc Benioff and the team at salesforce.com are trying to do. That’s what I believe the Social Enterprise is about. And that’s why I work at salesforce.com.
We all have to learn more about becoming part of the complex system we live in, rather than trying to control aspects of it. Mastery is expressed in skill and self-control, not in dominion or domination.
My thanks to Joi and to Kevin for giving me a better frame for my thoughts and beliefs in this context.