Piercing the Enterprise Bubble

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Harkness Tower, Yale

A few weeks ago I attended a reunion at my alma mater, Yale University.  As they always do, Yale offered up some of its most articulate faculty and administrators to describe the current state of affairs at the University.

The array of talent, initiative, and innovation on display was dazzling.  By the end of the two days, many of those of us who attended college decades ago were ready to sign up for another round — things have changed that much in the interim.

The Yale bubble

One surprisingly interesting session featured current administrators and faculty commenting on the current state of the University.  One dean mentioned what she calls the Yale bubble. It seems that students expect, and routinely receive, such high levels of performance from themselves and from the institution that they experience culture shock when they step outside its boundaries.

As one current student put it, “At Yale, it can be easy to get absorbed in our work, our activities, and friends. It can be easy to surround ourselves with a nice little Yale bubble.”  She goes on to describe how she and some of her friends broke out of that bubble to raise money for a disaster relief effort after a hurricane in the Philippines.

More recent events could be interpreted as showing the downside of the Yale bubble — a potential loss of balance and perspective as to what really matters.

Corporate culture — for better and for worse

Every enterprise creates its own nexus of practices, protocols, traditions, mythologies, and values — strands that together weave the fabric we call corporate culture. When you count over 300 years of history, $24 billion in the bank, and US presidents and other world leaders among your alumni, as Yale does, it’s easier than average to pull this off.

But every enterprise builds this cultural bubble, whether intentionally or not, and whether successfully or not.  It’s an essential part of what binds people to the enterprise — and thereby to each other — in collective pursuit of some common goal.

In some cases the enterprise bubble is “bubble-istic” — fluid, transparent, and porous.  It alternately expands and shrinks to fit new circumstances.  It is welcoming and inclusive.

In other cases, the enterprise bubble is made of steel and concrete.  It is hard, inflexible, exclusionary, and restrictive.  (North Korea might fit this model, for example.)

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The Competitive Runway

I read the following headline recently in the Wall Street Journal:  “Consumers crave [PRODUCT], but [PRODUCERS] enjoying their best profits ever are reluctant to switch.”  (The words I’ve bolded here were specified in the article, but I’ll get to that in a minute.)

Headlines reminiscent of this have been written many times in business history.  They are often prelude to disaster in the form of self-imposed obsolescence.

runway

Regarding Kodak, for example, one might in the late 20th century have written [digital technologies] and [film manufacturers] in the respective slots.  The profitability on film was so great that Kodak persisted in making and selling it, and famously did not invest soon enough in a switch over to digital. This was a titanic strategic blunder from which the company never recovered, eventually filing for Chapter 11 bankruptcy in 2012.

Willful ignorance

It happens constantly, in all industries, that consumer preferences migrate — sometimes so slowly that it’s hard to notice — until the change has become the new normal.  It’s more noticeable in B2C industries than B2B, but it happens in the latter too.

What makes these changes especially difficult to respond to is our near-universal tendency to gloss over and ignore that which could be unpleasant — or even fatal.  Our “all good news, all the time” corporate cultures make it tempting to look the other way and hope such problems will resolve themselves before metastasizing.

On the other hand, companies that have an innovation philosophy that demands that they “Obsolete ourselves before someone else does” have the upper hand.  Intel and Jobs-era Apple were famous for thriving under such regimes of continual, relentless self-betterment.

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Paths to Value

It makes my day when I am asked a question I can’t answer completely and easily. The students in Columbia’s Information and Knowledge Strategy program rarely fail to disappoint in this regard.

Where do KPIs come from?

One IKNS student has been using the KVC framework in her “day job” to design program evaluations for a global NGO. Her question had several aspects: “Who designs Key Performance Indicators? Is that job, a profession, or what? How and where do you learn how to do it? How do you know it’s right?”

My first instinct was to answer from my personal experience. Shortly after I left college — in The Digital Dark Ages — I was tasked to design  a set of performance metrics for day care agencies under contract with the State of New Jersey. I was officially a “Contract Administrator”, not a metrics designer. I didn’t know what I was doing — metrics design was just part of my job. I found a book on it, and somehow managed (like the one-eyed man in the Land of the Blind) to pull it off to everyone’s satisfaction.

The Balanced Scorecard industry

KPIs reached industrial strength with the development of the Balanced Scorecard in the early 1990s. People had begun to realize that financial performance metrics only took you so far — but typically these were the results of other events and activities that were operational in nature. Measuring those operational things (customer satisfaction, for example) was seen to have its own value. Metrics became a mini-industry — businesses were created to design and implement KPIs and (later) enterprise dashboards to monitor them.

In all this, there’s good news and bad news. The good news is that enterprise management has entered a new age of empiricism. Everyone wants to be evidence-based and metrics-driven, instead of gut-feel-and-instinct driven as previously.

The bad news is that in our quest for metrics, we are relying heavily on our ability to find the right metrics. Metrics do not grow on trees; they require resources (people, time, technologies) to develop and to implement. They themselves are investments, each having some (greater or lesser) ROI.

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Status Spring 2015

This spring has been uncommonly busy, and I regret that has caused me to slip a couple of self-imposed deadlines here.  Here’s what we’ve been up to.

Blended Value

I continued to work with TKA Director and branding expert Jay Gronlund on our Blended Value initiative — which seeks to redefine strategic enterprise goals beyond the limits of shareholder value, and to incorporate Environmental, Social, and Governance (ESG) factors in a balanced mix.

Knowledge-Based Security

Next up was a small pilot intervention for a section of the Special Operations Command of the US Department of Defense.    It seems that “knowledge” has great value not only where economic conflict is concerned, but also where geopolitical conflict is concerned — especially in this era when the nature of military conflict is continually shifting.

Knowledge to Value

Following that was a major address to the second annual summit of the International Management Consulting Association, with many of their members working in the Middle East and Eastern Europe (include the former Soviet republics).  I presented an initial treatment of a new methodology “Knowledge to Value”, which is designed to systematically mine enterprise knowledge in support of business development strategies.

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Knowledge to Value (K2V)

I was recently asked to keynote a conference on Turning Knowledge Into Value, funded by the European Union. That’s something I care deeply about, and I am greatly honored to have been asked. I have been head-down on that, and will share with you at least a top-line on what I’ve come up with.Tim in Turkey

I was at first planning to pull a few slides out of my Knowledge Value Chain® Handbook, and call it a day. But then the organizers doubled my speaking time, and at the same time I realized I wanted to give them more than that.

Knowledge is the engine of value

The KVC model can be the starting point for examining various issues. I decided to use the KVC core principles as a jumping-off platform, but to then get more granular on how you actually go about building an “engine of value” on a foundation of knowledge — step by step.

My experiences on the faculty of Columbia University’s Information and Knowledge Strategy program were helpful, as were comments from other faculty members there. But I also began to weave in themes from my stints in new product development at KPMG and PwC, as well as from the development of The Knowledge Agency. During those efforts, I’ve learned empirically — by trying things, by making mistakes, and by eventually finding out what works best.

Knowledge as a Service

In my experience, all knowledge is tacit. Knowledge is irreducibly human — it all resides in our heads. Before it can be socialized or shared, it must be made explicit — which we do though language and other forms of mediated symbolic expression.

In KVC terms, the way to get your knowledge into your client’s head is to first convert it into “information”. Then you can “communicate” it to the client, who can then convert it into his own tacit knowledge — and then make decisions and execute value-generating actions based upon it.

But “Knowledge as a Service” — as I refer to nearly-pure knowledge disciplines like law, finance, and management consulting — is only one avenue for knowledge to be manifested in a value-generating form.

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Whatever Happened to Knowledge Management?

That was the title of a talk I gave recently to a group of graduate students at the Palmer School of Library and Information Science.  It may have seemed that I was just trying to be provocative — but in fact, I was genuinely interested in finding the answer.

I think I now finally have.

KM 1.0 arrives

When I launched my company in 1996, Knowledge Management in its modern form had just arrived on the scene.  Books by Tom Stewart and Tom Davenport and Larry Prusak had begun to revitalize a field that had its roots back in the 1960s with Fritz Machlup and Peter Drucker.

Having been a researcher all my career, I was so excited by the potential of this approach that I described my company by the tag line “The Knowledge Agency”. That seemed to resonate with people, so I eventually adopted that as our main trade name, with a registered mark to go with it.

The curtain closes

At one point I brought on a former colleague who had previously been with a global technology company prominent in KM.  “Ron,” I asked him, “don’t tell me anything proprietary, but am I basically right that KM is the greatest thing since the Beatles — and that we’re all going to have a lot of fun and make a lot of money?”

“I hate to break this to you,” was his unexpected response, “but they’re dis-investing in KM.  It didn’t work for them — they couldn’t make enough money at it.”

I soldier on

I went back to rethink my goals several times over, each time coming to the same conclusion — that KM was (and is) something badly needed that will have a major impact if executed well.

But I noticed that, more and more, in my consulting practice I was being called on to diagnose and fix KM approaches that, once implemented, had failed to meet their original goals.  These were in some cases multi-million dollar efforts that ended up not being integrated into the entity’s work flow, and therefore did not provide sufficient ROI.  This happened so often that I began informally referring to myself as “Dr. Know.”

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Frameworks and Lenses

We recently had a discussion at Columbia’s Information and Knowledge Strategy program about consolidating, or at least coordinating, the various analytic frameworks that many of the faculty use in their work and teaching.

The consensus seemed to revolve around the idea that there is an optimal number of frameworks — that while too few leaves you with gaps in your perceptions, too many leaves you confused about which is “better”.

What is a framework?

A framework is a perceptual filter through which we see the world — in this case, the world of organizational behavior.  It’s a narrative overlay that integrates and orders disparate and dynamic elements of reality.  At best, it makes tangible that which is inherently intangible (“organizations” and “knowledge”, for example.)

A framework is like a lens that enables us to see what would otherwise be invisible.  Without such a lens, the world is a fuzzy undifferentiated mass — it’s nearly impossible to see clearly what is going on.  With a good framework, it’s possible to discern patterns — “shapes,” if you will — to diagnose what is awry, and even to predict what is likely to happen under certain conditions.

What about that lens analogy?

As a serious amateur photographer, I know the value of lenses.  When you’re starting with photography, you concern yourself most with the features of cameras themselves — how many megapixels does it display, does it have GPS and WiFi, and so on.

After you log substantial hours behind the glass, you realize that what really matters is the lenses.  A beginner will buy a lens almost as an afterthought.  An expert will notice subtle differences among similar lenses, and may even be able to tell which lens — but probably not which camera —  captured which image.  (In case you didn’t know, serious photogs don’t snap photos, they “capture images.”)

Canon 50mm lensAs you develop as a photographer, you often find that your needs and tastes change — even for what in some respects are interchangeable lenses.  A 50mm lens, for example, is a popular lens — it “sees” similarly to the human eye, and is so prevalent that it’s called a “normal” lens. It serves a range of needs, and is usually among the lenses you acquire first.  Most manufacturers make them, and some make several flavors.  Canon (my favorite vendor) currently makes four different 50mm lenses, each of which has its own characteristics and capabilities — and prices ranging from $125 to more than $1500.  As with so many things, you get what you pay for (at least to some extent.)

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    COMPETING IN THE KNOWLEDGE ECONOMY is written by Timothy Powell, an independent researcher and consultant in knowledge strategy. Tim is president of The Knowledge Agency® (TKA) and serves on the faculty of Columbia University's Information and Knowledge Strategy (IKNS) graduate program.

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    "During my more than three decades in business, I have served more than 100 organizations, ranging from Fortune 500s to government agencies to start-ups. I document my observations here with the intention that they may help you achieve your goals, both professional and personal.

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    E SCIENTIA COPIA. Knowledge is the Engine of Value.