Positioning Knowledge for Value

The early-winter holiday break is an opportunity to recharge our batteries and refocus our strategies. Amidst visiting with family and friends, I took time to reflect on the recent past and what the future holds.

Among other things, I realized that over time my clients have been paying more attention to the top half of the Knowledge Value Chain (how knowledge is used) and less about the bottom half (how knowledge is produced.)

What drives knowledge strategy?

Ideally, knowledge strategies spring from, and are tightly linked to, top-level enterprise strategies. In practice, however, many of the problems in knowledge production spring from misunderstandings of, or lack of clear linkages to, enterprise value.  Some of my research on this is cited in the KVC Handbook.  This knowledge-value gap raises several existential questions about knowledge-centric activities, among them:

  • How does knowledge support our enterprise mission and strategies?
  • What tangible benefits does knowledge provide us?
  • Is our knowledge strategy optimized in an economic sense?

Any lack of clarity at the top of the pyramid tends to get driven down through the chain, where it causes tactical and executional confusion and ineffectiveness.  Those of you in the trenches will know what I mean…

Benefits-driven positioning

If you are a knowledge producer, do not wait for those problems at the top to get sorted out — seize the initiative yourself!

We’ve been advising our clients: Always position your product (and I use this term to include services) from the point of view of the needs of, and benefits to, your user/customer/client/patron. Not — as so many of us do instinctively — from how your product works, why it is wonderful, or even why it’s better than your rivals’.  The diagram below summarizes TKA’s discovery process for working with clients on this. Read the rest of this entry »

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.

Read the rest of this entry »

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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Knowledge Strategy Simplified

I’ve been preparing to help Guy St. Clair teach his course Management and Leadership in the Knowledge Domain. This is part of Columbia University’s exciting new master’s degree program in Information and Knowledge Strategy, which I am pleased and honored to be part of.

This for me is a perfect opportunity to link my ideas about competitive strategy with my ideas about information management.  If you’ve read any of these posts, you’ll know that I believe strongly that the latter should serve the former, with few exceptions.

Guy and I will be presenting a high-level view of how to develop “knowledge strategies” in a range of industries. We’re using as our examples investment banking, pharmaceuticals manufacturing, advertising, and higher education. All are relatively knowledge-intensive as industries, yet each faces significantly different challenges at both strategic and tactical levels from each of the others.

Three basic questions

In approaching these industries, as I would approach any new client, I find the answers to the following qualifying questions essential in setting a direction for further diagnosis.

VM-CS-KS1. What is their value model? How do they produce revenue? Is the value produced solely economic, or are other value components (like societal benefit) also in play?

2. What are their competitive differentiators? How do they make themselves more attractive than their rivals? How are these factors weighted in importance and investment?

3. What knowledge/information do they require to support these value-producing and competitive factors, at both strategic and tactical levels?

Once I have reasonably complete answers to these three questions, I can begin to get a handle on where they need to be in terms of knowledge strategies.

You may realize that this is essentially a truncated version of the Knowledge Value Chain model. It drives down from the top — the organizing principle is the value model, which is then supported by — and even “given life” by — the knowledge model and infrastructure.

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“Knowledge” is a National Security Issue

The headline in today’s Wall Street Journal caught my attention:  “Bringing Jobs Back to the U.S. Is Bruising Task.” The article describes the Reshoring Initiative, a nonprofit group that helps companies return production to the US. 80% of these companies are relatively small, with revenues of $200 million or less.

The article describes that a key barrier to bring work back is the declining quality of the labor force in the US.  One of the issues is the lack of a good work ethic.  One company reports that when the announced that a drug test would be held for plant workers the following day, 20% of the work force didn’t show up for work.

2 + 2 = 5

But an even more fundamental problem — as has been widely reported before — is that American workers often don’t have the skills needed to run even basic manufacturing machinery.  The owner of a scented candle company that originally sourced in China and Vietnam reports that even elementary school math skills are absent in many of her US employees — including both line workers and supervisors.

As I understand it, making candles ain’t brain surgery.  If US workers can’t run candle making machines, how would they do in a factory making advanced electronics, or even cars?

This brings to mind the various surveys that continually report the low and falling test scores of US students relative to those in Asia, Europe, and elsewhere. (See, for example, data below from the 2012 Programs for International Student Assessment that originally appeared in the Washington Post.) This is not just some abstract global game of Jeopardy — it ultimately matters to how people put food on their table.Screen Shot 2014-06-26 at 5.23.30 PM

And to the future of the US economy as a whole.  While we in the US pride ourselves on our consumer-led economy, it’s clear that people can’t continue to consume stuff indefinitely if they don’t have adequate jobs.  The consumer-led economy only works when the people who buy stuff do so with money made by working in factories that make stuff.

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Strategic Knowledge – What’s New is Old

I take pride in bringing the latest techniques and insights to my clients.  But it turns out the origins of what I do go back at least 2500 years.  I discovered this while reading Lawrence Freedman’s new sprawling history of all manners of strategy, called (fittingly) Strategy:  A History.Strategy cover

Professor Freedman traces the modern use of the term “strategy” back to the 19th century, when it was used by von Clausewitz and others to describe the application of empirical science and reason to the conduct of military campaigns.

Strategy = leadership

But the term “strategy” ultimately derives from Greece in the fifth century BC, when a military leader or strategos was expected to “lead from the front, fight with the best, and show total commitment.”

Thus strategy is, at its core, about leadership.  The leader, be it in military or business affairs, is the one (to quote leadership expert Robert Reiss) whose job it is to guide the group from HERE to THERE — however those start and end points are defined.

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Calibrating Your Value Model

The holiday break provides us an ideal time to calibrate and refocus our efforts and build for the year ahead.  Given the dynamic nature of the business environment, I recommend you consider these two simple questions:  If I were starting my enterprise today, what would I be doing different from what I am doing now?  And what (other than inertia) is holding me back from doing those things now?

The changes we don’t see

Changes in the competitive business environment come slowly.  In the heat of battle — producing and selling what we produce and sell — we often don’t see change…until it has already passed us by.  We tend to do the same things we did last year — maybe a little faster, a little better, a little more efficiently.

But we forget that the market, the competition, the entire business environment is different from what it was a year ago, or even a quarter ago.  Ever so slightly different, perhaps — but then, big changes typically begin life as small changes.

Consequently, the value model that is central to our product or service offering may not be as, well, valuable as it once was.

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