Posts Tagged ‘Leadership’

It’s Time for a CKO

June 18, 2012

This blog post is a companion piece to the presentation I gave at the June ICKC Practitioner’s Meeting in which I presented slides and discussed some of the history of the launch of Knowledge Management, and why now is a critical time for firms to have a CKO. The title of the presentation was “Time for a CKO?” and was the second presentation of the meeting after “The New Economics” by Peter Bretscher.

The full slide-deck is also available both as a pdf and as a power-point slide deck at SlideShare

The Big Flop

In the 80’s and 90’s “The Knowledge Age” was the new fancy idea, and was taken up mainly by gurus like Drucker, but also several business academics.
Unfortunately the hype quickly overtook any ability to deliver, and consulting firms and software companies pounded money out of it and it quickly turned into a fad.

The idea was good, but the terrain was unprepared and consulting and software simply wasn’t going to deliver an ROI – Management didn’t know how to “do KM”, nobody was quite sure what the objectives were, and there simply were too few actual KM practitioners to even make a dent in it.

The result was an expensive, highly visible, and embarrassing belly-flop.

Back to Basics

So let’s just revisit two of the big moving parts driving KM and for the moment ignore all the practical reasons for KM like faster on-boarding, reducing waste, increasing quality, etc.

Two major changes have been underway historically – where wealth comes from, and the proportion of corporate value that is due to intangibles.

Firstly, wealth has changed in principle source from real-estate during feudal times, to being able to command labour and capital, to a current situation in which knowledge is the primary source of wealth.

Over the last hundred years, the measurement of corporate wealth has shown an increasing shift from property to ability. At the turn of the last century a firm’s wealth was made up primarily from its ownership of tangible assets – real estate, equipment, stock, and cash, but by the arrival of the early Knowledge Era, this had already been shifting

The current era is marked by a shift in the balance between the contribution to EBITDA and Market Capitalization in favor of Intangible Assets, and this is deemed likely to continue for several decades.

Secondly, the share of Intangible Capital as a share of the market value of firms has changed from a historical norm of <20% in the 1970’s to a current situation in which IC accounts for over 80% of a firm’s value.

illustration of the split between tangible and intangible value in the S&P 500 rising from 20/80 in the late 70’s to 80/20 in 2005

Knowledge was seen by Drucker, Senge, and others as being the only remaining way that firms can stay competitive in the Knowledge Era, and the major source of differentiation amongst competitors. These days every firm has more or less the same access to capital, raw materials, basic labor, and equipment as every other, and competitive advantage is no longer a matter of merely securing access to resources or materials.

The thing that separates Apple or 3M from the lower-order players is not physical assets but knowledge and acumen.

At the same time the people that track market valuation have been noticing an increase in the “Q” value that Tobin derived by comparing the market value of a firm with its physical assets and cash.
What has been increasingly obvious since the mid eighties is that the gap has been rapidly widening and that it seems to be stabilizing at around 80% of a firm’s market cap being attributable to intangible assets.

Source Adams & Oleksak (2010)

As per the International Association of IC Practitioners (IAICP), these include:

  1. Relationship Capital such as customer goodwill, reputation, and referrals
  2. Human Capital such as skills, knowhow, and expertise
  3. Structural Capital such as processes, patents, and trade secrets

They also add a fourth component, “Strategic Capital”, which I take as being the overlap of the first three that are individually necessary and collectively sufficient to achieve organizational strategic objectives.

Where Are We Now?

“Intellectual property has become one of the most important resources in the 21st century. It’s now an accepted fact that, just like financial capital or commodities or labor, IP is more than an economic asset – it also forms the basis of a global market”

Manny Schecter, chief patent counsel at IBM. (Forbes 2012)

Nonaka provides a model that distinguishes between knowledge that people can turn into documents (Explicit) and knowledge that either can’t be expressed or is locked away in their heads and practices and maybe even something they were unaware that they knew (Tacit). His model provides ways to move explicit knowledge into tacit knowledge (like studying and practicing the cello), tacit into tacit (like an apprenticeship), tacit into explicit, and explicit into explicit.

In support of this much has matured since his model was devised:

  • Many colleges and universities now offer master’s and doctoral programs for KM, and several institutes such as the Knowledge Management Institute and KM Pro offer certification courses for practitioners.
  • Several KM journals are published, amongst which the Journal of Knowledge Management Research & Practice has a rated impact factor.
  • KM interlocks with several other fields – at one end with the TQM, Lean/6Sigma movements, Applied Psychology, and Operational Research, and at the other end with Finance & Economics through Intellectual Asset Management and Intangible Asset Management

In addition, many large and innovative firms employ KM – from 3M to Xerox, including Deloitte, Dow Jones , Forrester, Fujitsu, Gartner, Google, HP, IBM, Lexis-Nexis, Pratt & Whitney, PWC, Siemens, World Bank , etc.

The primary areas of activity for KM are in workplace collaboration, management of innovation, the development of occupational communities in which standards of practice are refined, and corporate valuation through increased discovery and accounting of intellectual assets.

So where are we compared to the 80’s and 90’s?

The reasons for the lack of mainstreaming of institutionalized Knowledge Management have all fallen away, but the reluctance is still dwelling because of that memory in the minds of many executives. At the same time we have several emergent and increased pressures for institutionalizing Knowledge Management.

  • Technological changes and adoption rates continue to climb
  • You cannot simply put 80% of an organization’s worth under “goodwill”
  • The trade in IC has increased sharply over the last decade both for defensive and product development uses.

Simply put, IC is becoming fungible.

… and even being considered as collateral for loans by banks.

Return of the CKO

The CKO is not a new role, but one which holds increasing relevance in an age where knowledge and other intangible assets form such a large proportion of value, and in a time when retirement rate reaches 10,000 people per day in the US.

The CKO should be the structural keystone that brings IC and knowledge in particular under a single umbrella of scrutiny, management, and governance.
The days in which a firm’s knowledge could be left to the day to day operational dynamics are long gone, and it amounts to corporate suicide to leave knowledge management to chance.

To be sure, everyone “does” Knowledge Management, just like every firm “does finance”, but leaving it to chance implies that it is not likely to be done well, nor done in a fashion that enhances the likelihood of achieving organizational objectives. In much the same way that a CFO does not personally own all the money in the organization but provides governance, guidance, and a framework under which money and physical assets are managed and accounted for, the CKO should do the same for knowledge and IC.

Knowledge Management straddles all operations of an organization, and at its heart asks a simple duo of questions: how does a person know what they are meant to do, and how do they know how to do it?

In this sense KM overlaps on one side with HR/Recruitment in terms of what skills and experience a person needs to have prior to joining the organization in order to execute the assigned activities in their role.
KM also interfaces with Learning and Development in order to make good on knowledge that must be taught in addition to those “just-in time” job aids that must be presented to a worker at the time of execution in the form of knowledgebase articles.

On the valuation side, KM interfaces with Finance to establish value of knowledge artifacts and the abilities of staff.

KM provides both tactical and strategic support for the organizational mission as far as knowledge is concerned – from operational knowledge-bases, to Communities of Practice, to valuation of Intangible Capital such as trade secrets, methods, procedures, copyright, patents, etc.

In addition KM provides the framework and basis upon which those could be bundled or commoditized to make them available for franchising, leasing/licensing, or sale.

Is it For You?

The CKO role, and in fact organized and institutionalized Knowledge Management, is not for everyone, and the research shows consistently that there are several factors that are indicators that institutionalized KM and a CKO role would deliver a strong ROI.

The higher a firm rates on these items, the more likely there is to be a positive ROI for institutionalized Knowledge Management.
Here we deal with the three broad areas.

  1. The Business Model
  2. The Organizational Culture and Environment
  3. Volatility & Variability in the business terrain

Variability and Volatility deserve special attention since the more fluid and volatile the market, products, and labor pool are, the higher the need to be able to learn quickly and adapt fast and be able to lower the risks of volatility by having on-hand knowledge that represents the best and most current available.

To find out for yourself, try two surveys that I have built

  1. The KM Fit-test Survey
  2. The KMOL-C climate survey

Conclusion

The time to institutionalize Knowledge Management is now – the game has changed and all the old obstacles are either solved or no longer significant hurdles to implementing a formal process to gain control of IC.
There has never been a time in which pure knowledge in the form of know-how and know-who determine the value of a firm, and ongoing survival is going to depend on gaining a high degree of management capability over intangible assets.

~~~

Matthew Loxton is a Knowledge Management professional and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.

Knowledge Management and Organizational Learning – How does your firm shape up?

December 8, 2010

I was going to publish a different post today, but the excitement of having responses to a questionnaire got the better of me.

This week I put up the first release candidate after doing beta testing of a KM/OL climate survey questionnaire designed to measure the Knowledge Management and Organizational Learning beliefs and activity in an organization.

The sample frame was mainly KM/OL people, so there are some inherent biases that limit the degree to which the results could be generalized to the whole working population and all firms – one would for instance expect KMers to be active in social networking, to use Twitter, and probably have a blog or a web page. However, there are still many aspects which would be generalizable and which indeed stood out in the survey results, such as whether the performance appraisal system in use “makes a big contribution to helping [them] learn and develop” – to which a full 50% of respondents said it didn’t. This alone should be a wake-up call to HR and managers, because if your performance appraisals don’t drive learning and development, you are shooting yourself in the foot.

It is a “hair on fire” kind of thing.

.. but first some technical points.

Questionnaire Design

This is a questionnaire, not the result of a magical truth-serum, so there is some margin of doubt as to whether people are telling the truth or fooling around – that said, people are usually quite serious about giving their point of view, and there are ways to detect horseplay.

The sample is small: I had 20 responses to the beta, and 21 to the RC-1 version of which I deleted three either because they were incomplete or because the person was clearly just walking through the questionnaire to see what was in it. With 18 responses there isn’t a lot of generalization that can be done, but it certainly is enough to generate some “hey, what’s this!” moments.

Finally, this is a fast-track survey that I designed in just a few weeks and I didn’t have the luxury of a team of analysts, survey technicians, statisticians, and a trove of existing question items with a known behavior and pedigree. I borrowed some questions from Dubrin (DuBrin and Dalglish 2003), Debowski (Debowski 2006), and some previous work I have done over the years including a survey on eLearning use which I blogged about a while back, but on the whole the question items have little provenance and so one cannot compare this survey too finely against other or previous research uses.
From the beta version I also got a few good ideas from the test respondents, so a big thanks to them in helping me create this instrument. Without their help this would have taken far longer and been far more difficult.

Bottom line, this instrument is a marvelous (says I) tool for identifying trends and issues within a single organization, but you cannot at this point draw any conclusions about industry trends etc. from it.

Now, let’s look as some of the more interesting findings from the sample we have, and discuss what the implications would be if this was your firm.

Let’s start with the big-ticket items.

Frowns and Smiles

Only 27.8% of respondents said that their manager would smile if they saw them doing self-study during work-time, versus 33% that said they would frown, and 39% that said they would be neutral.
This is actually a bit of a disaster, as my previous research showed – if people think their manager would smile, then they not only keep their skills up to date by improving them at work, but they also do it on their own time. In contrast, those that think their manager is neutral about it, do far less at work and none at home, and those who think their manager would frown tend to do nothing about their own professional development at all.
What I found previously was that there is no correlation between what staff think their manager would do and what the managers report they would do – managers almost to a person think they would smile and be supportive, but their staff typically think differently, much of which is based on whether the manager themselves put visible effort into their own ongoing professional development.
Simply put if the managers do not model learning behavior, their staff presume that learning is not valued.

Apropos of which are the 28.7% who thought their managers did not “make a visible effort to improve their own knowledge and skills” and the 33% that couldn’t tell.

If you don’t fix this in your organization you had better like high staff turnover, low levels of discretionary effort and under-performing morose staff, because you are going to have a whole heap of it!

Sharing

It doesn’t take a genius to figure out that teamwork makes the difference between success and failure, and that when it comes to knowledge, sharing behavior is a critical component of achieving that end goal of maximizing shareholder value.

That is why it is alarming to see that while 61% feel at ease to access others in the organization for help and guidance, the same percentage feel that it isn’t true that “Knowledge-sharing is incorporated in the regular staff performance reviews”

So let’s get this right, we think it is important, our people want to do it, but we don’t make it part of how people are measured?
If your performance reviews don’t measure behavior that you definitely want, then what exactly is the point of a performance review?

HR, are you awake?

Organizational Assets

Here’s an IQ test: your company relies on some fancy factory equipment that costs about $100k a year in lease and maintenance and you have several hundred of these machines but don’t keep track of what they are and what they can do.
Is this a company that is going to survive over the long term?

Well over 60% report that their firms do not maintain “a current database of knowledge and skills of all employees”
Ok, so let’s get this straight, the assets that account for about 80% of a company’s value and we are in the dark about their location or capabilities?

HR, are you awake?

Organizational Learning

This one gets interesting.

Although the vast bulk of innovation and growth comes from learning from mistakes, 50% of respondents say their firms do not treat mistakes as learning opportunities and a further 22.2% don’t know, 50% also say that they focus on fixing low performance rather than replicating high performance, and to cap it all 55.5% report that each time their team encounters a problem, they seem to start from scratch to solve it, with the balance reporting that they feel only somewhat that they learnt from previous experiences.

Put that into perspective with the 72% that feel that their firms celebrate “the Superman who saves the day rather than the person who prevents a situation in the first place” and you have a picture of an organization that doesn’t learn or even know what to learn from, reinvents the wheel constantly, and then celebrates disasters.
Remember, you get more of what you celebrate, so if you make a big fuss of people doing heroic things rather than preventing the need for heroism, you will get more occasions that are a crisis and require a hero.
If you ever get the feeling that your company seems to lurch from one disaster to the next, this is probably why.

Work Health & Safety

With over 60% reporting that their work environment was characterized by “interruptions, noises or other distractions” you have accidents waiting to happen, low productivity, high stress, and of course, higher costs.
Research into medical mistakes shows that a huge proportion can be laid at the door of interruptions, and I have no doubt that the same applies to other fields and activities.

HR, are you awake?

Now that you are feeling depressed, you might wonder if there was any good news.

The Good News

Firstly, people seem to be experts in what they do, with over 80% reporting that they regard themselves as an expert in their subject domain, 78% know who the other experts are in the organization, over 60% make the effort during breaks to discuss their work with others, and 50% report that they get good ideas from customers and business partners.
Furthermore, not only are 68% passionate about what their organization is trying to do, but 89% say that having specialized knowledge has cachet in their organization.
Over 77% say that they keep up to date with what goes on in their area of expertise and also regularly attend external seminars and events in that regard, while over 60% go as far as presenting papers or delivering addresses in public on their subject area.
Nearly 80% indicate that they feel at ease in asking for clarification in the event that somebody in the firm said something they didn’t understand, which truly is a triumph of culture.

Of course this is somewhat offset by the fact that 60% also think that doing your job well means not having to care about what goes on in the rest of the company and 56% think that in their teams if something works ok there is no need to experiment to make it better – a surefire way to become obsolescent by embracing creeping conservatism, and it also means that 20% feel inexpert at what they do, 22% don’t know who the experts are, 40% make little effort to talk about what they do, and a stunning 50% don’t see customers as sources of knowledge.

… but then who’s perfect, right?

Web2.0

The use of web2.0 technologies like blogs, twitter, tagging, etc. was high in this sample, but that was to be expected and was even a bit low – fewer had their own web pages than I would have expected, and a some don’t even subscribe to podcasts.
In a more typical cross-section of a workforce, this would be lower, but it would be important that there was some activity in this region and a solid training plan behind teaching people how to use the technologies without making a fool of themselves, exposing the company, or getting themselves dooced.
If your senior staff and SMEs aren’t using podcasts to get domain-specific information while they are on the road and sitting in planes, trains and automobiles, then it is an early sign of trouble.

Conclusions

Knowledge management isn’t about buying a product – it’s about what you do with the knowledge at your disposal, and whether you put your knowledge assets to work in achieving your organizational goals – and whether your bad knowledge management habits work against you, is all up to you.
Whether your staff are keeping themselves at the peak of their game and know who to contact and feel free to do so is as much part of being competitive as having a good product but, is often neglected.

This post covered a survey tool that has been developed to measure the knowledge management beliefs and habits within an organization, and by using the current respondent data as if they were all in a single company, provided an example of what it might discover and where the critical areas might be.

The survey questionnaire is made available under a copyleft attribution basis free of charge, and the author can be commissioned to provide guidance and assessment.
You can try KM/OL climate survey questionnaire out online.

That’s my story and I am sticking to it.

Please contribute to my self-knowledge and take this 1-minute survey that tells me what my blog tells you about me. – Completely anonymous.

~~~

Matthew Loxton is a Knowledge Management expert and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.

Bibliography

Debowski, S. (2006). Knowledge management. Milton Qld, John Wiley & Sons.

DuBrin, A. J. and C. Dalglish (2003). Leadership, an Australasian focus, John Wiley and Sons Australia.

 

Death, Learning, and Corporate Survival

October 26, 2010

Why do mature companies die or grow frail and get eaten?

After all, once they have passed through the helter-skelter of childhood and have attained stability after the hectic days of early formation, why don’t they just live on forever?
This was a topic that interested Arie de Geuss of Royal Dutch Shell and he asked a similar question to one that led to a breakthrough in medical science almost four centuries ago – could the same hold for how we look at corporations?

Death as a subject

In 1662, John of Graunt built tables of mortality for the city of London, listing for each year the numbers of deaths by cause. This required not just the collection of data about death, itself a valuable exercise, but also required him to think in terms of categories of causes of death. Although many of the categories have changed over time, this process of thinking once set in motion, led to steady revision and improvement.

For example, from the year 1632, Graunt lists these as the top five causes of mortality:

Chrisomes*, and infants        2268
Consumption
**                     1797
Fever                                    1108
Aged                                     628
Flock
s†, and the small Pox    531

*Infant mortality before 1 month of age
**Tuberculosis
†Means “sediment”, but it is unclear what Graunt meant by this in conjunction with Smallpox

This systematic approach paved the way for tracking and intervention, and gave birth to the science of demographics and enabled epidemiology to develop.
You could say that Graunt was a necessary and key player in the development of modern medicine.

The Mortality of Companies

In his analysis of companies in terms of mortality, de Geuss created categories from the data that led him eventually to conclude that companies die because they develop learning disabilities – they became deaf and blind, and stopped learning – and therefore eventually succumbed to external forces that they were unable to notice or against which to marshal an appropriate response in time.

I view this in terms of Organizational Learning (OL) – which is why I describe my occupation as “Knowledge Management and Organizational Learning”, and I break it into five major components:

  1. Stimulus-Response Learning
  2. Vicarious and Promiscuous Learning
  3. Scenario Planning
  4. Ongoing Professional Development
  5. Innovation Intent

Stimulus-Response Learning

This is the kind of thing that even an earthworm can do, but which many organizations seem to lack.

If an earthworm touches an electrified wire, it eventually learns to avoid the wire, no matter which part of its body did the touching. In contrast, some companies will repeat the same mistake over and over again, seemingly needing to reiterate the same mistake several times with each and every business unit and team before the message finally gets through and becomes part of its adaptive repertoire.

Being smarter than an earthworm should not be that difficult for a corporation made up of smart people, but it means that internal communications and repositories are done in such a way that if one part of the organization makes a mistake or encounters something that poses a risk, that all other units and geographies have access to that same information in a way that they can actually use (and do!).

This turns out to be more difficult than one might assume and the “plumbing” side of providing email, portals, knowledge-bases, and content management are only about a third of the solution. The remainder is a corporate culture that is able to learn across divisional boundaries, and for this you need both leadership and vibrant Communities of Practice

Many organizations never get this far, and die because the rock that they stubbed their toe on last year, came back and hit them in the head this year.

Vicarious and Promiscuous Learning

Once one has evolved past the realm of Annelids, the next big advantage is to learn from other people rather than needing to take the lumps yourself. This saves money and time, and is therefore a direct competitive advantage.
Rome learnt from Carthage, apprentices learn from their tradesmen, and hopefully a company can actively look for examples of what to do and what not to do by observing others. Except where patents and copyright are an obstacle, the keyword is to “shamelessly borrow” ideas and then modify them to fit localized conditions.

This is best done by the leadership team, and by the Communities of Practice who can effortlessly dig their roots into the pool of expertise and experience that lies outside the organization but within their domain of excellence. When an SME comes back from attending a trade show or seminar they can mutate the ideas to suit the organization and spread them throughout the organization via the interdepartmental CoP structure.

Just achieving this stage will provide a significant competitive advantage and add decades of life-expectancy.

Scenario-Planning

So far we have dealt with the past and the present, and the next evolutionary phase is to consider the future beyond the next departmental quarterly review. Scenario-planning is a toolset that attempts to break at least partially free from the learned helplessness and practiced defensiveness that Chris Argyris outlines as part of “Single-Loop Learning“. By posing “what if” scenarios, there is the possibility, if you are nimble, to catch yourself before the auto-protective blinds come down and to notice the stealthy approach of a hidden predator, or surprise yourself with an outcome that was unexpected.

This is the playground of the giants mainly, because everyone else is too busy “just surviving” to look several years down the pike and try to make out the fuzzy shapes on the horizon or in the shadows. The irony is that it can lead to complacency (look at BP and the recent gulf of Mexico debacle), in the same way that seatbelts and airbags led to less careful driving in some people.

Scenario-planning requires a mix of dogged fact-finding and logical step-wise thinking, systems-thinking, and imaginative brainstorming. Plenty of DIY books exist on the topic, but usually a firm needs external help at least in the beginning. It also requires a mix of culture and technique that is frankly beyond most firms. After producing various scenarios and plotting the likely outcomes, and then working back to find solutions, it requires a very peculiar kind of management culture to stare the scenarios in the face and put money and executive sponsorship behind remedial action.

Although this is a critical component of achieving and maintaining longevity, its very success is a risk, since dodging future bullets makes a firm more likely to become complacent and also to value the process less. People in westernized countries are less likely have their children immunized because they have forgotten or have never experienced the real diseases – dodging them makes them seem less like the killers they are.

Ongoing Professional Development

Another dimension in successfully competing is simply having better skills and intellectual assets than your competitors. This runs the gamut of identifying people with better SKAs than your competition, to acquiring and keeping them, to putting them to work more efficiently and effectively than the next company in your market space. However, time passes, things change, tools rust, and if you want to keep ahead of the competition, having a workforce composed of people who actively pursue their own ongoing professional development is surely the best.

This is also the key element in forming a CoP, and without a culture of ongoing learning, the intellectual assets of a company will slowly gather dust and be buried.
The absence of a vibrant and concerted effort to maintain professional expertise is an early sign of cognitive degeneration in a firm, and a harbinger of senescence. If your staff don’t actively pursue their own ongoing professional development, you are already a dead-man walking.

Innovation Intent

The final dimension is the desire for change, and perhaps the hardest of all to achieve.

As companies age, like people, they tend to grow more conservative in outlook and more comfortable with the tried and true over the new and exciting.

This is a perfectly logical risk-aversive approach since most novelty, most innovation either fails or is deleterious. Mutations, for example, seldom produce an improvement – usually they just result in cancer. So sticking to what has already proven to work adequately is a very safe bet – in the short term.

However, this leads inevitably to rigidity in the face of change and decreased ability to formulate new solutions when the old ones no longer apply. Think of this in terms of bacteria – over time bacteria will acquire resistance to existing medications no matter how effective they were originally, and unless novel attacks are discovered, eventually the bacterium starts gaining ground and flourishes.
For this reason one has to have a deliberate intent to innovate, to test out new approaches and ideas before the old ones are exhausted and overrun.

However, this requires a cultural environment in which experimentation is supported, controlled, and encouraged. An early warning sign is if mistakes are typically punished rather than treated as learning opportunities – If punishment is the first and foremost reaction, then you have a safe bet that there is little innovation and the firm is already gathering moss and accumulating risk.

A word of caution is appropriate here – Major innovations don’t typically come from individual work, nor from steady evolutionary refinement over time, but from importing mature ideas from other domains and collaboration between people and across domains and organisations.
If individual work is rewarded and there is a winner-take-all culture, you already have a massive handicap.

Conclusion

Studying the causes of death in firms serves two valuable purposes – knowing the facts of death itself, and the formation of a classification on which to build remedial efforts. This provides a framework against which to take preventative and generative action, and with careful action, a firm can greatly extend its productive lifespan.

Most of the steps require a cultural component, and all require leadership and executive support that can look beyond the next quarterly earnings. But for those companies that have the character and desire, the processes listed can provide not just a new lease on life, but significant competitive advantage.

~~~~~~~~~

Matthew Loxton is a Knowledge Management professional and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.

Knowledge Management, Training, and Ongoing Professional Development

October 14, 2010

In a previous blog I covered the results of a case study into eLearning utilization and how the single biggest predictor of whether a person used an eLearning license was whether they thought their manager would smile or frown or be neutral if their staff used eLearning materials during office hours.

Not only did people who thought their managers would smile, use the licenses more and for longer, but they also put in significant amounts of their own time after-hours.
The big disconnect was that managers thought they were smiling but staff didn’t see it the same way.

This has significant implications for both the investment in learning materials and for ongoing professional development on the whole.

In this blog I will cover some of the next steps and what I have found by experience.

The Next Step – Engage the Managers

The obvious remedy is to engage managers and get them to conspicuously engage in their own ongoing professional development, and therefore by example demonstrate not just that they would be likely to smile, but that they were themselves eager participants.
Action, it would seem, might speak louder than words, or what managers believe their words portray.

Two immediate obstacles are likely to present themselves though – firstly, many managers regard themselves not as professional managers, but as SMEs who by virtue of seniority have been burdened with the unwanted baggage of managing other SMEs.
Secondly, even once that hurdle is crossed, the selfsame problem of perception about leaders disposition towards eLearning applies to managers – they are unlikely to take advantage of learning opportunities if they think that their managers do not value ongoing professional development.

This leads to infinite regress all the way to the CEO and beyond.

Before the managers will stick their necks out they need to know that senior executives would approve, and also to see learning behavior exhibited by the senior execs.

It comes down then to whether the senior executives will not only say good things about ongoing professional development, but also model the desired behavior themselves – If managers do not see both forthcoming from the executives, then they are likely to demure on self-development with the simple excuse that they are “too busy”, which is essentially shorthand for “not unless my boss makes it a priority”.

What to Do?

Getting senior executives to participate is the easiest thing, and the most difficult.
If managers ask for it, the execs are likely to wholeheartedly agree that budget needs to be allocated to training, that it should be done during office hours, and that managers have the duty to see that it happens – and they will generally be quite happy to include some choice phrases to this effect in their memos and speeches.

However, they simply won’t do any themselves.

The reason for this seems in many cases to be a mixture of three causes, one familiar, and two new.

  • Our old friend, “My boss doesn’t value it”
  • “I do my own development and it’s none of your business what that is”
  • “I don’t need any”

There are many technological ways to smooth the path, such as putting short audio-summaries of current books on their Blackberry’s or iPhones, printing out the 8-page pdf summaries for them to take on the plane, or subscribing them to business podcasts that deal with their divisional specialization or industry. Recorded interviews with business luminaries or respected leaders can be put on Blackberry or iPhone, as can short video clips from industry analysts. Technology updates on things like SaaS, Cloud Computing, and many other topics can be made available at the touch of a button (or few), and many can be done automatically via RSS feeds or concentrator applications like iTunes.

However, if they do not view it both as part of their duty as custodians of the corporate learning culture, and in their own benefit – and more to the point: that the CEO thinks so, then it is unlikely to happen no matter how technologically enabled it is.

The key would seem to be the CEO then.

The CEO

The CEO is under constraint and direction of the Board, and they in turn are beholden to the major shareholders who mostly want to know about EBITDA contributions and share-price growth, not training and ongoing professional development.
Likewise, the view of analysts and customers must be considered, and while customers are generally very happy to hear that a supplier keeps their staff well trained (and might be prepared to petition for it), it isn’t going to be very high on either constituency’s list of desired corporate achievements.

The problem then boils down to whether the CEO feels strongly enough about learning to stick their neck out and make it an issue, which they are not likely to do unless it has a good chance of success and has broad support and enthusiastic champions within the rank and file. Sticking out their neck on something that is likely to be a flop and not highly demanded is not a habit that many people acquire on their way to becoming a CEO!

Which brings us back to D’Oh, … or rather, to middle management.

Back to the Middle

Unless the middle management show passion about developing the skills of their staff and are prepared to push the executives on the topic, there will not be the kind of groundswell that would make a CEO likely to take up learning as a cause.

It all boils down to the importance of middle managers and their self-image as professional managers responsible for the well-being and development of their staff, and being prepared to make an issue of learning even though the executives do not seem to be modeling learning behavior (yet).
However, once they take the first step and have the initiative to step forward and be the example first and to drive learning in their own teams, then the door opens for the CEO to step through and for the executives to follow and start modeling the behavior themselves.
Once middle managers take the initiative to view learning and modeling of learning behavior as something for which they must make time, then the rest can follow.

It is the middle manager who can add learning activities to annual staff performance appraisals, and make that part of the criteria for awards, bonuses, and other rewards. It is the middle manager who can regularly ask staff about their progress, and who can align training units to team objectives. It is also the middle manager that most knows precisely what training is needed and which staff members would most benefit (and most deserve) the funding for training materials. They are also the only people who are in a position to allocate time for people to use the training materials, or to present tutorials to other members of the team.

It is again a case of organizational change happening from the middle up and middle down, and a clear illustration of why it is vital that middle managers see themselves as management professionals rather than as SME’s with an unwanted burden of having staff!

Conclusion

To get a culture of learning embedded in an organization and to reap the benefits of a highly-trained and current workforce, my experiences and research lead me to believe that two constituencies are crucial – the passionate activism by middle-managers on behalf of their staff, and a CEO that is prepared to be the sponsor for a learning culture (even if they later delegate it to a prominent CxO or EVP).

If you miss the middle, the ends unravel.

~~~~~~~~~

Matthew Loxton is a Knowledge Management professional and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.

Silos, Leadership, and CoPs: How to stay on target and build expertise

October 13, 2010

Introduction

Over the years I have often heard bitter complaints about “Silos” within organizations, and have seen many attempts to dismantle or at least de-claw institutional “silos” – sometimes with limited and short-term success, and other times with deleterious results.

In this blog I argue that these divisional boundaries are not just a natural manifestation of vertical specialization common in almost all large organizations, but that they are also vital and indeed necessary for the smooth functioning of the organization itself.
The counterparts to silos, and ways to deal with the downside of silos will also be discussed.

Silos – The Causes and the Upside

Once any group reaches around 70-150 people, it naturally fragments and if you want people to focus on key objectives and deliverables, vertical structures are close to mandatory in order to achieve success.

The reason we need to have a Customer Support division in a vertical structure distinct  from Consulting, Sales, HR, etc. is that each needs to focus on deliverables and goals and not get distracted by what other groups are doing.

Paying attention to the job at hand and staying on track with the KPIs and metrics common to the others in that divisional group is vital to delivering the desired results.
So the silos have to stay – unless you can afford to have people just doing whatever they feel like doing.

A counterargument to this is of course the Open Source or Crowd Source example, where the job gets done simply because people who may only contribute a single thing will do so out of intrinsic interest.
However, while this is clearly a model worth looking into, at this point it is unclear whether these discretionary acts are actually a form of parasitism on the traditional work structures – i.e. people tend to only donate excess capacity to Open Source when they have already secured a formal occupation that pays the bills.

Silos represent one of the few strong points of Taylor’s “Scientific Management” – keeping goals clear, simple, and tightly measured usually results in achieving desired results with a minimum of waste of resources or time.

The Downside to Silos

The complaints about siloed behavior are not without cause and many firms have seen internecine warfare erupt amongst divisions over resources, and all of us must have witnessed poor Organizational Citizenship Behaviors that result from an “us vs them”” sentiment within a company.
It is even quite common to find that divisional goals and metrics are mutually destructive – that the success of one division leads to damage to other divisions, sometimes even to the point that one division will pursue goals in a manner that does irreparable damage to the organization as a whole.
You might even have wondered if that division wouldn’t be better off working for the competition!

I have seen cases in which a Networking Sales group of a company refused business on the grounds that it wasn’t in their group’s best interests, but which resulted in disqualification from tendering on far more lucrative tenders for several other divisions in the same firm.
Likewise I have witnessed a Consulting team achieving fantastic results and plaudits all round for implementations that caused long-lasting damage to the Customer Support group and resulted in severe customer dissatisfaction.
A final example is of a sales-team that overachieved quota, but at the expense of both the Consulting group and the Customer Support division, and which virtually crippled the R&D team for years.

In all these cases the achievement of narrow goals and single-minded focus of one silo caused more harm than good when viewed from the perspective of the entire organization.

A second area of damage is degradation of skills and diminished organizational learning.
Divisions are usually largely homogenous in terms of goals and objectives, but are often diverse in terms of functional expertise – several different divisions might each have similar roles, for example salespersons, project-managers, managers, and so on.
By segregating project managers from each other and embedding them in distinct divisions one achieves better focus, but at the cost of loss of knowledge and reduction in organizational learning.
Mistakes tend to be repeated across the organization and discoveries or innovations in one part of the firm may never be utilized or even known in another.

There are two basic approaches to dealing with the negative side of Silos

  1. Managing them
  2. Balancing them

Managing Silos – The Leadership Way

The conflict can be solved by leadership at the executive level, and senior managers need to be aware not only of where their division fits in the overall scheme of things, but also how their actions impact other divisions. Often the term “Leadership Team” is more a desire than actuality, and unless there is real teamwork between the managers of different interdependent groups, Organizational Citizenship Behavior (OCB) amongst staff is unlikely.

It isn’t enough to just be friendly in the boardroom – OCB must be visible in the actions of the leaders, and embodied in their presentations and memos, and other communications within their group must be peppered with references to cooperative activities and policies, and must contain specific examples of cooperation and interaction with other groups.

If this isn’t done consistently, continuously, and deliberately, an “Us vs Them” mindset in staff is the default that will slowly creep back in as the operant behavior pattern.

Celebrating the successes of other departments is a good example of highlighting that “they” are “Us”.

Balancing Silos – The Community of Practice Way

To solve the problem of fragmented disciplines and the degradation to Organizational Learning, it is necessary to re-connect the areas of expertise in a way that enables cross-pollination and information flow without diluting their departmental focus. The command & control hierarchy needs to stay according to the organizational chart, but a new, informal structure such as the Community of Practice (CoP) should be built in order to let SMEs communicate with and learn from their peers.

A CoP of Project Managers, for example, enables “lessons learned” to be spread beyond divisional walls, and also opens up the opportunity for innovation – such as when PMs in one division mature a process that can be imported as a practice by another.

CoP’s cannot however be created by fiat – you cannot simply decree that one exists and then expect it to flourish. Instead it occurs by intrinsic reward and attraction, and with the support of the organization through provision of time, space, tools, and acknowledgement.

What the formal organizational structures can provide is resource support in the form of infrastructure such as meeting time during office hours, occasional travel funding, stationary and supplies, meeting rooms and equipment, and the like.
The bigger support though is intangible – it is the explicit and tacit acknowledgement of expertise by management all the way up to the CEO, visible respect for the fact that the organization has experts in the domain, and some degree of deference to that expertise.

It becomes visible in simple but powerful messages – like when a management meeting is rescheduled or relocated to a different venue when it clashes with CoP meeting or event. This sends a clear signal that expertise is a highly-valued quality, and that demonstrating one’s expertise in an organized fashion earns respect.
That respect engenders awareness, identification, and a desire to contribute and participate.

Conclusion

Silos are a natural part of the corporate ecosystem and need to be retained, but like any organism, may need to be pruned or trimmed occasionally. Silos can be kept healthy by managing them properly in ways that show the interdependency of each and its relationship to the success of the whole, and by balancing the formal structures of the Silos with the informal structures of expertise to be found in Communities of Practice.

That’s my story and I am sticking to it.

~~~

Matthew Loxton is a Knowledge Management professional and holds a Master’s degree in Knowledge Management from the University of Canberra. Mr. Loxton has extensive international experience and is currently available as a Knowledge Management consultant or as a permanent employee at an organization that wishes to put knowledge to work.


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