What’s the ROI of enterprise 2.0 learning?

Many a corporation misses massive opportunities by demanding to know “Where’s the ROI?” in cases where ROI is an inappropriate and misleading indicator. Permit me to explain why.

Return on Investment means different things to different people To some, ROI is a hurdle a project must achieve to warrant investment. To others, ROI is a way to coax people to make the business case for a proposal. Some treat ROI as a formula, others as a philosophy.

Typically, the higher you go in an organization, the more expansive the definition of ROI and the less reliance on it in decision-making. A $10,000 decision is likely to require ultraconservative estimates, solid arithmetic, and measurements in accordance with Generally Accepted Accounting Principles. For a $5,000,000 decision, corporate politics, intangible benefits, and gut feel may overrule the numbers. And at the $50,000,000 level, the numbers are at best a footnote to the real way executives make decisions.

Picture this: A CFO has calculated an ROI of 154% for Project A and 155% for Project B. His CEO must decide which project to back to the tune of $100 million. Can you really imagine the CEO will make the decision based on ROI?

“You can’t manage what you don’t measure” is nonsense. The vast majority of what senior executives manage is immeasurable. They make judgment calls; they play hunches. How else do you select the right people for key jobs? How else do you choose your partners? How else do you divine the future? Organizations pay senior executives handsomely to buy their ability to make wise choices in the absence of simple measurements.

Intangibles rule

Business enterprises exist to create value for their stakeholders. Once upon a time, value as profit was a good proxy for the value earned by investors. Profit, the proverbial bottom line, is the difference between revenue and expenses, and these relate back directly to changes in accounts on the balance sheet. Balance sheets record tangible assets: factories, land, trucks, and paperclips, things you can see and touch.

In 1982, intangibles accounted for less than a quarter of the value the U.S. stock market. By 1999, intangibles, the no-see-ums, made up more than 80% of the value of the market. Balance sheets do not record intangibles, things like know-how, customer relationships, and reputation. On the balance sheet, highly-skilled people have the same value as new hires: zero.

Imagine Google. Google’s book value, e.g. the stuff you can see and touch, is roughly $5 billion. Investors value Google stock at more than $13bmillion. The $125 billion bump is what investors are willing to bet that Google will get better and bigger. This is entirely intangible, i.e. not on the books and not on the bottom line.

If you were making decisions at Google, what would you pay attention? Would you do ROI calculations on what might impact the $5 billion? Or would you make decisions to impact the $130 billion?

Where’s the ROI from implementing interactive technology?

I’m going to take ROI back to its roots. Instead of using the conventions of 19th century accounting, I’ll define return as an increase in shareholder value.

When interactive technology (blogs, wikis, social software) is applied to an area for the first time, the results can be staggering. Consider these three examples where costs were negligible, and returns are counted in eight figures.

  • Three years ago, a staffer at Intel set up a wiki for sharing information among individuals throughout the company. It grew organically and has become a vital source of information throughout the company. Usage has surpassed a million page-views. The wiki is doing what knowledge management systems and intranets were supposed to do. The software was free. The wiki is self-maintaining. Benefits include time saved looking for things, less likelihood of using dated or inaccurate information, and accelerated ramp-up of new hires. If the system saves 30 minutes a week for its 20,000 active users, that’s more than 200 person-years, i.e. $30,000,000 or more in annual savings. The software was a free download. (Here’s a four-minute video on Intelpedia.)
  • Four thousand professionals at CGI receive news and updates in their specialties by subscription instead of foraging for research findings on their own. There’s less likelihood of important developments slipping through the cracks, and the consultants can bill at least one incremental half-hour a week per person with the time saved. The value of two thousand billable hours per week? Astronomical. Costs were minimal.
  • Tax preparer T. Rowe Price encouraged seasonal tax-preparation staff to contribute Frequently Asked Questions to a central repository. The central source of questions and answers enabled the 1,500 support staff to shave two minutes off the duration of the average customer phone call. The result? Better customer service and $15,000,000 in annual savings.

Business
ROI

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What do you want to improve?


Business
ROI

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How to cost-justify enterprise and informal learning

SHOW ME THE MONEY
Excertps from Informal Learning

Learning is not compulsory but neither is survival. R. Edwards Demming

It’s an immutable law of business that words are words, promises are promises, but only performance is reality. Harold Geneen

It’s like arguing in favor of the plough. You know some people are going to argue against it, but you also know it’s going to exist. James Hughes

Informal learning is the path to organizational capability, agility, and profits. It also respects workers and challenges them to be all they can be.
“Fine,” you say, “but my company is not going to go for any of this unless I can show them a solid return on investment.” Tell them about these examples of informal learning which we’ll explore in more detail in chapters ahead.

GETTING DOWN TO CASES

Sales force readiness

A global technology leader is moving at a fever pitch, acquiring a new company on average once a month. The company maintains its competitive advantage by providing its sales force and customers with instant access to case studies, product specs, sales tools, and insight into future trends. Company thought leaders in twelve strategically important areas meet in person to update one another, talk with customers, and what’s new in their field. The firm “Google-izes” this content, making it searchable with ease but also retrievable as video-on-demand, podcast, presentation, or text. The result is a better-informed sales force, more competence on sales calls, more cross-selling, better presentations, and ease in bringing partners up to speed.

Access to expertise

Knowledge workers waste a third of their time looking for information and finding the right people to talk with. Frequently they spend more time re-creating existing information they were unaware of than creating original material. Expertise locators direct workers to people with the right answers. Organizational network analysis pinpoints bottlenecks and poor connections. Bottom-up systems provide exception-handling workarounds and rules of thumb. Instant messaging accelerates information flow. Reduced search times, streamlined organizational processes, and finding people faster can increase worker productivity 20% – 30%.

Transformation

A major semiconductor company transformed itself from near-bankruptcy to record profitability in three years. They used group graphics to develop and communicate a new strategy throughout the organization. 95% of employees could explain the strategy and how they contributed to it personally. No formal training took place.

”Many companies nurture communities
of customers provide an on-ramp for new
customers and fresh ideas for old hands.”

Innovation

Times of change require new approaches, and conversation is the parent of innovation. Organizations are re-designing the workspace to encourage meaningful conversation. Mind maps and visualization tools accelerate discussion. Concept prototyping multiplies the volume of new ideas generated by workgroups. On-line collaboration and discussion software spark innovation among far-flung groups that share common interests. Formal learning promotes a curriculum; informal learning encourages thinking about opportunities.

Increase IT flexibiity

An organization that brings internet technology and internet culture inside the firewall reduces Total Cost of Ownership. Workers do not need to learn a new interface to participate. They already know how to search, blog, navigate, and add features. Software improves incrementally instead of in disruptive new versions. Modular web services replace brittle, hard-coded monolithic systems and flex with change.

Increase sales

The more people know about a product or service, the more likely they will buy it. Many companies nurture communities of customers provide an on-ramp for new customers and fresh ideas for old hands. The company provides the platform, be it space at a trade show or directions on building a group website; the customers provide the content. Loyal customers are great sales people. Beyond that, they are often the source of new product ideas.

Improve work processes

In a knowledge-based economy, said Shell Oil’s Arie De Geus, “the ability to learn faster than your competitors may be the only sustainable competitive advantage.” Nonetheless, when it comes to learning, most companies are akin to the lumberjack who was too busy chopping down trees to sharpen his axe. Learning is a skill, not a given. Meta-learning, helping people learn to be better learners, underpins continuous improvement across the firm. Improving worker process skills such as speaking and writing opens up the circuitry through which knowledge flows.

Reduce stress

Job stress devastates work performance. Stress has been implicated as a factor in heart disease, stroke, diabetes, ulcers, depression, serious accidents, alcoholism, and hypertension. Three out of four American workers report stress on the job. Health care expenditures are nearly 50% higher for workers who report high levels of stress. Attacking the problems associated with stress head on and giving workers more control over decision-making make dramatic improvements. One organization reported reducing tension by 65% and aches and pains by 70%. Participants were 65% less angry, 70% less worried, 87% less fatigued and 68% happier. There was a 44% decrease in their desire to leave the company and a 52% decrease in the desire to quit their jobs.

Unlock worker potential

The role of management used to be to tell workers how to do their jobs. “You’re not paid to think,” Frederick Taylor told workers. That’s history. Today, people are paid to think. Formal training is deemed successful if everyone passes the test or demonstrates enough to get by. In contrast, informal learning helps people “be all that they can be.” Informal learning also appeals to the incoming generation who are accustomed to learning from small chunks of information and snippets of conversation.

Optimize return on investment

In the knowledge economy, a superlative performer is not just 20% more effective than average; she can easily be ten times as productive. Seasoned workers, the “big middle” between new hires and senior staff, generate most of a firm’s profits, yet formal learning historically targets new hires and novices. Mid-career professionals don’t have time for classes; their learning is haphazard and unmanaged. If you were starting with a clean slate, you would probably focus the training budget less on formal learning for novices and more on informal learning for high performers.

Increase professionalism

Workers develop professional expertise in loose confederations of like-minded individuals. For example, engineers with an interest in optical computing might meet for beers after work to swap stories about breakthroughs and what’s on the horizon. Security experts come together when facing a common threat. Corporations that support these communities of practice by providing worker time to participate and technical support to capture and distribute their conversations stay on top of new developments, foster camaraderie, and avoid the unnecessary step of requiring subject-matter experts to explain things to instructional designers.

Self service

As business removes the labor content from services, often service improves while costs go down. We enjoy the convenience of the ATM, pumping our own gas, and ordering merchandise over the net. Informal learning brings the same benefits to acquiring knowledge: greater user convenience and lower overall cost.

Improve morale

Knowledge workers balk at being told how to do their work; it’s seen as micromanagement and an insult to the worker’s abilities. People enjoy conversation and learning; they do not relish listening to pontification from the podium. Formal training is top-down. By contrast, informal learning trusts the worker with the decision of how to master new knowledge and skills. This, in turn, increases morale while lowering turnover.

Impromptu meetings

Companies invest heavily in annual sales meetings and other galas under the big tent. Lead time for large events is six months or more. Often 90% of more of the air time is devoted to presentations. I’m not one to complain about occasional celebrations or parties, but they are a poor way for people to learning anything. Participatory sessions, conducted as needed and often by surprise costs less and get more across.

Conversations

Conversation is the most powerful learning technology ever invented. Conversations carry news, create meaning, foster cooperation, and spark innovation. Encouraging open, honest conversation through workspace design, setting ground rules for conversing productively, and baking conversation into the corporate culture spreads intellectual capital, improves cooperation, and strengthens personal relationships.

Keeping up

San Franciscans know that when the ground shakes, rigid structures crumble and flexible ones roll with the punches. The acceleration of time, globalization, outsourcing, software interoperability, open-sourcing, supply-chaining, and more are rattling the foundations of business. As we’ll see in the next chapter, business is going from push (rigid, conforming, monoliths) to push (flexible, innovative, small pieces). Training programs are push; top down, teaching the standard, difficult to revise. A learning platform is pull; dynamic, always responding to change. What is the ROI of survival?

EVALUATING INNOVATION

Successful business people make decisions based on reasonable expectations of future returns. In general, the more senior the leader, the further out the time horizon. The further in the future, the less precise the expectation. Great leaders have vision, not exactitude.
…..The investment community is, misguidedly in my opinion, fixated on quarterly results. But wisdom tells us that perpetually focusing on short-term numbers is not a prescription for long-term success.
…..Given a choice of now or later, senior managers want both. How can we deal with this conundrum? I’ll suggest that we adopt the perspective of a supremely successful businessperson, someone like Andrew Carnegie.
…..Andrew Carnegie rose from abject poverty to unimaginable riches through enlightened management and sound investments. He quit at the peak of his game, sold his holdings to J.P. Morgan, built himself a castle in his hometown in Scotland, and spent the rest of his days giving his fortune to good causes. As a businessman, he did not put up with foolishness.
…..When you’re evaluating an investment of time or money, or a new approach, say, informal learning, ask yourself, “What would Andrew Carnegie do?” Ask yourself the questions he’d ask. Get to the heart of it: does this project feel right? Is this the best use of your hard-earned money? Will this pay us back for taking a risk on it?
…..If a learning project—make that any project—does not make business sense, don’t do it. If the return on investment is not so slam-dunk obvious that you can sketch it out on the back of a napkin, do something with a higher return.
…..By the way, Carnegie favored informal learning. He was convinced “that much of that which is taught in the schools is of no value whatsoever in connection with the business of earning a living or accumulating riches. He had arrived at this decision, because he had taken into his business one young man after another, many of them with but little schooling, and by coaching them…, developed in them rare leadership.” (Hill, 1937)

WHAT DO WORKERS WANT?

Knowledge workers demand respect for who they are. They expect to be treated fairly. They thrive when given the freedom to decide how they will do what they’re asked to do. They rise or fall to meet expectations.
…..This is hardly new. They want life, liberty, and the pursuit of happiness. What’s new is that if they don’t get those opportunities, they will work for someone else. Talent is scarce and getting scarcer.
…..Ask yourself about your workers. Are they happy? Are they proud of what they do at work? Do they lead the lives they want to lead? Are they preparing themselves for the work of the future? Are they progressing in ways that increase their economic value? Do you think they feel they’re doing their part to make the world a better place? Are they satisfied with their jobs or looking for the quickest escape route?
…..Extreme high performance is generally coupled to the “flow experience.” Working at peak levels converts work into joy. Some find it addictive. It’s a better incentive than money.
…..Psychic income is real. I just read a note from someone who attended my first day-long workshop on informal learning. (If you really want to learn something, teach it.) The students were Chinese knowledge workers and professors. I was not confident that I’d gotten my message across. Then I found this on the wiki I’d left behind for follow-up.

“One message I got from Jay’s speech is the exponential acceleration of, not only the learning evolution, but the evolution of intellectual humankind. I feel enlightened and liberated. I am reminded of Plato’s Cave. Imagine humankind finally taking away the chains on their legs and necks, turning around to see that the traditional learning contents are but the shadows of the puppets manipulated by marionette players (instructors? Unfortunately I am one of them.) Will we, among the first released prisoners (thanks to Jay), become one of the intrepid pioneers to walk toward the light from outside of the cave, and ‘dive in’ the realities of the world?”

Now I am walking on air. Everyone should feel this good. You don’t receive rewards like this unless you have the latitude to make your own choices.

HOW CAN I TELL IF IT WORKS?

“How do I know that a graduate of one of these off-campus programs has learned anything?” snarled an accreditation official in the early days of distance education. “And how do we know if a Stanford grad knows anything?” came the retort of my boss, the future founder of the University of Phoenix.
…..He and I both knew academia’s deep, dark secret: outside of the school system, grades are meaningless. In fact, it’s hard to find a more random variable. Grades do not predict wealth, happiness, income, health, social standing, home ownership, optimism, or professional standing. The only place grades matter is at other schools and for professional credentials. So if grades make no difference to a graduate’s wellbeing, are students learning anything at school?
…..Traditional schools take attendance. That must count for something, right? Actually, the literacy rate in America was higher before we made schooling compulsory.
…..I talked with Don Novello (“Fr. Guido Sarducci”) about his routine, the Five-Minute University. In five minutes, you learn everything the typical college graduate remembers after five years. Where did he come up with the idea? “It’s all true, man,” he replied.
…..When I was championing the advantages of eLearning at the end of the last century, many people questioned whether self-directed learning could ever be as effective as a live training session. I questioned whether it could be worse. A few data points on the effectiveness of American classroom education:

40% of American adults (upward of 70 million people) did not know that Germany was our enemy in World War II. (Davis)

50% or high school students were unaware of the Cold War. 60% of the same group had no idea of how the U.S. came into existence. (Davis)

60% of adult Americans claim never to have read a book, 50% believe in UFOs, 42% cannot find Japan on a map. (Berman)

(In school) He learns to sit still, to line up in orderly rows, to take instructions, to feel guilt for his natural impulses – and perhaps to do a few simple things that he could learn to do one-fiftieth—yes, one-fiftieth-of the time it usually takes him. (Leonard, 1991 )

Formal Training Has Scant Impact

Training managers have complained for years that senior managers don’t understand the value of training. That’s why training is often the first area to get the axe when business heads south. And that’s also why training managers don’t get to “sit at the table” with the organization’s decision-makers.

Only 10% to 20% of training transfers to the job.

At least 90% of American Industry’s spending on training fails to result in transfer to the job. (Ford, 1997)
…less than 20% of training transferred to the job. (Brinkerhoff, 1994)
Most of the investment in organizational training and development is wasted because most of the knowledge and skills gained in training (well over 80% by some estimates) is not fully applied by employees on the job (Broad and Newstrom, 1992).
… more than 10% of the expenditures [on job training] actually result in transfer to the job (Baldwin and Ford, 1988).

Training is a necessary but insufficient means of changing worker performance.

The leading human performance authorities “have all demonstrated that most performance deficiencies in the workplace are not a result of skill and knowledge gaps. Far more frequently, they are due to environmental factors, such as lack of clear expectations; insufficient and untimely feedback; lack of access to required information; inadequate tools, resources, and procedures; inappropriate and even counterproductive incentives; task interferences and administrative obstacles that prevent achieving desired results.” (Stolovicth, 2002)
…..Geary Rummler determined training accounts for but only about ten percent of the potential for changing performance on the job. (Other factors are incentives & rewards, information, & feedback, support & resources, individual capacity, and motives & expectations.)
…..As we’ve seen, training departments manage only the 20% of training that is formal, assuming that informal learning is not in their charter.
…..Working with averages can be tricky. (You can drown in a river that’s an average of 6” deep.) Nonetheless, even if we beef up the numbers to compensate for double-counting, the impact of formal training is at best a drop in the bucket.
…..Let’s do the math. 20% x 20% x 10% = 0.4%. This implies that formal training is responsible for less than 1% of the potential change in performance on the job.
…..”Tragically, many firms have mistaken measuring activity for measuring results.”[end display text]
At least half of most companies’ investments in training go down the toilet because the training occurs too far in advance of its application. You lay down a great bottle of wine, leave it undisturbed, and open it a dozen years later to discover ordinary wine has become extraordinary wine. Bottle your great knowledge, leave it undisturbed, and when you open a dozen weeks later, the bottle will be empty.
Maybe the executives do understand the value of formal training. They’ve determined that in its present form, it’s not worth much.

Don’t Get Fooled Again

“You cannot manage what you cannot measure” is one of the oldest clichés in management, and it’s either false or meaningless. It’s false in that companies have always managed things–people, morale, strategy, etc.–that are essentially unmeasured. It’s meaningless in the sense that everything in business–including people, morale, strategy, etc.–eventually shows up in someone’s ledger of costs or revenues. Measurement, in other words, is a worldview, not just a scorecard. It is a means of thinking and acting, as well as measuring.

Tom Stewart, The Wealth of Knowledge

Businesses exist to create value, and the source of value resides outside the learning function. As the late Peter Drucker has pointed out, “Neither results nor resources exist inside the business. Both exist outside. The customer is the business.”
…..Tragically, many firms have mistaken measuring activity for measuring results. Training directors measure participant satisfaction, the ability to pass tests, and demonstrations. They don’t measure business results because they don’t own the yardstick by which business results are measured. Elaborate learning management systems track who has attended what, courseware distribution, workshop schedules, test scores, and online course completion, but not business metrics.
…..Especially egregious is the advice from consultants to measure performance using traditional accounting rules. This gives the false precision of hard numbers. Unfortunately those numbers are almost always off because they attribute no value to intangibles. Invisible assets such as intellectual capital, customer relationships, brand image, and business intelligence are worth far more than plant and equipment but they do not appear on a traditional balance sheet.
…..People have told me intangibles do not count because they are impossible to measure. It’s as if what you cannot see is not really there. Tell it to Wall Street. Google is worth $3 billion on paper (using traditional accounting measures). Investors value Google’s stock at $125 billion!!! That’s more than the value of Disney, The Washington Post, The New York Times, The Wall Street Journal, Amazon.com, Ford, and General Motors combined. Where is the missing $122 billion? It’s invisible stuff like brand, culture, and a team of people investors expect to keep minting money for them. Intangibles are real. You can’t see air either, but you can’t live without it.

The appropriate measure of learning is how good a job one is doing. Training metrics should be business metrics.

Paying attention to pragmatic end-measures will bring informal learning to prominence, but the switch is only now starting. In the next chapter, we’ll look into what’s just emerging.

Business
ROI

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What’s in it for you? What’s in it for THEM?

Let’s imagine you’re convinced that your organization needs to adopt an ecological, holistic approach to learning. How do you get skeptical management on board? How do you overcome the inertia of the day-to-day in order to lay the foundation for the future?

Begin by figuring out where you are. Are you just starting out or down the path a ways? Is management pushing for the change or resisting it or unaware? Is your organization’s use of web 2.0 in infancy, childhood, or maturity?

Select business drivers for change. Don’t try to solve all problems at once. One or two make for a good start:

  • Speed up the flow of information through the organization
  • Improve customer service
  • Streamline workflow and slash bureaucracy
  • Unleash the power of collective intelligence
  • Create a nerve center for corporate news and market intelligence
  • Make all corporate know-how accessible 24/7
  • Recruit best candidates for new positions and make them productive quickly
  • Replace training classes with informal, hands-on learning
  • Open the process of innovation to all employees
  • Help workers build strong, supportive relationships
  • Enable managers to assess the status and direction of projects
  • Empower all employees to contribute ideas and feel part of the team
  • Better relationships with customers, prospects, recruits, partners, suppliers

Are you trying to save time, increase revenue, cut costs, or improve efficiency?

For a more extensive list, check out What do you want to improve?

Consider your options
You might pick one of the learnscape patterns here or in the printed material: professional subscriptions, central information sharing, voluntary social networks, and so on. Perhaps something on this list will lead you to an ah-ha moment.

Organizations & community
ROI

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Services

Bringing the Learnscape Architecture approach into your organization

Informal learning often falls through the cracks. No one’s responsible; you don’t find it in budgets or job descriptions. Generally, this most important of activities for sustaining performance and driving innovation is left to happenstance. As one of the few areas that has been neither managed nor streamlined, the upside for doing a better job of it is often enormous.

We can help your organization experiment with using natural, informal learning to:

  • improve corporate responsiveness to change
  • foster a culture of continuous improvement
  • facilitate teamwork and collaborative problem-solving
  • replace traditional training with self-service, on-demand learning
  • build on social networking and web 2.0 in learning
  • keep professionals abreast of new developments while reducing cost
  • raise the bar from passing the test to learning without limits
  • reduce superfluous email and bureaucratic bloat
  • attract and retain inquisitive, self-motivated talent
  • shift responsibility for learning from managers to workers

Every organization is different, so every engagement we undertake is custom. Experience has taught us that cookie-cutter approaches don’t work well when changing organizational cultures.

Where to start, what it will cost

Typically someone in the organization will have read Learnscape Architecture: Getting Things Done in Organizations and spotted an opportunity to give it a try in-house. In rapid succession over the course of a month, we walk through these steps together:

  • exploratory telephone conversation to talk over what you want to accomplish
  • conference call with members of project team to set direction
  • online organizational or unit survey of practices and attitudes
  • review findings, determine approach, and plan visit
  • select one or two dozen internal change agents to work with
  • webinar to explain learnscape architecture approach
  • onsite workshop to generate enthusiasm for informal learning
  • corporate license to Learnscape Architecture tools and reference
  • action plan for informal learning experiments going forward
  • change agents do internal selling to establish beachheads
  • conduct prototype Learnscape projects
  • assess results of prototypes and plan future Learnscape

Fees for a bundle of activities like this, including a workshop for your team, start at $6,000 plus expenses.



Similar services are available a la carte.

A day of consulting

Sometimes just spending time together, reflecting on critical issues, reviewing organizational readiness, exploring your learnscape, and brainstorming learning strategies is sufficient to get you going. Typical fee $3,500 for first day, $3,000 per day thereafter.

A session on the phone

Just need some quick virtual advice, brainstorming approaches, elaboration of a case study from the book, or personal explanations of learnscape issues? Let’s talk on the phone. Typical fee is $425/hour with a two-hour minimum.

Public presentation

We speak at conferences, trade shows, user group meetings, and educational sessions around the globe. Fees for onsite presentations start at $6,000.

Webinar

We deliver presentations and Q&A sessions for prospects, in-house groups, executive retreats, and sales meetings. Fees for a one-hour session start at $1,500.

Survey

Sometimes it’s useful to hold your organization up to a mirror to gather ammunition to convince others of the need for change. We prepare questionnaires, conduct surveys by email (anonymous or open), provide detailed reports of findings, and provide interpretation. Fees for a twenty-item survey, including all administration and reporting, start at $1,000.

Business
Meta

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Collaborate or die

The Wall Street Journal, Business Week, Forbes, Stephen Colbert, the Manchester Guardian, Learning Circuits, and other leading voices can’t stop talking about Web 2.0. You’ve read the stories: The web is now the read/write web. Wikipedia is an encyclopaedia of 9.1 million articles in 253 languages, written entirely by volunteers. Facebook, YouTube, and Flickr are growing faster than the web in its meteoric growth phase. There are 70 million blogs online, and 120,000 new blogs are created every day (that’s about 1.4 new blogs per second). These phenomena are global; only 35% of all blogs are in English.

This is all well and good, but it provides no guidance to the manager who wants to take advantage of the new technologies. Managers need to know the opportunities and the pitfalls, applications and benefits, tricks of the trade and lessons of experience. That’s the sort of thing I intend to start (but not finish) here.

The Web is chock full of explanations of blogs, tags, and other social software.1 I interviewed scores of people to capture their thoughts on the human side of implementing and sustaining collaborative networks. As you would expect, people have different notions of what works. I’ve tried to capture these multiple perspectives in the checklists and vignettes that follow.

Collaboration rules.

When people work together instead of individually, they produce greater results and derive more pleasure from their work. Until quite recently, collaboration was not easy, especially when distance was involved or people couldn’t access the same information or a worker couldn’t figure out who was the right person to contact. Those barriers are fading fast. Software and networks that support collaboration are in place and inexpensive. Everyone complains about departmental silos; social networks bore through silo walls.

I asked Harvard Business School’s Andrew McAfee, who coined the term Enterprise 2.0, why he thinks social software will transform the business world. He told me that today’s collaborative technologies can knit together an enterprise and facilitate knowledge work in ways that were simply not possible previously. They have the potential to usher in a new era by making both the practices of knowledge work and its outputs more visible.

Many Happy Returns

Business has already squeezed the big process improvements out of its physical systems, but for many companies, collaboration and networking processes are virgin territory. The upside potential is staggering: people innovating, sharing, supporting one another, all naturally and without barriers. The traditional approach has been to automate routine tasks in order to reduce cost; the new vision is to empower people to take advantage of their innate desire to share, learn together and innovate.

Web 2.0, the “collaborative web,” renders overstuffed file cabinets and hard drives overflowing with email obsolete. Members of a group can share information and make improvements to one copy that’s virtually available to everyone. Workers learn to remix rather than re-invent, and having everyone read from the same page reduces the odds of mistaking obsolete information for current. Distance no longer keeps workers apart. As we remove obstacles, the time required to do anything shrivels up.

Why bother?

Collaboration that does not increase revenue, improve relationships with customers, cut costs, grow employees, expand innovation, communicate values, streamline the work process, or help execute strategy should not be funded.

Companies are using social software to:

Speed up the flow of information through the organization
Improve customer service
Streamline workflow and slash bureaucracy
Unleash the power of collective intelligence
Create nerve centers for corporate news and market intelligence
Make all corporate know-how accessible 24/7
Recruit the best candidates for new positions and make them productive quickly
Replace training classes with informal, hands-on learning
Open the process of innovation to all employees
Help workers build strong, supportive relationships
Enable managers to assess the status and direction of projects
Empower all employees to contribute ideas and feel part of the team
Develop more productive relationships with customers, prospects, recruits, partners, supply chain, and other employees

Compared to old-style groupware such as Lotus Notes, today’s social software is simple, unstructured, emergent, inherently transparent, and it scales.

Business

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Before the fall…


At the turn of the century, investors agreed that for eLearning, the sky was the limit. Or maybe it was more:  shoot for the moon. As a reminder to never drink the Kool-Aid without reflection, here is the advice investment houses were putting out before the dot-bomb implosion:
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Business

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Overview: Business

cloud

include ROI pages in this category

What do managers want?

“There is really only one management question: What do we need to pay attention to in order to be successful? Similarly, there is only one individual question: What do I need to pay attention to in order to be successful? ” Verna Allee

Personal goals include emotional payback and meaningful challenge. Strategic objectives are primarily people issues, establishing:

  • can-do spirit among workers
  • collaborative teamwork & innovation
  • a limber, sustainable organization
  • first-class customer service, higher sales

Return on Investment

Links

Jay Cross, The Big Picture on ROI
Jay Cross, Making the Business Case for Informal Learning
Tony Karrer, ROI and Metrics in eLearning
Dennis Howlett, ROI is so Business 1.0 Not
Elsua, Making the Business Case for ROI

Business

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How managers make decisions

Learning is business. You must be able to communicate with senior business decision-makers to get any major endeavor off the ground. This takes understanding. You can’t fake it. Don’t just talk like a business person; be a business person.

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Business

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Follow instructions

1830 warehouseFive years ago I gave the opening keynote at eLearning 2003 in Manchester. The weather was perfect, the city vibrant, the people cheerful; I had a great time. And I’m damned glad I didn’t work there in 1844, when Friedrich Engels visited.

Manchester was the birthplace of the Industrial Revolution. (The 1830 warehouse in the photo is the oldest railroad building in the world.)

Before the Industrial Revolution, people here and everywhere barely scratched out a living from their meager farms. They worked all day to just barely get by. After the Industrial Revolution, people worked brutal hours in filthy cities, and, as Engels noted, lived shorter lives.

Measles, smallpox, and whooping cough were four times more prevalent than in the countryside. Factory work and urbanization brought with them water pollution, poor nutrition, dangerous machinery, impersonal work, isolation, poverty, and homelessness.

Just as it had been on the farms, work was incessant. Dawn to dusk, every day but Sunday. An American visitor reported seeing “wretched, defrauded, oppressed, crushed human nature, lying and bleeding fragments.”

Nobody was watching television. Of course not, for Philo Farnsworth did not invent television until the 1920s, but even if the workers in 1844 all had 60″ plasma flat-screen monitors in their shanties, they would not have had time to watch. Discretionary time had not been invented either. People did what they were told.

According to the Bureau of Labor Statistics (
BLS), Americans devote more time to leisure and sports than to working, and a majority of leisure time is spent watching television.

American homes house more television sets than people. Television’s a one-way conversation. The average American watches it 4.5 hours a day. Watching t.v. stunts the intellectual growth of children, numbs the senses, and crowds out exercise. Television brings a casual attitude toward promiscuity, violence, and evil into our homes. But that’s not the worst of it: watching television wastes most of our discretionary time.

Citizens who have escaped being told what to do every waking moment don’t know what to do when the taskmaster leaves the seen. Rather than becoming independently productive, they do nothing. Given the time to shape their destinies, most people choose to zone out. Time in front of the idiot box robs us of opportunities to commune with others and make the world a better place. “To kill time is to injure eternity,” said Thoreau.

Wellington, a medieval pub in ManchesterThe same helplessness when no one tells people what to do pervades the workplace as well as the living room. Instead of creating value, people posture for an imaginary boss. They go through the motions of being good workers. They manage things that don’t require managing. They worry about other people’s business. They fret with others. They hold meetings to validate the inevitable. They set up processes to control the uncontrollable. They plan the future; God laughs.

Why are people satisfied to go through the motions? Because we are creatures of habit. First we make our habits; then our habits make us. We’ve habituated to a leisurely pace, where yesterday’s rules suffice for governing today’s business. We’re accustomed to the riches of surplus, so we are content to coast. Having ridden a century-long wave of progress, deep inside we believe that time will take care of everything because it always has.

Anyone with a pulse can sense that the world is spinning faster and faster. Read the prospectus: Past success does not guarantee future performance. Changes in the world are rendering our default behavior obsolete.

Continuing to make short-term choices, oblivious to long-term consequences, leads to disaster.

We live in a new world. Have you noticed the temperature rising? How about all those people living on land that was vacant ten years ago? How long since you’ve held a manufactured item that wasn’t made in China?

Phone calls are free. Computers are expendable. Film has disappeared. My one-man business does deals in Taiwan, Germany, Austria, Australia, and more. Twenty years ago the web did not exist. Nor did GPS. Nor Viagra. The extraordinary has become ho-hum.

The future is ours. We each, as individuals, have the most time and most power and most resources of any people in the history of the planet, and it’s criminal for us to passively wait for instructions. It’s up to us. As Stewart Brand wrote in the preface to the Whole Earth Catalog, “We are as gods, and we might as well get good at it.”

Business

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CGI Internet Inside

Three years ago, Knowledge Management at Canada’s CGI was the proverbial black hole that sucked in information and energy but never let it out. The staff who fed the beast were well-meaning but weren’t equipped to provide CGI’s 25,000 employees the up-to-the-moment technical savvy they needed. This is not sustainable in a firm that relies on its wits to outperform its competitors in a fast-moving global field. Executive management made raising staff satisfaction with KM a top priority.

Ross Button was tapped to head a project to raise collective intelligence. Ross and his staff of two, with in-sourced assistance from specialist groups within the firm, assembled what Ross and I have dubbed Internet Inside. Imagine having your own, custom version of the internet running behind your firewall.

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case examples
Tools for Learning

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What are we trying to fix?

SUBSTANDARD REVENUE

􀀓 Sales declining, customers postponing buying decisions

􀀓 Salesforce cannot express benefits of new products

􀀓 Sellers unaware of industry conditions and competition

􀀓 Friction in relationships with distributors

􀀓 Our partners are not well informed

􀀓 Sales and marketing on different planets

􀀓 Arms-length relationships with customers

DEFICIENT SERVICE

􀀓 Response time to customers is substandard

􀀓 After-sales inquiries are bogging down our call centers

􀀓 800 numbers and phone trees are driving customers away

􀀓 Service is inconvenient for customers, not 24/7

􀀓 We don’t learn from our customers

􀀓 We are not building customer loyalty

􀀓 Customer and prospects are/confused, frustrated

INEFFICIENCY AND BUREAUCRACY

􀀓 Deluged by internal email

􀀓 Can’t find the right person in a hurry

􀀓 People don’t know who knows what

􀀓 Can’t touch the right information when you need it

􀀓 Project coordination is tedious and things fall through the cracks

􀀓 Re-invention of the same documents and processes over and over

􀀓 Departments squabble more often than they collaborate

􀀓 Don’t learn from the people who join us from competitors

􀀓 Execs can’t get a read of progress or lack thereof

􀀓 Documentation is dated, versions confuse

UNENTHUSIASTIC, SLUGGISH STAFF

􀀓 Recruiting is harder than ever

􀀓 Some people do the minimum to get by

􀀓 People are not innovators and don’t keep up

􀀓 Know-how is walking out the door due to retirement and turnover

􀀓 People are glum because of the economy, an industry slump, whatever

􀀓 Turnover is too high

􀀓 When good people leave, we never see or hear from them again

􀀓 No time for experimentation or prototyping

UNDERDEVELOPED ORGANIZATION

􀀓 Difficult to collaborate inside the corporate firewall

􀀓 Difficult to collaborate outside the corporate firewall

􀀓 People prefer to work solo rather than on teams

􀀓 New hires take too long to become productive

􀀓 Analysis paralysis

􀀓 “Wait and see” attitude equals missed opportunities

􀀓 Culture clash, as if we are two organizations with different priorities

SUB!OPTIMAL EXECUTION

􀀓 Not everyone is on the same page

􀀓 Our people don’t know our history, values, and culture

􀀓 We are set in our ways, reluctant to change

􀀓 Not moving fast enough to stay ahead of competitors

􀀓 Functional silos thwart process improvement

􀀓 Still acting like two separate organizations long after a merger

􀀓 Hard to determine where we are as an organization

􀀓 Teams don’t talk about trends and forces that drive our business

􀀓 Don’t reflect on the lessons of our successes and failures

􀀓 Don’t take advantage of our collective intelligence

NOT LEARNING

􀀓 We are falling behind

􀀓 Not prepared for onslaught of digital natives

􀀓 Training can’t keep pace with the business

􀀓 Learning systems are outgrowth of classroom

􀀓 Training administration, creation, and delivery cost too much

􀀓 Managers hoard information

Online

Business

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What’s in it for us?

Speed up the flow of information through the organization

Improve customer service

Streamline workflow and slash bureaucracy

Unleash the power of collective intelligence

Create a nerve center for corporate news and market intelligence

Make all corporate know-how accessible 24/7

Recruit the best candidates for new positions and make them productive quickly

Replace training classes with informal, hands-on learning

Open the process of innovation to all employees

Help workers build strong, supportive relationships

Enable managers to assess the status and direction of projects

Empower all employees to contribute ideas and feel part of the team

Develop more productive relationships with customers, prospects, recruits, partners, supply chain, and other employees

Business

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Management time monkeys

Onken’s famous article summarized

Business

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Practitioner competencies

Australia 4/08

informal learning – an unworkshop*
with Jay Cross

*This unworkshop is participatory. Don’t expect to just sit back and listen. You will grapple with live issues, not other people’s “best practices.” Continue Reading »

Business

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John Hagel

Blogs…. I have become convinced that there is an even greater value – the ability to accelerate learning and capability building.

We have built institutions that are great at efficiency, but we have paid a heavy price in terms of undermining institutional learning.  FAST strategies deploy a learning architecture cutting across an entire organization. They also help to generate the productive friction required to drive and focus valuable learning.

Champions of institutional learning have often been their own worst enemies.  In their zeal for learning, they seem to say that all learning is good.  Well, that’s enough to make most executives cringe. There’s not enough time in the day to get work done – when is all this learning going to occur?

The real challenge is to figure out the answers to four questions

* What learning is most valuable?

* When is it most valuable?

* How can this learning be most effectively tied to near-term operational performance improvement?

* How can this learning be spread throughout the organization so that its benefits can be amplified?

Effective strategy development is ultimately about focusing and leveraging learning across organizations.  In my experience, FAST strategies do this far better than other approaches.

Business

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Push and pull

Telemarketers from the vendor with a push strategy call to sell you insurance as you sit down to dinner. The Hard Rock Café displays Bo Diddley’s guitar pick and plays throbbing music to pull you in. The itinerant Kirby vacuum cleaner salesman pushes; the Gilroy Garlic Festival is pull. Push is generally someone else’s idea; pull is what you think you want.

The Industrial Age was pushy. Owners predicted what would people would buy, built the factory, made large quantities to take advantage of economies of scale, and then tried to convince people to buy. Today change is so rampant and the future so unpredictable that Dell doesn’t build your computer until you order it. You cannot set up in advance when you don’t know what the future holds.

 

PUSH PULL
Assumes you can predict demand Assumes world is unpredictable
Anticipate Respond
Rigid, static Flexible, dynamic
Conform, core Innovate, edge
Monoliths, components glued together Small pieces, loosely joined
Program Platform
Get better at what you are currently doing Get better at whatever comes along
Standard content Standard interfaces

New management disciplines for the pull world all involve how organizations relate to one another (outsourcing, orchestration, productive friction). This, in turn, makes one think about where strategic advantage comes from. China is rapidly becoming the center for business management innovation, and this is the source of continuing advantage; copycats won’t catch you if you’re always ahead of them.

All of this is nurtured by networks stitched together with responsive, modular IT. 

Value, i.e. what it takes to stay ahead, used to reside in killer products or shrewd finance. In the pull world, value results from talent. Talent, in turn, is the result of maintaining relationships. The leading organizations of the future will be those with the ability to create and retain talent. Developing talent will become the role of the firm – and the way people choose who they want to work for.

 

Business
footnote
internet culture

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Focus on core, outsource the rest

Invest your money (or energy) where it will do the most good.

At the organizational level, do what your group does best and outsource anything left over. Concentrate on your secret sauce, not on routine and administrative stuff.

Any behavior that can raise your stock price is core — everything else is context. Context is “hygeine.” Do you bathe? Good. If you didn’t you’d lose your job. But don’t expect to receive a promotion for bathing no matter how squeaky clean you are. Differentiating on context is the single biggest waste of resources in Fortune 500 operations. Without very careful management, context always gets in the way of core because it absorbs time, talent and management attention.

Shareholder value (AKA market cap) is a function of competitive advantage, and organizations achieve it by focusing on core. Everything else is context, and context is a needless distraction. You don’t profit by maintaining trucks, cutting paychecks, or taking out the garbage. Hand those things off to organizations for whom those activities are core, e.g. Ryder Truck, ADP, or Waste Management.

This applies to how you invest your personal time, too. To the extent that you can pass off busy-work, you gain more time to be productive. For example, consider someone who makes $150/hour doing her own taxes to “save” paying a tax preparer $500. Since the tax work requires getting back up to speed, assembling the right collection of forms, and not inconsiderable arithmetic, preparing the taxes takes ten hours. Time is a limited resource. She is trading the $1,500 she might have made to “save” $500.

If you’re a working professional, it’s probably not sound to wash your own laundry, move your yard, or paint the front fence.

Business

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New roles for managers

Eco-learning

Companies are not machines; they are living organisms. Yesterday’s organizational teams are giving way to organic bioteams. We are all leaders. We must keep one another informed in real time. We trust living systems to self-organize.

The future of management

Management values (e.g., control, precision, stability, discipline, and reliability) have not changed in a century. Business has streamlined strategy, production, services, and operations. We’ve cut the inefficiencies from every business process but the most important: management itself.

Not Without Purpose

People are emotional animals. Gut feelings are real. Stress disrupts productivity. Acting from the heart as well as the mind makes us better people and happier campers. In nature, you either escape the bear or get eaten. In the office, however, the mind conjures up bears that never let up. All-day stress overtaxes the body.

80/20 or Bust

20% of the sales force makes 80% of the sales

20% of the products account for 80% of the profits

20% of the defects cause 80% of the problems

20% of the suppliers provide 80% of the stock

20% of the staff causes 80% of the problems

On Demand, In the Soup, on the Path to Glory

To maximize shareholder value, invest in core and outsource everything else. All commercial software development is informed by the example of the internet. Adopt simple standards, be open, make connections, simplify, let it flow. Think virtual.

RICH CLIENTS. No, not Warren Buffet and the Sultan of Brunei. We’re talking portals. The intelligent front-end. Instead of a static jump page (Yahoo or your intranet, for example), a rich client portal is a dynamic, smart connection to people, news, processes, alarms, learning, and more.

The Changing Nature of Leadership LiNEZine (2001). “Wide, ever-shifting boundaries change all the rules. We once rewarded compliance; today we reward innovation. We once praised obedience; today we praise ad hoc solutions. Yesterday?s subversive employee is today?s innovator.<

Business
enterprise 2.0

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Corporate Survival

Adaptation

co_cover_0208.jpgCLO, February 2008

Business firms evolve or die. The network era is crowding out the industrial era. Some organizations will not survive the journey.

Until a few hundred years ago, most people lived in the countryside, farming the land with their families. Then the industrial revolution created the greatest accumulation of wealth the world had ever seen. Farmers became factory workers.

Machines took over the physical work, and managers improved efficiency, eventually creating enough value to improve the circumstances of workers and dominate the First World’s economies. This is what most of us are accustomed to.

Nowadays, though, networks are replacing industry. We are in the midst of a great transition to an era of networks and service. Einstein’s relativity has replaced Newton’s clockwork universe, not just in physics, but in the way we regard the world. Reality emerges from the interaction of complex adaptive systems.

As a result, organizations are more like living organisms than machines. Knowledge workers have replaced factory workers. Ideas and relationships are more valuable than tangible assets. Shareholders owned the factories, but workers own their minds. Information spreading through network connections empowers workers to make decisions and take responsibility for them.

As Jan Carlzon wrote in Moments of Truth, “An individual without information can’t take responsibility. An individual with information can’t help but take responsibility.”

Why would a manager want to give up control? Carlzon again: “Problems are solved on the spot, as soon as they arise. No front-line employee has to wait for a supervisor’s permission.” Managers will give up control because it speeds up service to customers.

Today’s executives grew up in a business world managed by industrial-age rules. Deeply ingrained beliefs are difficult, if not impossible to unlearn. Many managers pay unquestioned allegiance to the vestiges of the industrial paradigm. They believe in hierarchical organizational structures, top-down control, information hoarding, rigidity, formality, competition and undervaluing intangibles.

In the opposite corner, most network-age businesspeople support flat organizations, shared responsibility, information sharing, extreme collaboration, flexibility, informality, cooperation and the importance of social capital and reputation.

Few people have a foot in both camps. The industrial-agers see the network folk as undisciplined techno-optimists. The network-agers think of the industry people as clueless reactionaries. The conflict between the two groups is building.

As people accustomed to the Internet join the workforce, they bring with them an appreciation of technologies such as instant messaging and social networks. Imagine an old-school organization where new hires in the local ranks swap information with colleagues in other silos and with customers. They will be better informed. As the saying goes, “Networks subvert hierarchy.”

This is not to say that networks will replace all hierarchies, for that leads to chaos. Someone has to sign the paychecks and mediate among the stakeholders. The challenge is to achieve the right balance, applying command-and-control as appropriate for stability and networks when they improve performance.

Traditional learning is bursting at the seams because there is always more to learn and unlearn. The amount of knowledge in the world doubles every three years. New discoveries invalidate former truths.

What is learning when knowledge is liquid and any curriculum dies in infancy? We used to learn in order to get along in the environments we take part in. Familiarity with how things worked enabled us to adapt, and adapting to one’s surroundings is still the goal of learning.



My early warning system is flashing, signaling that it’s time for business people to play a new game or take early retirement. Why the urgency? Because The object of the game is survival, and that requires crossing the great divide between where we are now and where we need to be a year from now. Continue Reading »

Business

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New Rules in Business

Leading in the Digital Economy: Sensing and Seizing Emerging Opportunities by Joseph Jaworski ad C. Otto Scharmer

The New Rules in Business

Imagine you are milling about in a large casino with the top figures in high tech – the Gates, Gerstners, and Groves of their industries. Over at one table, a game is starting called Multimedia. Over at another is a game called Web Services. In the corner is Electronic Banking. There are many such tables. You sit at one.

“How much to play?” you ask.

“Three billion,” the croupier replies.

“Who’ll be playing?” you ask.

“We won’t know until they show up,” he replies.

“What are the rules?”

“Those will emerge as the game unfolds,” says the croupier.

“What are my odds of winning?” you wonder.

“We can’t say,” responds the house. “Do you still want to play?”

– W. Brian Arthur

What distinguishes great leaders from average ones? Brian Arthur, economist, author and professor at the Santa Fe Institute, says it is their ability to perceive the emerging nature and rules of a game as they are playing it. In today’s economy, the name of the game, who’s playing, and how they’re winning is changing at a dizzying pace – and not just for technology companies. The globalization of markets and market forces, the predominance of networking and connectedness, the increased speed of all types of communication, and the valuation of knowledge over products mean more complexity, more competition, and more change happening faster and faster. In a world of increasing returns – where early success breeds more success – a marginal lead-time can spell the difference between big gains or failure.

Companies that want to thrive in this kind of flux need to develop a critical new capacity: the ability to sense and seize opportunities as they emerge.

A New Core Capability

People who achieve industry breakthroughs or develop revolutionary ideas follow a set of five practices that we see as the heart of this new core competence. Together, they constitute one organic process.

  • observing: seeing reality with fresh eyes
  • sensing: tuning into emerging patterns that inform future possibilities
  • knowing: accessing inner sources of creativity and will
  • crystallizing: creating vision and intention
  • executing: acting in an instant to capitalize on new opportunities

Innovation, whether in the context of improving existing processes or reinventing an entire industry, is never a mechanical process. While each practice is distinct, it occurs in a fluid continuum. Two or more practices are often done in conjunction, certain practices may be repeated, and an element of each is always present in the others. The three stages of the process – what we refer to here as sensing, knowing, and executing – are common to all creative endeavors. High-performing individuals, teams, and organizations are constantly iterating through this cycle.

In summary, we found that leading in the digital economy requires sensing and recognizing emerging patterns and positioning oneself, personally and organizationally, as part of the forces of change that are continually reshaping the world. Those who are successful appear to follow practices and principles which enhance this capacity. When this capability is fully developed, leaders at every level in organizations will find that through their intentions and actions they themselves can actively participate in the unfolding of new business worlds – and the rules by which they are created.

Business

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Illuminating the Blind Spot of Leadership

Design principles for evolving high-velocity business environments

Immersion—becoming fully engaged in the contexts at issue. In the words of Brian Arthur:
observe, observe, observe. All profound innovations occur in an atmosphere of
immersion. In that atmosphere, or sphere, one fully observes all that is happening and is
also open to ideas from outside its boundaries.
Interpretation—becoming conscious of one’s own and other people’s views and moving across all of them
with ease. Nonaka’s principle of multi-discipline and multi-viewpoint dialogue supports the
development of new interpretations. McKinsey’s Richard Foster brings artists into
corporate strategy conversations to inspire new interpretations.
Imagination—a quality of observation that involves seeing and sensing: seeing objects and sensing
emerging patterns that suggest future possibilities. The imagination, says Henri Bortoft, is
an “organ of perception.” To imagine is to “redirect one’s attention,” as Varela puts it,
from objects to sources and patterns.


Inspiration and Intuition
—the senses that allow one to recognize and strive for the highest possibilities.
This is the level of primary knowing that Eleanor Rosch talks about, the level of
presencing one’s highest possibility. And it is the level Kahane was speaking of when he
talked about the turning point of stillness in his Guatemala story.
Intention—the alignment of one’s will with what is trying to emerge as the larger whole.79 One of the
best leverages for changing the structure of organizational fields lies in the conscious use
of one’s intention. “Intention is not the most powerful force” says Brian Arthur, “it is the
only force.”
Instant execution—rapid experimentation and prototyping in order to capitalize on
emerging opportunities. At this stage, a laser focus on instant execution and fast-cycle
experimentation and learning are paramount. Execution also means terminating
experiments and options that do not work.
Implementation—embedding and embodying the seeds of innovation in appropriate structures. These
structures facilitate the next phase of evolution, emergence, and flow.

Business
internet culture

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John Hagel

blog

Edge Perspectives blog

The Only Sustainable Edge

have joined Deloitte Touche USA LLP to found and serve as co-chairman of a major new Silicon Valley based research center. This research center has a broad charter to build on my long-term work at the intersection of business strategy and information technology.

enterprise 2.0
important voices

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The Mythical Man-Month

Fred Brooks wrote The Mythical Man-Month about the lessons learned as the senior software engineer behind OS/360, at the time the slickest operating system ever written.

What became known as Brooks’ Law states, “Assigning more programmers to a project running behind schedule will make it even later, due to the time required for the new programmers to learn about the project, as well as the increased communication overhead. When N people have to communicate among themselves (without a hierarchy), as N increases, their output M decreases and can even become negative (i.e. the total work remaining at the end of a day is greater than the total work that had been remaining at the beginning of that day, such as when many bugs are created).”

He also noted:

  • To make a user-friendly system, the system must have conceptual integrity, which can only be achieved by separating architecture from implementation.
  • To avoid disaster, all the teams working on a project should remain in contact with each other in as many ways as possible (e-mail, phone, meetings, memos etc.) Instead of assuming something, the implementer should instead ask the architects to clarify their intent on a feature he is implementing, before proceeding with an assumption that might very well be completely incorrect.
  • Brooks muses that “good” programmers are generally 5-10 times as productive as mediocre ones.

Brooks’ Law seemed both whimsical and radical back in ’75. It didn’t seem right that adding people to a project would slow it down. A programmer told me it was like a woman having a baby in nine months; it didn’t mean nine women could not produce baby in one month. Brooks was saying more that that. He recognized that the output of knowledge workers was not directly related to the hours they worked.

Today we recognize that a great knowledge worker may produce as much value as a hundred of her less gifted peers.

Schools may mix the student with off-the-charts promise with his average classmates to avoid the appearance of favoritism.

In business, it pays to devote special attention to superlative performers.


Knowledge workers can goof off and still be productive.

Factory workers, particularly those on production lines, produce the same amount of value each hour. Most manual labor is similar: the best performer may produce 125% of the norm, but never 500%. Managers were lulled into equating hours and output. An employee who knocked off work early was presumed to be a slacker. Kibitzing in the coffee room was regarded as downtime.

Knowledge work is different. Google recruiters figure a top engineer can produce two hundred times more value than the norm! Assume that top engineer sits on a beach for six months and then, in the course of a few minutes, comes up with Google’s new $5 billion innovation?

Business
footnote
ROI

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Andy McAFee

Andy McAfee coined the term Enterprise 2.0 and is its leading thinker. Read his article Enterprise 2.0: The Dawn of Emergent Collaboration that appeared in the Spring 2006 edition of MIT Sloan Management Review. Bio & RSS

Business
enterprise 2.0
important voices

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Easiest way to do Enterprise 2.0

Euen McSemple:

The 100% guaranteed easiest way to do Enterprise 2.0?

DO NOTHING

And then your bright, thoughtful and energetic staff will do it for you. Trouble is they will do it outside your firewall on bulletin boards, instant message exchanges personal blogs and probably on islands in Second Life and you will have lost the ability to understand it, influence it, and integrate it into how you do business.

The second easiest way is to find ways of allowing this to happen inside the firewall which can be as simple as sticking in some low cost or free tools and then making sure your existing organisation can:

GET OUT OF THE WAY

The third easiest way is to do the second easiest way and then engage those who would have done the easiest way and get them to help you:

KEEP THE ENERGY LEVELS UP

And the hardest way …….

…. you don’t need me to tell you that

Business
enterprise 2.0

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Enterprise 2.0

Andy McAfee coined the term Enterprise 2.0 and is its leading thinker. Read his article Enterprise 2.0: The Dawn of Emergent Collaboration that appeared in the Spring 2006 edition of MIT Sloan Management Review. The latest.

McAfee’s SLATES model”

Dion Hinchcliffe

Business
enterprise 2.0

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Show me the money

Chapter three of Informal Learning

It’s an immutable law of business that words are words, promises are promises, but
only performance is reality. HAROLD GENEEN

It’s like arguing in favor of the plough. You know some people are going to argue
against it, but you also know it’s going to exist. JAMES HUGHES

ROI

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Linking training to business goals, not the first time

Jack Gordon, writing in Training magazine:

“While we’re at it, here’s one for top management: Does your training director find it difficult to make learning serve your desires because of the nature of your desires? If your idea of training that serves a critical need is a program that persuades employees to work more enthusiastically, for less money and fewer benefits, right up to the moment when you figrure out how to eliminate their jobs altogether, maybe the problem isn’t your training director. Maybe what you really need is dumber employees.”

I want to call your attention to Jack’s article CLO: A Strategic Player? which flippantly and brilliantly describes the wrenching situation that keeps the training function hidden in the back room:

The vision must have sprung to life not long after the first corporate training departments crawled forth as distinct entities from the primeval ooze of the Industrial Age. It has been a theme on the conference circuit for as long as trainers have gathered in hotel ballrooms to discuss their careers. The vision is commonly expressed in the form of a sermon with a title like “Linking Training to Business Goals.” A short version goes like this:

An organization’s training unit should not operate in the form of a little red schoolhouse, tucked away in a corner, divorced from the vital strategic concerns of the business. It should measure its success not by the number of courses it runs or the number of people it runs through them, but rather by the impact of its efforts on critical business criteria. The training manager should not be the last to know about new initiatives or shifting priorities that will require employees to be brought up to speed. Instead, the top training person should sit in the executive meetings where those initiatives are born.

Furthermore, the top training person should have as much business expertise as educational savvy. He or she must understand what executives and line managers care about and why�by speaking to them regularly, in their language, about their concerns. Only then can training and performance-support efforts be linked to key goals and thus become a strategic driver of organizational performance. Without such a link, a training operation will always be seen as a cost center and a more-or-less necessary evil rather than as the priceless asset it ought to be.

Thus endeth the sermon.

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Strategic value of learning

Examining the Strategic Value of Learning by Tony O’Driscoll, IBM. Online Educa 2005.

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Cost-effectiveness of eLearning

An article in the June 2001 issue of T+D magazine carried this line: “The fact is, as thousands of people around the world including myself and my boss learned the hard way, there are few claims as outlandish and as unsubstantiated as eLearning being a money saver.” I couldn’t resist sending this reply:

1. COSTS ARE NOT THE WHOLE STORY.

Costs are only part of the eLearning equation. The primary advantage my clients attribute to eLearning comes from increasing the top line, i.e. enabling organizations to do things they couldn’t do with traditional training.

For example,

Transforming a traditional business into an eBusiness
Certifying thousands of employees in technical disciplines
Accelerating revenue with simultaneous global product launches
Upgrading customer service by building skills during non-peak hours
Merging organizations on Internet time
Providing scalable training to channel partners

The cost of eLearning is relative. So long as the bottom line is increasing, organizations shouldn’t worry too much about costs.

2. IT’S eLEARNING + ILT, NOT eLEARNING *OR* ILT.

Your article suggests that eLearning is an either/or situation. This is a fallacy. Think of eLearning as supplementing traditional learning rather than replacing it. Only apply e-technologies when the benefits are obvious.

Take prework as an example. Traditionally, prework might take the form of reading material on paper. In today’s fast-paced world, the material is often out-of-date before it’s read. And whether anyone reads it — and gets it — before a workshop is anybody’s guess. The eLearning alternative is to post the prework on the web, where it’s always current, and require a passing pretest score for admission to the workshop.

3. THE PAST IS A SUNK COST.

When making an incremental decision, count only incremental costs. Most of my customers already have desktop computers, local area networks, and Internet access in place. The money already spent on these resources shouldn’t be toted up as an expense of eLearning.

4. THE LARGEST COST OF ALL IS FOREGONE OPPORTUNITY.

Again and again, I’ve found the largest overall cost of any corporate learning endeavor is the cost of people’s time. I’m not talking about salaries and benefits; I refer to the value they would have created had they not been tied up in training. Opportunity cost per hour is not a fixed amount. A salesperson’s time during working hours in peak buying season is worth much more than the same individual’s time after closing time in non-peak season. eLearning often enables the employee to shift learning to those non-peak hours.
Payback

Technology-enabled learning creates value by speeding things up. Business-school professors compare making big corporate changes to turning around the Queen Mary. Turn the rudder and in a few miles, the ship changes course. These days, organizations that lack the agility to turn on a dime can only go about as far as the Queen Mary (which is moored in cement alongside a pier in Long Beach, California.)

A Fortune 50 company used eLearning, knowledge management, and collaboration to bring new-hire sales people up to speed in six months instead of fifteen. Nine months x 1400 new hires/year x $5 million quota = $5 billion incremental revenue. To be sure, better products, sales campaigns, and a host of factors contributed to the gain but a tiny faction of $5 billion still yields a significant ROI. (Here are the details: New-hire training at Sun Microsystems.)

Ten thousand consultants at a Fortune 100 technical services company earned professional certifications via eLearning. The result? Less attrition, better esprit de corps, and $100 million revenue/year attributable to higher billing rates.

A software firm launches a new system into a $250 million global market with eLearning and virtual meetings. This accelerates time-to-market by two months, gives them first-mover advantage over a major competitor, builds a more confident and enthusiastic sales force, and gets the channel up to speed at the same time as the direct sales force. Gain? $80 to $100 million incremental revenue.

A very large retailer of personal computers realizes that customers are frustrated with their products because they don’t understand the software that accompanies them. The company offers customers free admission to an online learning community created by SmartForce. More than 100,000 customers sign up to learn Windows, Word, and Office apps online. Value of increased customer loyalty? Conservatively, $20 million in repeat business over three years.

Often an e-Learning initiative pays for itself right off the bat by eliminating travel and facility costs, but that misses the point, because in comparison, upside gains dwarf cost savings.

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Jack Phillips, Ed Trolley, and Jay Cross Debate ROI in 2000

Jack Phillips, Ed Trolley, and Jay Cross discuss the
ROI of eLearning
. 9/2000

Jay Cross—Internet Time Group

Jay has been passionate
about harnessing technology to improve adult learning since the
1960s. He has managed several software startups and is the former
president of MegaMedia WorldWide. Jay founded Internet Time Group
to help organizations learn. The group provides hands-on advice
on launching new products, building reputation, and accelerating
sales. Reach
Jay at www.meta-time.com.

Jack J. Phillips, Ph.D—The Jack
Phillips Center for Research

As a world-renowned expert on measurement and evaluation, Jack provides consulting services for Fortune 500 companies and is the author or editor of more than 30 books including The Consultant’s Scorecard and HRD
Trends Worldwide: Shared Solutions to Compete in a Global Economy
.
His 27 years of corporate experience in five industries led him
to develop the ROI Process™—a revolutionary process that provides
bottom-line figures and accountability for all types of training
programs.

Edward A. Trolley—The Forum Corporation

Ed, Senior Vice President of The Forum Corporation, spent
26 years with DuPont, where he held line leadership positions in
three different business units before being named Manager of Training
and Education for the multinational corporation. While with DuPont,
Trolley conceived the insourcing alliance concept “Running Training Like a Business.” Since
joining Forum in 1996, Trolley has carried the insourcing concept
to leading global companies, working closely with the human resources

leaders and line managers alike to significantly increase
training’s effectiveness and efficiency.

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Balance that scorecard

Accounting deals with numbers that can be audited. The rub is that the value of American corporations has migrated from tangibles you can see and touch to intangibles such as reputation, intellectual capital, and customer relationships. Twenty-five years ago, intangibles accounted for less than a third of the value of the S&P 500; ten years ago, intangibles had grown to more than 80% of that value.

Organizations that make decisions based solely on things that are sufficiently tangible to be counted might as well consult a Ouija board to set their goals.

Why do corporations plan? It’s to guide the deployment of resources and to tell people what they need to do. The annual goal at a firm I did some assignments for was to increase profitability by 8%. I had only the vaguest notion of what to suggest they do. Verbal descriptions speak to me; percentages do not

This is why Robert Kaplan and David Norton developed the Balanced Scorecard. The Balanced Scorecard divides an organization’s goals into meaningful objectives in several areas. Each Scorecard is customized to fit the organization. The top-level Scorecard cascades down through the sub-levels of the company, providing clear objectives that summarize upward to the overall mission.

Kaplan and Norton have written three very lucid books on their methods. They and others host conferences to explain implementing this approach. But frankly, you don’t want to devote days to the books or conferences until you’ve made a rough-cut assessment about where the Scorecard might work for you

If your organization has been navigating with a faulty compass take a look at the Balanced Scorecard.

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Training for performance?

The Canadian sales training manager of a major pharmaceutical company told his trainers than henceforth a substantial part of their bonuses would be based on the sales performance of their graduates.

“That’s not fair,” they complained. “We don’t have anything to do with their performance.”

He suggested they think about that one for a while.

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How to Measure the Impact of Informal Learning

“Ah, Jay,” you ask, “but how do you measure it? What’s the ROI? How am I going to sell this to the boss? How do you prove results?”

In brief, you measure the impact of informal learning the same way you measure the impact of any investment in the organization: by its outcomes. Are people able to do their jobs? Are they challenged? Are they working in top form?

Hold your breath a moment, for some of you will choke on this one: ROI and accounting are inappropriate measures of performance. ROI is a relic of the industrial era, when assets were tangible and repetition was the path to success in the factory. Today, the intangible assets you cannot see are far more valuable than those you can.

Google’s market capitalization, what investors think it’s worth, is $157 billion. Google’s fixed assets (cash, securities, receivables, plant, property, and equipment) are carried on the balance sheet at $20 billion. So where’s the missing $137 billion? Intangibles such as reputation, know-how, and customer relationships.

Look at the world through the eyes of a senior executive. What’s better, (1) looking at how you use the fixed assets or (2) increasing shareholder value (even though its components are tough to separate out? ROI assumes training is a cost, not an investment. Whether someone has learned to do their job or not doesn’t show up in the numbers because ROI overlooks the worker’s ability to execute.

This morning, someone asked me how to measure informal learning with an LMS. Another proposed using questionnaires to capture the amount of time people spent on informal learning. Folks, this is like trying to tell time with a thermometer. Any results you get are guaranteed to be worthless.

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Making the Business Case for Informal Learning

First of all, understand that you’re not buying informal learning. It’s already going on in your organization. In fact, three-quarters of the learning on and about how to do one’s job is informal.

The natural learning that occurs outside of classes and workshops is vital but it probably flies under your corporate radar. No manager is accountable; no department is committed to making improvements; there’s no identifiable budget. Hence, one of the most important functions in an organization, keeping up with skills to prosper in the future, is left largely to chance.

Second of all, a persuasive business case focuses on outcomes, not activities. The measure of success or failure is business metrics, not training metrics. The only meaningful way to assess any form of learning is performance. Are workers doing their jobs well? Is their work challenging? Are workers committed to becoming “all they can be?”

Third, since no one has been re-engineering informal learning, or even thinking about it, identifying applications is akin to being the first to enter an orchard that has never been picked. Low-hanging fruit is in abundance.

If whatever informal learning intervention you are proposing doesn’t have such an obvious payback that you can explain the value proposition on the back of a napkin, pick another project.

Don’t get tricked by the word informal. Informal learning is not “do your own thing.” Rather, it often begins with values, goals, and challenges. The workers have more say-so in choosing how to accomplish them, and they are usually more demanding on themselves than you would ever conceive of being.

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