Building smarter organizations

Building smarter organizations

#smartorg@dynamicadaptatn

Gordon Vala-Webb

February 2013

www.DynamicAdaptation.com

Our agenda

1. Do we need smarter organizations?

2. Designed for the “old” world

3. The response so far

4. Bigger cities are smarter, the work is smarter – but not organizations?

5. Why are large organizations not smarter?

6. What can we do?

7. If we get it right . . .Slide 2


Who am I?

I help leaders improve their business results by transforming how their people collaborate, innovate and share


Previously KM Director:• PwC Canada• Gov’t agency

Global lead (design / value) PwC social network

Slide 3

http://www.dynamicadaptation.com/


Do we need smarter organizations? (Drucker, Dilbert and Debs)

1Slide 4


Drucker

“Most of what we call management consists of making it difficult for people to get their work done”

Slide 5


The Dilbert index . . . most workers could not care less about their work

71%Of American workers are

"not engaged" or "actively disengaged“

in their work

Source: http://www.gallup.com/poll/150383/majority-american-workers-not-engaged-jobs.aspx

Slide 6

www.DynamicAdaptation.com Slide 7

Sickness absence, presenteeism and labour turnover costs – for example - the UK economy yearly

What would Debs think?

£26bnSource: UK Foresight Project on Mental Capital and Wellbeing http://www.guardian.co.uk/money/2011/jul/15/happiness-work-why-counts


A comparison?Large

organizations

?

?

?

?

Slide 8

Sheep

Slow

Follow the flock

Not fun

Can’t fly


Designed for the “old” world

2Slide 9


Our organizations were designed for the “old” – easier - world

New world

Complex

Discontinuity

Ambiguous

Slide 10

Old world

Stable

Repeatable processes

Authoritative knowledge

Adapted from Kent Greenes, “Knowledge Leadership, KMWorld 2011


They used hierarchy – great for repeatability, planning and control but terrible for innovation

KM World October 2012

KM strategy in a box Slide 11

Valve’s Handbook

for new employees

Source: http://www.valvesoftware.com/com

pany/Valve_Handbook_LowRes.pdf

http://www.valvesoftware.com/company/Valve_Handbook_LowRes.pdf

http://www.valvesoftware.com/company/Valve_Handbook_LowRes.pdf


And in the “new” world the pressure to be innovative is mounting

. . .Global hyper-competition

. . .Power shifting from West to East. . .Climate change. . .Slow growth. . .Youth unemployment. . .Public sector fiscal crises

Slide 12


If we don’t get it right - in extreme cases - extinction!

Slide 13

Image source http://stevedenning.typepad.com/steve_denning/2011/01/is-the-problem-with-capitalism-that-people-try-to-fix-it.html

http://stevedenning.typepad.com/steve_denning/2011/01/is-the-problem-with-capitalism-that-people-try-to-fix-it.html

http://stevedenning.typepad.com/steve_denning/2011/01/is-the-problem-with-capitalism-that-people-try-to-fix-it.html


The response so far

3Slide 14


The response so far . . . control culture

Slide 15

Source http://www.independentaudit.com/growth-strategy-means-we-need-a-stricter-control-culture/

:

http://www.independentaudit.com/growth-strategy-means-we-need-a-stricter-control-culture/

http://www.independentaudit.com/growth-strategy-means-we-need-a-stricter-control-culture/


The response so far . . . Belt tightening

• Exhortations “do more with less”• Cost controls• Business process re-engineering• Mergers / acquisitions• Offshoring• Remote working

Slide 16


Bigger cities are smarter, the work is smarter – but not organizations?

4Slide 17


With each doubling of city population, each inhabitant is, on average, 15 percent wealthier, 15 percent more productive, 15 percent more innovative, and 15 percent more likely to be victimized by violent crime

For cities, bigger is better

Slide 18Source: http://www.pnas.org/content/104/17/7301.full


At the same time, work has been getting “smarter”

Slide 19

Source: http://cdn.dupress.com/wp-content/uploads/2012/10/Screen-Shot-2012-10-01-at-9.20.13-PM.png?2b7236


“Smart” work now makes up 41% (and growing) of jobs in the US

Slide 20

https://www.mckinseyquarterly.com/Preparing_for_a_new_era_of_knowledge_work_3034?srid=520


But larger companies aren’t smarter (like cities)

Slide 21

Power rules – city versus companiesSource: http://kallokain.blogspot.ca/2012/11/why-cities-live-and-companies-die.html

Cities – get smarter Companies

- don’t or get less smart


In companies with over 1,000 employees, the average productivity of an employee drops by more than ¼ for each order-of-magnitude increase

Slide 22

In fact, average productivity drops by 25% for each order-of-magnitude increase

Source: http://www.cybaea.net/Blogs/Data/Employee-productivity-as-function-of-number-of-workers-revisited.html


Why are large organizations not smarter?

5Slide 23


Three reasons larger organizations are not smarter

1) The Maze-trix

2) Mind the complexity gap

3) Old think

Slide 24


Big Cheese

2nd Level Cheese

2nd Level Cheese

2nd Level Cheese

Assistant

1) The maze-trix: silos increase efficiency within a unit but create boundaries that make co-ordinating across difficult

Slide 25


Maze-trix - responsibility matrix

Slide 26Source: http://www.independentaudit.com/global-responsibility-matrix/

http://www.independentaudit.com/global-responsibility-matrix/

http://www.independentaudit.com/global-responsibility-matrix/


An maze-trix example - approving a contract change request at an aerospace company

Slide 27

Source: http://www.bain.com/publications/articles/the-focused-company.aspx

http://www.bain.com/publications/articles/the-focused-company.aspx




Symptoms of the maze-trix

• Exponential growth of decision points•Unclear reporting lines•Meeting overload•Email overload•Slow information flows•Lack of “complete picture”•Decision paralysis

Slide 28

We need to schedule a meeting

To plan for the meeting

To discuss why we have so many meetings

http://www.zazzle.ca/i_need_to_schedule_a_meetingto_plan_the_meeting_mug-168219332576188320





2) Mind the complexity gap: Being bigger means more bureaucracy – and that demotivates people so higher-performing staff tend to leave

Slide 29

Complexity

% of highly engaged /performing staff

Mgmt& rules

Adapted from: “Netflix Culture” http://www.slideshare.net/reed2001/culture-1798664#text-version


Mind the complexity gap – it kills

Slide 30Source: http://paimeiitguy.wordpress.com/2009/05/24/jim-collins-in-the-news/

http://paimeiitguy.wordpress.com/2009/05/24/jim-collins-in-the-news/

http://paimeiitguy.wordpress.com/2009/05/24/jim-collins-in-the-news/


Symptoms of the complexity gap

•Increasing bureaucracy and formality• Inefficient / over-engineered internal

processes•Decrease in % of high performers• Decrease in % of engaged or highly

engaged staff•Wait times for internal services

Slide 31


3) Old think: hierarchy is in our corporate blood

“U.S. corporations are historically imprinted with a hierarchical

model—you develop something at headquarters, you scale it, and

then you diffuse it.”Rakesh Khurana

Harvard Business School

Slide 32

http://www.strategy-business.com/article/00164?pg=all




Old think = control culture

Concentration of power equals abuse of power . . Such concentrations are

blood clots in the circulatory system of

society. . . The circulation of wealth, resources, and,

especially, ideas, is blocked. In a healthy

system, information flows are unimpeded by clots of power or the sclerosis of

hierarchy.

Philip SlaterThe Chrysalis Effect

Slide 33


Old think versus new think: key elements

New think

Integrative culture

People as feeling animals that think

Internal reward

Connected

Brain is plasticSlide 34

Old think

Control culture

People as thinking animals that feel

External reward

Selfish

Brain is fixed


Symptoms of “old think”

•Leadership by command and broadcast

•“SMART” performance goals•Monetary rewards•Fault-finding•Low trust

Slide 35

http://c15056394.r94.cf2.rackcdn.com/MITSMR-Deloitte-Social-Business-What-Are-Companies-Really-Doing-Spring-2012.pdf





What can we do?

6Slide 36


It can be done . . .

“30% of the top banks we studied were able to improve their efficiency while maintaining healthy growth”

Slide 37

Source: http://www.europeanbusinessreview.com/?p=6500

http://www.europeanbusinessreview.com/?p=6500




. . . By combining hierarchy and networks

Slide 38

1. Leadership renewal

2. A new organizational bicycle

3. Simplicity


1) Leadership renewal – essential elements

•Reject the “control” culture

•Establish shared goals

•Connect through conversation

•Embrace emergence

•Transparency in decision making

•Build trust

•Learn to use social media

•Authentic selves (Empathy versus egotism)

Slide 39

“The soft stuff is the hard stuff” Jack Welch


2) A new organizational bicycle – social networking

Slide 40

“A bicycle makes man the most efficient mover on the earth.A computer is a bicycle for our mind.” Wilson Miner


Emailed Knowledge

The old bicycle doesn’t work very well

Slide 41


The new bicycle - social networking platforms

42

. . . information, ideas and questions become isolated - they only go to the people who received the message

. . . trying to have a conversation is really hard

. . . it becomes a guessing game when working on a document together (“who made what changes to which version?”)

. . . the information disappears over time so that anyone joining the conversation late has a hard time coming up to speed

With social networking . .With emails . . .

Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/transforming-collaboration-with-social-tools.pdf


The new bicycle will enhance idea and knowledge flows by moving from closed / push to open / pullEmail Social platformClosed (one to few) Open (many to many)Push Pull (subscription)Inside OutsideEphemeral PersistentBroadcast User-generated

Slide 43

“We shape our tools, and thereafter our tools shape us.”Marshall McLuhan


Idea and knowledge flows have to across both internal and external boundaries

44

Outside

Near-side

Inside


Note: Some issues will need to be addressed

45

Reputation Risks

Security

Intellectualpropertyleakage

Regulatoryrequirements

Recordsmanagement

Privacy /Confidentiality

Training

$


3) Simplicity –drivers of complexity

Slide 46Source: Addressing general and administrative (G&A) complexity The next frontier in cost-cutting


Simplicity: Its not that simple but organizations need to work to reduce their complexity

Manage down their complexity:•Products•Processes•Organizational capabilities•Information architecture

Slide 47


If we get it right . . .

7Slide 48


If we get it wrong . . . extinction!

“It’s not the strongest of the species that survives, nor the most intelligent,

but the one most responsive to change.”

Charles Darwin

Slide 49



Slide 50Source: http://www.slideshare.net/dhinchcliffe/enterprise-20-summit-2012-closing-keynote



Slide 51

Google’s share price

Thank you and tell me what you think

Gordon (at)

DynamicAdaptation.com


Twitter: @dynamicadaptatn

Slide 52

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Gordon Vala-Webb and Dynamic Adaptation does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2013 Gordon Vala-Webb. All rights reserved.

http://www.dynamicadaptation.com/

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Building smarter organizations