Category Archives: Innovation & Knowledge Management

The last 10 years of R&D spending

Author Barry Jaruzelski discusses R&D spending by the Global Innovation 1000 companies over the last decade.

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Knowledge Management and Virtual Teams Management (Romanian)

Today I talked at ZF Live about Knowledge Management and Virtual Teams Management. The show was triggered by an online training I have delivered for Mediafax Group which was recently launched. The training is available at www.zfelearning.ro and you may find the recording of the TV show below (NB: both of them are in Romanian only):

Uncovering the secrets of innovation; the turning point in Knowledge Management

When we talk about innovation it’s easy to come up with the iPad example but the product itself is only one side of the story. We’re just looking at the tip of an iceberg. Have you ever wondered what’s below the sea? Let’s take a few moments to see how this innovation world looks like.

In the beginning there was darkness

Do you remember the first verses of the Bible? What happened in the darkness when our universe, the most amazing innovation, started to exist? It is written that “God said”. Whatever darkness you may face, you will never get out of it if you do not start to communicate. Communication is where it all begins.

Being innovative is not a statement or a nice attachment to your logo. It’s a long-term and continuous process. We are challenged to create the business of tomorrow even as we focus on keeping the organisation lean today, with more immediate incremental improvements supplemented by long-term big bets.

The key for this process is to enable connections between people and ideas. The tools we now have available are supporting communication more than ever. When you’ve read the word “connections”, your mind probably jumped to social tools such as Facebook, Google+, or Twitter. Indeed, businesses generally consider how to take advantage of these or similar web tools to communicate inside and outside the firm: enabling employee knowledge sharing, providing customer support, building the brand, or marketing products and services.

PwC recently launched the “Global Innovation Survey”, the largest and most comprehensive study of its kind exploring innovation from a global, multi-sector perspective. It uncovers insights obtained from interviews with board-level executives from 1,757 companies, across more than 25 countries and 30 sectors, who are responsible for overseeing innovation within their company.

Figure1The study shows that the most innovative companies use social media more often to collaborate externally and support the innovation process: 67% (most innovative companies) vs. 39% (least innovative companies) and they are more likely to manage innovation efforts formally or in a structured way: 78% vs. 66%. Moreover, when it comes to developing new products and services with external partners, the most innovative companies collaborate over three times more often.

The importance of collaboration can also be seen in the number of companies that are now working with customers or other businesses to co-create new products and solutions. The rapid upsurge in the sale of e-readers and e-books is a good example of how these collaborations can create game changing opportunities for some businesses and the threat of marginalisation for slower moving competitors.

Starting to communicate is not a requirement for innovation staff only but an innovative culture is required. Seven in ten of the executives interviewed by PwC also feel that a successful innovation culture relies on the organisation’s ability to foster an environment where smart exploration is encouraged even if does not always lead to a successful outcome. Leaders know that breakthrough innovations require exploration of entirely new types of business models and technologies. Sometimes, the experiments do not provide the expected results. Sometimes called a failure, those unexpected results are valuable discoveries that can guide the innovation team to bigger and better outcomes.

More lights in the sky

As we go deeper into creation we see that during the fourth day God made the stars to shine on the earth. Have you ever wondered why would we need stars since we already have light from the sun? Aren’t stars redundant lighting?

As companies begin to experiment and have success with social collaboration tools, they will begin to understand what we call the collaboration paradox: adding more information to the mix (so called “social information”) actually can help companies combat info overload by creating additional context that makes it easy to find exactly what you need.

The navigation techniques have always used stars as guidance on the ocean. We use “interest graphs” (maps of topics, ideas, or business issues and how they’re interrelated) to make it possible for individuals to navigate through our own oceans of information.

Effective innovators have structures and practices in place to make innovation more systematic. This allows them to “control” accidental discoveries, and to be continuous innovators. Such structures include a grassroots approach – empowering employees to act like entrepreneurs – as well as strong leadership backing and centralised support.

The leading innovators in PwC’s survey have clear preferences for a more structured innovation approach. Only a fifth (21%) of the most innovative companies manage innovation informally, compared with a third (32%) of the least innovative companies. In order to get the leading lights in the ocean of innovations, many leaders are shifting away from total reliance on informal structures.

Be fruitful

Why would a creator empower creation? We see fruitfulness as one of God’s requirements even for land and sea. Why would we require innovation at all levels? Well, especially in the knowledge days there is simply no other way.

Figure2A clear indication of innovation’s move into the mainstream is that many companies now expect staff to allocate at least some of their time to developing and supporting new ideas, rather than simply relying on a few bright sparks. Many participants talked about the need “to empower frontline staff”. The fact that talent is quite low down the list would further underline the move from innovation being “alchemy” by the few to “cookery” by the many.

While in the past R&D units would have focused on ways to enhance the product range, the PwC survey shows that many CEOs are looking to go much further by transforming what they sell and how they sell it. A soap powder manufacturer might open up a chain of launderettes or an engine maker could move from selling engines to charging users for running them, for example. What brings these new business models together is a shift in focus from products to solutions. The product is clearly an important part of the solution, but not everything. In turn, the role of technology goes beyond creating new and improved products towards gaining sharper insights into what customers want and how to deliver it. A common thread in the feedback from participants was the need “to spend more time in the marketplace”.

The most successful companies have gone further in seeking to create a culture of innovation. However, in keeping with innovation’s changing risk/reward profile this includes giving people extra time to create and nurture opportunities and being prepared to tolerate a level of risk and failure.

The turning point

The beautiful creation days have met a turning point and its effects are still here today. Why? Because there was a disruption between the knowledge Adam and Eve had and the way they decided to act. Interrupting critical knowledge in the decision making process is the turning point where most beautiful stories have ended tragically.

Figure3Some years ago I began to work on “capitalizing” knowledge in PwC for the EMEIA region, which is a territory covering all offices from the northern countries to South Africa and from the UK to India. This made me look with great interest on the efficiency of information flow and I realised that organizations that have dysfunctional knowledge management begin to suffer the same effects that the Alzheimer disease has on human brain: intellectual abilities are lost, even reach inability to think abstractly, the coordination is limited, and they have trouble performing daily activities. As a result, innovation becomes increasingly rare till it disappears completely.

Since its evolution is similar to an organization’s brain, in an article I wrote last year, I named this disease “Knowledgeheimer”. Thinking about an organization as a patient appeared to be making more sense to me when dealing with knowledge management. “Knowledgeheimer” is the turning point that burns a beautiful story into ashes.

In 1991, Knowledgeheimer’s treatment involved maximizing the organization’s intangible assets. Later, however, innovation was in the forefront of concerns – materialised into projects like Skandia Future Centre, a prototype to test the operation of new methods of capitalization of knowledge and, in particular, human intelligence within the organization. The basic principle was to stimulate new ideas and creative processes.

Today it becomes more obvious that establishing and fostering an innovative culture is a subtle mix of encouraging the right behaviours and giving people the means to take ownership of their innovation efforts. The Innovation Survey offers a glimpse of how this mix would look like.

Just as with Alzheimer’s, to combat “Knowledgeheimer”, the organization’s brain should be looked at consistently and intentionally, in a pro-active manner. Access to knowledge retention and taking benefit of this knowledge has to become part of the daily workflow.

Article published by Romanian Business Digest, October 2013; PDF copy here.

“Email is here to stay” – a statement against the human appetite for extremes

email
(Photo credit: Sean MacEntee)

A few days ago I was reading the interview that Don Tapscott, an adjunct professor at the University of Toronto, gave to McKinsey stating that email should be get rid of. I have to admit I agree with most of his statements but I don’t think killing email is the ultimate solution to internal communication platforms adoption nor the right way to embrace emergent technologies.

Besides having a communication channel outside the company, email does serve its internal purposes. I have looked over the emails I’ve sent and received during the last weeks. Indeed some of them could have been moved to our internal document collaboration platform but for many of them – I don’t think they should. Others are conversations with external providers which, from many reasons, it’s by far better to have them by email and have the output documented.

I do see the value of internal communication platforms. I’m a promoter of such a system but let’s not make the classical human mistake of making it the answer to all questions. It’s not.

There are many “soft” solutions to increasing internal platforms adoption. Why not move critical communication (e.g. bonus announcements) to the platform instead of email? Why not use gamification techniques and make it appealing?

Indeed, top management adoption is needed. Yes, we have to change the way we communicate and accept challenging open questions. The possibility to initiate, vote and debate new ideas should be easily available to all staff – this kind of discussions should indeed be stored in the internal communication platforms and even analysed in a structured way if possible. I would even support merging the two and have email as part of the internal communication platform – provided that security and functionality is being offered at the same level – but still, email would be, even then, a service on its own.

Instead of letting ourselves go with our human appetite for extremes, let’s make a smart use of existing and emerging technologies.

The future is now: remote workers in the knowledge times

Do you think the days when new hires will not come into the office for training is far away? I’ve done it two years ago and I’ve done it again these days. It’s true it was an internal hiring but all training has been delivered virtually: video conferencing and practice based assessments. Some eLearnings are also on their way… Because the rites of social media are so familiar to many employees, I can establish working relationships faster than ever with members of my remote teams.

As a recent McKinsey study shows, virtual approaches to work are attractive to a wide array of employees, including working mothers, older workers, and younger, Generation Y professionals who want flexible lifestyles from the start. Younger workers are often particularly suited to work remotely, having grown up socializing and collaborating online. “They don’t want to work 9 to 5,” says Bonny Simi, vice president of talent at JetBlue, “and it doesn’t matter to me if they work better from six at night until three in the morning or if they can do the work in six hours instead of eight.” (McKinsey Quarterly – “Preparing for a new era of knowledge work”).

Employers first began ramping up their use of remote-work arrangements in the 1990s. As technology evolved, companies such as IBM found they could eliminate permanent offices for their sales force and other customer-facing employees. Consulting companies also made a better use of “open-spaces” since partially their staff have to be on client site anyway.

Such moves yielded huge cost savings on real estate while increasing the time consultants could spend with customers. Now, thanks to broadband, cloud computing, and a burgeoning market for online collaboration tools, many more jobs that once required “face to face” interactions can be performed anywhere. These jobs range from insurance claims processors to law associates and corporate workers in functions such as finance or knowledge management.

In fact, by some estimates perhaps one-quarter of all US jobs could be performed remotely, and in McKinsey’s 2011 survey of 2,000 US businesses, one-quarter of them said they planned to use more remote workers in the future. Are you going to be one?

An ever changing knowledge management service

I attended yesterday a conference organised in Bucharest by the Wall Street Journal on the topic of „HR 2.0 – How organisations are transforming in the new economy” and it proved to be the first opportunity to speak outside PwC about the Knowledge Management service I’m coordinating across Europe, Middle East, Africa and India.

I presented the project as an example of how to manage a virtual service to better serve the knowledge management needs of our consultants. I talked about the way we manage change in our team, our secondments and HR outsourcing via other PwC Shared Delivery Centres. The challenges of such a service are extreme:

  • High volume of data (internal and external);
  • Dynamic team based on secondments;
  • Virtual networking and performing across the region on a daily basis as we are in the same office;
  • IT infrastructure highly secured with global coverage.

If I look back to how this service worked and how it does now, even if there is consistent and permanent change management, the benefits are also extreme, from many points of view:

  • Cost savings by efficiently managing capacity;
  • Secondees get back to local territories with international experience and can use that on the benefit of the local firms;
  • Motivation is always high;
  • Always a fresh perspective.

You may find here the slides of my presentation. Among the other invited speakers, there was the Managing Partner of Tiffin University, the Managing Partner of Lugera & Makler and the HR Director of Orange Romania.

Knowledgeheimer’s treatment: unlocking value and productivity through social technologies

I remember how eight years ago I was explaining to one of my clients the benefits of having an online platform that could be easily updated by his sales force, used by both client facing and back office and act also as a sales platform for anyone accessing the internet. It was an innovative idea, custom made but the word “social” had nothing to do with it. Technologies have come a long way and we often hear the word “social” sticked to some other ones such as “knowledge sharing” or “business benefits”. Nowadays, by not reaching the full potential of the existing knowledge sharing system, companies begin to suffer the same effects that the Alzheimer disease has on human brain, as we’ll see shortly.

According to McKinsey’s “Social economy” report, the social technologies today look like this:

  • over 1.5 billion networking users globally;
  • 80% of online users interact with social networks regularly;
  • 70% of companies are using social technologies; 90% of them report business benefits from such technologies;
  • knowledge workers spend 28 hours per week writing, searching and collaborating inside the company.

However, their potential is somewhere here:

  • between USD 1 billion and USD 1.3 trillion could be unlocked by social technologies in four sectors;
  • twice potential value from better enterprise communication and collaboration;
  • 20-25% potential improvement in knowledge worker productivity.

About Knowledgeheimer

During the last few years, I understood that knowledge management comes in fact to maintain the organization’s brain, to keep it active, to develop it so the organization is able to work and innovate. I observed that organizations with dysfunctional knowledge management begin to suffer the same effects that the Alzheimer disease has on human brain: intellectual abilities are lost, even reach inability to think abstractly, the coordination is limited, and they have trouble performing daily activities. Since the evolution is similar to an organization’s brain, I named this disease Knowledgeheimerclick here for details on this concept.

How do we treat these symptoms?

McKinsey’s report shows that two-thirds of this potential value lies in improving collaboration and communication within and across enterprises. The average interaction worker spends an estimated 28% of the work week managing e-mail and nearly 20% looking for internal information or tracking down colleagues who can help with specific tasks. But when companies use social media internally, messages become content; a searchable record of knowledge can reduce, by as much as 35%, the time employees spend searching for company information. Additional value can be realized through faster, more efficient, more effective collaboration, both within and between enterprises.

The amount of value individual companies can capture from social technologies varies widely by industry, as do the sources of value. Companies that have a high proportion of interaction workers can realize tremendous productivity improvements through faster internal communication and smoother collaboration. Companies that depend very heavily on influencing consumers can derive considerable value by interacting with them in social media and by monitoring the conversations to gain a richer perspective on product requirements or brand image – for much less than what traditional research methods would cost.

To reap the full benefit of social technologies, organizations must transform their structures, processes, and cultures: they will need to become more open and non-hierarchical and to create a culture of trust. Ultimately, the power of social technologies hinges on the full and enthusiastic participation of employees who are not afraid to share their thoughts and trust that their contributions will be respected. Creating these conditions will be far more challenging than implementing the technologies themselves.

Most customer-facing decisions are made without using customer insights

Why do we take non-productive decisions? This is a question easy to hear nowadays. I believe one of the answers (probably the most important one) comes from a Market Research Executive Board report: almost all executives agree that customer focus is critical to their company’s success – yet only 40% of senior executives feel that they have the support and tools that they need to be customer focused.

And why is that? – we may ask. Well, research into the customer decision-making environment reveals that the Research function—the organizational owner of customer knowledge, one of three components of customer focus – is currently set up to impact only 10% of the company’s customer-facing decisions. This leaves 90% of decisions being made based on “gut instinct” and/ or insights and information provided by other sources.

Not long ago I realised the importance of client facing behaviour – more details in this article – and decisions inside the firm will definetly impact this behaviour directly.

 

Knowledgeheimer

Ford’s production lines have marked a turning point in human history. Business had to change and whoever did not understand the need for automation and series production was to be crushed by industrialization itself. After nearly 100 years, Skandia marked the official beginning of “the knowledge era”: Leif Edvinson was hired in the early 90’s as a CKO (Chief Knowledge Officer) in order to capitalize intangible assets of the organization. At Skandia’s size, it was obvious that there were a lot of resources wasted and they spent a lot of time “reinventing the wheel” rather than facilitating transfer of expertise, innovation, lessons learned – in a word, knowledge.

Two years ago I began to work on “capitalizing” knowledge in a territory stretching from northern countries to South Africa and from UK to India which made me look with great interest on this topic. I found that knowledge management is perceived differently from one company to another (with some elements in common) and what works in some parts of the world as formal structure has no relevance in another cultural environment. Also, the literature is divided, sometimes the KM (knowledge management) function being located in the organizational chart somewhere similar to internal audit, sometimes subordinating it to the CEO, Business Development or, in early literature, integrated or confused with IT.

Out of the box

Only after I began to think “out of the box”, I understood that knowledge management comes in fact to maintain the organization’s brain, to keep it active, to develop it so the organization is able to work and innovate. Organizations that have dysfunctional knowledge management begin to suffer the same effects that the Alzheimer disease has on human brain: intellectual abilities are lost, even reach inability to think abstractly, the coordination is limited, and they have trouble performing daily activities. As a result initiatives become increasingly rare till they disappear completely.

Since the evolution is similar to an organization’s brain, I named this disease Knowledgeheimer. Thinking about an organization as a patient appeared to be making more sense to me when dealing with knowledge management. Knowledgeheimer allowed me to identify knowledge management problems without being limited by structures, tools and frameworks.

Ethernal Youth

Organizations can live longer than people who created them, and the disappearance of founders should not bankrupt the companies they founded. The most important condition to avoid such major danger is a healthy organisational brain that leads to effective coordination and the capacity to constantly adapt the business to the realities of the time. As organizations grow, the “brain” is no longer a person or a group, but rather the result of collective intelligence.

Knowledgeheimer is very sensitive to some risk factors and advanced age is one of them. However, Knowledgeheimer is not necessarily installed due to the passage of time, but to the inability to utilize and share knowledge. Organizations can stay young as long as they keep an active brain, responsive to internal and external stimuli.

Although they do not solve the problem, investments in distribution systems and retention of information, collaboration platforms within the organization and between organizations and customers are a turning point. Without them, Knowledgeheimer is already installed. However, creating an organizational culture that encourages knowledge sharing and teamwork is the essential driver so that investment in technology is not in vain.

Any organization needs information from external sources as no one has complete ownership of all the knowledge in this world. Lack of access to external information sources and lack of an external performance assessment is also one of the causes of Knowledgeheimer. The effect is breaking out of reality which leads to schizoid behaviour and functional retardation.

Prevention and treatment. About Steve Jobs’ toilets.

In 1991, Knowledgeheimer’s treatment involved maximizing the organization’s intangible assets. Later, however, innovation was in the forefront of concerns – materialised into projects like Skandia Future Centre, a prototype to test the operation of new methods of capitalization of knowledge and, in particular, human intelligence within the organization. The basic principle was to stimulate new ideas and creative processes. This successful project was then replicated by the Ministry of Finance in Denmark with what they called “Mindlab”. However, as I said, the need for specific medications leads to the need of each organization to open its own lab.

Sometimes treatment methods relate to patients’ creativity. For instance, Steve Jobs has been criticized by employees that he moved water dispensers and toilets in the middle of the building. In this way, each of them was forced to get out of their own perimeter. Discussions from the water dispenser often end with views of company processes and products. This soon led to an informal environment for expression of collective intelligence.

Just as with Alzheimer’s, to combat Knowledgeheimer, the organization’s brain should be looked at consistently and intentionally, in a pro-active manner. Access to knowledge retention and its capitalization should be part of the daily workflow.

A look into the future

I’m reluctant to “one size fits all” when it comes to knowledge management. I believe in the individuality of each organization and believe that a keyword for the future of knowledge management is “creativity”. Approaches will have to be creative, even if they are based on similar tools: databases, networking platforms, expertise location, or collaboration systems for communities of practice. Knowledgeheimer is already the most common form of organisational dysfunction and, if not treated properly, worsens as it progresses, eventually leading to death. As we become more and more knowledge-driven societies, its incidence is increasing from year to year.

Article published by Money Magazine, July 2012 edition. Click here for the original printed version.

Interpretations of Innovation

A little while ago I wrote an article on innovation – What does innovation mean to you?

There were a few reactions on what innovation really is and whether it is a sub-set of change management or integrated into knowledge management. Leaving the operational part aside, I found on Jeremy Gutsche’s speach some very interesting ideas, including some comments on failure and its role. Have a look when you’ve got a chance, it takes 30 minutes but it’s time well spent: