Enterprise 2.0 crock? Depends how you define it…

 

   Dennis Howlett makes some well justified criticisms of Enterprise 2.0 at ZNet’s Irregular Enterprise blog.  I’ve never been a fan of the term ‘enterprise 2.0’ (in the way the term is usually used), and for example, have commented previously that:

“I have the same concern about ‘enterprise 2.0’ which the CIPD report (based on Andrew McAfee’s work) describes as web 2.0 behind an enterprise’s firewall (eg Yammer vs Twitter).  To me, enterprise 2.0, or ‘business 2.0’ anyway, is about a new way of working, which can be enabled through the use of web 2.0, but can also be supported through other face-to-face techniques.”

 

But I do think there is some value in the term too.  Here are some thoughts on Howlett’s points:

“Regardless of what you’re told by the E2.0 mavens, business has far more pressing problems. The world is NOT made up of knowledge driven businesses. It’s made up of a myriad of design, make and buy people who -quite frankly - don’t give a damn about the ‘emergent nature‘ of enterprise.  To most of those people, the talk is mostly noise they don’t need.They just want to get things done with whatever the best tech they can get their hands on at reasonable price. That doesn’t mean some wiki, blog or whatnot.”

 

I totally disagree with this.  I think society’s expectations of business have changed drastically (the global reset), and businesses understand the way they need t operate to take account of these shifts.  Plus post recession, many organisations are going to have to do the same or more with less people.  There are two key ways to deal with this situation.  Either improve the capability of each person (their human capital), or the relationships that provide the synergy between the people (the social capital).  E2.0, in my terms (I don’t care that much about whether it’s emergent), provides one means of developing the social capital to respond to this new situation (see my next post for more on this).

 

“Communities are driven by passionate community evangelists who, for the most part I see as driven people. They don’t have an allegiance to the company or brand but to the idea of community. There’s nothing wrong with that but I have to ask the question - what happens when they move on or become tired of batting their head against a brick wall? As someone engaged with community building as a stepping stone to transformation I understand the challenges.”

 

I agree community participation will often follow the power law – a few people will make most of the contribution.  So what do you do?  You recruit and develop your employees to get more people who will participate and hence, shift the curve.  And when one of your evangelists leave, you try hard to recruit another.

 

“Like it or not, large enterprises - the big name brands - have to work in structures and hierarchies that most E2.0 mavens ridicule but can’t come up with alternatives that make any sort of corporate sense. Therein lies the Big Lie. Enterprise 2.0 pre-supposes that you can upend hierarchies for the benefit of all. Yet none of that thinking has a credible use case you can generalize back to business types - except: knowledge based businesses such as legal, accounting, architects etc.”

 

I’m a fan of flat structures and squashed hierarchies, but I don’t think these are essential parts of E2.0.  The key is to identify the sort of social capital you want to develop, then identify how you can create this.  The strategy that emerges may be to flatten hierarchies, but it may not.  There are plenty of other very valid ways to develop social capital too.

 

“In the meantime, can someone explain to me the problem Enterprise 2.0 is trying to solve?”

 

Enterprise 2.0 in my terms creates social capital that enables organisations to set new or more stretching business goals.  It doesn’t necessarily solve a problem.  It certainly provides an opportunity.

 

 

Technorati Tags: Dennis Howlett,ZDNet,Enterprise 2.0,E2.0,crock

 

 

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Cisco’s management experiment

 

          A number of other blogs have posted on Cisco’s unusual management structure recently, see for example:

• Henry Blodget, Business Insider: Has Cisco’s John Chambers lost his mind?
• Brad Reese, Network World: Management vision of Cisco CEO John Chambers under fire
• Ben Worthen, Digits (Wall Street Journal blogs): Cisco CEO John Chambers’s big management experiment.

 

As you’ll see if you read these posts (and can probably tell from their titles), these posts; readers’ comments on these posts; and also employee feedback (eg on Glassdoor.com) are quite disparaging.

I’ve also posted previously on Cisco’s network organisation structure design, and on their new Collaboration Framework.  Both of my posts are broadly favourable (although they don’t deal specifically with this top level structure), so what’s going on?

 

Cisco’s management structure 

During the last eight years, Cisco has been replacing its top-down divisional structure with committees of executives from across the company.  More than 750 company leaders are currently involved in 59 committees (12 councils for $10m+ business opportunities, 47 boards for $1m+ opportunities, and below this, a number of working groups) - see Cisco’s top level organisation chart at the top of this post, and also take a look at a previous post of mine that also refers to some of this.  Cisco’s current goal is to broaden participation on these committees to 2500 or more employees.

The motivation behind these changes has been to move from a command-and-control operation dominated by competing departments to a widely cross-functional, collaborative company which uses the various standing committees to facilitate executive decision-making, create cross functional alignment, and guide business initiatives.  Cisco now makes 70% of its decisions in these committees (up from 10% just two years ago).

In addition, the new structure has enabled Cisco to increase the number of markets the company is targeting from two in 2007 to 26 today (each of which could soon reach sales of $1 billion, accounting for more than 25% of Cisco’s revenue) and this number could increase to 50 next year.

Cisco’s CEO, John Chambers has said that part of his goal in making the changes has been to make spread his executives thinly, making them rethink how they work and what they work on.

Eventually they "realize they can’t keep their head above water and if they want to swim they have to give [some responsibilities] to their teams".  The new management structure "makes everyone uncomfortable, including the CEO," he says.

 

The criticism

While most commentators understand that Cisco needs to change, becoming more innovative in order to grow organically, rather than relying on acquisition as it has in the past, its recent changes have drawn substantial criticism.

The new structure is reported to add bureaucracy, remove accountability and slow down decision making.  It’s also blamed for the company’s falling market share in certain key product categories.

 

My perspectives

Cisco’s structure is certainly different, and it must have been a brave, or foolhardy, decision to require top executives to spend 30% of their time serving on 10 or more committees.

I’ve worked myself in one public sector organisation in which I and other executives were required to spend significant time working in committees and this certainly generated a lot of waste there.  So it’s easy to see how this committee based structure could result in a massive bureaucracy that simply produces slower and lower quality decisions.

But Chambers clearly believes that business needs to change – see these comments in a recent New York Times interview:

“I’m a command-and-control person. I like being able to say turn right, and we truly have 67,000 people turn right. But that’s the style of the past. Today’s world requires a different leadership style — more collaboration and teamwork”

“Big time, the importance of collaboration. Big time, people who have teamwork skills, and their use of technology. If they’re not collaborative, if they aren’t naturally inclined toward collaboration and teamwork, if they are uncomfortable with using technology to make that happen both within Cisco and in their own life, they’re probably not going to fit in here.”

 

If Chambers is right that collaboration is the ‘next big thing’ then it might have been a bigger risk to keep things as they were than to change.

To a certain extent, I think criticism of the changes bear similarities to push back against organisations allowing people to use social media technologies during work times (the ban Facebook debate).

Both this structure, and individual use of social media, may lower individual productivity.  But that’s no longer the point.  They key now is productivity of the group, delivering organisational speed and innovation.

Cisco doesn’t want to replicate the experience of Sony being take over by Apple for design of the ipod (Chambers had a similar experience to this at Wang where the company got left behind by the rise of the PC) and it obviously needs to organise itself differently if it’s going to produce different results.

And the scale of the transformation will certainly make it very clear to executives how their behaviour is expected to change – avoiding one mistake made by a lot of organisations undergoing change.  But given this, a lot of employee feedback bound to be negative.  I think Chambers is right too see the fact that over 20% of his leaders have left the company as a positive.

 

The Difference

I think the key to Cisco’s success (and I predict they will continue to be successful) is the way that they have made these changes.  Yes, the top level structure could have degenerated into a paralysing bureaucracy, but I don’t think it has, and I don’t think it will.

See my earlier post on Cisco’s Collaborative Framework for a review of the approach it’s taken to support these changes, and which I think have been critical to ensure that they have been implemented well.

And probably even more important, has been Cisco’s single minded focus on collaboration.  This hasn’t been something it’s tried to introduce lightly, or quickly, or half heartedly.  So it’s been able to produce, what in my terms I call organisational capability – a capability for collaboration.

I don’t know if collaboration will be ‘the next big thing’ – although I believe it will.  But I also believe organisations have access to a wide variety of other different options for competing.  They key is to choose one and do it properly, not worrying too much about the way that business has traditionally been done.

So I guess John Chambers won’t be too worried by the recent criticism!
 

 

Also see: McKinsey’s conversation with John Chambers

And this interview on CNBC:

 

Technorati Tags: John Chambers,Cisco,Henry Blodget,Business Insider,Brad Reese,Network World,Ben Worthen,Digits,management,vision,experiment,rerouting,operating committee,councils,boards,working groups

Rerouting Cisco graphic: Ben Worthen, Digits (Wall Street Journal blogs): Seeking growth, Cisco reroutes decisions

 

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Whole Foods: Conscious Capitalism

 

      I’ve been watching some of the videos from the Conscious Capitalism conference earlier this year (brought to my attention by Ray Sisodia from Bentley University on the Moon Shots community site).

The conference was opened Sisodia talking about ‘firms of endearment’ and the need for a ‘declaration of interdependence’ – a recognition that we are all interconnected and co-dependent.

Sisodia presented a number of statistics about trust with business, which provided a context for the later proceedings:

• New York Times: “The majority of the public… believes that executives are bent on destroying the environment, cooking the books and lining their own pockets.”
• Roper: “Only 2% of investors believe that CEOs are ‘very trustworthy’: 72% believe that wrongdoing is commonplace at companies.”
• Harris Poll: “90% of Americans believe that big companies have too much influence on government.”
• “80% believe business is too concerned about profits and not enough about responsibilities to workers, consumers and the environment.”

 

I thought the most interesting presentation during the conference came from John Mackey, CEO at Whole Foods.

Mackey continued Sisodia’s train of thought, noting that business is widely seen as greedy, untrustworthy and widely unethical, and putting the blame for this on poor business ideology.  This has led to the current push back against capitalism and means that now “corporations and CEOs are in the toilet”.

In Mackey’s view, the narrative we use to describe businesses needs to change – and ‘conscious capitalism’ provides an appropriate alternative.  This is about:

• Enterprises having a deeper purpose behind maximising profit and shareholder value
• Enterprises being managed to optimise value for all major interdependent stakeholders
• Servant leadership to the enterprise and its stakeholders.

 

This approach means that profits should not be pursued – they ensue from working towards a higher purpose.  In Mackey’s view, maximising profits is a curious purpose for a business – and one that typically hasn’t come from the entrepreneurs who created new businesses – but from economists.  Entrepreneurs usually define an initial meaning for their businesses, and organisations need to hold on to this (accepting that meaning will evolve over time).

Great companies have great purposes which tap into the highest ideals that humans aspire to:

• Service to others: expressing love and care (the good)
• Discovery and the pursuit of truth (the true)
• Excellence and the quest for perfection (the beautiful)
• Changing and improving the world (the heroic).

 

Mackey notes he is not anti-profit.  Profits are essential for doing business.  But we need to recognise that profits are created through voluntary exchange, not from the exploitation of people.  The paradox of profits (similar to happiness) is that they are best achieved as a by-product of something else.

The problem is that not many bosses act in this way – there are few servant leaders.  Take executive reward.

• In 1980, the average US CEO received $40 for every $ earned by the average worker
• In 1990, it was $100
• By 2006, this had increased to $364 for every $ earned by the average worker.

 

At Whole Foods Markets, the highest pay is limited to $19 for every $1 the average full-time team member earns.

Also stock options – typically the top five executives will received 75% of stock options.  In Whole Foods Markets, the top executive only received 7%.

In Whole Foods, executive reward reflects the expectations of different stakeholders – in other firms, it “reflects a certain amount of greed”. 

 

An inspiring presentation – and a great conference.  See more of these presentations at http://www.bentley.edu/conscious-capitalism/index.cfm.

And for more insights on new ways of managing, join the Moon Shots community site at http://moon-shots.ning.com.

 

Technorati Tags: John Mackey,Whole Foods,Conscious Capitalism

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The broken society / Morality in politics

 

    My favourite post in the bloggers circle so far is one on the Bleeding Heart Show: the ‘Broken Society’ vs ‘Back to Basics’.

Comparing David Cameron’s reflections on the ‘broken society’ with John Major’s earlier attempts to get ‘back to basics’, blogger Neil Robertson suggests Cameron’s strategy is likely to be more successful, given that it avoids the potential for the government being seen as hypocritical:

“Where Major’s rhetoric was fogged-over by vague moralising about returning to the ‘neighbourliness, decency & courtesy’ of the past, Cameron is more precise, identifying the specific symptoms of the ‘Broken Society’ and arguing that only by reducing them can we have a happier, more equitable future. Significantly, all of the social evils he lists (however indirectly) either costs the state money or causes harm to law-abiding people, and he is not asking for anything more from the British people than those things most of us already do…

Just as Major & Cameron’s ideas are framed very differently, I suspect the consequences of the two speeches will also be very different. Thanks to the fuzziness with which ‘Back to Basics’ was sold, Major unwittingly committed the Conservatives to leading the country to a kind of moral reformation. Unfortunately for him, by doing so it became fair game to scrutinise the character of his cabinet, and when a number of those ministers failed to stand up to that scrutiny, it fatally undermined the project he was trying to sell.”

 

However, Robertson also refers to an earlier post by Melanchon and suggests:

“By seeking to describe the ‘Broken Society’ only in terms of those ’social evils’ which intrude upon the law-abiding majority, Melanchon essentially argues that Cameron has ripped the morality out of his crusade, creating a campaign which is more transactional than it is rooted in the values of religious conservatism. For him, the party isn’t calling for social change because it is moral and good; merely because it will save the state money & make us a little safer.”

 

There are a number of great points in this.  The point about hypocrisy is definitely right and Cameron’s approach to societal renewal is definitely safer.  But I do wonder, given further deterioration of societal mores and connection since the early 1990s, whether this is now enough?

The debate takes me back a couple of week to the arguments expressed by Michael Sandel in the second of the BBC’s Reith lectures (also see my post on the first of these).

Reviewing two hotly contested contemporary issue: the question of surrogacy, and same sex marriage, Sandel suggests that moral and religious arguments should play a role in political discourse and in justifying laws.  He notes:

“Many people shudder at the prospect. ‘Isn’t it dangerous?’, they ask, ‘to bring morality and religion into politics? Isn’t it safer for a government to try to be neutral and avoid taking sides on the moral and religious convictions its citizens espouse?’ I say no, not necessarily, for two reasons. First, it’s often not possible for government to be neutral on substantive moral questions / it’s not always possible to decide questions of justice and rights without resolving substantive moral questions; and, second, the attempt to do so can make for an impoverished public discourse / even where it may be possible, it may not be desirable.”

 

Reith’s argues that we shouldn’t try to avoid morale issues but should take the opportunity to debate these factors publically.  So perhaps Cameron is being politically smart, but may also be missing an opportunity by stressing redistribution of power and the need for more personal responsibility, political transparency etc.

I still find John Major’s speech resonates strongly with me – and I think that introduced differently, with more focus on serious debate / richer discourse, it could have resulted in different conclusions too.

From my own perspective, the question that arises is whether we perhaps need to have some back to basics debates within our organisations as well – taking one topical issue for example, on what do managers and employees collectively believe is a justifiable salary differential?

These wouldn’t be easy debates to have, but implemented well, might result in more committed, aligned workforces.

 

Technorati Tags: Neil Robertson,the Bleeding Heart Show,David Cameron,broken society,John Major,back to basics,Melanchon,Michael Sandel,Reith lecture,#bloggerscircle

Photo credit: Adrian Pingstone

 

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RSA Bloggers’ Circle

 

     As a Fellow of the Royal Society for Arts, Manufactures and Commerce (RSA), I’m delighted that this blog is now part of the recently formed ‘Bloggers Circle’, formed with support from the RSA to help amateur bloggers interested in public policy gain more impact and recognition for their posts.

The other blogs in the circle seem to deal primarily with political and charitable issues, whereas this one focuses mainly on social issues within organisations.  But I believe a lot of issues that are key concerns in society in general are also increasingly ones that organisations have to face, and that therefore, there is enough of an overlap between the other Circle blogs and this ones to make membership relevant and useful.

Therefore, I’ll be submitting some of my own posts to the circle and you’ll hopefully start to see some of them discussed by other circle members (I’ll let you know when they are).  And I’ll also be discussing some posts from other Circle members on this blog – beginning with my next post -

And if you’re interested in joining the circle, you’ll find info on how to do this here.

 

 

Technorati Tags: Bloggers Circle,Matthew Cain,RSA

 

 

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