Tag Archives: The World is Flat

Problems and the people who solve them

Note: This is the sixth and final part of a longer series on how social media is affecting management. You can find the earlier posts – The future of (knowledge) work, Knowledge Workers in the British Raj, The north-south divide, Working in Hollywood and World of Warcraft in the workplace – elsewhere on this blog.

What impact will Social Media have on your business? Is it evolution, revolution, or a non-event? It’s hard to deny that Social Media is changing how we understand the role of government, and how we interact on the social commons. But what is its impact on the private sphere: the gated communities which are our businesses and organizations? Some folk claim that we’ll see a similar shift in the private sphere as we’re seeing in the public one. A revolution in the workplace as the workers realize that they really do control production, downing tools in search of a better deal and conditions.

This point of view ignores two key facts. First, that private spaces are, by their nature, more flexible than public as we are free to define who can inhabit them. Revolution is unlikely. Business owners still need someone to hold accountable for the performance and behavior of their businesses, just as regulators and governments want to ensure that someone in the organisation is on the hook for meeting their demands. Management will continue to manage, and to be held accountable, no matter how empowered the workforce becomes{{1}}. Second, that the technologies we’re deploying don’t just change how we carry out the tasks our businesses needs, as they also change what tasks we need to carry out. There is no reason for tomorrow’s organizations to operate within the same framework that yesterday’s ones did.

[[1]]The future of (knowledge) work @ PEG[[1]]

The nature of work is changing, and the shift in work practices looks like it will be comparable to the shift we saw during the Industrial Revolution – between the 18th and 19th centuries – when almost every aspect of daily life was influenced in some way. Before the Industrial Revolution people worked from their homes, farming or blacksmithing as the need arose, and the concept of work-life balance hadn’t found its way into the dictionary. After the revolution most people worked in vast bureaucracies, leaving home every morning to travel to work (or, early on, living in vast company owned dormitories next to their work) and fit themselves to into the tasks demanded of them.

The Industrial Revolution gave us Taylorism, a view of business which equates the organization to a vast programmable machine. Businesses were inward looking, intent on improving their internal operations. Optimizing business was the challenge of defining the perfect sequence of tasks, each carefully sculpted to deliver maximum value at minimum cost, and then selecting and shaping employees to fit the tasks.

The environment business operates in today has changed dramatically since Frederick Taylor created scientific management. The world used to be fairly stable; you wore the same clothing styles (more or less) as your parents before you, as would your children following after. Today, however, the environment changes significantly every year, if not every month or week. Nowhere is this more evident than with the creation of fast fashion, with Zara flipping the company’s supply chain on it head to optimise time from runway to shelf rather than cost, swapping the seasonal fashion collection for a constant stream of new products and driving new customer behaviours in the process.

The stability business used to rely on has given way to a more uncertain environment; the predictable progression of the business seasons in a temperate climate exchanged for the unexpected and often unpredictable storms and hurricanes of a more tropical clime{{2}}. Our success used to rely on the quality of our toolkits – the business processes and assets at the heart of our business – as it is these toolkits that enabled us to survive the steady progression of the seasons. Today our success relies on our skill – our ability to leverage the on-demand services and capabilities we find around us – as it is our ability to adapt these tools we find around us to the unexpected threat or opportunity, that now determines our success.

[[2]]The North-South divide @ PEG[[2]]

The old, highly specialized and highly entailed experts we used to rely on are rapidly becoming a liability, and we’re incrementally replacing specialized skills with solutions, frameworks and on-demand services. From IBM’s first election toting machines built with repurposed punchcard readers from knitting mills, through early departmental computers (such a L.E.O., the Lyon’s Electronic Office) to the birth of enterprise IT (and client-server along with it) and more recent web technologies, the history of technology in business has been a story of slowly reifying layers of expertise in tools, enabling this expertise to be distributed and leveraged. Social Media is just the latest step in this evolution, the key difference being that it automates and streamlines the communication and collaboration between individuals, rather than tasks that these individuals work on.

Our companies are being hollowed out, their middle layers of management replaced by software and solutions. Rather than empowering middle management, Enterprise 2.0 and Social Business Design is eliminating them. Social Media is empowering the team at the front line and the executive to connect directly with each other, bypassing the many layers of middle management most organizations contain. They’re externally focused – the front line intent on tending our customers and delivering product, the executive focused on understanding the waves in the market and charting the business’s path forward – where middle management was internally focused, concerned with keeping the bureaucracy functioning, a bureaucracy that many organizations are in the process of dismantling. Similar to the rural Indian civil service in the British Raj{{3}}, we’re moving to flat, or even super-flat, organizational structures which swap the command-and-control of the past for clear objectives and the devolution of responsibility for decisions to the front line.

[[3]]Knowledge workers in the British Raj @ PEG[[3]]

Tomorrow’s business, after it has adopted Social Media, will not just be a new command-and control paradigm (bottom-up rather than top-down, distributed rather than centralized) retrofitted to our existing bureaucracies. Tomorrow’s business will be something different, smaller and much leaner, built from dynamically forming coalitions focused on achieving a common goal. The highly skilled specialists concerned with building the complex toolkits will become a thing of the past.

The transformation from large bureaucratic organizations to more fluid coalitions will result in a similar shift in work practices as we saw during the Industrial Revolution. We can already this the beginnings of this with companies starting to understand that their knowledge workers prefer to supply their own tools (such as mobile phones and laptops), as well as the current trend for organisations to restructure their contracts with suppliers, focusing on the outcome they want delivered rather than quality and cost. Smaller workforces holding more general skills will integrate themselves with a community of partners, suppliers and high value free agents, with the company functioning in a similar way to the studios in modern Hollywood{{4}}. The company sets the agenda by determining what problems it wants to focus on, while providing its staff and the broader community swirling around them with a platform to dynamically form teams around specific challenges and goals, World of Warcraft style{{5}}. Rather than defining the perfect task and then fitting the employee to the task, we need to define our goal and then assemble the perfect team to achieve that goal.

[[4]]Working in Hollywood @ PEG[[4]]
[[5]]World of Warcraft in the workplace @ PEG[[5]]

The most significant shift for our businesses is the transition from being knowledge using organizations, to knowledge creating organizations. While the world might be flat (as Thomas Friedman showed us{{6}}), with globalization and the Internet providing on-demand access to low cost products and services from around the globe, the world is also spikey (as Richard Florida claims{{7}}) as the need for localized and personalised services drive demand for unique and creative solutions which fit into a local context. The winners in this race will be the businesses that can marry the two.

[[6]]Thomas L. Friedman (2005), The World if Flat, Farrar, Straus & Giroux [[6]]
[[7]]Richard Florida (2005), The World is Spikey, The Atlantic [PDF][[7]]

Which brings us back to the impact of social media on your organization. It’s not a revolution that will remove the need for the C-level; someone still needs to sign the books and be held accountable to shareholders. Social media might tip the balance a little toward a more collective form of management, but it will not rewrite the rules overnight. Nor is it little more than better and more efficient groupware. Creating a social business is not simply rearranging the people (and power dynamics) or your existing business; it demands smaller, more dynamic teams with more potent and focused team members who might not be on your payroll full time.

What Social Media is doing is driving organizations to complete the shift started in the last few decades, moving from manufacturing centric enterprises to knowledge creating organisations.

The basic economic resource – ”the means of production,” to use the economist’s term – is no longer capital, nor natural resources (the economist’s “land”), nor “labor.” It is and will be knowledge. The central wealth-creating activities will be neither the allocation of capital to productive uses, nor “labor” – the two poles of nineteenth- and twentieth-century economic theory, whether classical, Marxist, Keynesian, or neo-classical. Value is now created by “productivity” and “innovation,” both applications of knowledge to work.

— Peter Drucker, The Post-Capitalist Society{{8}}

[[8]]Peter Drucker (1993), The Post-Capitalist Society, HarperCollins[[8]]

Historically companies have provided a locus to gather the capital, resources and skills required to provide the scale needed to manufacture products cheaply and efficiently. Today problems, the problems of our clients and customers, are increasingly becoming the focus of our organizations, as capital, resources and skills are commoditized, caught between globalization and the Internet. The strongest determinant of success in business today is the ability to solve problems that other people (and organizations) care about. Companies are transitioning from an internal focus to an external focus, intent on gathering the skilled craftsmen required to deliver the projects needed to solve the problems that the company concerns itself with. Companies are becoming the focal point for a network for skilled craftsmen and service providers who are required to solve the problems that the organisation is interested in.

Business is increasingly becoming a question of forming the right team, at the right time, in the right place, with the right tools to provide the best possible outcome. We’re also trying to achieve this in an environment where it is no longer feasible to own all the resources and people we need. Consequentially, success now depends on our ability to mobilize the resources and skills we need from across a broader network that includes not only our (few) employees, but our contractors, partners and even customers. Social media and social business are the tools that allow us to tweak our operating models to do this.

So the impact of social media on our businesses is to strip them back to their cores and (re)focus their energies on what really matters in a rapidly changing and unpredictable environment: problems and the people who solve them.

With cloud computing, the world is not flat

Does location matter? Or, put another way, is the world no longer flat? Many cloud and SaaS providers work under the assumption that where we store data where it is most efficient from an application performance point of view, ignoring political considerations. This runs counter to many company and governments who care greatly where their data is stored. Have we entered a time where location does matter, not for technical reasons, but for political reasons? Is globalisation (as a political thing) finally starting to impact IT architecture and strategy?

Just who is taking your order?
Just who is taking your order?

Thomas Friedman‘s book, The World is Flat, contained a number of stories which where real eye openers. The one I remember the most was the McDonald’s drive through. The idea was simple: once you’ve removed direct physical contact from the ordering process, then it’s more efficient to accept orders from a contact centre than from within the restaurant itself. We could event locate that contact centre in a cheaper geography such as another state, or even another country.

Telecommunications made the world flat, as cheap telecommunications allows us to locate work wherever it is cheapest. The opportunity for labour arbitrage this created drove offshoring through the late nineties and into the new millenium. Everything from call centres to tax returns and medical image diagnosis started to migrate to cheaper geographies. Competition to be the cheapest and most efficient service provider, rather than location, determines who does the work. The entire world would compete on a level playing field.

In the background, whilst this was happening, enterprise applications went from common to ubiquitous. Adoption was driven by the productivity benefits the applications brought, which started of as a source of differentiation, but has now become one of the many requirements of being in business. SaaS and cloud are the most recent step in this evolution, leveraging the global market to create solutions operating at such a massive scale that they can provide price points and service levels which are hard, if not impossible, for most companies to achieve internally.

The growth of the U.S. enterprise application market
The growth of the U.S. enterprise application market (via INPUT)

Despite the world being laser levelled within an inch of its life, many companies are finding it difficult to move their operations to the cost-effective nirvana that is cloud and SaaS services. Location matters, it seems. Not for technical reasons, but for political ones.

Where we store our assets is important. Organisations want to put their assets somewhere safe, because without assets these the organisations don’t amount to much. Companies want to keep their information — their confidential trade secrets — hidden from prying eyes. Governments need to ensure they have the trust of their citizens by respecting their privacy. (Not to mention the skullduggery this is international relations.) While communications technology has made it incredibly easy to move this information around and keep it secure, it has yet to solve the political problem of ensuring that we can trust the people responsible for safeguarding our assets. And all these applications we have created — both the traditional on-premesis, hosted or SaaS and cloud versions — are really just asset management tools.

We’re reached a point where one of the a larger hidden assumptions of enterprise applications has been exposed. Each application was designed to live and operate within a single organisation. This organisation might be a company, or it might be a country, or it might be some combination of the two. The application you select to manage your data determines the political boundary it lives within. If you use any U.S. SaaS or cloud solution provider to manage your data, then your data falls under U.S. judicial discovery laws, irregardless of where you yourself are located. If your data transits through the U.S., then assume that the U.S. government has a copy. The world might be flat, but where you store your assets and where you send them still matters.

Country-specific regulations governing privacy and data protection vary greatly.
Global data protection heat map (via Forrester)

We can already see some moves by the vendors to address this problem. Microsoft, for example, has developed a dedicated cloud for the U.S. government, known as BPOS Federal, which is designed to meet the government’s stringent security and privacy standards. Amazon has also taken a portion of the cloud it runs and dedicated it to, and located it in, the EU, for similar reasons.

If we consider enterprise applications to be asset management tools rather than productivity tools, then ideas like private clouds start to make a lot of sense. Cloud technology reifies a lot of the knowledge required to configure and manage a virtualised environment in software, eliminating the data centre voodoo and empowering the development teams to manage the solutions themselves. This makes cloud technology simply a better asset management tool, but we need to freedom to locate the data (and therefore the application) where it makes the most sense from an asset management point of view. Sometimes this might imply a large, location agnostic, public cloud. Other times it might require a much smaller private cloud located within a specific political boundary. (And the need to prevent some data even transiting through a few specific geographies – requiring us to move the code to the data, rather than the data to the code – might be the killer application that mobile agents have been waiting for.)

What we really need are meta-clouds: clouds created by aggregating a number of different clouds, just as the Internet is a network of separate networks. While the clouds would all be technically similar, each would be located in a different political geography. This might be inside vs. outside the organisation, or in different states, or even different countries. The data would be stored and maintained where it made the most sense from an asset management point of view, with few technical considerations, the meta-cloud providing a consistent approach to locating and moving our assets within and across individual clouds as we see fit.

Childhood readers and the art of random

Note: This post is part of larger series on innovation, going under the collective name of Innovation and Art of Random.

Innovation can seem random. We’re dealing with so much change in our daily lives that we miss the long and tortuous journey an innovation takes from it’s first conception through to the delivered solution, causing the innovation to seemingly appear from nowhere. We’re distracted as we’re trying to cope with the huge volume of work our changing environment creates, adjusting to the new normal, while trying to find time to sift through the idea fire hose for that one good idea. However ideas are common, commoditized even, and our real challenge is to make connections.

As Peter Drucker pointed out: insight, the tacit application of knowledge is not a transferable good. The value we derive from innovation comes from synthesis, the tacit application of knowledge to create a new solution. The challenge is to find time to pull apart the tools available to us, recombining them to synthesis new (and hopefully innovative) solutions to the problems we’re confronting today.

While ideas may be cheap, the time and space needed to create insight are not. We need to understand our problem from multiple contexts, teasing out the important elements, bringing together ideas to address each element in the synthesis of an original solution. This process takes time, often more time than we can spare, and so we need to invest our time wisely. Which steps in this processes are the most valuable (or the least transferable), the steps we need to own? Which can we outsource, passing responsibility to partners, or even our social network? And is it possible to create time? Using technology to take some of the load and create the breathing room we need.

Dr. Khee Pang
Dr. Khee Pang

One of the best pieces of advice I picked up at university was from Dr. K. K. Pang, who unfortunately passed away in March 2009. Dr Pang taught circuit theory, which can be quite a frustrating subject. It’s common to encounter a problem in circuit theory which you just can’t find a way into, making it seemingly impossible to solve. Dr. Pang’s brilliant, yet simple, advice was “If you don’t like the problem, then change it to one you do like.”. Just start messing with the problem, transforming bits of the circuit at random until you find a problem that you can solve.

Fast forward to my current work, far removed from circuit theory, and I still find myself using this piece of advice at least once a week. It’s not uncommon to come across a problem, a problem with little direct connection to technology, that needs to be approached from a very different angle. When stuck, take a different angle, make it a different problem, and you might find this new problem more to you liking.

You often bump into the same problem in different contexts as you work across industries and geographies. Different contexts can necessitate a different point of view, making the problem look slightly different. This highlights other aspects of the problem that you might not have been aware of before, highlighting previously hidden assumptions or connections to other problems. However, while this cross industry and geography insight is a valuable tool, the time required to go spelunking for insight is prohibitive. We find ourselves spend too much decoding the new context, and too little teasing out the important elements.

Learning to read, something I expect we all did in our childhood, is a struggle for fluency. We work from the identification of letters and words, through struggling to decode the text, to a level of fluency that enables us to focus on the meaning behind the text. Being fluent means being good enough at identification and decoding that we have the time and space for comprehension.

The ability to change the problem in front of you is really a question of being fluent in a range of environments; understanding a number of doctrines. These might be different industries (finance, public sector, utilities …) domains (logistics, risk management, military tactics, rhetoric …) or even geographies (APAC, EU, US …) as each has its own approach. We need enough experience in an environment to be able to decode it easily. Generally this means in the trenches experience, focused on applying knowledge, allowing us to weed out the common place and find the interesting and new. But building fluency takes time though; we can’t afford to immerse ourselves in every possible environment that might be of interest.

For quite a few years (from back in the day when my email address had a .oz at the end) I’ve been collecting a network of colleagues. Each is inquisitive in our own way, each with our own area of interest or theme, covering a huge, overlapping range of doctrines, while always looking for another idea too add to our toolbox. With the world being small, or even flat, this network of like minds has often been the source of a different point of view, one which solves the problem I’m working on. More recently this network has been migrating to Twitter, making the shared conversation more dynamic and immediate. It’s small networks of like-minds like this which can provide us the ability to effectively outsource the majority of our analysis, spreading the effort amongst out peers and creating the time and space to focus on synthesis.

Which brings us to the crux of the problem: innovation relies on the synthesis, and the key to synthesis is in finding interesting problems to solve. An idea, no matter how brilliant, will not go far unless it results in a product or service the people want. Innovation exists out at the surface of our organisations, or at the production coal face. Just as with the breath strips example, interesting problems pop up in the most unexpected places. Our challenge is prepare ourselves so that we can capitalise on the the opportunity a problem represents. As a famous golfer once said:

Gary Player
Gary Player

The more I practice, the luckier I get.
Gary Player

The world around us changes so rapidly that innovation can seem random. The snowmobile was obvious to the people who invented it, as they worked via trial-and-error from the original problem they wanted to solve through to the completed solution; it didn’t leap from their brow as a fully formed concept. Develop your interests, become fluent in a wide range of relevant topics and environments, use your network to extend your reach even further, and look for interesting problems to solve. In a world awash with good ideas, when innovation relies on your ability synthesis new solutions by finding an new angle from which to approach old problems (possibly problems so old that people forgot that they had them), the key to success is to find our own focus and then use your own own interests to drive yourself forward while effectively leveraging your network and resources around you to take as much of the load as possible. Innovation is rarely the result of a brilliant idea, but a patient process of finding problems to solve and then solving them, and sometimes we’re surprised by how innovative our solutions can be.

Distance is meaningless

Sarah Lacey has publish a interesting article over at TechCrunch: Think the Term “Supply Chain” Is Unsexy? Meet the Kinky King of Beijing. The bit I like is somewhere toward the middle of the article.

Like a lot of entrepreneurs in China, Sloan is cagey about what I can and can’t say about how the operation works. That’s not because it’s illicit—it’s because it’s so incredibly lean, flexible and outsourced that he doesn’t benefit if competitors realize exactly what he’s pulled off business-wise. But suffice to say with a small army of employees peppered around the globe, Sloan—aka the “Kinky King of Beijing”—is looking at an incredibly profitable business that’s already generating more than $1 million in revenue and growing quickly. He’s exploited what each region does best: Romanians are his programmers and SEO, Indians and Brazilians do his Web design, and China does the manufacturing and fulfillment. He hired his whole staff without leaving his living room. His next act? Finding new products and following the same playbook.

As I’ve said before, we need to get over this notion that off-shore means the third & second world manufacturing products designed in the West, and for the West. People are using technology to completely reinvent our understanding of what makes a company. It seems that The World is Flat only scratched the tip of the iceberg.

Posted via web from Business-Technology

The rules of the game are changing

Can China beat the U.S.A. at customer service? Not quite yet according to The Economist, but they do seem to be getting there. If Chinese businesses can start to out perform the West in front office processes then China would start to be the front line seller, not the back office producer. And China has a massive, and rapidly maturing, domestic market to experiment on as it tries to get these processes right.

The Economist’s article provides us with a real sense of the shift in global business that that the current financial crises only seems to be accelerating. I’m a big believer that there’s nothing particularly special about the people in any particular country. I’ve been lucky enough to work on most of the continents and with a diverse enough range of nationalities to understand that we’re all equally intelligent, creative and innovative given half a chance. If we’re all as smart as each other then ultimately success (or not) of a country will come down to the size of its talent pool (population) and the willingness of its businesses to invest. China and India, with their massive populations, and drive to modernize are well positioned to tip the balance in their favor, if they can sort their domestic markets out. This appears to be happening.

Our current assumptions seem to be that the East (China and India) will manufacture products designed in the West (the U.S.A. and Europe) and which are sold to western customers. Most of the value is generated and captured in the West. This makes sense at the moment as the West (and the US in particular) is the largest, homogenous and rich market in the world. Western companies have the advantage of a large domestic market, and overseas companies all target the West as it offers the largest potential to grow their businesses.

However, China’s move into the front office has the potential to flip the entire balance. Western companies could be manufacturing Chinese designs for western domestic markets, with the cash generated in the West and value captured in the East. With its huge internal population Chinese business will have access to the talent it needs to invent and design new products and services. It has have a large domestic population to grow a business and tune its offering. As costs rise and the advantages of labour arbitrage are eroded, manufacturing will slowly migrate from East to West to be close to the client where it avoids currency risk (similar to how various Japanese car companies established factories in the American south).

The question on all of our lips, though, is “How does this effect me?”

The world is a more complex place than we first assumed. Not only is the business cycle accelerating, but globalization and the global financial crisis seem to be changing the underlying rules which drive the business cycle. Global supply chains are becoming yet more complex, and we’re even more tightly integrated into the global village. Plowing the same farrow as last year is no longer a viable strategy if we want to survive. We all need to think quite carefully about not just how we’re going to create good businesses in our local market, but what is going to provide out businesses with the originality they need to survive in a global market as we come under increasing pressure from competitors from all around the globe.

Suddenly it seems like The World is Flat  only scratched the tip of the iceberg.