Riveting article on Bloomberg / Businessweek about how leaders really don’t want employees to innovate. Rather: “Businesses need most of their workers to carry out their primary duties with enthusiasm and consistency,” writes Pat Lencioni”

As to how organizations should lead and execute, the article opines in two seperate areas:

“What should leaders do? Be more open to new ideas from employees? Probably not. Better yet, they should stop overhyping innovation to the masses and come to the realization that only a limited number of people in any company really needs to be innovative

As heretical as that may seem to those who want to believe that “innovation is everyone’s business,” consider that even the most innovative and creative organizations need far more people to be dutiful, enthusiastic, and consistent in their work than innovative or creative.”

If you’ve read this blog before, you’ll know that I’m all for respecting the realities of how organizations operate today and finding a more decisive and surgical approach to leveraging the benefits of open collaborative and flatter organizational structures based on performance acceleration opportunities for client organizations. So I’m not opposed to Pats overarching message that managers need to ensure focus in innovation when it comes to meeting performance goals that have been promised to shareholders.

But here’s where this thinking goes off the rails and conforms hopelessly to the status quo (or Innovation 1.0):

Innovators vs. Innovation Cultures

There’s a difference. By organizations embracing and encouraging innovation, that really doesn’t equate to every factory worker walking off the line and putting on a lab coat. That would no doubt be asinine. Building Innovation cultures come in many flavors (see this by Hutch Carpenter on the many incarnations). It really means opening up the participatory funnel on not only suggesting but more importantly, refining the good ideas and getting the kinks out. In practical terms this means getting the big brains hidden in the corners of your enterprise to contribute unique data points (validation, rebuttals, refinement, oversight) to remove risk and enrichen outcomes. Far away from the lab or mahogany row where ideas have traditionally been hatched lies two complementary flavors of talent: practical front line customer centric views (customers, support, sales, partners, marketing) as well as deep deep component level knowledge (product developers, suppliers). Both these camps bring a heavy dose of insight that can shape execution outcomes.

Balancing The bird in hand vs. Two in a Bush

Other than that visionary CEO, when’s the last time you’ve heard leaders tout their innovation wins? They generally talk about operational and revenue wins because they manage people and products (development or sales). The problem with mahogany row innovation is that those same management realities of preferred top down innovation that Pat touts, bring along another, ugly, truth. Management systems of the last 4 decades have rewarded people managers more than subject matter experts. If you manage large numbers of people you get rewarded. If you continue to remain an individual contributor that wants to contribute deep deep subject matter expertise, theses very little room for you in the leadership ranks at most organizations. The fact is that beyond long range directional moves and high level innovation requirements to get there, operational leaders often can’t sweat the details of what might be, at the cost of managing where the dollars and cents come from today. They need the best minds across the organization to come together and execute on business innovation, whilst they keep Wall Street satiated during the next earnings call.

Ideation vs. Idea Execution

Innovation cultures support execution. The germination of innovation can often be really top down directional in many cases but with the best of the best when it comes to sourcing talent across the ecosystem (customers, employees, partners and suppliers). Citing one of our own examples, were working with one of the world best known traditional software companies facing what looks like a very dark cloud computing overcast on their core bread and butter business landscape. The realization to innovate comes decisively from the top yet together were leveraging those very core assets in place today (product know how, market positioning, incumbent customer segment needs) to innovate a shift in service delivery model, market engagement and value proposition to embrace the new opportunity.

In line with what our work covers (and the byline of this blog), I was naturally drawn to this Economist book review of “The Other Side of Innovation: Solving the Execution Challenge” by Vijay Govindarajan and Chris Trimble of the Tuck School of Business at Dartmouth College. The book offers a reasonable approach to executing innovation that would in fact be embraced by many many leaders. This snippet of examples gets to the crux of the issue:

Nucor Corporation, a steelmaker, gives its workers bonuses if they can produce steel more efficiently. Deere & Company, a maker of farm machinery, has produced a detailed playbook on how to design new tractors.

These are distinct execution outcomes of an innovation culture – different from some notional wild west format. And I believe in sharp contrast to recent concentrated innovation efforts that were high profile failures. And beyond the few forward thinking organizations who can let innovation run loose but still reel in the big fish (for the record, I don’t have a problem with this and we work with partners and customers that live this management theory), the flavor of innovation sold by many theorists offer this often impractical mode of innovation design:

Many would-be innovators deal with the trade-off between efficiency and innovation by rejecting traditional management entirely. They repeat mantras about “breaking all the rules” and “asking for forgiveness rather than permission”. They set up skunk works (small, autonomous units with a remit to innovate) and mock the boring corporate types who write their pay-cheques. But again this is counter-productive. Mocking the corporate establishment only encourages it to starve you of resources.

In the Power of Pull by John Hagel III, John Seely Brown and Lang Davidson, we see definite data how our efforts to date (which includes how we have innovated to-date) is keeping us on track to approaching a big zero when it comes to return on assets. So I would suggest that we rethink unnecessarily top loading our ideation and as important, feasibility and execution. We need all big brains on deck to collaborate in more agile ways (read: wrap around new concepts more fluidly) and this book gives data on why it needs to be done ASAP. And if its decisive innovation examples you are looking for when success would have been a pipe dream without a well orchestrated concert of surgical business decisions, supplemented by a coalition of the brightest, there’s plenty in The New Polymath by Vinnie Mirchandani on both do’s and don’ts referencing the Telco, Healthcare, CleanTech and other business sectors.

In my assessment, in practical terms, many oftoday’s leaders have little choice but to encourage some degree of an innovation culture that allows them to test, validate, dispute and confirm large scale directional changes with a broader set of talent that transcends hierarchy. Customer and market expectations and the effects of globalization are more dynamic than ever these days and the ability to see the best innovation come through whilst still delivering results today will in fact require all hands on deck. So, as leaders, before you unleash the Kidons of innovation, make sure your differentiating between decisive innovation execution and wild west idea festivals. That disciplined approach to seeing ideas through will in big part dictate the odds of long term viability.

Next week the GigaOM network hosts yet another addition of its clandestine famous Bunker Sessions. This event brings together a select group of industry thought leaders to discuss the business ramifications of a given emerging technology topic. The setting resembles a town hall format, inviting everyone to participate and share experiences. This time around the topic is ‘Future of Work: Crowd sourcing, Cloud Computing and Mobility.

I have the privilege of participating and moderating parts of the half day event. One of my sessions covers how advancements in web connectivity is mediating work and labor access. The second focuses on effects of SaaS and connectivity, particularly in the context of the application layer.

Here is a description of the event from the Bunker Sessions website:

How many times have you worked from a coffee shop or from home? Ten years ago that would have been unimaginable, technically and culturally. The easy access to broadband, mobile computing and cloud based software services is impacting the way we think about building companies. It affects the way we employ people, the meaning of talent and how employees will think about employers. The aim of this session will be to lay a groundwork for debate about the changes coming up.

Every employer institutes some element of a work life balance program as a strategic talent retention weapon or morale booster. Whilst these programs will always have a place as HR charts strategy, we’re at the start of a shift in employee expectations around mobility, workspaces and collaborative tools and technologies. This shift will trigger a change from what’s been considered point programs, to price of entry organizational capabilities that attract and energize the best talent.

Depending on your industry, some of this is happening now whilst some of it is still conceptual. But these new modes of work have business benefits as well – they’re not just a reactionary HR strategy to Gen Y expectations. Regardless of the catalyst, these changes will have an impact on operational design, HR and of course, IT.

The event is sponsored by Accenture and Orange. Speakers and panelists include:

• Fabio Rosati, CEO of Elance
• John Hagel, Chairman, Center for the Edge and Author of “The Power of Pull”
• Vinnie Mirchandani, CEO of Deal Architect Inc. and Author of “The New Polymath”
• Lukas Biewald, CEO of CrowdFlower
• Aaron Levie, CEO of Box.net
• Tim Young, CEO of Socialcast
• Evy Wilkins – Curator of HR & Tech SF and COO of DoYouBuzz
• Mary Hamilton – Global Lead, Workforce Technologies, Accenture Technology Labs

A few-first-come-first-serve (free) tickets are also available and I encourage you to request a pass. Email bunker@gigaom.com to make it happen.

More information on the event in this post on the GigaOM blog. See you there!

The McKinsey Quarterly has this excellent (and sobering) piece on how a financial crisis can accelerate global economic activity. A central point of the article is that whilst commodities and foreign exchange are truly globalized by Adam Smith’s definition (the Law of One Price which states that when markets are fully formed, all customers can get the same item at the same price, regardless of location), labor continues to offer significant arbitrage in different parts of the world primarily due to exchange rate restrictions that don’t let true currency value adjust naturally. I quote:

But it’s also important to understand that emerging-market economies have a structural advantage that is grounded in the operation of the global economy. Saber-rattling Western trade negotiators frequently focus their attention on the “unnaturally” depressed exchange rates of countries such as China, and this is a component of the structural advantage to which I refer. But its roots run far deeper—all the way down to the fundamental issue that labor can’t be freely traded on a single global market, while capital and commodities can. Any company sourcing its production or service operations in a lower-wage emerging-market country therefore can save enormously on labor costs. That’s painful for displaced Western workers, but it’s good for the company’s profits, good for consumers in developed markets, and good for the newly minted citizens of the global economy who are working in emerging-market factories and call centers. This is a dynamic we take so much for granted that it’s easy to imagine it as a semi permanent condition that will underpin global economic development for the foreseeable future.

Lowell Bryan, the author, opens with the a sharp wake up call:

This article explains why we should consider that seeming improbability and examines the possibility that financial crises may accelerate the transition to a global economy with more balanced trade, capital flows, and consumption.

The write-up is just superb and every CEO whose senses a complacent reliance on current labor arbitrage in her organization (read: her profit estimates depend on it), should think again.

A financial crisis may well accelerate the transition towards a global economy with balanced labor costs, but there are two other factors that are in play here. I briefly covered both these during my keynote at the International Forum on Enterprise 2.0 in Milan, earlier this month. Here goes…

First, it’s the developed nations that created the proverbial monster. As the western world sends work offshore, the standard of living and by extension cost of living in emerging markets are rising dramatically. More job opportunities means employees have negotiating power when it comes to wage increases. With rising wages we get shrinking labor arbitrage. So this can’t go on for ever. Labor prices will rise slowly but surely, at least in countries that are both quality labor pools as well as hot emerging markets.

Second, what needs to be taken into account is a phenomena that has far more immediate consequences that we work closely with our customers on, and that all leaders need to consider. In addition to balanced trade and perfect capital flows, we’re moving towards perfect engagement flows. And this will have a profound effect on globalization, financial crisis or not.

The web and now social network connectivity transcends geography and that’s obvious. From a business stand point, this means prospects and customers everywhere are fully aware of the global competencies of your organization (and that of your competitors) when it comes to innovation, product expertise, support and satisfaction.  If your Westin Hotels entering China, Yelp has already informed guests about the heavenly bed you offer in the U.S. If you’re Comcast and you’re entering Malaysia, new customers may want to get support from Frank’s superb team @Comcastcares and not the call center in Bangalore. That’s because the social web is putting fluid and deep engagement flows in place between markets, and possibly long before you even reached/scaled operations in some of these locales.

With emerging markets opening up, most organizations rushed to build locally relevant products and that was a great start. With open connectivity comes engagement and with that, comes knowledge sharing. Buyers today are much more aware of your global portfolio capabilities. So products will need to reflect not only local relevancy, but also global competency.

Customers expect the brightest customer support reps, product innovators, and subject matter experts to wrap around their innovation and support needs. Not where its the most cost effective for you, but where the best answers and experts reside across the globe. And so with or without a financial crisis and with or without your attention, engagement flows will accelerate global economic activity because the customer expects it.

How do you get there? You plan and design scalable 21st century collaborative enterprises that expose the talent and passion of:

• happy customers who can be objectives advocates of your expertise and your integrity
• sales and distribution partners who know the intimate needs of customers
• employees and suppliers who know the true power of your products…

…..where ever they might be.

Are you ready?

The flagship Enterprise 2.0 Conference in Boston, Massachusetts ended last week. I’m going to pen two posts to cover my thoughts on the achievements and challenges in the Enterprise 2.0 sector based on observations at the conference. This post covers the big (positive) shifts and the conference itself.

A quick disclaimer first: I’m on the advisory board of the Enterprise 2.0 conference.

The conference attracted a gaggle of practitioners, leading enterprise analysts and bloggers, and vendors who opined about latest techniques in collaborative approaches and technologies to improve engagement and relationships between employees, partners and customers.

(Image: JP Rangaswami / Credit: Alex Dunne)

For my part, along with colleague Oliver Marks, I co-chair the strategy and execution planning track which , like our work, is focused on identifying where collaborative approaches can accelerate workplace and process performance and on how to plan, sell, design and execute programs.

Every year the conference pushes management and engagement boundaries by introducing newer concepts, often in the face of lava-like progress on the ground. In its 4th year, my sense is that we can definitively see a tiny white light at the end of the tunnel with respect to the ultimate stamp of legitimacy – the eventual emergence of a capital and operational budget line item to build and support 21st century collaborative enterprises.

Thanks to the work of some very dedicated practitioners (there’s scores more), there’s no  doubt that the Enterprise 2.0 case studies of tomorrow are now being written. It’s a long road but these will eventually showcase more agile and fluid collaborative approaches that leverage existing process and collaborative systems and initiatives which will surface the best minds across the enterprise ecosystem to solve tough business challenges and enable effective competition.

A few large themes, and in particular order……

The Tide’s About to Rise

Tools won’t drive but they will enable. The entry of established vendors and a maturation of pure play positioning signals a decisive shift from feel-good to problem solving and growth focus.

• First, the traditional pillars of the Enterprise Software business attended and showed off their Enterprise 2.0 wares, en masse. We had platform offerings and extensions from the likes of SAP (Streamwork and Elements), Cisco (Quad), Microsoft (SharePoint 2010) and Novell (Pulse) and IBM (Lotus Connections).
• Second, proven vertical specialists such as Saba Software (Saba Live) and Success Factors (Cubetree) talked about collaborative offerings weaved into traditional talent management and workplace performance constructs.
• Third, the case for connected threads between employees, partners and customers gets stronger. Vendors such as Jive Software, Telligent and BlueKiwi offer strong platforms for customers ready to tackle multi-pronged solutions, whole hog.
• Fourth, a few horizontal platform providers woke up to the fact that they need to shove a foot into the door that leads to the process side of the house if they want to be taken seriously. Beyond experimental or tactical applications of collaborative constructs that are often void of purpose, they are moving from carpet bombing Enterprise 2.0 to launching surgical strikes. PBworks for instance announced strong collaborative wrappers to traditional CRM processes. CrowdCast latched on its predictive smarts to a known problem at every enterprise – how to turn today’s often dormant, “for the executive-brass-only” business intelligence capabilities into for-the-masses decision facilitation that helps any employee estimate the consequences of their decisions before they take action. And Socialtext introduced a beta release of what looked to be a social middleware layer that adds engagement to process.
• Fifth, those that are unapologetic about their approach to doing one thing and one thing only – simpler and better than anyone else, stuck to their story. Providers such as Socialcast and ThougtFarmer. The former continues to proudly call itself a light weight activity stream that adds much needed engagement to large, complex environments. The latter continues to innovate to gives you a far better intranet that replaces your asynchronous portal design, circa 1991.

Content, engagement and process – all in context. From a vendor offering perspective, that’s a first and must be celebrated.

Closely tied to this is another trend. Seasoned enterprise sales and marketing executives are being successfully lured to Enterprise 2.0 vendors. I spent a lot of time with them and one thing is clear: They are not adopting the party line. Rather they are channeling the passion and energy of cause driven entrepreneurs towards practical value propositions that customers will possibly care about. 

The reason I’ve led with vendor innovation here is that historically speaking, there’s a significant, practical take away from the entry of established players. The ramifications of platform and vertical process specialists betting on collaborative enterprises, means this: We’re about to see hundreds of millions of marketing dollars put to work to drive awareness and education around Enterprise 2.0, Social, Collaborative (or your jargon of fancy) forms of engagement in the workplace. Add to that, the network effect about to ensue when new and existing ecosystems around these vendors (Strategy Consultants, SI’s, ISVs, Resellers) start to articulate solutions to business problems for their customers based on these innovations.

This rising tide will lift all boats and likely cement a stable foothold for Enterprise 2.0 in the application stack (a big caveat to this that I will cover in a subsequent post). The technology may come from your process vendor, or from a pure play. Regardless the programmatic spend to realize business value will need its own budget.

None of this means that customers will be guaranteed performance acceleration or that smaller vendors will achieve instant stardom. This level of exposure may well highlight some of the rudderless propositions afforded around the altruistic value of E 2.0 that seasoned customer executives will instantly balk at. Dennis Howlett covers this with great insight on his ZDNet blog. And I’ve written before about the risk of the E2.0 marketplace facing the same fate as portal vendors. That continues to be a genuine possibility.

But one thing is certain: the Enterprise 2.0 message will now have far, far deeper tentacles into mahogany row. That’s good for big platform players as well as their pure play counterparts that don’t have the budgets to educate as many buyers as they would like to, on the value and promise of Enterprise 2.0. Many large buyers don’t allow single source deals and so, RFPs will often have to cast a wider net and as a consequence, expose pure play innovation in the marketplace

Distributed Customer Stories Beyond the Obvious

Most of the case studies to date have been skewed towards either Hi-Tech or Professional Services (consultants, agencies, etc) organizations. What’s unsettling about this to me is that neither are strong sample sets to extrapolate a credible assessment of wide scale acceptance across other industry sectors. I’m not in any way suggesting that it’s been easy going for orgs in hi-tech or services, but relatively speaking, hi-tech is traditionally an early adopter of technology enabled innovation and so its natural that a lot of Silicon Valley-esque organizations have jumped in first. In the case of Professional Services, knowledge and expertise is itself the end product. And so making the case that finding better ways to surface and reuse knowledge can more directly improve margins, if done correctly. Two very strong drivers to give E2.0 a shot. Again, some of these are my customers, and at others, I personally know internal champions who are banging their heads against the wall with adoption and cultural issues.

All that said, relatively speaking, what we’ve been missing all along are strong, tangible case studies from other sectors that are not early adopters or don’t naturally see a direct link to the bottom line. Many of these are extremely successful organizations in their markets but from a collaboration standpoint, some are still evaluating SharePoint 2007.  But that’s begun to change. We see it in our work and we finally saw a respectable number of case studies and customer stories from companies in other sections. Examples are YUM! Brands (restaurants), Harvard Business Review (publishing), NASA (government), Thomson Reuters (financial media), Vanguard (financial services) and Abbot Labs (life sciences) that made great presentations on their strategic uptake on open, collaborative constructs to drive performance.

Articulating the Business Case

A seemingly less critical point but one that I think is extremely important. This time around, customers were far more articulate when describing the inefficiency or limitations of existing processes and transactive designs before jumping into the promise of collaborative constructs. Enterprise 2.0 is often labeled as a solution looking for a problem and for good reason. In two customer panels that I moderated on Customer Networks and HR and Workplace performance, practitioners stated succinct, large scale business inefficiencies and competitive and market economics factors that have compelled their organizations to consider new ways of conducting business. These practitioners have been rooted in a structured process laden world over the last decade or two and spoke with authority when it comes to articulating what’s wrong first before gushing at what can be so right with Enterprise 2.0.

Where some organizations/departments have the luxury of being led by the likes of John Chambers (Cisco), Lem Lasher (CSC) and Brad Smith (Intuit) who naturally consider collaborative enterprises to be a necessarily utility to compete effectively and often without ROI prerequisites, most look for far stronger, tangible business case justifications from the get go. I’ve seen my customers in both camps, but there’s more customers who look for a strong articulation of what’s wrong with how things are done today and a seasoned justification to try a new approach. And we saw this maturity of critical business justification at least to the extent that an executive can’t afford to not listen to cause and effect arguments. That’s a huge step forward. 

The Definitive Watering Hole for the 21st Century Enterprise

The point that often gets lost in the midst of constructive criticism is that we have a strong physical platform with the Enterprise 2.0 conference to compliment digital and often disconnected conversations on Twitter and the blogs to help each other. As important, the conference offers a vehicle for attendees to share suggestions and for organizers to respond with solutions the next time around. There’s always a yearning from attendees to see more case studies, to see less vendors and consultants on stage and I think that’s legitimate.

Honestly, I don’t personally have a categorical objection to vendors presenting on the keynote stage. The reality is that vendors are no different from the rest of us in one particular aspect: They also share a passion and vision for a better way to conduct business and are putting their money where their mouth is, every day. Unfortunately one too many vendor keynote speakers launched demos where they should have taken the allocated 20 minutes to share industry vision and big market and customer problems that need tackling. It’s implied that their offerings address these challenges. What we largely got was 1.0 marketing to a 2.0 crowd. A big opportunity was lost to level with the rest of the community by offering new pathways to value and by inspiring the collective. These were in sharp contrast to keynotes from the likes of JP Rangaswami, Professor Andrew McAfee, Vinnie Mirchandani and others.

But we also saw more senior executives and mangers from the buy side present or join panels, this time around. I evaluated last year’s event by looking at the degree of practitioner focus and gave it a thumbs up. This year, the conference offered an all day Adoption track chaired by the able Susan Scrupski that gave practitioners significant leeway to design their own day long workshop, panels and sessions. So the conference built on last years practitioner centric efforts.

The conference is now in the early stages of catering to the entire Enterprise 2.0 life cycle: Credibly articulating the business case for layering in a collaborative backbone to enrichen process, understanding the tools, applications and platforms, getting adoption and tactical planning right, and holistically looking at interaction between customers and employees. With the help of a strong cadre of instructors and track chairs including Mike Gotta, Irwin Lazar, Tony Byrne, Oliver Marks, Susan Scrupski, Rachel Happe , Dion Hinchcliffe, Alistair Croll and Larry Cannell.

Whilst still consultant/analyst heavy, the conference is also become a clearing house for not only customer success stories but about the journey, as was made evident by over 30 customer stories presented on the keynote stage, in panels as well as in session talks.  Kudos to TechWeb and in particular the management, sales, marketing and operational teams for their flawless organization of the event itself.

Some Must Read Posts on the Event

There’s a lot of blog posts and media coverage offering up excellent opinion on the conference and state of Enterprise 2.0 from the likes of Oliver Marks, Thomas Vander Wal, Bertrand Duperrin and Nigel Fenwick.  I’m still digesting and will expand on these in my next post. But if your looking for the best blow by blow coverage, that comes from V Mary Abraham, Bill Ives and Patti Anklam. (please comment if I missed anyone and I’ll update)

What Comes Next:

It wasn’t all peachy. In a subsequent post, I’ll try and cover some of the following items that I suggest we deal with, pronto.

• We’re still lacking adequate operational metrics alignment to be taken more seriously.
• Addressing cultural nuances is certainly an important success factor. But we’re hiding behind cultural arguments as the universal culprit, far more than we rightfully should.
• The millennial discussion is mostly without substantial evidence and downright asinine.
• There’s a giant disconnect between today’s customer expectations and the ability of employees to fulfill these expectations. I covered this in my keynote at the International Forum in Milan week before last, and Ill try to add insights from others, based on my discussions.
• Unnecessary complexity added to design frameworks and to toolsets which, will only overwhelm potential customers.

On a personal note, this is the one event in the year that I look forward to most. And it did not disappoint. I chatted with lots of old pals into the wee hours of the morning, and had the good fortune to meet people who visit this blog and to thank them for taking the time to read and engage. Some in the community use this platform to genuinely bond once a year and to graciously share experiences, lessons learned and to celebrate the work of everyone involved. And you can’t put a price on that.

Next month I travel to Milan to speak at the 3rd International Forum on Enterprise 2.0.  A premier event on next generation enterprises and the processes and technologies that will power them, this event attracts business and technology executives across Europe and respected thinkers, advisors and practitioners that play a role driving business performance at leading organizations.

There’s some excellent content on tap at this event. The agenda is packed with purpose driven sessions around Marketing, HR and Innovation showcasing real world, practical experiences on applying new, more current techniques to performance.

Keynote

The conference has a great line up of keynotes and speakers including Andrew Gilboy – Oracle and Emanuele Scotti – Open Knowledge, Hutch Carpenter – Spigit and Verna Allee of Value Networks.

I will be keynoting the conference on the implications of the social customer on today’s organizational design and infrastructure. As important, the need for collaborative enterprise design to engage customers, partners and employees, to cater to this new customer dynamic.  I hope to help frame the discussion for executives as they prepare to respond to these changes in customer dynamics.

Workshop

In addition, I’ll do a workshop on the first day that provides a primer on the process from Idea to Launch. This 4 hour workshop will include instructional content, do’s and don’ts, pitfalls to avoid, and how to align the promise of open, collaborative constructs with discrete performance goals. One particular area where we will go deep is the pitch – in addition to instructional content, we’ll moderate a panel of vendor CEOs that pitch the most skeptical customers on a daily basis on how newer collaborative approaches can move the needle. We’re thrilled to have leaders at Telligent, Broadvision and Blue Kiwi join the panel. A special thank you to them for giving back to the larger Enterprise 2.0 community by sharing insights and practical knowledge. Finally, we will also involve practitioners that will tell their story on how they launched Enterprise 2.0 initiatives at their organizations.

More about the conference

The conference has three primary themes as stated on the website:

• Inside the organization: Intranet 2.0, Community Management, Human Resources 2.0, Social Learning, Organizational Network Analysis, IT Governance

• Outside the organizations: Social CRM, Sales Communities, Social Media Marketing, Social Media Monitoring

• Innovation: Idea and Innovation Management, Crowdsourcing and Idea generation, Prediction markets

An excerpt from an interview conducted by ComputerWorld (translated from Italian) with Emanuele Quintarelli, one of the organizers of the event:

Among the more than 40 actions to point out the contribution of Hutch Carpenter on 3C innovation to Sameer Patel on the use of collaborative approaches to improve business performance and ultimately the joint submission by Mark Tamis and Esteban Kolsky on how to compete by building a business client-centered. In addition to experts and also indicate that twelve managers of major Italian companies will go up on stage to confront so candid and transparent about the real risks and opportunities of the introduction of similar approaches in business.

More on the conference, the esteemed list of speakers, and agenda here. 

Hope to see you there!

That’s a quote from Bill McDermott, Co-CEO of SAP on the keynote stage. A message from SAP’s leadership to over 50,000 customers, employees and partners worldwide.

As I travelled back to Palo Alto last night from SAPPHIRE 2010, the central theme came clear to me: SAPs re-focus centers on leveraging people and relationships to redesign 1) its operations and technology strategy, and 2) its product design.

Operational and Technology Strategy

To net it out, there’s no question that this process enforcing company has gone back to the drawing board and come back with a singular focus: build together with people centric ecosystems. Partners, Customers and Employees. You sense clarity on a number of fronts -  sizing up the opportunity and execution path, frank recognition of its challenges in front of partners, bloggers and media and customers, it’s commitment to collaborative innovation, and more agility with respect to how it develops it’s products.

Most significant for me, was instilling a renewed sense of purpose for its employees. SAPPHIRE ‘veterans’ such as Vinnie Mirchandani had high praise for the event. In the context of fresh promise and tangible steps to move SAP forward, Dennis Howlett considered the content at this SAPPHIRE to be the best in 14 years (review here). The new leadership also embraced skeptical, critical feedback, extending a hand to those who have taken the time to express tough love.

In terms of technology strategy that will permeate most of its products and how SAP does business, global CIOs the world over will be hopeful of the commitments made here around technology excellence – in-memory and real time, virtualization, separation of user experience and business logic (more below) and a gradual move toward iterative design and innovation to replace outdated sequential multi year release cycles. Consider CTO, Vishal Sikka’s explanation of how SAP got a bunch of developers to build hundreds of mobile apps in just under 6 weeks. That’s agile from any company, let alone a global 50,000 employee, multi-national organization such as SAP.

Moving on to Products

Particularly striking to me was how SAP is now separating business logic from user experience, as described by Co-CEO, Jim Hagemann Snabe. They understand that end customers expect new, engaging ways to work as we move from the data centric web to the interaction web. As James Thomas, an executive in the BI group, summed up the experience design principle:

The devil is certainly in the (execution) details but the idea that enterprise software can offer hip-huggingly modernized experience design we see in consumer software, is extremely compelling.

As we described in our Enterprise 2.0 Whitepaper (summary post by Oliver Marks)  on Performance Acceleration, the consumer web and broadband have led to the ‘me” web in our consumer lives where data, engagements and content converge around the participant. It’s refreshing to see the enterprise understand the implications of this shift and begin the transition, away from the application centered user experience.

As you consider the strategic implications and enabling technology infrastructure that will power people centered, collaborative 21st century enterprises, SAP realizes that its core asset is being an enabler of critical customer, employee, partner and supplier processes for its customers. In principle, that positions the company extremely well to power in-context collaboration around business events.

Unfortunately, that’s where SAP missed the real opportunity to truly revolutionize business process facilitation in this first iteration of Business By Design. In speaking with customers and SAP executives the sense I got was that Business ByDesign (ByD) is a lighter weight rendition of SAP’s on premise suite. I sought comments from Paul Greenberg, ZDNet blogger and author, and someone who intimately understands process:

ByD enters a market that has already seen in-memory, lighter weight ERP offerings designed for the mid market and SMB.

The missed opportunity for me is this: Business Process Automation has not really seen “back to the drawing board” re-thinking in well over two decades. Since the early iterations of process automation, we’ve seen very useful but incremental improvement in how we transact and enforce process. But somewhere along the road we began to interchange business activity loops with how our ERP laden software enforced process completion. The reality is that in this day and age, customer expectations around engagement, and the opportunity to extract more from partner and supplier relationships have changed a lot since that original process automation design. And without question, at an accelerated pace in the last 36 months with the advent of new collaborative concepts and expectations on how people can work together to enrich business outcomes.

SAP has the chance to re-think how discrete business activities need to be conducted in the 21st century and what the optimal blend of process, engagement and content access truly supports today’s business needs. Customers opine openly on the consumer web and are looking for expert advice, beyond marketing, when they engage with businesses. Channel Partners want to do business with manufacturers who don’t just build good products, but those that make it easy to administer, sell and service the end customer. Suppliers who are getting commoditized, in reality, have critical component-level / raw material knowhow that can help them differentiate themselves as strategic partners to their customers. All of these examples require injecting some level of engagement and collaboration, alongside today’s largely ‘transactive’ and asynchronous data sharing enterprise process design.

Whilst I clearly heard a focused interest in adding collaboration to process, my fear is that collaboration and people engagement is being treated as a bolt on to age old process automation software. We see a glimmer of hope in StreamWork (which I think is a superb start towards collaboration in context), but it remains to be seen whether SAP has the chutzpah to truly ‘untether’ itself from a process first, engagement second mindset.

Relationships bring Agility

The good news is that its commitment to a people centric operational design and agile development processes can overcome this. As I said earlier, the most important objective at this time was to re-vitalize its relationships and sense of shared purpose with employees, customers, partners and community participants. And the company achieved this in spades. This new operational design, if executed correctly, will earn the markets patience as SAP tries to methodically expresses these new people centric, collaborative qualities in its products.

p.s. there’s a lot of  awesome content out there and I’ll do another post summarizing what I liked best. But for starters, check out Tom Raftery’s Photos on Flickr, here.

I read, with great interest, an interview with Jeff Clavier of SoftTechVC in Network World. Jeff’s had notable successes in the consumer world (Mint, MyBlogLog, and Userplane). I’ve never interacted with Jeff (other than recommending a Dim Sum Restaurant on Twitter) but I’ve always had respect for him – unlike many others, he’s adequately self deprecating when it comes to his passing on an opportunity to invest in LinkedIn. : -)

On the topic of Enterprise Software, Jeff says:

Most of SoftTech’s investments have so far been in the consumer space. “Innovation is slower on the enterprise side,” Clavier claims, and “beset by security issues.” “It’s a mature market with only a few acquirers; sales are more difficult and investors have little leverage when there are so few buyers. Low cost, consumer applications that leverage the Web offer capital efficiencies not matched on the enterprise side – and they are fun to work with.”

I’ve had conversations with scores of CEOs of traditional and Enterprise 2.0 companies on this topic. I’m still sticking with my analysis of over a year ago about Commoditization that’s partly due to a lack of focus on process and context, too much reliance on nebulous measures such as productivity and little alignment with tasks at hand. That’s played out with CubeTree’s purchase for $20 million. Anemic by Enterprise standards.

But leverage is coming. I’ve been reading a galley copy of The New Polymath by Vinnie Mirchandani, due out later this summer, and its clear how enterprise application infrastructure, based on customer expectations is ripe for a re-haul. It’s not just about the cloud and its also not just about SaaS vs On Premise business apps. Simpler, better, faster-to-update ways of GTD in context, and in a way that connects people, are about to hit. And that opens up organic as well as M&A opportunities on the technology supply side.

There’s quite a few opportunities’ that are large enough to have significant impact, but I’m going to touch on a few areas I see when talking to end customers, discounted by the pace of innovation, to date.

• Decision Facilitation: Yes, in-person meetings and email are time consuming, expensive and often un productive. The answer is not to simply move those to digital interactions powered by Enterprise 2.0. That’s a first step. But that can also mean moving the same unproductive discussions to a digital platform and arguably more of them since its less time consuming. We still need to wrap a decision facilitation layer around it to drive better results. OpenAPIs, activity streams, data and document access all in context is where its at.
• Exception Handling: Somewhere between your Enterprise 2.0 platform and your structured employee, partner and supplier processes, lies a wide open gap. It’s a myth that we can get by with process laden technology since it solves 70%, 80& 90% of repeatable process tasks. The other 10%, 20%, 30% is where things can go horribly wrong and cost millions. Weaving in a social fabric to deal with those exceptions to standard process outcomes is barely tapped today.
• CRM 2.0 (or socialCRM) is DOA with Enterprise 1.0. You can have the most sophisticated customer community but remember, prospects and customers are looking to bypass marketing and talk to experts deep inside your org and partner ecosystem. You cant have a vibrant and successful community if you’re rely on a 1990s style latency riddled, portal/intranet/extranet inside the firm. Even a “facebook for the enterprise” that cant methodically wrap around real time customer interaction demands is but a first step.
• Performance: I joined a panel on SugarCRM’s SugarCon event last month with Esteban Kolsky, Jeremiah Owyang and Diogo Rebelo where we discussed who owns Social  Data in the enterprise. Traditional BI tools extract results from structured data systems. New performance applications will blend social and analytical data to improve discrete business performance outcomes  – HR and Talent, Spend Management, Communication Performance. Etc. Ultimately moving from “here’s the report” to “here’s what to do about the data”.

Each of these can spawn vastly different value propositions for end customers.

Jeff’s spot on when he talks about simple consumer constructs starting to influence how Enterprise users interact with people and data. And all of the opportunities, above, will expect this as a price of entry. The big consideration though for large mature enterprises will be to avoid siloed efforts and the need to form a central collaborative back bone that’s still flexible enough to show concrete improvement around specific business tasks (sales, marketing, innovation, etc). Last month, Oliver Marks and I  presented at Interop on Performance Acceleration via Enterprise 2.0 and this was further validated by a very mature audience of technology managers and executives.

I’m expecting to have a lot of interesting conversations on this topic over the next few weeks. Tomorrow I head to SAP SAPPHIRE, then to the International Forum on Enterprise 2.0 in Milan where I’ll be talking about 21st Century Enterprises and the Role of Social, and finally at the Enterprise 2.0 conference in Boston where were going to be focusing on business value of E2.0.

I’ll update this post after I’ve processed what I learn.

It’s fascinating how we consider New Product Development /Research to be investments (by implication, a return can be had on these) on one hand, but we allocate marketing and customer acquisition as an expense. In plain English that translates to: We’re ok with considering what we design, build and sell, an asset that will yield returns. But not the effort it takes to serve prospects and customers that may be interested in what we purvey. Baffling, no?

Marketing has this almost comical, inverted model of inputs and outputs that defies Economics 101. A business typically buys inputs at wholesale and sells products at higher margin retail thereby seeking to make a profit. In contrast, marketing uses big picture estimates such as ‘customer lifetime value’ to estimate how much you can make from the average customer (output). But excluding branding, cost inputs to acquire prospects and sell more to customers are at hefty, mind boggling, retail costs – point advertising spots to sell a product, product launch emails, webinars, promotions, and recently, SEO/SEM campaigns. Hell, we financed Google’s insane success thanks to this model, if you think about it! 

Moving from Transactive vs Relationship Elasticity

I see customer acquisition model as a mindset of ‘transactive’ elasticity. In other words your spend goes only as far as supporting each transaction. So, your spending over and over again to sell new products to the same target customer. And that tactical design can’t be treated as anything but an expense. Conversely, investments are nurtured over time, are less susceptible to cuts in a down market, and yield results at intervals or in perpetuity. 

Contrast this with a model where you invest in relationships with your customers by engaging authentically with them in communities. These communities give the money you allocate to customer acquisition far more elasticity by spreading the wealth across the life of the relationship with relatively smaller spikes in expense that correlate with new product awareness. They center on investing in fostering and facilitating a dialogue with your customers, your partners and your prospects. Dialogues that far outlast single transactions. And via a platform to engage with them between transactions. Sounds like an investment and not an expense to me now.

This is articulated really well in, “CRM at the Speed of Light”, a must read by the terrific Paul Greenberg:

“Transaction is not the paramount artifact of the interaction. Instead a transaction becomes the side effect of rich relationships that are built on conversation. This notion is fundamental, and is a radical switch in priorities for the interaction between customer and vendor”

Edge Relationships Don’t Scale

Creating true relationship networks, whether on third party participatory networks (such as Facebook or Twitter) or on your own branded communities require a clearly defined approach, mindset and interaction design.

Umair Haque, Director of Havas Media Labs and blogger at Harvard Business Review wrote a superb post “The Efficient Community Hypothesis”  (that I recommend you read in full):

“People, truth, identity, reputation, values are the five elements of an efficient community”

I agree with that and they apply to communities that foster these relationships.

That said, community building often gets limited to efforts managed by the “social media expert” or the community manager. Its no doubt a first, extremely important step and herculean at that, (just ask Rachel Happe) but edge efforts don’t scale easily. And if the effort is superficial, they quickly start reeking of old school spam marketing (just see many of the groups on LinkedIn, for example, that sport the same old marketing pitches).

To be truly valuable, customers want to bypass marketers and get to those that have the highest quality information. The best information, void of spin or marketing speak, are in the minds of your other customers, your channel partners who may interact with customers more than you do, and your suppliers who know more about individual components that make up your product.

To enable such a design you need a collaborative design and enabling technology infrastructure that allows for the right minds to wrap around the customers needs. Marketing needs to broker and facilitate that, and then get out of the way. That’s the new customer acquisition design for the 21st century enterprise.

For a more in-depth overview of how to respond to this new customer dynamic and to move from a transactive model to a relationship model, take a look at a recent piece I published with Oliver Marks and TechWeb (email required).

Getting There

I’m not suggesting we stop advertising products when they launch. But do we have to buy marketing, over and over again at retail prices to sell that same customer time and again? Instead, why not invest (not expense) in more elastic relationships that defrays a good chunk of that retail cost?

Customer Acquisition seriously needs a new name to affect any institutional change in how organizations consider the actions and investment behind customer engagement. Customers never gave us permission to acquire them and it’s a bloody expensive to acquire them at retail, anyway. Tomorrows winning CMOs and Marketing leaders will be making a case for this to their CFOs and CEOs, today. I’ve been fortunate to work with some of these forward thinking folks. It’s not about big bang, it’s about etching away at it piece by piece and having it emerge, organically.

I was very disturbed to learn about the passing of Professor C.K Prahalad this morning (hat tip to Shiv Singh).

There were a few books in the 90’s that had significant influence on shaping my personal thinking about how to accelerate performance in business. Three notable ones were The Ultimate Resource (Version One made the case for how entrepreneurship was the ultimate resource but that’s out of print now), Execution and Competing for the Future, by CK Pralahad and Gary Hamel.

About the professor, from Wikipedia:

Prahalad has been among top ten management thinkers in every major survey for over ten years. Business Week said of him: "a brilliant teacher at the University of Michigan, he may well be the most influential thinker on business strategy today." He was a member of the Blue Ribbon Commission of the United Nations on Private Sector and Development. He was the first recipient of the Lal Bahadur Shastri Award for contributions to Management and Public Administration presented by the President of India in 2000.

In this latest book, “The New Age of Innovation:

Professor Prahalad and M.S. Krishnan suggest an internal capacity to reconfigure resources in real time by focusing on clearly documented, transparent, and resilient business processes (the link between strategy, business models and operations) has become a strong differentiator.

As many of you know, I focus militantly on how the internal design of the enterprise need to be re-casted to meet the social customer’s demands and how to compete effectively. Technology differentiation as a competitive weapon played a central role in the last round of management thinking and strategy. Going forward its going to be about how effectively you can create and leverage people networks to solve business problems and get ahead by complimenting those discrete processes that have been unnecessarily fenced in by those very structured systems. Technology obviously has a critical role to play. But its a lot more than that.

Professor C.K. Prahalad was one of the few that not only pushed the boundaries on where organizations need to be interms of their thinking and wiring but he was one of the few that brought practical solutions that were cognizant of realities on the ground. More important he never lost sight of the “how” as he presented new thinking around the “what” and the “why”.

Here’s the professor on Innovation:

The Hindustan Times and Business.in have more details.

My deepest condolences to the Prahalad family and his loved ones during this difficult time. May he rest in peace.

If you’ve read this blog before, you know that the central theme here as well as in my work is centered around performance acceleration and so I love seeing quality stuff on this topic. Dion Hinchcliffe has a super post up on ZDNet addressing the topic of performance in the context of Enterprise 2.0.

Dion provides a very balanced score card on the results to date as far as Enterprise 2.0 is concerned:

In fact, I would propose that most of the theoretical discussion around the benefits and returns of enterprise social software is largely out of context. We still focus too much on the tools themselves (which are exciting), the potential for radical organizational change and/or transformation of traditional hierarchies (also very interesting, yet it unnerves those trying to run a business even though such transformation takes a time), and a focus on new collaborative approaches instead of looking for the best way to solve business problems. What is often lost when the primary focus is on Enterprise 2.0 — defined here as freeform social tools in the workplace, or the “Facebook imperative” — is a concentration on developing solutions to achieve specific business objectives. When you have tool myopia, it sometimes seems like every business problem looks like a nail for your particular software hammer.

Amen.

The topic of performance and alignment around business objectives has been covered by a number of thinkers and doers in the space, including Hutch Carpenter, Bertrand Duperrin and Oscar Berg. Over a year ago, I proposed a simple illustration for practitioners to consider, that differentiates between the notion of social computing (concepts and tools) and Enterprise 2.0 (a state the enterprise achieves), depicted by this diagram from a much older post:

Similar messages have come from a number of folks, calling feverishly for business justification and performance alignment. Some great examples from Bertrand, Oscar and Hutch here. That’s a sampler but these and other thinkers have contributed excellent thought leadership and grounded ideas on this topic.

Dion brings up a good point that there’s too much focus on tools. No question about that. But his second point about radical transformation is far more important:

There’s still plenty of theorizing and even calcified views around the promise of social for social’s sake where making the business social from the core out is just the right thing to do. I’ve firmly believed and consequently advised clients to look at it differently. At a time when organizations are looking to pull themselves up from a near death spiral by surgically focusing on set of needed business fixes, instead of providing the necessary depth to articulate what’s structurally wrong with a given mode of conducting a business activity and how enterprise 2.0 could be a possible performance enabler, the focus often is on the benefits of social towards more nebulous outcomes such as openness, information and email overload, sharing, and productivity. All of these are important but addressing these benefits need to be a means to some measurable business end.

Where it can get even more dangerous is proposing decentralized DNA changing models to move to social from structured and process, again with an under appreciation for business context, decision facilitation structures and other political and incumbent design realities on the ground. Not to mention, proposed decentralized governance models as amuse-bouche. To be clear, I’m not against proposing DNA changing business designs in principle, but boy you better be able to back up the justification behind that 24 month turnaround plan your suggesting that’s more substantive than the revolution that is socialized work without a cause. Right about that time, the CIO sitting in the room is quietly thinking, “I have a worldwide SAP upgrade to worry about, thank you”.

The notion of emergence where adoption of these E2.0 concepts and tools comes from the bottom up just never sat well with me. But, ironically, if there’s one place where I consider emergence to be totally applicable is in fact the DNA change process, built off of the success of discrete business outcomes and subsequently federated across the enterprise. That’s a topic that I deal with all the time, but I won’t get into it here.

And culture, whilst certainly a common adoption barrier, is often cited as a huge deterrent to adoption, when in actuality, the required business alignment was missing in the early stages resulting in fuzzy understanding around participation incentives by end users to give enterprise 2.0 a real chance of success to begin with. Practitioners are beginning to see that culture and behavior can actually be harnessed to drive adoption and ultimately performance. Change is scarce currency in any enterprise context.

Not that it matters too much, but the process pundits will continue to barf on social as long as these altruistic benefits of the enterprise social web command the airwaves. To their credit they have a point in that its going to take a lot more to unlock those business initiatives (and budgets) that are enabled by structured ERP systems or Microsoft SharePoint that conveniently shows up with Windows Server on every Sys. Admins desk.

Ultimately, a central problem lies is measuring or estimating performance for Enterprise 2.0. As Dion says it is in fact notoriously difficult.  But it shouldn’t be done in the first place. Performance or return needs to be calculated and measured at the programmatic level around business solutions your trying to affect. Enterprise 2.0 approaches and technology are but one part of the overall strategy, investment, return and risk model.

Social because its better than anti social is hard to argue with, but it just won’t cut the mustard in the long run, especially on Mahogany Row. Focusing on business performance, and a credible, honest assessment of where social and collaborative concepts actually can in fact move the needle, will.

Talking about honest assessments, here’s a quote from Chris Yeh, a vendor and investor in Enterprise 2.0 software that speaks volumes:

Customers who buy PBworks as an experiment in “social software” tend to see an initial spike in activity, but disengage over time.