CollaborativEye

Why aren't there any books on how to ride a bike? (OK -- I found one on Amazon, but work with me...) You can read and learn from books on molecular biology, cost accounting, and computer programming, so why not something as simple as learning to ride a bicycle? The truth is, you don't really KNOW how to ride a bike, until you've been on it, fallen off a few times, and become personally engaged with the bike. Philosopher Michael Polanyi called this "Personal Knowledge" in his ground breaking book of the same title back in 1958. Fast forward 50 years to several McKinsey studies in which three types of knowledge interactions as posited: transformational, transactional, and tacit. Transformational interactions change raw materials into finished goods; transactional interactions involve knowledge which can be codified and explained as a process or set of steps (e.g closing the books for the month, or entering sales data into a CRM system). Tacit interactions, on the other hand, are much more complex, ambiguous, and involve what Polanyi called personal knowledge. Tacit knowledge requires judgement, context, and interaction with others to determine the best solution. For example, how should you respond to an irate customer? What features should be included in the next release of product X? Which logo treatment is best? What investment fund is most appropriate for this customer?

McKinsey research indicates that 70% of all jobs created since 1998 involve tacit knowledge interactions as their primary component. However, only 24% of software spending is aimed at improving tacit knowledge interactions! No wonder we feel that we are getting further behind even though we have more and more technology at our disposal!

The implications of tacit knowledge on business cannot be overstated. Organizations which successfully improve the productivity and effectiveness of their tacit knowledge workers will be able to build competitive advantage which will be difficult for others to copy. There will be no "play book" to copy -- rather the competitive advantage is built into the tacit interactions between employees, customers, partners and the ability to innovate and come to the right solution to a problem more quickly.  How can business leaders improve their organization's tacit knowledge effectiveness?

1) By providing the tools where interactions and collective knowledge are encouraged and preserved.  Technology examples include collaboration platforms such as blogs, wikis, instant messaging, knowledge management platforms, etc. The goal is to make collaboration  so simple and pain free that it increases meaningful, shared communication dramatically. And no, email is obviously not the answer.

2) Exploring communication platforms that can capture experience, context, and nuanced judgement more successfully than stand-alone text. For example, listening to a set of successful conversations between a customer service rep and an irate customer may be much more effective than reading a 10 page paper on customer service protocol. Or another example, providing tutorials on the use of a CRM system which show exactly how to perform an operation, complete with screen recordings, and audio narration discussing possible exceptions, alternate approaches, and considerations.   

3) Clear the decks for more tacit knowledge interaction by reducing the burden of transactional interactions. Very little time should be spent learning how to fill out an expense form or learning how to run a monthly report in the ERP system. Companies must provide focused, on-demand learning that provides employees with transactional knowledge when and where they need it.

We all know by now that social networking technology, collaboration, and "wikinomics"-thinking works. There are still some naysayers, but their arguments are wearing thin. However, there are limits to collective intelligence and the wisdom of crowds and understanding these limits is just as important as understanding the potential. So when does collective intelligence just plain not work?

Interestingly, as far as I know, all the books extolling the virtues of Enterprise 2.0, Collaboration 2.0, and your-favorite-term-here-2.0, were written by one or two authors rather than hundreds or thousands. These authors created a position, gathered support, did the research, created drafts, and pushed the writing project through. We are Smarter than Me tried to break this pattern and use the concepts that the authors write about in the creation of the book. But they concede that part-way through the project "...we found the actual text of the book, the flow of the topics, and the graphical design had to be produced in the conventional way, rather than relying on the crowd to perform these functions." (pg. xiv) I applaud Barry Liebert and Jon Spector for their candor. Why the breakdown?

Before we answer, the same book provides another example of "collective intelligence gone wild". TheBusinessExperiment.com (TBE) was created to harness collective intelligence for the incubation and creation of businesses. Interaction was good during the idea creation and refinement stage, but when an actual project was chosen to work on, the wheels fell off. Most people lost interest, and getting any real work done was difficult to impossible. A "traditional" leadership was created, with a CEO who quickly drove the project forward. Again, why the breakdown?

I think these examples provide important reminders that collaboration and collective intelligence still require leadership, albeit leadership of a different kind. The role of such leadership?

1) From Jim Collins of Good to Great fame:  Get the right people on the bus (and correspondingly get the wrong people off the bus). TBE founder Rob May noted that inviting people to vote on ideas attracted people who liked to discuss ideas rather than people interested in the actual idea itself. In application, this means that leadership needs to chose a specific direction or plan (hopefully applying collaborative principles in the idea creation, vetting, and refinement process), and then amass the right team to make the initiative a reality. The actual implementation, once passionate people are on board, can again utilize collective intelligence.

2) "2.0" leadership still requires the hard work of translating an idea into a plan. Leadership must create a vision around the plan, sell that vision, and  set goals. That plan must include some type of work-breakdown-structure to give concrete things for people who are "on the bus" to sink their teeth into. The size of tasks is important: too big and the task is too open-ended to realistically develop in a collaborative, distributed manner. On the other hand, the task cannot be too small or progress will grind to a halt.

My goal in this post is not to say that collaboration doesn't work. Far from it. As we evolve in collaboration maturity, we will see failed experiments from which we must learn. Understanding the limitations in a concept is crucial to appropriate and most effective application of that concept. Collaborative leadership understands these limitations and knows how to strike the right balance between top-down decision making and collaborative wisdom. Further, collaborative leadership must be willing to explore where that balance is.

In our previous post, we discussed game theory and highlighted 5 conclusions from Axelrod's work on the Evolution of Cooperation which help promote cooperative environments:

1) Enlarge the shadow of the future - make future interactions more frequent and likely and important

2) Change the payoffs - give incentives to value cooperation more than non-cooperation.

3) Teach people to care about each other

4) Teach reciprocity

5) Improve recognition abilities

We will focus on several of these as ways to foster cooperative and collaborative environments.

Enlarge the Shadow of the Future

Collaboration thrives in environments where current behavior is heavily weighted by future prospects of interaction. Keeping units small (see the"magic" of the number 150 in a previous post) is key to encouraging frequent and repeat interactions between individuals. Social networking software can also aid in bringing people together more frequently because the costs of interaction are reduced, and it is also easier t find the "right people" to maximize the benefit of the interaction.

Change the Payoffs

Can leaders make it more attractive to collaborate than to not? Certainly, and we are not talking about monetary awards for "most wiki entries" or "most prolific blogger." Rather, ingrain collaboration in the culture by sharing stories of effective collaboration, giving public recognition, and promoting known collaborators into positions of leadership. Again, social networking software can aid in sharing the story of the power of collaboration and increase the implicit value of these types of interactions.

Improve Recognition Capabilities

In game theory, cooperation is predicated on the ability of the "players" to recognize each other between "games" (iterations), and see and understand their behavior so that they can react to it appropriately at the next iteration. Transparency and reputation management from social networking systems can aid tremendously in this vein by reducing uncertainty about the past behavior of individuals. And coming full circle, reputation management also serves to enlarge the shadow of the future by increasing the "durability" of interactions, i.e capturing the behaviors in a system that is open for others to see.

The bottom line is that collaborative environments can be created and nurtured through attention to factors such as those outlined above. And such factors as enlarging the shadow of the future, changing the payoffs, and improving recognition capabilities can be enhanced through the judicious application of social networking capabilities.

Collective intelligence, as previously discussed in this journal, is not a new concept, and it is certainly not a "2.0" concept. Even jaded skeptics will admit that most of us have experienced it: remember that sports team you belonged to that had a special feel to it, or a band you played in,  or perhaps you belonged to a group that always seemed to create energy just because you met together?  What are the characteristics of such groups or activities such that the outcome of the group is more than the sum of the individuals? Jean-Francois Noubel offers the following characteristics:

1) Emergence - a "spirit" or "personality" in a group. More formally, a new set of properties, order, or complexity that is present in the whole, that is not present in the individuals. Think about "The Wave" in a stadium -- looking at any individual the action is quite uninteresting, but look at the entire stadium of individuals and you see the motion of the wave emerge.  Can emergence be designed and managed? I believe so.  For example, the Amazon recommendation engine does a masterful job of creating value out of the marginally valuable actions of individuals.

2) Holoptical space - spaces in which individuals each perceive all of the other members in the group.  Further, holoptical spaces provide perception to the individual of the movements/actions of the group as a whole. In a sports team for example, an individual player can see the progress of the team as a team, not simply the individuals. Many of the Web 2.0 social networking tools aim to increase the reach and efficiency of holoptical spaces by providing real-time insight into all other members' activities and maps of whole-group activity.

3) Social contract - rules of engagement, either explicit or implicit, governing the actions of the group.

4) Polymorphic architecture - relationships and responsibilities dynamically adapt to varying situations and environments.

5) Circulating object-link - the item or concept that brings the group together. Could be a ball (in the case of a sport), a song (in the case of a band), or more abstractly it could be a mission or ideology for a group.

6) Learning organization - a group with a learning process, learning from failures and successes and modifying behaviors, processes, and structures appropriately.

7) Gift economy - as opposed to a competition-economy in which payment is received in exchange for a good or service. In a gift economy, individuals give to the community first, then afterwards realize benefits as a result of benefits experienced by the entire community.

Some collective intelligence characteristics may benefit from the application of Web 2.0 or other social networking and collaboration tools. Others may require process, structure, or cultural change. Strategic leaders who desire to foster a culture of collaboration should think about all of these elements as they apply to their organizations and create specific plans to improve the collective intelligence of their organization. This will safeguard from simply applying "buzz word technologies" in the hopes that change will miraculously result.

I spent about an hour at last week's Open Source conference here in Portland with Rod Beckstrom, co-author of The Starfish and the Spider. I won't give a book review here (see the Amazon.com link for some excellent user book reviews), but will focus on a few observations. In a nutshell, the starfish is a biological example of a completely decentralized organism -- cut it in half and you'll eventually get two starfish because it has no central nervous system. On the other hand, the spider, although it may look superficially like a starfish, is extremely centralized -- cut off its head and it is dead! The book gives several examples of decentralized organizations which exhibit resilience similar to that of the starfish: the Apache Nation, Alcoholics Anonymous, and even al Qaeda. There are many reasons why such organizations prevail and thrive while their centralized counterparts fail. I'll focus on two: circles, and ideology:

1) circles: these are independent, autonomous units that form without hierarchy or structure. Self-enforcement of norms, rather than top-down enforcement of rules, lends power and resilience to these units. Decentralized organizations are difficult to combat because of the existence of many circles - you can squash a circle, but in all likelihood one or two will pop up to replace it. Web 2.0 technologies make the formation and maintenance of many "virtual" circles feasible, transcending spatial boundaries. Collaboration is essential between members of a circle because there is little to no hierarchy and certainly no centralized communication channels.

2) ideology: decentralized organizations need a compelling ideology as "glue". Often, such ideologies provide a more powerful and effective bonding mechanism than what is found in many centralized organizations, which normally have stakeholder monetary value at the top of organizational values. This is in line with studies on employee motivation which find that monetary rewards are seldom the most important factors for employee satisfaction and retention. Although the book doesn't get into it much, I believe Web 2.0 tools can be instrumental in spreading ideology between members: educating new members, reinforcing it amongst existing members, evolving and maturing it through dialog, debate, shared stories, and capturing it for posterity sake.

The book makes several statements to the effect that decentralized organizations (or decentralized industries) do not make much money. I want to fight this statement, but have to concede that if you look at most examples, it is true. But is it necessarily true? For example, al Qaeda does not make money, but it certainly is an organization that raises a lot of money. The fact that the money is raised and spent in a decentralized fashion doesn't change the fact that money is being made. In a different type of example, IBM's involvement in the Open Source community does not generate any direct software revenues for Big Blue, but it estimates a savings of over $1B per year in development costs in addition to sizeable service revenue (Source: Wikinomics). I believe the real innovation that needs to occur is to take the concepts of decentralization as outlined in Beckstrom's book, and develop sustainable businesses that generate value for investors, participants, and all other stakeholders.

Starfish points in this direction with the interesting concept of a hybrid organization: one which combines centralized components with decentralized components. Two types are presented:

1) A centralized organization with a decentralized customer experience (for example, eBay)

2) A centralized organization that decentralizes internal parts of the business (for example, Sun and IBM with Open Source).

So what is new here? Certainly the concepts of empowerment, decentralization, moving decisions "to the edge" have been around for a while. What is new is that "2.0" technologies are now available that can make decentralization feasible on a very large scale (and ironically on a very small scale as well). What else is new is a growing demographic that prefers working in non-hierarchical, decentralized environments (see my post on changing demographics of the Web 2.0 Net Generation).

A new competence that will be required of organizations (and their leaders) in the future is to identify specific elements in a business that need centralization, and which elements need to be cut loose with decentralization. This will certainly involve some risk taking, and the ability to reconfigure business operations and even business models in sometimes radical ways. Beckstrom calls this "finding the sweet spot", and the exciting thing is that it is not really a "spot", but a moving target that changes as industries and customers evolve. Companies which develop a strategic competence in being able to find (and keep tracking) the sweet spot of their businesses will produce market leading profits.