No need to curb your enthusiasm ...

July 8, 2008 · · Posted by Greg Lloyd

Read Prof Andrew McAfee's recent blog post Curb My Enthusiasm for a very concise summary of the model, analysis and conclusions of a July / August 2008 Harvard Business Review article he co-authored with MIT's Erik Brynjolfsson. McAfee poses a polite challenge that I'll paraphrase: For a bold and important claim, where is he wrong?

He asks if readers have a better explanation of the pattern he and Brynjolfsson observe: that since the 1990's a combination of the Web and IT spending on enterprise information systems has shifted the ability of businesses to recognize and deploy good ideas; that this has raised the pace and level of competition, making effective innovation more valuable, and more strongly differentiates winners and losers in competitive markets.

McAfee further claims that the Web and IT changes they analyze appear to be step functions:

This new, nastier competition does not depend on continued IT innovation. It only depends on continued managerial innovation. If all the technology vendors were to close up shop tomorrow competition in all industries would not eventually revert to where it was prior to the mid-1990s. The current IT toolkit lets companies propagate business ideas faster, more broadly, and with higher fidelity. That’s all that’s necessary to increase the pace of competition, and to keep it high. Of course, the tech vendors are not about to shut themselves down and we’ll see a lot more innovation from them; this will only serve to further increase competitive nastiness. But technology innovation is the icing on the cake of managerial innovation. - Andrew McAfee Curb My Enthusiasm

It's an interesting argument that seems to be based on an observation that it's possible to reduce the "friction" inherent in introducing new ideas or techniques using two diametrically opposing approaches:

Embed what's new as part of a discrete and non-discretionary process. A good example from the new paper is CVS pharmacy discovering that prescription customers became frustrated when they dropped off a prescription, only to return and find that the order had not been filled because a medical insurance check raised a question that was quick and simple to answer but couldn't be resolved until the customer returned. CVS changed their pharmacy software so that any such questions were raised at drop off time - and improved customer satisfaction scores from 86% to 91%. Because the process change was embedded in an inflexible software process, the change could be rolled out to all pharmacies with very little confusion, training, or other costs - and implemented uniformly.

Use social software principles to make the benefits of new ideas, techniques - or just connections and working communication - more visible and actionable throughout the organization. McAfee refers to this type of software as:

  • Emergent: freeform, and containing mechanisms to let the patterns and structure inherent in people's interactions become visible over time. and
  • Freeform: Optional, without workflow, egalitarian, accepting many types of data)

To get good results, both embedded and social methods require good ideas and the ability to implement good ideas effectively.

Unlike the cookie cutter results you can expect from a precisely repeatable change to a deterministic human or automated process, using social software as platform to engage and connect people throughout the enterprise requires a mix of bottom up participation and top down support and encouragement - and willingness to innovate. Good management and leadership combined with good execution can produce a sustainable competitive advantage over competitors who are not as good or committed to innovation.

For example GE's Workout process in the 1990's was a well-regarded innovation designed to shake up GE's rigid management culture by giving employees a stronger voice - and commitment to listen.

The Work-Out process was born. These were two or three-day events held at GE sites around the world, patterned after New England town meetings. Groups of 40 to 100 employees would come together, with an outside facilitator, to discuss better ways of doing things and how to eliminate some of the bureaucracy and roadblocks that were hindering them. The boss would be present at the beginning of each session, laying out the rationale for the Work-Out. He would also commit to two things: to give an on-the-spot “yes” or “no” to 75 percent of the recommendations that came out of the session, and to resolve the remaining 25 percent within 30 days. He would then disappear until the end of session, so as not to stifle open discussion, only returning at the end to make good on his promise.

Tens of thousands of these sessions took place over several years, until they became a way of life in the company. They are no longer “big events” but part of how GE goes about solving problems...

A middle-aged appliance worker who was at one Work-Out spoke for thousands of people when he told me, “For 25 years, you paid for my hands when you could have had my brain as well – for nothing.”

At last, because of Work-Out, we were getting both. In fact, I believe Work-Out was responsible for one of the most profound changes in GE during my time there. For the vast majority of employees, the boss-knows-all culture disappeared. - Jack Welch Voice and Dignity | Every brain in the game

Enterprise 2.0 thus becomes more about Release 2.0 of how a large and disparate group of people can work together effectively with common purpose than about Release 2.0 of a particular technology. One big jump - the writable Web - was enough to get the revolution in social software started:

Prior to the Internet, the last technology that had any real effect on the way people sat down and talked together was the table. There was no technological mediation for group conversations. The closest we got was the conference call, which never really worked right - Clay Shirky, A Group Is Its Own Worst Enemy

This is a big idea - no need to curb your enthusiasm !

For a free copy of the academic paper on which the HBR article is based - including a detailed description of the model, analysis and conclusions - see Scale Without Mass: Business Process Replication and Industry Dynamics, HBS Technology and Operations Management Unit Research Paper No. 07-016.

See also The Rise of Enterprise 2.0, Andrew McAfee | Video | Enterprise 2.0 Summit 2008 Tokyo
Enterprise 2.0 - Letting hypertext out of its box
Learn by watching - Then do

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