The latest Social Business MIT Sloan Management Review Research Report has just been released: “Moving Beyond Marketing”. This is an interesting title in itself as it mirrors exactly what we see happening in the general marketplace – a clear shift by many who have viewed the term ‘Social Business’ as just another phrase for ‘Social Media’ (the external use of social tools for marketing purposes) to an understanding that Social Business includes not just the use of social tools externally but also how social tools can be used across organisations internally to enable new ways of working which impact the end to end business chain and drive business value. To start your business you can also hire startup lawyers as they can help you out legally. InstantInfo Systems about unified communication for business is providing customer services related to business you can also use their service by contacting them.

Here are a few key findings by houston marketing agency rom this year’s survey respondents which highlight the maturing of social business:

• 63% agree or strongly agree that social has had a positive effect on their company’s business outcomes.

• Nearly three out of four believe that social business is important today – while nearly 90% see it as important on a three-year horizon.

• Although more than half of the least socially mature companies don’t measure their social business efforts, more than 90% of maturing companies actively do. They use tools to measure various metrics – including operational and financial – which connect social initiatives to business. 67% integrate metrics into systems and processes to improve business decisions and drive social business endeavours.

• Employees want to work for companies that excel at social business – 57% saying it is at least somewhat important. Interestingly that was consistent among respondents aged 22 to 52.

• Companies are using social business across many functions. Over 80% use it to spur innovation and improve leadership performance and manage talent, while 60% integrate social business into operations.

• Respondents from Business to Consumer and Business to Business companies both report that their companies are creating value with their social business initiatives.

The ‘Aha’ moment described in the research has arrived for many businesses who have been experimenting with social tools but now many are beginning to understand how they can change the relationship between customers, employees and business partners. Social business transformation is happening in incremental steps, the research reports, but it still takes visionary leadership which understands and believes in its potentials to go ahead and make it happen.

If you have experienced the ‘Aha’ Moment or want to learn more about it then perhaps you would like to join us for the London Enterprise 2.0 Summit which Agile Elephant is co-producing with Kongress Media where we will focus on “Driving Business Value with Social Collaboration and Digital Transformation” and will bring together case studies from organisations who are already on the path to becoming social businesses.

April and May have been very busy months for the Agile Elephant Crew – first client, first conference, first Meetups ,  first partners signed  – and has not left as much time for background research (and hence blogging) to take place. But it is ongoing.  One thing we have been doing a lot of work in is the future of Organisations in general. We have been researching where similar initiatives to current theories have occurred in the past, to learn what worked, what didn’t, and what came afterwards. Our first “Lessons from the Past”  article was on Ricardo Semler. This second one is about previous attempts at non hierarchical workgroups, specifically Quality Circles and Cell based operations, as they were a precursor to all the pods/peletons/holacracies/fishnets* (see diagram at top of article)/wirearchies etc. etc. proposed today.

Cells and Circles were adopted with enthusiasm in the 70’s/80’s but many had been abandoned by the late 90’s. The Economist notes that:

Quality circles fell from grace as they were thought to be failing to live up to their promise. A study in 1988 found that 80% of a sample of large companies in the West that had introduced quality circles in the early 1980s had abandoned them before the end of the decade.

 It is thus useful to understand why this occurred.

A summary  of Circles and Cells

From Wikipedea:

A quality circle is a volunteer group composed of workers (or even students), who do the same or similar work, usually under the leadership of their own supervisor (or an elected team leader), who meet regularly in paid time who are trained to identify, analyze and solve work-related problems and present their solutions to management and where possible implement the solutions themselves in order to improve the performance of the organization, and motivate and enrich the work of employees. When matured, true quality circles become self-managing, having gained the confidence of management. Quality circles are an alternative to the rigid concept of division of labor, where workers operate in a more narrow scope and compartmentalized functions.

Cellular manufacturing, sometimes called cellular or cell production, arranges factory floor labour into semi-autonomous and multi-skilled teams, or work cells, who manufacture complete products or complex components. Properly trained and implemented cells are more flexible and responsive than the traditional mass-production line, and can manage processes, defects, scheduling, equipment maintenance, and other manufacturing issues more efficiently. (This technique was used outside of manufacturing as well)

In summary overall, the initial benefits from these systems were very good, yet over time their effectiveness and efficiency waned and by the early 2000’s they had frequently dropped out of use. We wanted to understand if there were any lessons in this history that may apply to the next generation of non-hierarchical approaches being proposed today.

Quality Circles

The summary below, taken from Wikepedia,  is a pretty accurate and succinct description of the issues Circles faced:

Based on 47 QCs over a three-year period, research showed that management-initiated QCs have fewer members, solve more work-related QC problems, and solve their problems much faster than self-initiated QCS. However, the effect of QC initiation (management- vs. self-initiated) on problem-solving performance disappears after controlling QC size. A high attendance of QC meetings is related to lower number of projects completed and slow speed of performance in management-initiated QCS. QCs with high upper-management support (high attendance of QC meetings) solve significantly more problems than those without. Active QCs had lower rate of problem-solving failure, higher attendance rate at QC meetings, and higher net savings of QC projects than inactive QCs. QC membership tends to decrease over the three-year period. Larger QCs have a better chance of survival than smaller QCs. A significant drop in QC membership is a precursor of QC failure. The sudden decline in QC membership represents the final and irreversible stage of the QC’s demise

One of the big problems with Quality overall is that inconvenient messages of failure often get the messengers shot by embarrassed powerful people in sales, operations and finance. Quality Circles, multidisciplinary by nature, had no one powerful person who was a natural sponsor, so they needed a high degree of top management involvement (read: protection) to ensure they could survive the slings and arrows.

The other problem Quality Cells hit over time were newer, shinier fads came along – and thus these Circles were dropped as the newer fads needed crewing up, as the same workers had to be involved to make the new Thing work, so the Old Thing was dropped . That the new fads were more sympathetic to more traditional hierarchies didn’t help the cause of circles.

Cells:

The biggest challenge when implementing cellular manufacturing in a company is dividing the manufacturing system into cells. The issues may be conceptually divided in the “hard” issues of equipment, such as material flow and layout, and the “soft” issues of management, such as upskilling and corporate culture.

The “hard” issues are a matter of design and investment. The entire factory floor is rearranged, and equipment is modified or replaced to enable cell manufacturing. The costs of work stoppages during implementation can be considerable, and lean manufacturing literature recommend that implementation should be phased to minimize the impacts of such disruptions as much as possible. The rearrangement of equipment (which is sometimes bolted to the floor or built into the factory building) or the replacement of equipment that is not flexible or reliable enough for cell manufacturing also pose considerable costs, although it may be justified as the upgrading obsolete equipment. In both cases, the costs have to be justified by the cost savings that can be realistically expected from the more flexible cell manufacturing system being introduced, and miscalculations can be disastrous. A common oversight is the need for multiple jigs, fixtures and or tooling for each cell. Properly designed, these requirements can be accommodated in specific-task cells serving other cells; such as a common punch press or test station. Too often, however, the issue is discovered late and each cell is found to require its own set of tooling.

The “soft” issues are more difficult to calculate and control. The implementation of cell manufacturing often involves employee training and the redefinition and reassignment of jobs. Each of the workers in each cell should ideally be able to complete the entire range of tasks required from that cell, and often this means being more multi-skilled than they were previously. For this reason, transition from a progressive assembly line type of manufacturing to cellular is often best managed in stages with both types co-existing for a period of time. In addition, cells are expected to be self-managing (to some extent), and therefore workers will have to learn the tools and strategies for effective teamwork and management, tasks that workers in conventional factory environments are entirely unused to. At the other end of the spectrum, the management will also find their jobs redefined, as they must take a more “hands-off” approach to allow work cells to effectively self-manage. Instead, they must learn to perform a more oversight and support role, maintaining a system where work cells self-optimize through supplier-input-process-output-customer (SIPOC) relationships. These soft issues, while difficult to pin down, pose a considerable challenge for cell manufacturing implementation”

The issues the Cells had were not, then, just the “hard” systemic issues – or at least these were easier to predict and solve albeit could hit the business case at transition. The really hard issues were the “soft” ones, especially the requirement to have people who could be multi-skilled, whereas a more Taylorist system, with tasks broken down, can use less skilled labour. It would seem that whereas Cells when working properly worked very well indeed, it took more effort to set up and run them, whereas hierarchies have lower setup costs, need less “soft skilled” attention and can still work adequately, even if not properly run. In other words, Cells were high impact but high maintenance, and if they could not get all the inputs right – continually-  Cells tended to perform no better (if not worse) than hierarchical systems.

10 Reasons for Success or Failure

In his book “Quality: A Critical Introduction”,  John Beckford quotes the example of a western retailer that took almost every wrong step in the book. These included:

– training only managers to run quality circles, and not the staff in the retail outlets who were expected to participate in them
– setting up circles where managers appointed themselves as leaders and made their secretaries keep the minutes. This maintained the existing hierarchy which quality circles are supposed to break out of
– expecting staff to attend meetings outside working hours and without pay
– ignoring real problems raised by the staff (about, for example, the outlets’ opening hours) and focusing on trivia (were there enough ashtrays in the customer reception area).

In summary, our research showed there were also a number of other conditions that also tipped the balance,and in summary  meeting or avoiding the the following conditions were essential for success:

1. Need to have top management involvement for them to work
Without top management support and resource allocation they seem to never make it to more than localised “interesting experiments”, and won’t scale or roll out. Over time they are not seen as part of the mainstream way of working and are prone to being disrupted operationally and politically (see point 9 below).

2. Have to be above a certain size/skill level to operate well (enough members)
This applies mainly to Quality Cells – they need a fairly large membership to keep going as people get caught up in other tasks, move on, or run out of creative ideas. Cells more tended to need a flow of new blood to prevent ossification.

3. Members need to be trained to use them (hard and soft tools). Both Quality Circles and Cells have two key requirements:
– People need to know how to use a large number of the tools/techniques they require, and that means they need to upskill from the more traditional Taylorist huge division of labour model
– People need to learn how to manage both themselves and everyone else in a team without a hierarchical structure, to ensure that things get done

4. They will not work if the thing they are trying to do doesn’t work in the first place
Circles and Cells were designed for very specific reasons and tasks, but were too often used as last gasp attempts to solve very intractable problems. You can’t inject quality into poor designs or substandard materials, and a cell approach won’t work for commodity products when Western labour costs are much, much higher than the Far East. All too often they were not given the authority, resources or time to match the responsibility they were tasked with, and so failure was assured.

The main reasons most fail are:

5a. Management kiboshes ideas coming from Quality Cells, especially if it impacts Management
5b. Cells are not given the authority to cover the responsibility they have
(i.e. the premise of both is scuppered from the get go)

6. Natural life – There is evidence that any organisation of people has a “natural life” before it ossifies. People naturally lose enthusiasm and interest after some time as operationally the biggest problems are solved / all ideas are aired/ rewards given don’t match effort put in etc., and the circle or cell ossifies and eventually dies. Given that mesh system require more input from their members, this process hits them harder than hierarchies.

7. Emergence of an internal hierarchy in the Circle or Cell is a real probability as it is natural for people to derive a “pecking order”, and must be managed – if it happens, losers tune out/leave and the people rising to the top in this way are too often not the best for operational effectiveness.

8. No real rewards for doing QC/Cell work well means people don’t have a motivation to do this over the more comfortable status quo (the real killer is to use it overtly as a cost reduction/output increase approach).

9. In a mesh structure, as opposed to a hierarchy, every node must be more fully functional. This quote from Wikipedia sums it up:

“The implementation of cell manufacturing often involves employee training and the redefinition and reassignment of jobs. Each of the workers in each cell should ideally be able to complete the entire range of tasks required from that cell, and often this means being more multi-skilled than they were previously. For this reason, transition from a progressive assembly line type of manufacturing to cellular is often best managed in stages with both types co-existing for a period of time. In addition, cells are expected to be self-managing (to some extent), and therefore workers will have to learn the tools and strategies for effective teamwork and management, tasks that workers in conventional factory environments are entirely unused to. At the other end of the spectrum, the management will also find their jobs redefined, as they must take a more “hands-off” approach to allow work cells to effectively self-manage. Instead, they must learn to perform a more oversight and support role, maintaining a system where work cells self-optimize through supplier-input-process-output-customer (SIPOC) relationships. These soft issues, while difficult to pin down, pose a considerable challenge for cell manufacturing implementation”

The change management programme here, moving from a traditional structure, needs to be huge.

10.  Staff, Cells and Circles usually exist within larger hierarchical structures, and there are continual tensions that must be managed. There are many whys and wherefores (see above points), but to use a biological system analogy, in essence the larger  organism tries to reject the foreign element and unless there is continual usage of immune-suppression drugs, it will eventually be rejected (unless the whole structure is changed – difficult –  or the cell/circle is kept at some distance, which loses a lot of the proposed benefit). The corollary – hierarchies emerging within heterarchical structures – is uncommon insofar as there are so few heterarchical structures, but exceedingly common insofar as the normal evolution for any heterarchy is a hierarchy – initially informal (a “pecking order”), later formalised. This pattern exists from early human settlement to the latest research on work teams and other “flat” structures.

(In)Conclusion

Big picture, its hard to set up and maintain these sorts of Cell/Circle structures for any period of time compared to a hierarchy – they are higher output, higher impact, true – but also need higher setup and input effort to keep the benefits flowing. This is interesting, as in theory a network/mesh is more stable than a rigid structure as it is more effective,  flexible and resilient. All the latest organisation models make the axiomatic supposition of mesh superiority for these reasons.  Unfortunately the one thing that is not coming through is that these early heterarchical structures were lower energy, stable, or self sustaining in any way (the opposite in fact) – whereas all the research is implying that hierarchies are (far too) stable and self sustaining.

It is very clear that setting up and running these early heterarchies was non trivial. It is also very clear that hierarchies are a comparatively stable state structure (By the way, the Holacracy model seems to look much like a conventional hierarchy above the workcells). Not only that, but where Cells and Circles were set up within a hierarchical milieu, they struggled. The opposite is not true, hierarchies – often initially “pecking orders”, later more formal structures – usually replaced the  heterarchies in these cells and circles unless carefully managed.

Arguably of course, these problems above are due to trying to construct heterarchical systems within existing hierarchies, and one should instead rather start an organisation as one means to carry on (the Heterarchical Startup gambit). But will a heterarchy scale up the Dunbar numbers to 50, to 150, to 500 people, as the level of automatic co-ordination reduces?  Note there are no examples of large scale Cells or Circle organisations, they all tended to operate within hierarchical structures, mainly defined by the workflow of the underlying enterprise, and typically topped out between the 15 and 50 Dunbar numbers.

Anyway, there is clearly something in these “Heterarchy 1.0” system designs that is flawed, we are not yet clear as to precisely what it is. That is the subject of ongoing research for us, but we believe these 10  lessons are all clearly useful for looking at the new wave heterarchy thinking around today and so we are looking at all the new ideas with the points in mind – but that will be a future post (or probably more than one…)

*Fishnet structures are interesting as they – in my view – point to the probable endgame, i.e. structures that can integrate heterarches & hierarchies.

Three interesting findings from MIT/Sloan Review on why Social Business projects fail, based on  data from the 2013 social business report from MIT Sloan Management Review and Deloitte, “Social Business: Shifting out of First Gear,” (points summarised below):

1. Managers go into social business with unclear business  objectives.

The first insight can be found in the question that asked respondents whether the social business initiative they were involved in was started to address a specific business problem. Sixty three percent of respondents indicated “no.”

This situation, a classic one with information technology, occurs when managers hear about the latest technological developments and decide their organizations need to adopt these tools simply because colleagues and competitors are doing so.

Uncritical adoption of technology, particularly when associated with social business, is a recipe for failure

2. Initiatives start as pilots then fizzle out due to modest participation.

A clear business objective may not be initially necessary, however, if the initiative is explicitly started as a pilot project…..Indeed, about half of the respondents indicated that the social business initiatives without a clear business objective were intended as a pilot project.

The problem with pilot projects is that they require an important condition for success that is often painfully lacking in most organizations — slack resources. If employees are going to figure out how to employ new social business tools in their work, they need free time to explore the technologies and figure out how to integrate it into their work.

3. Companies expect social initiatives, even pilots, to deliver a financial return on investment.

The third insight comes from the fact that 53% of social business initiatives are expected to deliver a financial return on investment (ROI). This finding, by itself, is not surprising of course. The desire to demonstrate ROI is understandable in for-profit companies, even if it is often notoriously difficult to achieve with social business initiatives.

More surprising is that there is a surprisingly low correlation between the desire for a financial return on investment and responses to the previous two questions.

As the article points out, it is difficult to quantify or achieve ROI in social business initiatives when its business objective has not been clearly defined.

It was interesting in the Enterprise 2.0 Summit in Paris that over and over 3 key points were felt to drive successful projects:

• Solve a business problem
• Even if there is no formal ROI, understand how value will be created by the Social Business project
• Get backing from the resource holders – pilots and point systems can only grow so far.

Interesting article in the MIT/Sloan Review about companies who are succeeding in using Social Business tools. They surveyed over 4,800 respondents around the world. In essence the research` shows that value is concentrated most strongly in companies that have reached a certain level of sophistication in relation to their social business initiatives, which they refer to as social business maturity (see diagram above). In summary, they see six major signals of increasing maturity (summarised below):

Social business maturity involves business process transformation, not just using social tools and technologies in the enterprise. We asked respondents whether social business initiatives lead them to develop new business processes or fundamentally transform existing ones. Seventy-one percent of respondents in maturing social businesses say that their social business initiatives involve a fundamental transformation in business processes, as opposed to only 28% of respondents from companies in the early stage of social business maturity. This finding suggests that social business entails more than just adopting social tools in an organization. Rather, it involves redesigning business processes in ways made possible by these tools.

Social business often starts in marketing, then gets applied to other functions and processes. We asked respondents for what purposes their companies used social business tools. Companies in the early phases of social business maturity were more likely to report using social business primarily for externally facing activities, specifically marketing functions. Companies with a greater level of social business maturity, in contrast, were more likely to report social business use balanced between internal and external uses, with both innovation and leadership applications used nearly as much as marketing applications. Only maturing social businesses report applying social business tools to business operations to a great or moderate extent (60%), compared with 13% of the companies in an early stage of social business maturity.

Social business maturity involves increasing sophistication in measurement. Companies have been looking for ways to effectively measure social business results to assess ROI:

First, although 52% of the least socially mature companies do not measure their social business initiatives, this number drops substantially as companies move out of this earliest stage of maturity. Second, although anecdotal evidence is only the first step toward measurement, it remains nearly equally important for companies at all stages of social business maturity. Even the companies with the most mature social business practices apparently need to continue telling success stories to drive use of social business tools. Third, once companies begin quantitatively measuring social business results, our data suggest a path of increasingly sophisticated measurement.

More mature social businesses increasingly rely on social data. Our research also suggests that companies with more mature social business practices are more likely to rely on social data. Eighty-eight percent of respondents from such companies say social data are important, compared with 38% of those from companies in the early stages of social business maturity. Maturing social businesses are also more likely to use this data in different ways than companies with less mature social business practices. For example, while only 8% of companies in the early stages of social business maturity integrate social data into their operations to a moderate or great extent, 67% of maturing social businesses do so.

Social business maturity involves a higher level of responsibility and accountability within the organization. More mature social businesses are more likely to report a single leader or group responsible for social business initiatives. These leaders are also likely to be at a higher level (such as a vice president or member of the C-suite) in more mature social businesses. State Street’s Hannah Grove noted the importance of managerial responsibility for social business. “Ownership is a very important question, particularly when you think about the ramifications for anything not working out well,” she said. “And so there really has to be a sort of singular owner — for lack of a better word, governance and compliance — just to make sure that people don’t go off the reservation.”

Maturing social businesses manage new challenges along with successes. Greater social business maturity does not necessarily mean that a company has overcome the challenges associated with social business. In fact, some of our data suggest successful social business initiatives might actually introduce new problems for companies. In multinational companies, although social business maturity was highly correlated with how much social business helped a company operate across geographies, it was also associated with increased operational challenges across geographies.

This report comes at an interesting time, given that Gartner recently estimated that through 2015, nearly 80% of social business initiatives would fail to meet their stated business objectives. Both that report and this may be true, I recall in the early days of MRP II (precursor to ERP) system implementations, making it work was hard and there were many failures, and the companies that made it work had to change a lot of things – it was quite a journey.

To us the conflicting reports, and many of the first generation suppliers consolidating, is a sign that the market is in a changing phase – but reports of its death are somewhat over-estimated in our view.

McKinsey on using social tools to find hidden influencers in a business. The issue with most major change programs succes is winning over the people:

Winning over skeptical employees and convincing them of the need to change just isn’t possible through mass e-mails, PowerPoint presentations, or impassioned CEO mandates. Rather, companies need to develop strong change leaders employees know and respect—in other words, people with informal influence. But there’s one problem: finding them.

The solution, say McKinsey, is to use Snowball sampling:

…a simple survey technique used originally by social scientists to study street gangs, drug users, and sex workers—hidden populations reluctant to participate in formal research. These brief surveys (two to three minutes) ask recipients to identify acquaintances who should also be asked to participate in the research.

In business, one can use similar approaches to find out:

Companies can construct simple, anonymous e-mail surveys to ask, for example: “Who do you go to for information when you have trouble at work?” or “Whose advice do you trust and respect?”.  In shop-floor and retail-store settings where workers don’t have ready access to e-mail, companies can use anonymous paper surveys.

McKinsey found that:

– influence patterns almost never follow the organizational chart.

– exist at all levels of a company and aren’t easily identified or predicted by role or tenure (although relatively few are senior company leaders, as might be expected given their formal influence).

– even when company leaders believe they know who the influencers will be, they are almost always wrong.

No great surpries there, but useful corroboration.  Good point on needing non-digital tools for finding such people among non or semi-connected workers, many businesses still have many of these. Anyway, once you have found your foxes, the next is to create the conditions to influence the enterpriswith. McKinsey found 4 techniques worked well:

1. Think broad, not deep. The [client] company sought influencers in a swath of regions, functions, and roles (including frontline ones). The diversity of opinion and experience not only helped provide energy and good ideas but also later proved important in communicating the changes, in role-modeling them across the company, and in combating skepticism.

While there is no formula to determine how many influencers a company should include, the sample must be wide enough to pull in a diversity of roles and perspectives….. The goal is finding enough people with influence in enough roles to get a high degree of connectivity across the company through a relatively small number of connections (out of the total number possible). Some roles may prove to be particularly important. (Case study mentioned cashiers in retailers)

2. Trust, but verify. To build trust, participants at the manufacturer [one client] received letters of invitation explaining the program’s goals, why these employees had been nominated, and how the company wanted them to help. It took pains to make the initiative voluntary. Having influencers opt into change efforts builds trust and encourages high-quality results. Indeed, many influencers will be eager to help and view the experience as an honor worthy of their best efforts.

But goodwill dissipates quickly if employees feel coerced. Before extending any invitations, the manufacturing company discreetly vetted all participants with Human Resources and local managers. Vetting the participants helps “screen in” influencers who are well regarded by both peers and superiors, while acknowledging the reality that not all influence is positive and not all influencers want change. Although “bad eggs” should be screened out of important program roles, they still merit attention—as valuable sources of insight about how to convert skeptics.

3. Don’t dictate—cocreate. Both clients studied  engaged their influencers as thought partners in the change effort, not just as mouthpieces for change. That’s an important point because the influencers’ informal authority dwindles if they seem to be doing the bidding of management. The participants were organized in teams addressing themes they helped identify (for example, shop-floor safety, incentives for employees to think more innovatively, and actions to make the company more customer focused). Because both efforts required sustained input from the participants, the meetings inspired and motivated them. As the programs gathered steam, many of these employees helped to spread feelings of empowerment in their usual roles as well.

4. Connect the dots. To boost the odds of lasting change, the manufacturer created an online forum, supported by videoconferences, aimed at encouraging the influencers to meet and support one another periodically. In an effort to make these interactions as meaningful as possible, the company divided the influencers into smaller, volunteer-led groups focused on common themes. This approach not only helps to produce more tangible actions and outcomes but also makes it easier for the groups to connect with colleagues working on similar projects in other regions or business units. The participants’ sense of community, and of themselves as change leaders, grows as they share best practices, discuss new ideas, and address the inevitable challenges. The company’s early commitment to in-person gatherings has made subsequent interactions by e-mail, telephone, or videoconference far more meaningful. In general, creating opportunities for influencers to meet in person usually pays big dividends.

There is a noticeable Hawthorne effect (or should one say a snowball effect):

While the programs at both companies are works in progress, these early success stories have highlighted specific activities and behavior that drive performance. They are thus helping the companies to further articulate and accelerate the expected changes. Employee-satisfaction scores have also improved sharply at both companies, in large part thanks to increased levels of collaboration and empowerment.

It’s interesting to think about how one may adapt social business techniques for this, and vice versa. First thoughts are that as a way of creating an influence programme for social business implementation, it seems fairly sensible. Second thought is that it would go much better with certain social tools already in situ (internal collaboration and communication software, crowdsourcing for internal inovation and problem solving for example.). It would be interesting to see if you could find the same people using email or social analytics, or  see if one could monitor influencer impact digitally.

(Wirearchy Cartoon above by Hugh McLeod of GapingVoid)

There has been a lot of discussion in recent months about ways of organising work and structuring organisations in future enterprises – Podularity, Holacracy, Wirearchy, Post-Shifting , Smart Working, at a conceptual level Umair Haque and what I call “Stowearchy” ( 🙂 ) to name but a few recent thinkers, and that is not to mention all the academic work.  We have been around longer than we’d like to admit, and some of these are using concepts that have been tried before, and we wondered if there was anything to learn from these. The first is to look at the organisational revolution Ricardo Semler started off in SEMCO. To recap, the Semler story in brief is that (Wikipedia):

Ricardo Semler went to work for his father’s company, originally called Semler & Company, then a Mixer & Agitator supplier in São Paulo. Ricardo favoured diversification away from the struggling shipbuilding industry, which his father opposed. After heated clashes,  Antonio Semler resigned as CEO and vested majority ownership in his son in 1980 when Ricardo was 21 years old. On his first day as CEO, Ricardo Semler fired sixty percent of all top managers. He began work on a diversification program to rescue the company.

That was the start of a  fairly revolutionary set of steps

He fired most of the top managers and got rid of most management layers; there are now three. He eliminated nearly all job titles. There was still a CEO, but a half-dozen senior managers traded the title every six months, in March and September. Executives set their own pay, and everyone in the company knew what everyone else made. All workers set their own hours. Every employee received the company’s financial statements, and the labor union held classes on how to read them. Workers choose their managers by vote and evaluate them regularly, with the results posted publicly.

Not all was sun and light, there were problems. Attempts to introduce a WL Gore style matrix organisational structure in 1986 failed to achieve desired improvements.  It takes experimentation to make things work in any one business. There are some specifics worth noting – firstly, on cells (or Pods, as they seem to be called now):

In 1985 one of his managers suggested to Semler that he should create self-managed teams of six to eight production workers who would be entirely in charge of all aspects of production. They set their own budgets and production goals. Compensation was then tied to budget and production performance. Costs went down. Productivity and profits went up. Semler liked that. Many production workers liked that. Others were leery of taking on what they saw as “management” responsibility. It was the middle managers that didn’t like the new concepts. They felt they were losing their power and prerogatives. In a little over a year, one third of them quit.

Then came Brazil’s financial crisis and the Government severely limited access to liquid capital. The company tried everything to cut costs, but eventually it came to cutting staff, which with Brazil’s labour laws would have broken the company. At that point:

…a worker’s committee approached Semler with a proposal. They’d take a pay cut, but with three conditions. First, the profit-sharing percentage would be increased until salaries could be restored. Second, management would take a forty percent cut in salary. And, third, the workers would get the right to approve every expenditure. Semler agreed.

In the plants, workers started handling multiple job duties and using their knowledge of how the factory worked to come up with new procedures that saved time and money. At one factory they divided themselves into three manufacturing units of about 150 people each. Each unit had complete responsibility for manufacturing, sales, and financial management.

The autonomous team idea was adopted throughout the company. As it evolved the teams began hiring and firing both workers and supervisors by democratic vote. Policy manuals disappeared to be replaced by a policy of common sense. There is an actual manual, though. It runs about twenty pages and is filled with cartoons and brief statements of principle.

150 seems interestingly close to the main Dunbar Number. The next step was how these units may be set free to change focus or expand:

One more change had to be completed in order to create the Semco we see today. In the late 80s a group of engineers had received permission to become what was called the Nucleus of Technological Innovation (NTI). The idea was that they, and a group of workers, would become fully autonomous. In effect they were seeking to extend the autonomous team concept to a larger group.

Effectively the group would operate entirely on its own, though with the same culture as Semco. Their performance would be reviewed every six months. They took a percentage of sales as compensation. That model, essentially extending the autonomous teams, eventually became the model for all of Semco.

At the end of the first six months, NTI had identified 18 such opportunities. Following the success of this initiative, satellite units were encouraged throughout Semco. By the late 1980s, these satellite units accounted for two-thirds of its new products and two-thirds of its employees. As Fortune wrote in 2001, “Obviously it’s all insane, except that it seems to work.”  There is much more, described in Semler’s book “Maverick”.

After the first decade, partly due to a fainting spell when he was 25 due to the huge workload inspired him to want a greater work-life balance for himself and his employees,  Semmler wrote a second book “The 7 Day Weekend” describing their ongoing experience, focusing on the human issues. This structural freedom requires real disciple to operate properly:

The corollary of democracy and treating people as adults – the only real rules at Semco – is huge peer pressure and self-discipline. ‘It’s as free market as we can make it. People bring their talents and we rely on their self-interest to use the company to develop themselves in any way they see fit,’ declares Semler. ‘In return, they must have the self-discipline to perform.’

There’s no hiding place for those that don’t, even if performance is judged in non-standard ways. ‘To survive here you have to get on someone’s list of people they need for the next six months, and you can’t do that by playing political games.’

They also had to continually work on reducing heirarchy:

Even now [2002], laments Semler, ‘we’re only 50 or 60 per cent where we’d like to be’. Hence the constant attempts to unsettle even Semco’s unusual order – the latest of which is the disbandment of the firm’s headquarters in favour of satellite ‘airport lounge’ offices dotted around Sao Paulo. Not only do people not have fixed desks, they don’t even have fixed offices.

‘They thought it was about location. In fact, it’s about eliminating control,’ says Semler happily. ‘If you don’t even know where people are, you can’t possibly keep an eye on them. All that’s left to judge on is performance.’

Operating a business with a very low level of heirarchy and structure requires extraordinarily discipline.  In fact,  Semmler noted one of the major tasks was to screen all the New Age Work enthusiasts and those who didn’t want to get fully involved with the business out of the applicant pile, as neither type has worked out (which has provoked many to question what happens to those who cannot become fully engaged with business life). But to finish, he left a series of principles which are interesting to think about in a Social Business context:

• Forget about the top line. (i.e. profit, not revenue)
• Never stop being a start-up.
• Don’t be a nanny.
• Let talent find its place.
• Make decisions quickly and openly.
• Partner promiscuously.

We hear a lot about the “War for talent”, but over here at Agile Elephant we are a bit dubious about whether “talent” is always properly understood by those recruiting it. We know from various studies that a motivated, well organised team of “B listers” can beat superstars on a regular basis, as “Moneyball” showed clearly.

This is an interesting piece about Google’s experience of recruiting, and how they have shifted from Old Google recruiting, which has found smart people but not necessarily the best talent.  Google’s head of people operations, Laszlo Bock, detailed what the company looks for now. And increasingly, it’s not about credentials. Google has spent years analyzing who succeeds at the company, which has moved away from a focus on GPAs, brand name schools, and interview brain teasers.  They have found that the race is not to the one with the strongest CV on paper:

– Graduates of top schools can lack “intellectual humility” – Megan McArdle argued recently that writers procrastinate “because they got too many A’s in English class.” Successful young graduates have been taught to rely on talent, which makes them unable to fail gracefully. Google looks for the ability to step back and embrace other people’s ideas when they’re better. “It’s ‘intellectual humility.’ Without humility, you are unable to learn,” Bock says. “Successful bright people rarely experience failure, and so they don’t learn how to learn from that failure.” Many schools don’t deliver on what they promise, Bock says, but generate a ton of debt in return for not learning what’s most useful. It’s an “extended adolescence,” he says.

– Learning ability is more important than IQ – Succeeding in academia isn’t always a sign of being able to do a job. Bock has previously said that college can be an “artificial environment” that conditions for one type of thinking. IQ is less valuable than learning on the fly, Bock says.  A behavioral interview, in contrast with those that ask people to figure out how many tennis balls fit into a tennis court, might ask how you’ve reacted to a particularly difficult problem in the past. They can also help find people who fit the company’s definition of leadership. It’s not about leading a club at school or an impressive prior title, Bock says, but the ability to step up and lead when it’s necessary.

I must admit, a part of me looks at this and says – “yeah – and?” but its a sign – in my opinion – that the last 15 years or so of recruitment “best practice” are being seen as the chimera they are, having been filled with too much pseudoscience, cod-psychology and arse-covering fear of being seen to make the wrong hire, so the best paper trail proof of “talent” is used as a substitute for judgement.  Y Combinator’s Paul Graham recently noted that they have found the top software engineers are not minted at University, a useful predictor is what they were doing with their teenage years – hacking code and building computers is a good sign.

I think 2 things are happening now, both based on hard headed empirical logic:

– Firstly, we are starting to see a return to things everyone actually always knew, but its now OK to say it, think it, and do it again – human factors and judgement matters. This is largely what is going on with Mr Bock in Google

– Secondly, as data becomes digital its easier to measure the end to end effectiveness of employees vs. their attributes, and calculate algorithmically what sort of profiles work best in different companies.  Some time ago  I wrote about  evidence now emerging that when cold analytics are used, it turns out that the most talented employees and managers are not the highly rated superstars.

Social business, in our view, is a blend of the technology and the human insight –  so recruitment is, I suggest, not going to be any different.  (interestingly, the same thesis comes up when Nate Silver discusses using Big Data analytics – the algorithm is not enough, you need the human insight)

Last week we went to the Enterprise 2.0 Summit in Paris, I posted up my notes from the case studies earlier (Day 1 and Day 2 here), but I’ve been letting the overall lessons from the conference percolate and gel in my mind. Also, I’ve had the opportunity to read a lot of other people’s thoughts over the last few days. I believe that what is emerging in the arena is the following:

1. The “first wave” of the E2.0/Social Business movement is coming to an end, the consolidation of Dachis and Sprinklr, new directions from PostShift, the entrance of major consulting players like McKinsey and Deloitte, and the emergence of (or purchase of) social business tools by major software players, plus the increasing calls for integrated systems, all signal major shifts in a young industry.
2. The increasing number of emerging case studies are starting to make it clear what works, and what does not. We are also starting to see which of the “patchwork elephant” array of social business concepts and theories that have been around for the last decade or so are looking valid, and which are looking  more fanciful (or more kindly, are still before their time).
3. We all noticed a split between what I call the “humanist” and “technical” approaches to Social Business apparent at the conference, and to an extent this article reflects a concern that 2 camps emerge in what should be a holistic ecosystem..

To an extent point 1 is a given, any successful trend has a number of predictable phases in its lifecycle, and what we are seeing in my opinion is the shift from early adopter to the early mass market phase, as the ecosystem changes  case studies are starting to show what sort of Social Business is making it over the Chasm first. This is not to say that other models will not follow as the sector matures, but we are seeing the first phase emerging.

Point 2 I will talk about in a later post when I’ve done a full analysis of all the case studies, but I’ve summarised some emerging clear lessons over here. I was intrigued by the emergence of so many ideas about organising businesses (with wry interest I note that there are a lot of echoes of  theories of 30 – 40 years ago) but it is emerging as a major area that needs addressing. This is hardly new news in Social Business either, Adriana Lukas reflected on this issue in the first Patchwork Elephant conference we ran in 2010, and was looking at Heterarchical and Holon approaches even then based on her client experience. As I wrote in my piece on the many Dunbar numbers, business copied its  structures from the military structures of yesteryear, the military has changed hugely since WW2 but its not clear that business has changed so much. There is clearly a well overdue time for change.

On the point of multiple Dunbar numbers, Dunbar is quite clear that different sizes of human network structure have very different requirements on the human relationship dynamic, this is often forgotten in a world that thinks everyone you link to on a social network is a “friend”. To an extent technology can help (there was some fascinating hints on how social business tools can overturn the Allen curve from the case studies exploring Proximity) but it is extremely unlikely in my view that the way one can organise and run a 5 person cell will ever be the same as running a 15 or 50 person operation, never mind a 150 or 500 person one.

However, what this post is about is point 3, the apparent difference between “technical” and “humanist” approaches to social business and the damage such a split could cause. My view is that they are two halves of the same elephant, a necessary yin and yang if you like. The model I believe best expresses this in a useful way for business is the McKinsey 7S model (another oldie but goodie), so much so that I see it as the “7 Social” model. The model was designed as a strategic vision for groups, to include businesses, business units, and teams. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing.

The diagram of the model is at the top of this post, and we have a more detailed breakdown over here, but in essence it says there are 2 sides to Social Business, the “Hard” requirements – systems, strategy and structure – and the “Soft” requirements – staff, skills and style, and the whole system has at its hub the Shared Values of the enterprise.

In a bit more detail – the “Hard”  (or Technical) requirements are:

Day 2 at the Enterprise 2.0 Summit, and more case studies. The first session was on enabling output improvement, interesting in that it was financial  services, which has extra issues with the “3 Amigos” – Legal, Security, Compliance

Dan Florescu – ING
Project to increase engagement and collaboration started in 2010, many people only work 4 days a week, some on 3 – need to learn to manage an army of job sharers. Used Sharepoint, not social at time [I can support that – AP] so did mods, which was expensive – later added Sitreon as an overlay. Put system in using scrum approach.

Business aims were to
– enhance profiles with skills and allow people to find the right person easily
– reduce meetings (used online agendas setting and hash tags to cover topics)

Lessons learned:
– Legal, Security, Compliance – the “3 amigos” – very powerful in a financial company. Had a simple user agreement, and a report button to cover these issues.
– Anyone can start a community, but you wind up with a lot of ghost groups. They do a 40 – 60 day clean up – 40 days notification if no activity, 60 days delete
– Had a 25% increase in activity from 2012 to 2013 but need to get more people and doing more stuff to really add value (a critical mass?):
New head of HR – companies these days less likely to listen to bosses, more comms/collaboration/etc needed

Raphaele Naud – Fidelia
Multiple-Site, info in silos, 3000 people, very hard to get info from right person fast. Wanted to centralize info and transform workplace. Choosing tools, used consultants, chose XWiki after an RFP with user requirements – has customisable, good Interfaces. Debut “Wikidelia” 2010, started piloting and onboarding mid 2011, started to adapt system by asking people for feedback, requirements.

KFS for Wikidelia
– critical to have useful information at beginning of system life so first application was online data/document repository
2012 started with community building capability
– management support
– heavy user involvement in task force
– info had to be easy to find information
– must be easy to use or users won’t use, especially to write/add stuff
– set up teams, communicate with managers up front, then all in pilot
– used feedback and learning to adapt and roll out further
– buzz launch – T shirts, info as to where stuff is, SOS helpline, mascot design, then vote

Impacts
– a move from oral to written culture
– had 500 seasonal workers, very fast onboarding
– “un-siloed” the information as it is now held centrally
– now 500 visits a day
– got lots of people getting engaged with helping amend, allowed people to add their own stuff

Now implementing Ideas Box – started off by asking about business strategy issues but
– have a continual operating committee to add stuff, 2 day response to proposals,

Discussion with Dan & Raphaele

Some points:

– Need to understand managers are not as familiar with social as staff are, bigger journey for them
– Banks do have to ensure compliance of documents
– Fidelia uses socnet plus document mgmnt, continual scrutiny
– ING documents are in team databases, socnet only for collaboration

Where the company is making the money, that’s what social should help – motivates managers, makes employees see sense of using system

Benchmarking – did you look at best practice? Managers felt safer if they could see other companies doing it.

Main Success Factors:
– Community mgmnt
– Sponsorship
– Deliver value

The second session was on using social technology to foster innovation.

Mathilde Parlier Blot – Peugeot

Aim was to drive Main driver was not to just stack ideas, needed to make it real, and make it cross discipline
Idea competition – collaborative v competitive balance. – 1000 connected users – predefined deliverables, used gamification and incentives (not sure how). Actions:
– Company wide commas, weekly newsletter, inspiration space with information relevant to competition
– Voting – at least 5 comments to get out of pool for evaluation by specialists
– Got 7000+ uniques, 1300+ participants, 1000+ ideas, 3500 comment prizes – car, health and wellness voucher etc
[AP cynically, gamification means lots of valuable ideas for free, only need to pay for a few]
– 200 useful ideas,

Parallel quick win “Costbuster” idea, shorter/sharper program
– 30,000 + visits, 17000 comments
– 117 Costbusters (short term cost reduction) ideas vs 200 innovation idea
– Euro 40 mil savings

Latest plan – Fusebox – external challenge – 350 visitors to date

Hurdles
– Not Invented Here
– absorption capacity – limit to how much company can deal with
-IP rights
-HR policies at odds with requirements and desired behaviours

Plusses
– break down organisation silos
– higher value on behavioural skills
– customer driven naturally
– positive communications.

Jerome Introvigne – Groupe POULT

It was all in French so its taking me some time to translate it, not a language I’ve ever learned and my Latin doesn’t help a lot 🙂

The following were not strictly case studies, but are notes from an indicative session on structuring Social technologies within the overall business processes

Accenture –  Joao dos Santos

Business Procsss Mgmnt (BPM)  is good for stable, repeatable processes. BPM and ERP doesn’t see Ancillary activities [what I call informal systems spring up to support this], non structured data and non accountable people “moments of truth” decisions

Adaptive Case Management – (ACM) Accenture term = social tech + case management + BPM + Enterprise Case Mgmnt. Case combines events, data,content, people, policies etc. ACM is more lightweight than BPM. It gives you a huge audit trail and traceability from the social data as well

2 Roles of Social Interactions in ACM:
– collaboration drives runtime collaboration, innovation etc – user case management is best tool
– integration with external networks which generates information from market, eg customer complains on Twitter – use various tools for this, open a case to cover eg Twitter complaint

Challenges:
– Need to get closer to beneficiary of the process eg client
– Must be very goal driven
– Transaction drives process, not process driving transaction
– Systems continually self configure.

My take, confirmed by Joao – ACM is aimed at parts of a business with case management potential, eg customer service

Bertrand Duperrin – NextModernity

Requirements
1. Design for BRP ( Bareley Repeatable Processes)
2. Design social for structured activities – how does this tool help me with my business goals, not all your social goals
3. bring social services into context of bus application and vice versa

Challenges
1. It’s not about adding but transforming – but social is very touchy feely, very hard to do predictable, reliably, measurably
2. measuring the impact – don’t know what to measure in social activity, but do know what to deliver in processes – so see how the social processes impact the business metrics
3. managers must adopt not as average users but as managers
4. technology adoption and open standards – yes tech is 20% but it’s the first 20% and really matters.

The thing that stood out to me is that Social technologies do not really give any advantage with repeatable processes, they are more effective at dealing with “barely repeatable processes” and unstructured information. The slide I’ve used at the top is from Bertrand’s talk and illustrates this well, with a useful quote from Theory of Constraints originator Eli Goldratt – use appropriate systems for appropriate tasks.  The ERP systems are not going to go away, in my view a similar arrangement will arise where Social technology will be the “mid-range” system between one-off projects and the  main production systems – much the as the product/process matrix works for manufacturing operations