• Engagement
• Strategic HR
• Productivity
• Complexity
• The Dunning Kruger Effect
• High Potentials

Articles are included from the likes of Accenture, BP, Charlene Li, Gary Hamel, Google, HCL Technologies, MIT, Sainsbury’s, Seth Godin and Strategy + Business.

Tag Cloud

Going through this quarter’s articles, blogs and research, the key word or theme for this quarter is “complexity” and in particular how organisations should be embracing what is inherently complex, rather than trying to simplify and standardise across the board. This desire to simplify can range from high-level decision-making to talent management, where in many cases things are not always as they seem.

Engagement

Regular readers of this update will know that employee engagement has been flavour of the month in corporate boardrooms for some time now. It seems that organisations are waking up to the fact that engagement and the willingness to go the extra mile in terms of discretionary effort is not necessarily down to pay and benefits but a far more complex and intangible set of criteria that require specific insight and understanding of culture, relationships and values.

Given the number of conferences and seminars on offer covering engagement it appears that there is a cottage industry developing to guide senior executives through this tricky area. However, with engagement unlike some areas of corporate development, teaching executives about how to engage their people suffers from a number of inherent difficulties. Firstly, can something as naturally intagible as engagement be taught in a systematic manner? Secondly, do organisations and more specifically, senior executives actually want engagement given the change in outlook and culture it will require?

In a blog post, Michael Specht lists five criteria for successful engagement:

• Involvement in decision making
• Feel they are able to voice their ideas, & managers listen to these views
• Have line of sight between employee performance & company performance
• They have career development
• When the organisation is concerned for employees’ health & wellbeing

To this I would also add strategic and cultural alignment, i.e. the organisation acts in a consistent manner with it’s stated goals and values.

These bullet points reflect the broad consensus emerging for the prerequisites for successful engagement, in particular the Macleod Review (pdf) from last year and Dan Pink’s recent book Drive detail similar requirements. Anyone unfamiliar with Pink’s work can do a lot worse by watching this enthralling animation of a talk he gave to the RSA.

Surely, given the evidence supporting the case for improved engagement is something all organisations are striving for? Well, I’m not convinced that many are willing or able to undertake the necessary changes in outlook and culture to achieve this. Digging a little deeper it appears that pursuing engagement as a key strategy in boosting performance is going to require change or a reversal in corporate attitudes that many executives may find too unpalatable or difficult to achieve even if they wanted to.

By looking a little closer we can actually start to understand what an organisation would look like if it were to really focus on cultivating engagement as a key value. To start off with one of the main requirements of engagement is to give people autonomy or control over their role and an active say in decision-making.

This came up in a provocative blog post by Paul Gillin entitled Gain Control by Giving it Up, where he talks about a new book called Open Leadership by Charlene Li. In her book Li puts forward the notion that the traditional model of focusing hierarchical reporting and concentrating decision making and influence in the hands of a few senior executives is damaging to organisational performance. This is not a new idea but on this evidence I think Li makes a very strong argument.

“Open Leadership will make a lot of people uncomfortable because it proposes that the only way to govern effectively in a transparent business world is to give up control and trust people to do the right thing.”

“Li asserts that today’s business world is too complex and competitive to permit organizations to continue to manage the way they have since the Industrial Revolution. That top-down philosophy assumes that people are idiots who can’t accomplish tasks without instructions, rigid rules and constant oversight.”

“New business leaders set examples, demonstrate confidence and create cultures that tolerate intelligent, well-intentioned failure.”

Li is not alone in her views on the damaging nature of traditional organisa

tional structure, these are reflected in an excellent blog post by Gary Hamel in the Wall Street Journal.

“I believe that many of the tools and methods we use to manage people at work are ill-suited to the challenges of succeeding in today’s “creative economy.” All too often, legacy management practices reflexively perpetuate the past—by over-weighting the views of long-tenured executives, by valuing conformance more highly than creativity and by turning tired industry nostrums into sacred truths.”

“we should remind ourselves that dogma often masquerades as truth, and that we are often comforted by the deception. There are many who would prefer a lazy ramble along the gentle contours of the tried-and-true then a hard scramble up the rocky incline of the untested and unproven.”

Hamel goes on to cite HCL Technologies CEO Vineet Nayer as someone who has successfully managed to “invert the pyramid” and empower employees so that they are at the heart of the organisation.

“We must destroy the concept of the CEO. The notion of the ‘visionary,’ the ‘captain of the ship’ is bankrupt. We are telling the employee, ‘You are more important than your manager.’ Value gets created between the employee and the customer, and management’s job is to enable innovation at that interface. To do this, we must kill command-and-control.”

This same view of challenging the traditional role of leaders is echoed in a Financial Times article by John Kay:

“Domineering chief executives often fill their boards with cheerleaders, and rarely seek sceptical counsel. An army of professional advisers can hardly wait to get its hands on fees. The independence of equity analysts is compromised by their association with deal-making banks. Both analysts and journalists find their access depends on good relations with the businesses they cover. Many of the worst deals were widely applauded when announced. The modern cult of the heroic chief executive is at the root of the problem.”

To underline the need for radical change in the role of organisational leaders, Gary Woodill argues that traditional management of activities such as strategic reviews, long-term business planning and centralised setting of objectives is a waste of time.

“What is interesting is that new methods have been developed in providing companies foresight, at least for a few years. But most strategic planning is an extension of the past.”

Giving up what we have long held to be productive and positive is something that Jeff Sutherland blogged about:

“Study after study at MIT and around the world show that incentive bonuses cause people to perform worse if they have to do any thinking in their job. (Hopefully, that is most of us.) Of course, all the research shows performance appraisals demotivate people but we still hand out performance appraisals thinking that will help employees improve performance proving that much of what we think and do is fundamentally flawed.”

In her book Li argues that decentralising power is an inevitable change that organisations are going to have to make. I think that many organisations or those leading them run a mile from this concept and most organisations are currently moving in the opposite direction. Advances in technology and the recession have meant that organisations are monitoring and looking to standardise their employees activities on a greater scale than ever.

With greater monitoring and the unsuitability of traditional organisational command and control, mediocrity is perpetuated and people are forced to take a narrow view of their role in the organisation. A blog post by Johnnie Moore discusses the idea of “closing the field”:

“services get analysed by experts and chopped into smaller functional units. Front and back offices are created; some back office functions then get outsourced. Each unit is given its own performance targets. For example, a call centre operator has to clear 60 calls a day. Inevitably, everyone learns to game the system; one way to deal with lots of calls is to cut people off or pass them along – leading to even more calls later etc etc.”

In short, what is required is not a new stratgey to focus on engagement but a new organisational culture that places engagement at its heart to highlight the difficulties in effecting cultural change, Gautam Ghosh highlights a video entitled “Culture eats Strategy for Lunch”.

The reality is that the vast majority of organisations have a culture or organisational structure that suits the command and control mindset. Advances in technology have meant that it is becoming easier and easier to micro manage and standardise procedure to the nth degree. The upshot of this is that it actively disengages people from their role and perpetuates poor performance. My feeling is that faced with the choice of giving up control and influence or maintaining the status quo the vast majority of modern executives will go for the latter.

Part of this is inevitably down to the herd mentality. As with bonus culture, the negative effect on performance is well acknowledged. The reason cited by executives however for sticking with bonus culture is that everyone else is doing it. It will take a brave leadership team to abandon the traditional command and control mindset.

This does not mean engagement will not continue to feature heavily in discussions and in seminars and conferences. Enterprises will still continue to roll-out annual engagement surveys and I suspect many organisations will be on the hunt for marginal increases in engagement, if it means the culture stays the same.

Strategic HR

This got me wondering, if engagement is something that people are happier talking about and measuring rather than executing, what other “sacred cows” are there that are appealing in theory but likely to remain out of reach in the real world? The obvious one would be strategic HR.

Once again, this quarter has seen a plethora of articles and blog posts outlining the key role HR has to play in the organisation of the future. Research conducted by Google was highlighted in a HR Magazine article where a persuasive argument is constructed from the data for the role of “human systems director”.

“As collaboration and innovation accelerate, thanks to new enabling technologies, elements of the HR and IT functions will integrate and HR and IT roles will shift as they adjust to the ideas economy.“

“HR will need to ensure employees are motivated to collaborate and innovate, with the study finding that 34% of HR personnel agree they will need to learn new skills to foster a sense of corporate community”.

This viewpoint is supported in an article from Fast Company, which discusses how HR is theoretically at least, well positioned to play a central role in the organisation of the future:

“HR was once thought of as the hiring, orientation, and birthday party crew. But, not anymore, not in today’s interconnected, globally competitive world. Smart organizations are realizing that strategic talent recruitment and human capital development are the new differentiators. Bringing HR to the senior strategy team is gaining currency.“

“The wisdom to embrace strategic HR demonstrates not just that people are the central resource for an organization, but that their calculated, mission-driven development is at the center of competitive excellence.”

Like the support for engagement all these points are highly compelling and make strong intuitive sense, however is this viewpoint reflected in reality by the visible actions of organisations? Are we seeing a more diverse cadre of HR executives emerging who are capable of delivering a more strategic alternative and abandon the traditional role of HR? These visions of the future strategic capability are put under scrutiny in a Wharton survey:

“It’s puzzling and a little surprising,” says Wharton management professor Peter Cappelli, co-author of the research along with Yang Yang, a Wharton post-doctoral fellow. “Everyone says that HR executives need broader experience as well as more business experience, but it looks like it is still a ’siloed’ career.”

The article suggests that HR continues to see itself as a profession within the organisation. However, if it is to reach it’s strategic goal, this needs abandoning in place of a more general role requiring a broader level of business experience:

“professionals approach problems differently than leaders with more broad-based experience. “General purpose business executives are trying to figure out what makes sense for the organization, while a professional acts like an accountant or a lawyer with a standard set of solutions to problems. The business executive says, ‘Let’s figure out what works for our business and makes the most sense for us,’ rather than turning to a standard tool kit and rolling out an accepted solution.”

Buried at the bottom of the article is this very telling paragraph:

“Within human resources management, the authors also examined the type of HR experience that led most often to the top job…..Notably, the biggest increase in experience was in employee surveys, which the authors suggest could indicate a greater emphasis on “HR metrics” in the years between 1999 and 2009. Salary and benefits are the major cost for most companies, and Cappelli suggests that top management is concerned with measuring and accountability when it comes to this large outlay.”

This is very interesting and in my view about as far as you can get from a trend towards a more strategic role for HR. If the people at the top of the HR tree are the ones who owe their lofty positions to their ability to number crunch and interpret the data for the board what chance is them either abandoning this role in favour of a far more strategic alternative.

Similar themes are highlighted in a HR Magazine article by Chris Roebuck, in arguing that the transactional side of HR can be outsourced, he goes on to say:

“So what does HR need to do so survive, in both public and private sector? Propose change and savings before they are thrust upon you. Assess what HR is really there for and deliver appropriate structure and strategy. Proactively focus on key organisational deliverables above all else.”

In other words this strategic HR debate is analogous to the difficulties in tackling engagement. The people at the top of the tree i.e. people who need to execute this are the ones least capable or inclined to actually deliver the required changes.

Interestingly, just as I was writing this update Sainsbury’s announced that it was creating a new Customer Service and Colleague director role for Gwyn Barr. The role seems to subsume HR within it and blends customer’s and colleagues together. You can read more about it here.

Productivity

It can be argued that the organisations requiring the most radical change are the largest ones where the culture of command in control and standardisation is most heavily entrenched. Ironically, these are the types of organisation who it can be argued would be the ones to most benefit from an increased focus on engagement. As Allan Englehardt highlights in his blog:

“Large companies with ten times the number of employees are only a quarter as productive as their smaller competitors. Employee productivity is a big issue. If all the FTSE-100 companies achieved their average profits per employee, then the index would generate almost £1 trillion of additional net profits for the economy.”

Interesting stuff, Englehardt goes on to speculate that this could be due to:

“Bigger companies may have more meetings with more people attending slowing down decision times, innovation velocity, and productivity.”

Complexity

It would be remiss of me to not mention the articles that have come out discussing the BP oil leak in the Gulf of Mexico. Particularly pertinent to themes already discussed in this issue is this piece over at HBR, where the authors discuss whether:

“much of this disaster actually have been the result of a massive organizational failure not of people but of design?”

In particular the authors focus on the reorganisation of BP’s operational structure in a programme implemented when CEO Tony Hayward took over.

“And reality is complex. When it comes to decision-making, any universal imperative that forces sub-organizations to flatten and pushes teams to expand in size regardless of local circumstances is foolish. This wasn’t obvious at the time. BP raked in record profits over the past two years — although it also developed quite a record for safety violations. But the oversimplification of management structure — which played out on rigs as well as in cubicles — was a disaster waiting to happen.”

It would appear that a corollary of acknowledging complexity is an increased acceptance of what Charlene Li termed “well intentioned failure”. Coming back to an appreciation of failure, in an interesting article over at S+B, this another example of advocating an appreciation of complexity, the authors argue that trial, experimentation and a willingness to accept failure is a key element of delivering sustained innovation and effective collaboration:

“The speed and complexity of the global business environment calls for a new appreciation of a systems-focused view of the world, one that recognizes the interrelationships of people, processes, and decisions — and designs organizational actions accordingly. The intellectual roots of systems understanding are very diverse, but they converge around three interrelated assumptions. First, because many of today’s organizations are complex and ever-changing, static solutions that try to lock in any ongoing management solution are likely to become new sources of destabilization themselves That is why organizations need to be dynamic — capable of adapting to unexpected developments.”

“Second, organizations must have a capacity for widespread experimentation and trial-and-error learning if they are to be self-correcting. Finally, although a systems view requires an understanding of how all the parts fit together as a whole, it also depends on an intimate understanding of the parts themselves. This is because change in any part of the system or in its outside environment — including the other systems to which it is connected — can produce profound ripple effects. Significantly, these assumptions all recognize the importance of human participation in decision making.”

In a blog post Seth Godin refines this outlook with a good take on the different type of failure that can actually strengthen an organisation.

By simplifying and standardising, we remove our ability to tailor local solutions, this stifles innovation and ultimately disengages staff. Simplified structures enable easier decision-making but that does note necessarily equate to better decisions. To further support the argument against standardization, there was a good article over at Accenture that argues that businesses need to take a bespoke approach to employee development across the board:

“Given the realities of today’s complex business environment, it is no longer possible to satisfy a workforce with one broad, standard approach to managing talent. A perfect storm of events and trends is pushing organizations to abandon the traditional employment compact along with the one-size-fits-all approach to human resources.”

“But in an era of growing diversity, more complex knowledge work in which jobs are increasingly difficult to standardize, a shortage of qualified workers and talent-driven competitive advantages, today’s generic people practices will be quickly rendered obsolete—and increasingly detrimental to the bottom line.”

The Dunning Kruger Effect

Over the past couple of months there have been a number of articles discussing the Dunning Kruger effect, this all started with a New York Times interview with David Dunning I must admit that I had not heard of this before but it certainly raises some questions about talent management. There is a Wikipedia definition and Kevin Hoffberg has a blog entry, which summarises the NYT interview:

“When people are incompetent in the strategies they adopt to achieve success and satisfaction, they suffer a dual burden: Not only do they reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it. Which led to my observation: if you’re incompetent, you can’t know you’re incompetent.”

In other words:

“We’re not very good at knowing what we don’t know.”

For those who like to get into the detail, Dunning Kruger is discussed in another blog entry from a sceptical Tal Yarkoni.

I’m sure that there is something to the Dunning Kruger effect. For organisations, I think the main implication is in the field of talent management, in particular how we evaluate how well people are at doing specific tasks and more importantly how we predict how people will do in other more challenging tasks. All this talk of complexity got me thinking that unlike in the old days where objective or mechanical tasks were the norm, i.e. how many widgets you can make in a particular time, it was pretty easy to tell how well an individual was at a particular task. In such cases the Dunning Kruger effect would have a limited impact because objective comparison of performance is relatively simple.

However, for most activities in modern organisations, outputs are subjective in that success or failure is difficult to accurately gauge or quantify, allied to this is the seeming interconnectivity of everything. This means that it is much harder to isolate the specific drivers of performance. In other words performance in most activities ends up measured in shades of gray rather than in black and white.

This can lead to all sorts confusion and problems when it comes to understanding present and predicting future performance. This becomes even more complex if you throw in the Dunning Kruger effect. If we can’t accurately tell if we are good at something ourselves what chance has the organisation of effectively identifying those most likely to succeed.

High Potentials

The difficulties in effectively developing an effective talent management programme are highlighted in this recent HCI article:

“programs aimed at this class of talent are usually organized around some sort of annual nomination process and offer targeted leadership development opportunities such as business rotations and special stretch assignments. But despite the prevalence of these programs, most haven’t delivered much in the way of results. Our recent research on leadership transitions demonstrates that nearly 40% of internal job moves made by people identified by their companies as “high potentials” end in failure.”

In discussing ways in which organisations can improve:

“The “high potential” designation is often used, at least in part, as a reward for an employee’s contribution in a current role. But most people on your leadership track will be asked to deliver future results in much bigger jobs – a consideration that often gets overlooked when senior management anoints talent.”

In my view, it’s not necessarily the size of the future role but the circumstances surrounding it. There are so many variables that affect individual and group performance that it is no wonder that so many organisations struggle with effective talent management and succession planning. In many cases organisations are failing to take into account intangible factors that influence performance, issues such as key relationships, cultural fit and values all play a significant part in performance.

Well, that’s all for this update. As always any comments and feedback is most appreciated.

• Mergers, Acquisitions and Human Capital
• Motivation and Engagement
• Myths surrounding Top Talent
• New Ways to Engage via Social Network Analysis
• Limits of Understanding around Managerial Behaviour
• Passion and Purpose
• Innovation Constraints
• Managing Tacit Knowledge

Articles are included from the likes of Deliotte, Gary Hamel, Henry Minzberg, HR Magazine, Karen Stephenson, McKinsey and Strategy + Business.

Tag Cloud

As regular readers will be aware, over the past 12 months we have been highlighting those writers, commentators, bloggers and academics from a range of disciplines who have consistently questioned the ways organisations manage their people. This covers topics from engagement, motivation and talent. Undoubtedly the global recession has brought these issues into sharp focus, however there are few indicators that organisations are actively re-assessing their approach to their interaction with their employees.

Many of the topics covered in this review are the issues that we are coming across at Four Groups. In particular our methodology, 4G, represents a new approach to:

• Boosting engagement and motivation
• Optimising performance via networks and relationships
• M&A Integration
• A new approach to management through new technology and organisational understanding

These are all key issues currently facing organisations and we are always keen to show how our approach can help deliver tangible results. Please contact us if you are interested in learning more about 4G.

These will also be topics familiar to regular readers, however, as with the old adage, if you shout loudly enough and long enough, people will begin to take notice. There have been some signs that this debate is emerging from the online muddle of internet chatter and may in time reach a more mainstream audience. Certainly, we are starting to see more consensus emerging from a variety of sources.

Mergers, Acquisitions and Human Capital

I’m going to kick off this update with a brief look at some recent articles focusing on M&A. I think this topic is important because in many ways poor M&A integration is a microcosm of many of the problems that can emerge from dealing with human capital issues. With M&A transactions, everything is accelerated and the spotlight quickly highlights any failures in communication, cultural understanding or purpose within the organisation. Whilst many organisations pride themselves on the slickness of their management of deal flow, whether an acquisition actually achieves it’s original aims is often overlooked and this failure throws into sharp relief some of the dislocations and lack of cultural and organisational awareness that can seriously erode value.

On the other hand, mastery of M&A integration on a systematic basis would seem to imply the following:

• Clear goals articulated by the leadership
• Strategic input and collaboration from all areas
• Ability to combine strategy and execution seamlessly
• Clear understanding of culture both within the organisation and the target
• Efficient communication channels
• Management that is able to engage at all levels

These are all issues which are being focused on in wider organisational discussions but have particular resonance when looking to integrate newly acquired organisations.

Unsurprisingly, recent articles looking at this subject have focused on the human capital side of M&A integration. All the empirical evidence indicates that this is the area where value is either created or destroyed. An article in HR Magazine draws on a recent report from Hewitt Associates. Pointing to an increase in deal activity in 2010, the key to M&A success lies in the ability to manage the human capital side of the deal:

“Stephan Vamos, European leader of Hewitt’s Corporate Transaction and Transformation practice, said: “As we examine the reasons why companies aren’t achieving their M&A goals, it’s not surprising that the inadequate management of leadership and talent issues is at the core. Put simply, poor human capital management can be a true deal-breaker.”

Given the historically high number and frequency of these transactions, there is little sign that organisations have got a grip on these human capital issues. Over at Deloitte, there are a number of articles discussing the failings of organisations to effectively manage all aspects of the people side of the M&A process, from due diligence through to integration. Perhaps because it is seen as a process that organisations have found this so difficult. Instead, acquires should maybe look to take a more bespoke approach to their acquisition.

Taking a more flexible and tailored approach to each transaction is the focus of an article over at the McKinsey Quarterly. The authors advocate the use of small and agile M&A teams to screen and transact deals. For larger corporations, a big M&A team capable of filtering and transacting a high deal volume has been the norm. However, by using smaller, permanent M&A specialists, a more flexible project-driven approach is required, bringing in specific expertise as and when required:

“If the essentials for the governance and execution of M&A are in place, many companies can carry it out successfully with a small, experienced team that pulls in resources project by project. Companies with large, standing M&A teams typically have a formalized approach to M&A decision making – an approach different from the one for standard investment decisions.”

“Large corporate M&A teams can work through deals more quickly, but they can sometimes get so focused on finding the next one that they lose a clear connection to the strategies of the business units. We have observed organizations where even business unit managers directly affected by a deal come to the table relatively late.”

In a similar vein, back at Deloitte there is an interesting article on the selection of the M&A leadership team. Again, highlighting the intangible nature of such a process and the fact that organisations have tended to focus on the process rather than the people:

“Leadership – and leadership selection – is not an exact science and can’t be reduced to facts and formulas. Subjective factors such as personality and chemistry are ultimately what will drive behavior and results.”

Clearly, if you are going to write about M&A integration, human capital issues are the ones to cover, these are the issues that are most poorly defined, where there is little consensus and hard, tangible data is so hard to uncover.

Given recent technological advances and understanding of key intangible issues such as social networks and culture, there is an opportunity to take a fresh look at this topic and develop a new taxonomy of M&A integration to enable each organisation develop it’s own approach. What is certain however is that people are complex and represent the greatest challenge to the vast majority of M&A transactions.

Motivation and Engagement

Moving on from M&A to broader organisational issues, the continued focus of many commentators is motivation and engagement. Indeed there is evidence that this discussion is emerging in the broader media. For example in January, the Times ran a piece challenging the orthodox perception that bonuses are an integral and essential part of corporate life. This article draws on many themes we have covered in previous issues, in particular Dan Pink’s arguments about the lack of any hard evidence of the effect of cash bonuses on boosting performance:

“Companies succeed through teamwork but bonuses propound the idea that success is all down to individuals; the scramble for taking credit and claiming your bonus destroys co-operation between colleagues; and, critically, bonuses distract employees, managers and companies from the basic truth that the best work is done by people who enjoy what they do.”

This article also cites Henry Mintzberg’s recent arguments about how bonuses in the form of cash and stock options have had a universally negative impact on the global financial system.

Perhaps most interestingly, this article references a new book by Boris Groysberg questioning the assumption about the portability of talent in the financial services industry. In his research Groysberg has found:

“Exceptional performance is far less portable than is widely believed,” he says. “We found that mobile stars [bankers who leave one company for another] experienced an immediate degradation in performance that persisted for at least five years. Thus their exceptional performance at their prior employer appears to have been more firm-specific than is generally appreciated.”

Clearly, this has significant implications across a wide range of organisational activities from recruitment to talent management. This also implies that talent and success is a far more complex and subtle equation than is commonly assumed. Even if Groysberg’s research stacks up, I can’t help but feel that things will continue as they have been. Ultimately as we will see below, there are far too many vested interests to challenge the status quo in such a fundamental fashion.

Myths surrounding Top Talent

So how have we ended up here? Should employers get so concerned when employees threaten to leave if their demands are not met? In the UK, this has particular resonance with the state owned banks RBS and Lloyds both paying out large bonuses on the premise of needing to retain key talent. Maybe as Groysberg states, it is time to call the bluff on the myth of top talent.

Not only do we have significant vested interests in keeping up the current attitudes to pay and bonuses. The cycle also becomes self-perpetuating as a new generation of managers ascend the corporate ladder. In an interesting blog posting at Flip Chart Fairy Tales, Rick points towards a culture of executive entitlement as a cause of current economic difficulties. Drawing on the BBC as an example, these arguments could easily apply to other sectors or organisations. One particular example is the willingness of executives to sanction large pay increases for their direct reports:

“Eventually I came to realise that executives liked to raise the salaries of their direct reports because it helped them to justify their own pay increases. Their bosses would then collude with them for the same reasons and so on up the management chain. Underpinning this attitude is a sense of entitlement.”

Like Groysberg Rick argues that it is time to call peoples bluff over salary or bonus demands:

“The BBC could get away with paying its people a lot less and most of them wouldn’t leave. Many executives, if they spend long enough in the large monopolistic bureaucracies, come to almost believe the justification for their own high salaries and perks. They and their peers become caught up in a self-reinforcing myth in which they convince themselves that they really could command even bigger salaries elsewhere and that they really are so crucial to the organisation that it must pay ever more exorbitant amounts to retain them. For the truth is that few senior executives are as talented or as irreplaceable as they like to think they are.”

So, if bonuses are not an effective incentive to improve performance and retaining key talent is not as important as organisations believe, what steps can enterprises take to motivate and engage their people to greater productivity?

New Ways to Engage via Social Network Analysis

Regular readers will recognise that we are coming back to issues around engagement and the lack of it in current organisations. If there is going to be any sustained change in the way that organisations manage their people, what strategies or actions are going to replace the current incentive culture? Again, we are starting to see an element of consensus emerge. Previous issues have shown us that ideas of progress and achievement are key to this equation. A HBS article reinforces this idea:

“On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive, and their drive to succeed is at its peak. On days when they feel they are spinning their wheels or encountering roadblocks to meaningful accomplishment, their moods and motivation are lowest.”

This has positive and negative implications for the majority of organisations, on the plus side as the authors note:

“As a manager of people, you should regard this as very good news: The key to motivation turns out to be largely within your control.”

However, this presupposes that managers are capable of systematically developing the necessary skills and desire to fully tap into this potential for increased engagement.

What other ideas are out there that can help organisations manage and engage their people? In addition to a more holistic approach by managers, technological innovation also holds the key to potential ways that organisations can better manage their people. One area that holds much potential is Social Network Analysis

Over at Joshua Letourneau’s blog there is a very interesting interview with Dr. Karen Stephenson, where she discusses her research into Social Network Analysis. Although recorded in 2008, there are a number of very interesting points about the importance of understanding networks in being able to influence organisational performance.

In particular, Dr. Stephenson challenges another widely held organisational belief. Namely the relevance of the organisational chart as a reflection of an organisation’s structure. Arguing that these charts fail to take into account the key social networks that underpin organisational culture and performance. It is only now however that we have tools to begin to understand and identify key networks.

Even so, there are few organisations that have a clear understanding of all the networks and connections that enable them to get things done. This has particular implications for any organisational change programme where embarking on such a programme without a clear understanding of social networks is like starting a journey with half a map. This is a key view shared by Four Groups and underpins our work with 4G.

Limits of Understanding around Managerial Behaviour

In recent issues, we have heavily featured some articles from Henry Mintzberg. This quarter he has given an interview to Strategy + Business that dovetails nicely with the above findings. Here Mintzberg points to failures of management training as a root cause of poor organisational performance and in particular the paucity of research relating to managerial behaviour:

“I think it’s amazing how few people are actively researching managerial work – empirical studies of what managers do – as their main focus. Many people are concerned with organizational issues, but because they don’t actually study what managers do, they lack insight into the essence of organizations.”

According to Mintzberg, this lack of tangible research is compounded by an unwillingness to act on it even where it does exist:

“Where there is reliable management research, it doesn’t always get recognized or translated into practice. For example, we know that the most effective companies and organizations are those that embody the importance of being communities. People in these companies are committed and respected, and when you unleash that kind of energy, it’s quite remarkable. But most conventional management practice and education has gone in completely the opposite direction. It’s becoming more mercenary, more individualistic, less community oriented, and less nuanced.”

In this interview Mintzberg advocates a learning process that instead of focusing on the teacher/student dynamic, instead encourages learning by getting students to draw on their own experience in dealing with problems or issues.

Passion and Purpose

Mintzberg’s comments are consistent with a number of other articles published this quarter. Indeed one thing that has been noticeable has been the number of articles calling for managers and organisations to take a more holistic or passionate approach to their work. In a couple of blog posts over at the Wall Street Journal Gary Hamel raises some interesting points about purpose.

“I believe that long-lasting success, both personal and corporate, stems from an allegiance to the sublime and the majestic. Viktor Frankl, the Austrian neurologist, held a similar view, which he expressed forcefully in ‘Man’s Search for Meaning’ “For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended consequence of one’s personal dedication to a cause greater than oneself…”

“But I know this customers, investors, taxpayers and policymakers believe there’s a hole in the soul of business. The only way for managers to change this fact, and regain the moral high ground, is to embrace what Socrates called the good, the just and the beautiful.”

In a further post, provocatively titled Management’s Dirty Little Secret, Hamel asks:

“why are we complacent when confronted with data that suggest most managers are more likely to douse the flames of employee enthusiasm than fan them, and are more likely to frustrate extraordinary accomplishment than to foster it?”

Clearly warming to his subject Hamel goes on to say:

“Given that, we have to wave goodbye to the ‘knowledge economy’ and say hello to the ‘creative economy’. What matters today is how fast a company can generate new insights and build new knowledge – of the sort that enhances customer value. To escape the curse of commoditization, a company has to be a game-changer, and that requires employees who are proactive, inventive and zealous. Problem is, you can’t command people to be enthusiastic, creative and passionate.”

Innovation Constraints

Hamel touches on the role managers have in encouraging innovation. In an interesting blog post, Jeffrey Phillips, discusses the innate difficulties in managing this process. In particular he highlights five key constraints preventing senior management from effectively promoting innovation. These are:

1. Most senior executives are not innovators themselves
2. Most senior executives are guardians or keepers of the corporate culture
3. Most executives are focused on short-term targets and goals
4. Many innovation programmes are focused on encouraging senior executives to generate new ideas rather than the people who have most contact with customers
5. The size of many organisations means that articulating a clear innovation strategy becomes very difficult to co-ordinate

I think that there are some interesting ideas here, certainly the first and fourth points tie in very explicitly with an emerging consensus on innovation that we have highlighted in previous issues. In particular:

“The ultimate fulfilment of the Peter Principle is that the higher you climb in executive management, the further removed you are from what an average customer really wants. This makes dictating the kinds of innovation necessary very difficult and results in vague requests for innovation.”

This is one of the complaints that Mintzberg has been particularly vocal about in recent months. So where does this place the role of senior management in innovation? Again, we keep coming back to ideas of managers being facilitators rather than directors:

“They can impact the culture through rewards and recognition. They can understand their value in creating clear strategic goals and communicating those effectively. They can introduce tools, techniques and methodologies to help the innovators accomplish their goals. They can introduce a common language and approach for innovation as tools for innovators to use. They can encourage networking and interaction with other firms which will spawn many more new ideas. They can introduce new tools to gain customer insight. They can create new funding mechanisms beyond an annual plan. In essence, they can become the cheerleaders, funders and toolbringers, which is really all they can do effectively.”

Quite a thought! The lack of understanding about innovation is also the subject of a Business Week article. In this article, Stefan Lindegaard reaches many of the same conclusions as Phillips.

“The problem is that top executives reward middle managers for getting stuff done and executing flawlessly. This can be counter-intuitive to innovating. But top executives are often too far away from the action to understand how this compensation structure makes it harder for innovation leaders to succeed.”

Clearly too much emphasis is currently placed on senior executives coming up with the killer ideas, as Robin Hanson states:

“Knowledge isn’t generated by lone geniuses who magically produce brilliant new ideas in their gigantic brains.”

This is expanded on in a HBR piece, the authors advocate moving away from a traditional Knowledge Management model that focuses on the management of existing knowledge:

“We know we’re better off engaging in the interactions and collaborations that create new knowledge about how to get things done. What we need are new approaches to creating knowledge, ones that take advantage of the new digital infrastructure’s ability to lower the interaction costs among us all – ones that mobilize big, diverse groups of participants to innovate and create new value.”

Clearly technology has an important role to play here in terms of facilitating the generation of new knowledge and innovation. However, managers still have a key role to play in encouraging or identifying areas of potential collaboration.

In addition to failing to cultivate effective innovation, senior executives come under additional criticism for being in a state of denial. In a new book, Richard S. Tedlow documents the blinkered approach to pressing organisational issues that spiraled into massive corporate failure:

“Denial is falling into a cognitive Bermuda Triangle. Everything is clear, yet you lose your bearings.”

In a familiar refrain, Tedlow goes on to say:

“It is often middle managers who are best acquainted with new realities….. Unfortunately, when middle managers actually raise these problems – especially those that contradict the firm’s prevailing assumptions and conventional wisdom – they are often ignored, or worse.”

Managing Tacit Knowledge

This quarter I’ll try to keep the HR focus down a little, not least because there is a paucity of new or interesting articles on the subject. There have been a couple of notable exceptions. First up is this provocative blog post, Joshua Letourneau advocates a fundamental refocusing of the HR function. Here he quotes a surprising anecdotal figure:

“Less than 1.5% of all Social Network Analysis (SNA) projects I’m aware of have been HR-purchased or HR-centric. This greatly surprises me because I believe SNA, or the ability to map the invisible networks that exist parallel to the formal hierarchy (i.e. the way work ‘really’ gets done), should empower HR more than any other business unit.”

In an echo of articles already cited above:

“As the shift from transactions to tacit knowledge transfer has happened, HR has not updated its focus and structure. Since we’re now aware that Human-Networks innovate, create value, etc., as opposed to purely individuals (i.e. “resources”), has the time come for HR to be now known as HN (“Human Networks”)?”

I think that this is key to the future of HR, however there are few signs that people are acknowledging the reality facing them. As Letourneau states:

“Networks drive performance, not individuals.”

Another blog post questioning long-held assumptions was written by Steve Hearsum. In this blog post he questions the efficacy of 360 degree performance appraisals:

“As humans, we are constantly assessing how social encounters either enhance or diminish our status… performance reviews often provoke a threat response; people being reviewed feel that the exercise itself encroaches on their status. This makes 360-degree reviews, unless extremely participative and well-designed, ineffective at generating positive behavioural change.”

I think this critique is valid for many aspects of performance appraisal.

Given that an organisation is fundamentally a relational system, it is only by looking at things such as motivation that we can get to grips with what is actually happening.

Interestingly, the subject of motivation and how traditional performance appraisals can foster negativity also came in for criticism from Dan Pink at the end of last year.

That’s about it for this quarter. As always any comments and feedback are appreciated and if you are interested in discussing any of these topics in more detail, please get in touch.

We discussed the idea that people-based issues can be managed in a systematic and structured manner, something that Bruce is firmly in support of. 4G represents a proprietary approach developed by his company to understand and predict intangible aspects of people’s personality, interaction and values. However, our conversation was not so much about 4G itself but about taking a holistic approach and the how’s and why’s of it.

The full piece can be found here and our thanks go out to Rowena Morais and Isabella Chan for bearing with us!

There is a tension at the heart of our efforts to collaborate. This tension and its possible resolution is best captured by the following questions.

• Should we be putting people first, before technology, in our efforts to collaborate?
• Does collaboration benefit from a more formal process?
• Can collaboration be encouraged in a replicable and systematic manner (as much as anything concerning people can be repeatable and systematic)?
• Does the lack of a formal process for optimising collaboration hold back productivity and performance?

This article attempts to answer these questions and shine new light on what constitutes successful collaboration.

What is collaboration?

At the outset, it is useful to consider what we actually mean when we talk about ‘collaboration’[1]. Wikipedia defines collaboration as “a recursive process where two or more people work together toward an intersection of common goals, for example, an intellectual endeavour that is creative in nature. In particular, teams that work collaboratively can obtain greater resources, recognition and reward when facing competition for finite resources.” By way of contrast, Google offers us 26 possible definitions.

While wanting to avoid any jargon, what is most striking about the various definitions is how frequently the concept of informality is seen as being intrinsic to collaboration. By extension (and certainly from a management perspective), it is this apparent informality that creates a paradox, or at least some significant contrasts around collaboration. The table below illustrates these ideas and the tension between collaborative ways of working and more formal approaches.

Whilst acknowledging that an organisation’s preference is for methods of working that can be most easily measured and managed, the paradox of collaboration lies at the heart of knowing which way of working is most suited to the task at hand. Put another way, it is a case of more control versus less control, more spontaneity versus less, or even greater adoption of change or not. It is these contrasts and inconsistencies lying at the heart of how we choose to organise work that creates an apparent gap or tension in collaboration. This is then especially relevant for those who seek to encourage or promote collaboration within organisations.

Why collaborate anyway?

Whilst it is useful to acknowledge the informality of collaboration, at least when compared to more formal methods of working, it is also useful to examine why collaboration occurs in the first place. As with the formal/informal dichotomy, it would appear that collaboration happens for two reasons; the first because it just happens, the second because more formal working practices are introduced under the guise of ‘collaboration’, when in reality collaboration in its truest sense isn’t taking place.

From a managerial perspective, collaboration is often encouraged on the basis that it delivers greater productivity than the alternatives. At the heart of collaboration is the ability of the group to contribute more to the organisation than the sum of the parts. It is also the case that collaboration is one of a number of different ways of working and in that sense, it is important to pick the right ‘tool’ for the job. By way of example, the following list illustrates activities with particular relevance to collaboration;

• Change Management
• Government and Organisational Design
• Innovation
• Learning and Development
• Marketing
• Project Management
• Software and IT

Reading between the lines, it would not be foolish to argue that collaboration is not a vital component of any successful organisation. Equally, collaboration efforts have played a significant, if not essential role in the creation of open source success stories like Firefox, Wikipedia and Linux, amongst others.

Given the nature of collaboration and its current role in helping organisations (of various forms) achieve their objectives, it is perhaps worth revisiting the original tension in collaboration mentioned earlier. As before, an inherent contrast lies at the heart of organisational collaboration, namely how to manage and ‘control’ something that is by definition informal, ad hoc and spontaneous?

How is collaboration being encouraged?

Collaboration and its anticipated benefits are relevant to every organisation. By extension, the means of encouraging collaboration are extremely wide and varied. Perhaps the easiest way to explore this in more depth is to look at the classic People, Process and Technology mantra, in this instance however, the order will be Technology, Process and People.

Technology and collaboration

While it is evident that encouraging collaboration through the use of technology has merit, it is also important to realise that successful collaboration in this day and age requires elements of technology, process and people. That said, recent developments with regards to internet based technologies have seen a proliferation of new collaborative technology emerge, many of which can be seen in light of the recent Web 2.0 and Enterprise 2.0 memes. In brief, the creation of many free or low cost online applications has made sharing, editing, commenting and tracking group activities much simpler, aiding and abetting collaboration in the process. Examples of these programs include blogging, wikis and social networking amongst others.

While this new class of programs should be seen in the wider context of desktop (e.g. word processing, spreadsheet) and enterprise applications (e.g. CRM, payroll), it is their ability to share, comment and collaborate with others that is of greatest relevance. Such is the current popularity for collaboration in all things technology that even IT giants like SAP and Oracle have been doffing their caps in this direction.

While the recent emergence of Enterprise 2.0 technology has been well documented, how does this impact an organisation who wants to encourage greater collaboration? Clearly, technology facilitates greater collaboration, the possibility for more innovation and the better use of resources increases. As above, technology on its own doesn’t guarantee success. Instead, people must be trained and the benefits of the software must be given an appropriate purpose.

Processes and collaboration

As we have already seen, processes are by definition an oxymoron when it comes to collaboration. On the one hand, processes imply consistency, repeatability and reliability, Six Sigma being an excellent example of this. On the other hand, collaboration excels when there are few, if any constraints in place, there is a place to develop informal working, innovation and spontaneity can thrive[2].

Where does this inherent contrast leave our efforts for greater collaboration? There would appear to be two broad themes that seek to boost collaboration efforts across business processes. The first evolves around the ‘formalisation’ or ‘facilitation’ of collaboration through various organisational initiatives and ‘processes’, examples of which include;

• Communities of practice
• Facilitation
• Leadership
• Matrix management
• Mentoring
• Self managed and virtual teams

The above approaches all aim to improve productivity and maximise the use of available resources. In a similar vein, another approach seeks to encourage and facilitate collaboration, raising awareness and supporting participation. While these methods may differ, they all share a common goal in terms of increasing performance and helping realise wider organisational objectives.

The second theme acknowledges the fact that within the realm of processes, there will always be an aspect of work or interaction that is beyond definition or easy measurement. In acknowledging the existence of such ‘gaps’ in processes, there is an implicit creation of informality and by extension, this creates fertile ground (no matter how small) for the development of collaboration. Various approaches have been taken to measure these ‘gaps’ and by extension, their facilitation and development can be encouraged. Perhaps the best example of this is Social Network Analysis, or Organisational Network Analysis, an approach which measures interactions, levels of trust and frequency of communication within groups with the aim of understanding how work is really done, increasing efficiency and helping facilitate better collaboration. A second, related methodology is Value Network Analysis or VNA. VNA focuses on understanding and optimising the relationships through which commercial value flows.

Whilst the processes and approaches above seek to encourage collaboration, their strengths lie in providing support and facilitation for it, or in the case of SNA/ONA and to a lesser extent VNA, the strength lies in measuring and helping to find areas of an organisation that have a greater appetite for collaboration[3].

What appears to be missing from these approaches is a method to systematically encourage collaboration in a way that both enables people to work together in a genuinely collaborative manner, whilst retaining the inherent advantages of clearly defined processes. Combining these two abilities is particularly important when working on complex, large scale projects requiring the coordination of activities across multiple teams, divisions, projects or geographies.

People and collaboration

The third component of collaboration and by far the most important is that of people! Having explored the impact of technology as an enabler of collaboration and processes as a way to measure and encourage collaboration, people themselves must be free to choose to collaborate and to then be able to act upon this choice. In essence therefore, successful collaboration is at its best when the following conditions are created;

• Training around collaboration raises people’s awareness but genuine collaboration is often spur of the moment and is highly context specific, it isn’t just about training
• People need to value collaboration, they have to want to put it into practice
• Sustaining collaboration requires trust and the alignment of behaviours, relationships and culture

While it is important that collaboration is valued, spontaneous and is trusted, facilitating and systemically encouraging collaboration is far easier said than done. The following examples illustrate some of these challenges and how other people have articulated them.

• Behaviours
• Boundaries and Silos
• Culture
• Relationships
• Shared Interests
• Sustainability and Value

Behaviours

Behaviours are critical to successful collaboration. While we may talk of altruism and training activities, successful collaboration often calls for changes in our behaviour. “People have to change the way they communicate and interact with others. The breakpoint of my PhD…”[4]

Boundaries and Silos

The existence of boundaries and silos are particularly relevant when looking at more complex examples of collaboration, if an effort to collaborate crosses organisational boundaries such as departments, divisions or reporting lines, progress may slow. “We identify three key barriers to effective coordination and collaborative information sharing across organizational boundaries: intergroup bias, group territoriality, and poor negotiation norms.”[5]

Culture

Related to the three themes mentioned so far, culture acts as a social ‘glue’ and helps inform behavioural norms, etiquette and protocol within an organisation. “The problems we face now and into the future will only increase in complexity and it will require teams of people within and across organisations to solve them. At the heart of the problem is collaboration culture. Does the organisation have a culture that supports collaboration? And if not, how do you change your culture to be more supportive?”[6]

Relationships

Similar to behaviours and culture, relationships determine the type and characteristics of our interactions. “Individuals may have previous relationships with each other or may be new to each other. Those with previous relationships may have positive or negative views of each other… What adds complexity to collaboration efforts is not necessarily the number of people involved. It’s the number of relationships they have with each other.”[7]

Shared Interests

If interests aren’t aligned, or people feel that common interests don’t exist, collaboration can falter. This is particularly relevant with regards to objectives and adopting a perspective that is larger than initially thought. “For example, negotiations might also incorporate parties’ interests in the timing of information or of product sharing, consideration of short-term versus long-term needs, or the distribution of credit for joint outcomes. By identifying a broader set of interests and issues, it becomes easier for negotiators to make mutually beneficial tradeoffs that enlarge the pie of value.”[8]

Sustainability and Value

Over and above the issues mentioned already, the concept of sustainability is also key to developing successful collaboration. Ensuring that collaboration efforts provide value in the short and long term is key. “Perhaps the single most telling issue that professionals have to resolve in effectively networking online is identifying where to focus efforts. When online networking is done in-house the issue is not so much where to network online, but rather one of making sure that the resource provided connects effectively to business strategy and plans, priorities and to business processes, and that it helps people find each other and connect to collaborate effectively across what might otherwise be impeding organizational barriers. Then the issue of networking quality comes to play superseding selection of where to network per se, and quantifying networking value is one of showing that this resource can be more than just a cost center for the organization.”[9]

While the issues above all illustrate the complexities that go with fostering and assisting people’s efforts to collaborate, the role of trust as a catalyst in this cannot be underestimated. If anything, trust is the central theme, around which examples such as the ones above evolve.

Easing the tension

In attempting to resolve the paradox around collaboration, namely squaring its informal, ad-hoc nature with the means to manage and enhance it for the benefit of those involved and the relevant organisation(s), our themes to date have yet to reconcile them. While numerous approaches around people, technology and processes have been adopted, none seem to present a coherent resolution. As mentioned at the beginning of this piece, the following questions remain unanswered;

• Does collaboration benefit from a more formal process?
• Can collaboration be encouraged in a repeatable and systematic manner (as much as anything concerning people can be repeatable and systematic)?
• Does the lack of a formal process for optimising collaboration hold back productivity and performance?

By way of an attempt to answer these questions, perhaps the best starting point is to look at the work around ‘Small World’ networks and in particular that of Uzzi and Spiro[10]. Small world networks are defined as “a network structure that is both highly locally clustered and has a short path length”[11]. In other words, people’s connections in the network overlap with one another and the links or paths between people are small, people are tightly connected. The significance of ‘Small World’ networks in helping collaboration cannot be understated. Uzzi and Spiro write “Small world networks have been shown to arise in a surprisingly wide variety of organized systems, from power grids to brain cells to scientific collaborations. The high incidence with which they occur has led to the speculation that there is something fundamental and generalizable about how they organize and govern success in biological, physical, and social systems alike.” They then go on to state that “the varying ‘small world’ properties of the systemic-level network of these artists [Broadway Producers] affected their creativity in terms of the financial and artistic performance of the musicals they produced. The small world network effect was parabolic; performance increased up to a threshold, after which point the positive effects reversed.”

If we assume, like Uzzi and Spiro, that small world networks do play a major role in the success of social and organisational systems, “how do they arise and evolve? What factors lead to the formation of a small world as opposed to another type of network?”[12]

How 4G can help

From our own work with behaviours, relationships and cultures, a number of theoretically optimally collaborative groups or networks are defined via 4G which would appear to be ‘small world’ in nature, but which also create conditions that are highly conducive to collaboration, namely the greater likelihood of peer support, clear communication, trust, respect, shared values, balancing formal and informal ways of working and offering critical feedback. 4G makes this information available in terms of optimised, ‘small world’ or Social Groups and this can then be translated into practice. By profiling relevant people, understanding the specific relationship dynamics in a group, the underlying business context and making this ‘small world’ information available, two outcomes are possible.

From an individual perspective, people are free to self select colleagues and peers to collaborate with, knowing their relationships are likely to be more productive, successful and sustainable than average. Knowing this information in advance increases the chance of successful collaboration occurring and individuals and organisations benefiting accordingly.

From an organisational perspective, the information generated by 4G can be used to encourage and develop existing efforts around collaboration. This ranges from creating ‘ideal’ groups to form teams or communities of practice, through to helping better understand existing efforts at collaboration, enhancing facilitation and further developing existing collaborative projects.

The key to both individual and organisational outcomes is that the information from 4G helps replicate and enhance (if chosen) the small world effect via theoretical ‘ideal’ groups and the means of predicting and implementing their practical equivalents. The diagram below outlines and summarises how 4G helps the collaboration efforts from both an individual and organisational perspective.

Conclusion

At the heart of the collaboration dichotomy is the idea that the formal processes and structures employed by organisations only sporadically achieve the inherent benefits or opportunities from true collaboration. More often than not, because the organisation is not accustomed or prepared for these instances, the potential benefits are lost in the organisational machine. By using a selection of the techniques mentioned above alongside the power of 4G, it is possible to square this circle and benefit from the replicability and predictability of processes, combined with the innovation, problem-solving and accelerated productivity developed from an organisational structure which taps into collaboration in its truest form.

Footnotes and references

[1] Thanks to Guy Tweedale, Mike Tierney, Steve Dale and Tim Platt whose input helped shape and inform this article.
[2] This contrast, with particular reference to Six Sigma is, to some extent, already recognised and being worked through. The following post explores this in more detail
[3] Having measured aspects of an organisation through SNA/ONA/VNA, one great by-product is the ability to facilitate collaboration as part of a change in process or organisational design. This outcome is clearly very valuable and it is perhaps a moot point to argue if it is a. solely the act of measurement, or b. implementing changes as a result of the measurement that makes the promotion of collaboration a direct outcome or not. An example of this can be found at this page
[4] Review of “Let’s Have a Talk About Collaboration” – slide 39
[5] Boundaries Need Not be Barriers: Leading Collaboration Among Groups in Decentralised Organisations – links to a pdf
[6] Collaboration consulting—fostering a collaboration culture
[7] Seven Sides of Collaboration: Relationships
[8] Boundaries Need Not be Barriers: Leading Collaboration Among Groups in Decentralised Organisations – links to a pdf
[9] Private correspondence with Tim Platt
[10] Collaboration and Creativity: The Small World Problem
[11] ibid
[12] ibid

By making the traditionally intangible aspects of an organisation tangible, managers can benefit from superior information and greater choice. This new perspective combines insights and knowledge that would previously only have been available by chance alone with a comprehensive view of the organisation in question.

Factors that Drive Intangibles

The recognition and subsequent rise in the importance and value of intangibles has been an ongoing feature of management for some time. Examples such as Knowledge Management, Balanced Scorecards (BSC) and Strategic Planning all attempt to quantify and make tangible aspects of an organisation that are initially intangible in nature.

While there are many examples of tools and techniques to make information more tangible, it is also useful to ask why this trend has been put in motion and what advantages are available from it. The three ideas below are by no means exhaustive, but are an attempt to shed light on the factors that drive the importance of intangibles.

• Economics
• Execution
• Experience

The economic aspect of intangibles looks at two main areas. The first is a broad consensus that intangibles contribute to superior financial performance. Examples include linking activities such as brand valuation, human capital and innovation to increased shareholder returns. A second economic aspect of intangibles looks at increasing efficiency and reducing costs through an improved understanding of intangible costs and the factors of production. Activity based costing is one example of this approach and by better understanding the tangible and intangible costs of production[1], it is possible to generate improvements and efficiencies in resource allocation.

The second idea, execution, is perhaps best summarised by the maxim ‘you can’t manage what you can’t measure’. Turning this on its head, one might propose that being able to define or measure an intangible aspect of an organisation makes its control, management and related execution possible.

The third idea concerns experience. In particular, some of our experience as managers is built around the realisation that we directly control very few things. By extension, much of what we manage is intangible[2] and therefore we are best guided by our experience. This idea is perhaps best summarised by Albert Einstein who said, “the only source of knowledge is experience”. By building on and codifying our experiences (where possible), we are able to turn the intangible, tangible and in doing so, we are able to create a larger pool of knowledge from which to draw. Furthermore, as we increase our pool of knowledge, we are able to ask more probing questions about what is currently intangible and seek new ways to manage it and make it tangible.

The Value of Intangibles

Whilst economics, execution and experience may not be the only factors influencing intangibles, when combined, they go some way to explaining the increasingly important role that intangibles play in modern management[3]. Equally, intangibles impact on three key constituents of an organisation, namely its values (cultural and financial), processes (how work is done) and resources (e.g. human, IT, facilities). By simultaneously impacting on the values, processes and resources (Christensen’s VPR framework) of an organisation, intangibles offer new ways to manage and influence aspects of an organisation that are historically very difficult to administer.

The Use of Other Tools

While there are numerous tools and techniques to help manage intangibles, particularly around people, they have tended to focus on discrete parts of an organisation, rather than offering a complete or holistic view. Continuing Christensen’s Values, Process and Resources based view of the firm, it is possible to examine a variety of tools which aid the management of intangibles. With this framework in mind, it is possible see which tools impact on values, processes and resources.

The following table details thirteen management tools[4] and their primary organisational and VPR focus[5].

Tool	Values	Process	Resources
Balanced Scorecard (BSC)
Business Process Reengineering
Core Competencies
Knowledge Management
Lean Operations
Mission and Vision Statements
Offshoring
Outsourcing
Shared Service Centers
Six Sigma
Strategic Planning
Supply Chain Management
TQM

As can be seen from the table above, the tools tend to converge on the process component of an organisation. Equally, while BSC and Strategic Planning do span the three elements of VPR, achieving this coverage from other tools requires them to be used in conjunction or combined with one another.

It is also worth acknowledging that some of the tools could cover alternate parts of the VPR framework, creating a different table from the one above. For example, organisations such as Motorola or GE might well consider that they have ‘Six Sigma values’ as part of their corporate culture. Likewise, it would be simplistic to suggest that offshoring and outsourcing have no impact on the resources of the organisation in question. With these exceptions in mind (and there are more besides), the key consideration for the selections made in the table came from each tool’s area of organisational impact or primary focus.

What about the Balanced Scorecard?

From the table above, it would appear that the BSC and to a lesser extent, Strategic Planning offers the perfect tool for managing intangibles and equally providing a holistic view of an organisation’s values, processes and resources. While it would be wrong to suggest that this isn’t the case, there are some relevant intangibles that the BSC can fail to capture, in particular those associated with the learning and growth perspective.

While it is beyond the scope of this article to present a comprehensive overview of the BSC, there are a few observations that can be readily made, particularly in light of linking together intangibles around values, processes and resources. Perhaps the best starting point comes from Kaplan and Norton’s own writing where they state that “the three principal categories for the learning and growth perspective are: employee capabilities, information systems capabilities and motivation, empowerment and alignment”. What is particularly striking about this extract is how one could quite easily substitute the three constituent parts above[6] for Christensen’s VPR framework. The table below illustrates these overlaps.

In essence therefore, we are back to where we started. In trying to better manage intangibles and in particular those around people, we are left with a choice of tools which focus on discreet parts of an organisation, rather than tools which offer a holistic overview, linking the learning and growth perspective and/or values, processes and resources together.

A 4G Perspective

Given this brief overview of management tools and in particular, the BSC and the VPR framework, there are two potential conclusions that can be drawn. The first is that as we have seen above, BSC and VPR focus on discreet, as opposed to interlinked aspects of people focused intangibles. The second conclusion, as evidenced both by the BSC’s raison d’etre and the diversity of management tools as covered by Bain and others, is that management tools which provide a holistic view, rather than discreet view offer greater value. Building on these two ideas, 4G offers a means of simultaneously analysing the people based intangibles and aspects of the BSC/VPR perspective. At its heart, 4G offers insights into three key areas, namely;

• Understanding individual’s behaviours and personality (Social Profiles)
• The prediction and articulation of relationships (Social Relationships)
• The definition and measurement of culture and values (Social Groups)

The diagram below illustrates how Social Profiles, Relationships and Groups link to VPR ideas.

By understanding and predicting the interlinked roles played by individuals, their relationships and group culture, it is proposed that 4G goes some way to providing managers with new tools and techniques for getting more from their people. Equally, such a perspective offers insights that historically would have only been available by chance alone.

Additional Education Opportunities

Regardless of your current level of management skill, one can always
benefit from additional education. You can earn an MBA online, even while working a full 40 hour work week.

Footnotes and references

[1] This analogy can also apply to transaction costs and better understanding the costs associated with various organisational processes, again with a view to increasing efficiencies.
[2] Examples of intangible factors that are managed on a day to day basis might include; relationships, processes, costing structures and tacit knowledge, amongst others.
[3] By way of example, of the 25 management tools given in Bain’s Management Tools survey, at least 8, or 32% are concerned with the management of intangibles.
[4] The 13 tools are a subset of the 25 tools detailed by Bain at http://www.bain.com/management_tools/
[5] The remaining 12 tools listed by Bain are felt to bypass the VPR framework in that they are a combination of specific technologies, customer management and methods focussed on dealing with the external environment.
[6] Further thoughts on the Balanced Scorecard and attempts at linking and improving the management of the learning and growth perspective can be found in the CIMA and INSEAD paper entitled “Effective Performance Management with the Balanced Scorecard”
[7] For the sake of completeness, one might wish to focus solely on the overlap between alignment and values, but this may be a case of splitting hairs

The MBTI reported type code is a beginning point for people to determine their “best fit” type. They may behave differently from what their preferences are. Life is that way. Work demands we use aspects of ourselves that are not our favorite use of time. That’s true in other aspects of our lives as well. Therefore, MBTI is not predictive of future behaviors.

That’s one reason why there is no best pairing of people in significant relationships according to MB Type Code alone. There are benefits and challenges no matter who we partner with. Granted some are easier than others.

I assume that 4G measures traits or behaviors which can predict how successful a relationship can be. Not so with Myers-Briggs.

I think this is an excellent summation of one of the differences between MBTI and 4G. However, it also raises a question in my mind over how such instruments reflect day to day reality. Surely there has to be something deeper or ‘better’ to measure in order to represent people’s own reality of relationships and that ‘some (relationships) are easier than others‘? Put another way,

…there is no best pairing of people in significant relationships according to MB Type Code alone

But in reality, we all know that some relationships are more equal than others!

Type differences in relationships can be a source of growth and/or conflict. However, within 4G, there are a number of ideal or more successful combinations of types in relationships than others.

The original from the Myers Briggs site follows.

Type differences in relationships can be a source of growth and/or conflict. However, there are no best or more successful combinations of types in relationships.

The first that is worth mentioning is Relationships of Action. In essence, this is all about creating energy, new ideas, brainstorming and motivation between two people. These ideas are well reflected in a post entitled ‘Energisers‘. You could think of this relationship like a set of spinning gyroscopes, constantly firing off one another and creating lots of noise and activity in the process. Now, while this relationship is ideal for motivation, there is a slight danger that the partners burn each other out or they run out of energy.

The second relationship is a Relationship of Reflection. This acts rather like a mirror and just as a mirror highlights imperfections and is used to guide delicate work (e.g. make-up or shaving), so Relationships of Reflection are a source of critical insight and are ideal for correcting problems or oversights.

Both of these relationships are Green and can be seen as being very positive and for the benefit of both people. What is also interesting is that while these relationships require ‘no effort’, they also represent differences in thinking styles and approaches adopted by the various people involved. In particular, there is no cloning taking place here!

As you can see in the diagram, there are different grades of relationships, ranging from ‘no effort’, through to ’significant effort’. The main idea in this instance is to outline that certain relationships are more preferable than others. In addition, this grading of Social Relationships creates a framework for decision making, facilitation and interventions.

What is also worth mentioning is that behind the simplified grading in the diagram, there are actually 14 Social Relationships in total. This then creates a far more complex and ‘rich’ context with which to apply the insights from 4G.

To the best of our knowledge, we don’t know of any other tool or technique which offers such predictions, or insights. We are aware of the work of Fiske and Kenny who have put together other means of understanding relationships but they don’t seem to offer such predictions or insights.

As can be seen, there is a mixture of different relationships amongst the group of five. In particular, Paulo and Susanna and Jim and Kate both share very easy relationships and accordingly, they work very well together. On the other hand, Ulrike and Jim and Ulrike and Kate have a far harder time of things. They need to spend more time, energy and effort in order to achieve the same levels of performance that people with other relationships do.

There are many people who talk, write and blog about relationships and hopefully our take on predicting relationships will add to this thinking.