In the tangible economy, mechanization and mass production drove huge productivity gains as manufactured goods replaced those made by hand. These efficiencies came through strict discipline. Managers could describe to their employees in great detail the smartest way to accomplish their work: “Take Part A, attach these two screws then join Part A to Part B.”  Through time and motion studies, the fastest and most efficient way to do things could be identified. To achieve these results, employees had to adhere to strict guidelines. In such an organization, decision-making was an activity that resided with management. Like military commanders, the word of managers was the guide for corporate action. This was a classic command and control model.

But in today’s world, your company is really a series of networks. These networks include both internal and external players. Knowledge is dispersed throughout the network—it is not concentrated in the managerial class. And the organization needs that knowledge to succeed. This means that a traditional hierarchical approach where knowledge and power flow from the top down will not get you the results you need. To describe this model, we borrow the image of orchestration from Peter Drucker.

Drucker used the metaphor of the orchestra conductor over and over again to describe the challenge of management in the knowledge era. He explained that an orchestra conductor does not know how to play each of the instruments of an orchestra.  Yet, the conductor clearly is the leader and manager of the team making up the orchestra. In his or her work, the conductor cannot and should not get too deeply into the technical details of each individual instrument and musician.  Rather, the conductor chooses the music, sets the pace, and ensures that all the musicians are playing together. “A great orchestra,” he asserted, “is not composed of great instrumentalists but of adequate ones who produce at their peak.”

Sound easy? Of course not. But it captures the essence of the challenge of management in the knowledge era. And makes it clear that a new management model is needed because workers underneath a manager have special talents and skills that the manager does not possess. This approach contrasts sharply with the widely understood dynamic in the industrial model. Industrial workers were expected to do as they were told. They were not valued for their knowledge or creativity. While this is an overly simplistic statement, it is more true than most people would care to admit, even today. Because the majority of organizations are still set up as if they were running factories where workers are interchangeable and dispensable—rather than businesses dependent on knowledge workers to create and preserve competitive advantage.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

Check this out for your internship during Spring from Southwest airline. It opened today with 33 internship position.

If you would look for any of these position, check here.

As with so many other aspects of knowledge assets, there are both bottom-up and top-down aspects to networks. There are many who study networks that see them as analogous to self-organizing, living systems that occur in nature. If you believe this, then you believe that organizations can organize themselves. There is a lot of truth to this and it makes sense to dig in, using the approaches we outline above to understand how a network is working organically so that interventions are effective. But it is unrealistic to believe that businesses will become completely self-organizing in our lifetimes, if ever.

On a practical level, organizations often do take a top down approach and try to influence and improve the performance of their networks—or even to create them. Chris Meyer of Monitor Network explains this view in Consulting magazine (April, 2006–not on line) by saying “networks are like computers in that they need applications software or a design of how to use them to be productive, and to do this we begin with the work and not the technology.” In other words, networks need a task, a sense of purpose to be effective.  His suggested approach is to first define the work to be done, then identify the talent needed to make it happen, “engineer” the exchanges needed, design the experience, and assemble the technology.  In other words, build your networks by thinking about the business purpose first and then the technology and platform.

As explained in a past post, the knowledge factory is an updated version of the Value Chain diagram developed by Michael Porter. When it came time to organize the kind of business depicted in Porter’s graphic, the organization chart fit the bill. There was someone in charge of each of the boxes in the value chain. Sometimes there was a manager overseeing several of those managers—a head of manufacturing, or of an individual plant. Many companies also had Chief Operating Officers. At the top was a CEO and/or a President. Power, funding, and communications all flowed from the top to the bottom along the “chain of command,” a term that invokes a military organization but one that is changing as we speak.

Of course, every organization still has an org chart. And a chain of command. But neither is as monolithic as they used to be. The work of most organizations today cannot get done if employees are forbidden to reach into another silo or chain or command directly as opposed to the old way of “going through channels” that slowed things down and inhibited communication. As you will see in the coming posts, there is a balance to be struck between the org chart and the network map….

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

Hyundai’s Equus and VW’s Phaeton 

If we had a dollar for every customer that had a negative dealership experience, we’d have retired ages ago, example story a la the Chicago Tribune. Anecdotally, auto OEMs would be wise to put great amounts of resources into improving the dealer-customer relationship. The U.S. market is still in credit crisis recovery mode. The rich-poor gap in the country continues to increase. Status quo of the 2000s is no longer tenable and we are paying the price in the industry. 

One such change recently proposed by Hyundai is the way in which its dealers interact with customers. Beginning with its new flagship Equus car, Hyundai will have sales specialists show the US$50,000-US$60,000 base price car to potential customers. One has to admit that a car company selling US$60,000 sedans requires more than a little imagination and polish to also sell US$10,000 hatchbacks, and vice versa. The real question is can the new experience lead Hyundai to sales that eclipse the BMW, Cadillac, Lexus, and Mercedes brands. Hyundai claims they wish to achieve a modest 3,000 sales per year. Less clear is how Hyundai’s brand image will convince well-to-do, discerning Bimmer and Benz drivers to toss their keys into the wind and have a go with the Hyundai brand.

Source: http://www.leftlanenews.com/hyundai-equus.html 

Hyundai is not the only automaker to predominately sell mass-market cars, and then make a bold move up market. VW famously brought its Phaeton luxury sedan to the U.S. market only to leave 2 years later in 2006, failing to convince customers of the BMW 7, Mercedes S-class, Lexus LS, and of course sister company Audi’s A8. Meanwhile the Phaeton has done relatively well in Germany, and connects its cars with customers who can see the cars being built and delivered in a state-of-the-art sales and manufacturing facility in Dresden. According to Automotive News, “Axel Mees, Audi’s North American chief, was forced to leave the company in November 2004 after he criticized the Phaeton and Piech in an interview, saying he would not buy the car because it has a VW logo and was sold at Volkswagen dealerships alongside other volume brands.” For more on the Phaeton’s eminent return, see: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100819/ANE/100819860/1317 

Moreover, if Hyundai’s model works, it could start selling its penultimate sedan, the Genesis, in the same way. For more on the latest Genesis development, see: http://www.leftlanenews.com/hyundai-genesis-sedan-2011.html 

But the approach has yet to be thoroughly tested. Concerns for dealers have to include discussions about resources, namely the time and expense that a concierge in-home service would mean. In the first place, dealers and OEMs need to identify the sorts of customers that would be best suited for this treatment. Not everyone will want a salesperson in their own home (movie example: Glengarry Glen Ross with Alec Baldwin, Al Pacino, Jack Lemmon, et al). In the second place, how do you sell to a customer “on the spot” as in many auto dealerships when you have only one example to show customers, rather than the endless colour and options list presented at the dealership. Third, the model calls for the elimination of “bargain basement deals” and “Fourth of July blowouts” and “end-of-the-year closeouts”. The use dealer advertising medium will have to get more clever and personal. Individual car profit will be absolutely essential for this model to work. Customers expecting to haggle, and dealers that give in, will find themselves in an awkward position come time to close the deal and sign the paperwork. Finally, the service model will be drastically changed. No longer can dealerships expect to rely on overpriced service advisors (sic service salespeople) to cater to customers in their garages.

Instead, OEMs are right to challenge the way their dealers do business. Years of lackadaisical management have lead to atrophy in long-term dealer profits, OEM loyalty, and overall customer service. Now is the time for change.

Over the years, there have been more than a few articles on China’s interest, or lacking interest, in developing domestic innovation and IP in the commercial sector, and China’s use of soft power, or failing to use its soft power, to promote the best interests of the state. And while these issues are rarely tied together, the recent article Pickens urged Bush to take Iraq’s oil in the Aspen Daily News led me to.

Issues that may or may not have little in common, the article took me back to my junior year at the University of Missouri where I learned about Porter’s 5 forces and the widely held belief of first mover advantages. That for a firm, it is important to stay ahead of the competition, and develop “sustainable” competitive advantages in the market.

In the article though, a different reality is being reported

Instead of Iraq’s greatest oil supplies going to the country that waged a seven-year war of liberation there, Pickens bemoaned, they went to China, which cut deals to mine the oil fields of Ramallah, which Pickens estimates holds 15 billion barrels of crude.

“Here we were,” Pickens said. “We paid the price and [we] don’t get it … . It’s heartbreaking to me to lose our people and the Chinese end up with the oil.”

Which led me to think about the wider application of this is, and the fact that while many will bemoan the fact that China will not use its power for the “greater good”, or that it firms (or people) are unwilling to innovate, this article highlights a simple point. That it is simply easier to let others to lead, and that leading isn’t all that it is cracked up to be… particularly if you are a country (or a firm) focused on problems that you have been facing for decades. That, while there are certainly opportunities for being the first to develop a new product, or to hammer out an international conflict, there are too many cases supporting the business as usual model.

Which leads me to my next point.

I have met many people in China, and who follow China, who are literally waiting for the day for this condition to turn around.  That there is going to be this tipping point where China takes the baton and runs with it.  And it is an assumption that in many cases limits their engagement in China as they are either afraid of investing (and getting screwed) in China, or see this tipping point as an opportunity in itself.

In all the discussions in recent weeks here on the growth of networks and organizations, it is hard to say which came first—the human or the technological connection. The shift to a knowledge economy has made it more and more attractive to connect and automate using IT and networking technologies. The rise of new forms of networking such as social media is actually fueling the trend. Probably some of the most interesting trends are the situations where the concept of networking is changing the whole vision of the business. If you begin to see your organization as a network, then the world literally opens up to you.

An example of this is the “two-sided market” network which has used to explain markets where platform providers serve as a connecting node between two kinds of stakeholders. Examples include Microsoft and/or Apple who are an intermediary between consumers and application developers. Another example is Monster and CareerBuilder who serve as a connection between employers and job seekers. 

The concept of networked business models has also been applied very effectively in the nonprofit sphere. We became aware of this approach to achieving social goals through a paper by Jane Wei-Skillern and Sonia Marciano. They document how the small, networked organizations can accomplish much more than large nonprofits that do all the work themselves. They contrast two models within the organization Habitat for Humanity. The typical Habitat program in a country builds around 200 houses per year by focusing on fundraising, staffing, and programming. But the program in Egypt takes a different tack. It works through existing community organizations and averages around 1,000 houses per year. This approach puts the mission at the center of operations and is willing to cede some control in the process.

A final example of networked business models that has been used frequently in recent years is Al Queda, which was deliberately designed as a decentralized system of cells linked primarily by ideology. Our friend, Ken Jarboe at the Athena Alliance blogged in 2007 that it was ironic that the U.S. response to this networked business model was to “rearrange the bureaucracy” by creating the large Department of Homeland Security.  This can almost be seen as a battle between centralized and decentralized control.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

Another way to approach network analysis within your intangible capital knowledge factory is to zoom down to the level of individual workers.

One of the common ways of using this kind of map is to identify and find patterns in the interaction between groups of employees and/or groups of external people. This kind of analysis can be used to identify critical sources of knowledge, the “go-to” people to find information or solve problems. It can also be used to understand the knowledge exchanges that happen—who helps connect people together, who helps solve problems and those with specialized knowledge.

A simple but very clear example of this kind of analysis was published a number of years ago by some of the leaders in the field of social network analysis in an article entitled Knowing What We Know. It described a company that had made significant investment in knowledge management technologies. Within this company, there was a large division with an organization chart like this:

In the research described, the flow of information within this division was examined. It produced a very different pattern from the org chart:

This map makes it clear that a mid-level manager, Cole, was very important to the flow of information. This represented a risk to the organization. Cole could become overburdened. Further, if he were to leave the organization, there would be a big hole in the communications flows. A key outcome of this analysis was to channel some of the requests that Cole was receiving to other managers. Other findings included the fact that the most senior manager, Jones, was one of the most peripheral people in the network and needed to re-engage with the group. Finally, it was clear that a recent office move by the subgroup at the top had separated them from their peers, a situation remedied through more deliberate communication and instant messaging.

Although very simple, this example illustrates the power of network analysis at the level of individual people in your organization. Much larger analyses are now possible using visualization software. Social network analysis can be done for groups of all sizes and purposes. In the medical device company described above, for example, this approach would mean moving beyond roles and mapping people—each of the 80 or so internal and several hundred external players—as one large network or as a series of geographical networks across the country. Or in a research network, it could mean mapping players in multiple organizations across the globe. The goal of any of these is to identify the quantity of information flows and the role played by individuals in the network.

Adapted from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization by Mary Adams and Michael Oleksak.

Miss Philippines rated #1 on Miss Universe website…Can’t wait to see the show tonight at NBC.  You go girl!

A few weeks ago I received a notice for a workshop called Beyond Skin: A Spiritweaves retreat with Michael and Anneli that would take place just down the road in Dallas. When I read the description of the workshop, my soul knowingly said to me, “GO!”   

A movement meditation that encourages you to move your body beyond the surface: to a place within where you can be content with your strengths and your struggles. A dance exploration that inspires you to move beyond the patterning to a place of source. You will be called to move beyond the separation to bring what is outside of you to play within and what is within to pray out int he world. We will use the potent practices of the 5rhythms and Soulmotion.  

These words, in particular, deeply resonated with me : a dance exploration that inspires you to move beyond the patterning to a place of source. I LOVE LOVE LOVE this!   

I’m so happy I followed my intuitive impulse because last weekend with Michael and Anneli has now become one of my all time most breathtakingly transformative dance experiences EVER. And this old modern dance major has taken lots and lots of classes and workshops in the 5rhythms, dance therapy, authentic movement, trance dance, life/art process with Anna Halprin, etc… The masterful, and I mean MASTERFUL, guidance of Michael and Anneli was beyond magnificent to experience.On Saturday, Anneli and Michael purposefully guided us through three hours of moving before we officially took a break. It took me nearly three hours of moving before I realized that my thoughts aren’t thinking me. Anneli encouraged us to find that place where the breath breathes you. I am out of my head.
I am in my body.
I have surrendered to my spirit.
I am beyond my skin.
My breath breathed me.   

And boy oh boy did I need that release AND realization. Like many of you, I’ve got so many projects and it is easy to slip into that default place of busyness. This shift that transpired within me in that moment is still reverberating through me. And now, the clarity and creative energy I’m bringing to those projects is ever so much better.

What shape waits in the seed of you to grow and spread its branches against a future sky? −David Whyte 

Another HUGE experiential takeaway for me was the dynamic with which I want to bring my dreams into the world. Michael and Anneli encouraged us to play with the dynamics of different shapes, especially playing with moving a shape with less effort. I LOVED this! I can manifest my visions with a sense of ease and play rather a forced energy that doesn’t feel authentic for me. Simplicity is powerful! 

If you ever have an opportunity to take a workshop with Anneli and Michael (Spiritweaves), listen to your knowing soul and go for it. 

Allow yourself to reach the place where your breath breathes you, to move beyond your patterning to a place of source. 

It’s official! Tomorrow Facebook is launching Facebook “Places” – a geo-location service that will allow users to broadcast their location, see where their friends are, and search places.

Here are the snippets from tonight’s livecast from Facebook’s headquarters in Palo Alto: 

• Mark Zuckerberg pointed out that technology does not need to estrange us from one another. There is a “third place” that helps create a relationship between public space and community (first two are home and workplace). Places is not about broadcasting your location to the world, it’s about sharing where you are with friends.
• Facebook is rolling it out gradually, first in US; the features will be visible to everyone, but ability to check in will be available in US only
• Three key components: Help you share where you are, help you find where your friends are, and discover new places around you..
• Facebook is launching Places on touch.facebook.com and in a brand new iPhone app being released later tonight. A new icon will appear on the home sreen. Open it and it will show you a list of friends, including those who are nearby (looks a lot like Foursquare). As soon as you check in you’ll see a list of places around you. You can search for nearby locations. If they aren’t there, you can hit the ‘+’ symbol to add a place. To add a place you type in a name and description. Tap Checkin button. You’ll see a preview of the story at the top, with a notice of what will happen (and a link to find out what’s going on). Once you agree, creates a new story on the Place page.
• Privacy: Default check-in to be visible to friends only. You can dial it down and restrict to a few specific people. Can remove any check-in from your phone or on the web. If you create a place, you can delete it as well; you’ll have a full control over a place and its privacy settings.
• Tagging: You can only tag your friends while you are checking in. You’re notified whenever you’re tagged. You can always remove any tag. You can opt out of having friends tag you at all. Can just hit ‘Disabled’
• “Is this your business?” is a feature of the Places product. You can claim a business page.
• No updates planned to Facebook’s T&C based on this announcement
• Plans for blackberry and android are in place, no timeline though; touch.facebook.com works on android though
• Screenshots below are the courtesy of  TechCrunch

Also, check out official blog post by Facebook: http://blog.facebook.com/blog.php?post=418175202130

Apologies for the long absence. As some of you might have guessed, it has been a busy summer with things here at CGC, and it has been a struggle to keep up with my daily responsibilities..

For my first post back (and I do have more posted planned), I wanted to load up some notes I wrote down while preparing for a presentation recently on why it was important for firms, investors, policy makers, and anyone else paying attention to this space to keep things in perspective.

That, beyond the investments in cleantech, it was going to take a focus to retool many of the systems we have built to support our economies before we could grade success… or declare anyone a winner. In fact, at this point, we would probably be best to stop giving awards away altogether..

That it was a problem that went beyond the definition of “carbon”, and would involve product design, resource management, building operations, packaging, waste management, labor safety, consumer education, single-use products, and reverse mortgaged economic models… and before we could do that, we would need to begin valuing our resources accurately (i.e. without externalities).

So, why should firms change?
1) Regulation: As you may have noticed lately, China has been working hard on a number of new regulations, shutting down non-compliant factories, and are studying other ways to remove the space between current practices and environmental sustainability…

2) Cost: With the prices of resources (materials, energy, labor, etc) all experiencing price “inflation” and shortages, firms have a strong bottom line catalyst for efficiency in operations and developing new products and processes that have a reduced footprint environmentally.. as well as on the bottom line.

3) Awareness: Regardless of whether or not Twitter is blocked, the fact is that civic awareness of issues is growing, and depending on the area, there is a direct tie being made between a challenge faced and the factory behind it.

4) Enforcement: As consumers become citizens, and as government agencies are catalyzed to act, the “firm” is finding itself more and more in the middle of a difficult position. A position of paying fines, investing in new equipment, or even closing their gates.

So, what are firms doing?
1) Standing still trying to work it out and hope it all goes away
2) Going after low hanging fruit first to remove waste without having to invest in changing real processes or equipment
3) Investing and reinventing

So, what should firms be doing?
1) Looking to understand the issues they face:
- Apple: Labor and waste
- Coke: Water, packaging, and transportation (oil)
- Marriott: water, electricity, and shampoo bottles!

2) Developing new systems to address the CORE issues:
- Getting past the donation for brand stories
- working past a single “green” product and developing systems that have a radically different environmental footprint
- develop and execute models that pay the full costs of labor, environmental impact, and reduces waste before it is created

3) Engage Stakeholders
- The equation is not only dependent upon sales, and customers & suppliers are not the only stakeholders one must consider
- governments do have power
- Citizens drinking lead tainted water will find the source
- Media outlets won’t always be a friend, or be easily influenced

So, the word is out.  China is #2， Numero Dos， 第二 … and EVERYONE is talking about it. Some are even saying China will be King of the hill by 2020

Officially word came down with the Japanese Cabinet’s announced their economy put out 1.288 trillion USD, a few points below the 1.337 trillion China had reported earlier. Never mind that Japan is 10x as productive, or that the Japanese economy has essentially been limping along since the early 90s, or that this is not a annual figure (yet)… the law of numbers (and China’s 1.4 billion people) sealed the deal.

What does all this mean, and what should we make of this milestone?  It was something I was asked a few hours back by hometown (St Louis) radio and TV reporter Charles Jaco as part of his roundup of the event where he asked my thoughts on the following issues:

1. Everyone looks @ the Chinese economy as this thundering monolith. But do they have the same problems we do, i.e.–high unemployment, social dislocation, etc?.
2. Everyone often says it’s Chinese consumption that will pull us out of this economic mess. But you indicated to me that’s false and that any cure will have to come from the US, not China. How come

Keeping in mind that St Louis is about as middle country as you can find it in the U.S, that the cit has a LONG history of industry and trade, and that they are in the final stages of a potentially large logistics hub deal with China, the questions were laced with a few angles… (1) What does China being #2 mean for the world (2) is China real and (3) should Americans really be looking to China to save them.

In answering these questions, and keeping in mind I had 2 minutes to dive into these questions, I felt it important (and I still feel it important) to provide a little context.  that, while China had certainly hit a long sought after target, and was certainly looking forward to being king of the hill, that China’s economy was still a very lopsided (as the recent Caijing article points out)… that there is more than a single “China” that needs to be considered.  And that the economy, regardless of how large it has become and the targets it has blown through, is very very fragile… as proven by the fact that China fears any growth below 8% would lead to instability (economic and political)., whereas the other major economies of the world have survived negative growth periods over the last 24 months.

Diving a bit further, and getting into the hurdles that China faces, I started by addressing the misconceptions of what the average “Chinese consumer” is, and where China’s savings are located… that while China, and the Chinese, may have high savings rates, the bulk of the savings were actually held by large state owned enterprises.. and that going forward, China would have to address some very large systemic issues (education, health care, and assets) as well.

On the second question, this was a bit easier as I largely have felt that the entire “China saving the world” story was a bit overbuilt.  Sure, China’s wealth and support of other currencies has been invaluable over the last 24 months, but unless China is going to go on a SUSTAINED overseas spending spree, it would be hard to see how China would save the American economy.  That the American economy, in St Louis, was suffering from local, state, and national issues that would have to be resolved outside of the global economic market place.

So, what does China being #2 mean?  At this point, it essentially is confirming discussions that have been going on in the past.  that China’s size was going to drive the data points forward, but that these numbers need to be viewed in a separate context than just a Country vs. China basis.

That, it is (and will be important) to look at China by itself and understand what the numbers mean for the country.