Kathy Harris

Happy anniversary — I’ve just completed the first year of my innovation blog. I completed 106 posts this past year and exceeded my own expectations. And, thanks to you for reading. 

On September 9, I posted a blog on the topic of CRM and KM and this generated tremendous interest. This week, I’m traveling and with little time to spare, I’ve decided to highlight some key ideas from my past KM posts.  Enjoy the best of KM and Innovation and look for more on this topic during the next 12 months.

1. Can social software close the gap in KM? See “Musings on Innovation, Knowledge Management and Social Software”.
2. Are KM and connective intelligence critical to innovation? See “Knowledge Management and Innovation – Connections”.
3. Working on a strategy for KM? See “Mistakes in Strategy for Innovation, KM or …”.
4. Know how to avoid cultural and behavioral barriers in KM? See “Failure Points in People-Centered Initiatives”. 
5. Need to preserve KM when cost-cutting is rampant? See “Intangibles in a Recession – Value Lost”.
6. Need help defining “what’s in it for me” for employees? See “Incentives and Innovation”.
7. Is KM a critical part of your workplace strategy? See “Workplace Innovation — The New Critical Success Factor”.
8. Finally, is KM in CRM finally within easy reach?  See “CRM and KM — Are We There Yet?”.

I’m at the CRM conference this week and among the topics of conversation is a familiar one — knowledge management. With the advent of sophisticated search and social software, many people believe the KM challenge is resolved. After all, look at the evidence:

• Whatever knowledge people need is “out there” somewhere in the digital mire and is available and accessible – all we have to do is search for it.
• Social software is compelling and friendly and has lifted the barriers to knowledge sharing.
• And underlying the first two advances is the assumption that the average person is good at search and has the social skills and attitude to collaborate and share their knowledge.

Let’s start with the obvious: Most people aren’t great at search – getting relevant, specific information from the web is a challenge for most people (even with semantic capabilities, tagging and indexing improving in some key domains). Users need some knowledge of the desired content to build a good search argument. They also need an ability to determine the trustworthiness of information and separate fact from fiction. They even need to understand the language of search and the web to take advantage of their power. 

Also, social software and sophisticated search doesn’t make people smarter or less territorial or more collaborative – it does expand information sources and access to experts and interesting people. And for willing participants, social software can enable them to expand their sociability - they can learn from other people, contribute their knowledge and the rich social interactions may influence them to drop their barriers to sharing ideas and knowledge. 

My conclusion is that while it may seem out of sync with the powerful computing capabilities of 2009, organizations still need a strategy, focus and structure in knowledge management. KM is a business practice, a process and a cultural change. It even includes policies — for reuse, for knowledge sharing, and so on. It is not the tools of search, social computing, expertise location, content management, etc. It is about people using those tools and processes to find and apply information to fill a need or resolve a specific problem in the (often unique) context required by a customer, a call center agent or a sales and marketing team member.

And while we might expect to easily find the location of the nearest branch of our company or directions to it, we should not expect to ”discover” the relationship a customer has with our company and where the gaps exist in their service or portfolio of products. This information exists through organizing, structuring, combining and qualifying information. Knowledge is information that is enriched with context and other enhancers — there is no card for “get out of KM jail free” – yet!!

I’m at Gartner’s  U.S. CRM conference in Phoenix this week and our attendees will hear research on a broad range of strategies and issues. In fact, by noon on Monday (just in the first four hours of the conference), they will have heard about which CRM strategies to cut and which to keep; Web-centric customer relationships; managing customer experience in a recession; and Web 2.0 and e-commerce. So, in 2010, CRM will demand attention and investment on multiple IT fronts — managing costs, enhancing relationships, growing the business and leveraging new Web capabilities.

Meanwhile, in a Gartner briefing just last week, IT leaders from a wide range of industries indicated that their 2010 budgets are unlikely to grow above 2009 levels. A few even said their budgets may be lower than 2009 levels.  This means that although you’ll have many opportunities and needs for investing in CRM in 2010, you probably won’t have sufficient money to do so.  Prioritizing and controlling spending are critical to resolving the dilemma of increasing demand for CRM technology coupled with a flat IT budget. Simply put, to spend money, you’ll have to free up money. But, how?

Start by understanding how you currently spend on IT and how “healthy” your spending profile is. Gartner recommends using a framework for gaining insight into current IT spending to determine the percentage of the IT budget that is consumed by simply “running the business” of CRM vs. growing and transforming CRM capabilities.  Run-the-business activities are defined as those that “support or improve essential, non-differentiated business functions and capabilities that do not directly produce revenues”. And, as a rule of thumb, enterprises whose IT run-the-business costs exceed 65 percent of the total IT budget are at risk of under-investing in the future. Therefore, these companies are at risk of inhibiting change, growth and their ability to respond to evolving market conditions. During 2008, on average, organizations were spending just over 66% on running the business.

So, if your spending level for running your business is at or near this unhealthy range, aim your innovation efforts at restructuring this spending to a lower percentage of the overall IT budget.  Some key mechanisms that can reduce the cost of CRM IT are application portfolio management, software as a service (SaaS), project portfolio efficiency/effectiveness, single data warehouse, and virtualization. Explore these and other ideas to free up money to invest in the future. Also, see other blog entries on reducing or managing the cost of IT: “Innovation in Applications Support – Can it Be?” and “Innovate, Invest, Cut Costs — Courageous Decision-Making”.

Meanwhile, stay tuned for other news from the CRM conference.

One of my older presentations defined three roles that IT plays in innovation — IT can focus innovation on their internal processes, emerging technologies or business innovation.  Then, I jumped the shark a little and decided to represent these three roles on a Maslow-like hierarchy- a triangle with three layers representing the IT roles from bottom to top.  And, the Maslow analogy is this: as IT fulfills their user’s needs for processes, emerging technologies and business innovation, then IT gains increasing levels of credibility (and eventually of course, self-actualization).

Most of my audiences just didn’t get the Maslow analogy so I retired it quickly. But, I still believe the concept is a good one.  So, here goes. Try this as a way to think about credibility and innovation.  

The lowest level of the hierarchy represents IT’s internal processes. You must perform these processes exceptionally well for your business users and by doing so, you’ll gain credibility. From a Maslow perspective, this is the equivalent of providing users food, security, health and human needs. If you don’t do this well, you won’t be taken seriously farther up in the hierarchy. And specifically, the business won’t offer IT a seat at their innovation table without credibility. 

The second level of the hierarchy is IT’s management of emerging technologies. This is a natural role of IT and most organizations have a process to manage it. However, without the credibility gained through great execution in level 1, your ability to push the envelope with emerging technology or to gain support for significant investments will be limited.  So, you must innovate well to earn the credibility to push the envelope with emerging trends and technologies. 

The third and highest level of the triangle represents business innovation and specifically, IT being invited to participate with the business.  If credibility has been achieved, then IT can engage in business innovation as an equal partner – the business will want you there and will value your ideas and insight. Conversely, if you don’t have credibility, your business partners will wonder why you’re there and why you aren’t working on innovating your IT processes.

So, if you don’t have great IT processes, innovate there first — aim for agility and speed.  Next, focus on bringing the right emerging technologies to the business before pushing the envelope.  If you innovate IT first, then a seat at the business table is waiting.

Any complex initiative demands good planning, design, development and implementation. However, the teams that manage innovation initiatives often do these things well and still don’t succeed.  Most often, the failure point occurs after implementation and during the socialization of change –the first six months of an innovation’s life.  Socialization means that the people using the innovation adopt and internalize the new way of doing things – they also leave behind the old ways and diffuse the change through the organization. 

The success factors of socialization are well-documented — we all know the guidelines but often treat them as just another task in a big initiative.  Socialization implies a deeper commitment than most organizations acknowledge – in fact, socialization, its actions and its attitudes may be the most complex part of innovation.  Here are a few throughts on socializing change.    

• Key owners and sponsors must “sign up” for change. Many teams take appropriate steps and even ask sponsors to sign an approval document.  But, sign up goes beyond approval meetings and documents. The team leading the initiative must ensure that owners and sponsors know exactly what they’re signing up for – for example, which business units will be affected, what processes or products will change, when will these change, which jobs will be affected and what will we stop doing? This will probably lead to a lot of questions and challenges from sponsors and maybe more work – good job!
• Usability should be assured before development begins. Many times, a new process or product works but its usability is low. The initiative team should develop methods to confirm usability of processes or products before they build them. This probably means adding expertise and tasks for early prototyping, pilots or simulation; but if an initiative is important and costly, the additional time is well spent. Also, a good thing.
• At implementation time, educate the business and operational leaders first. Train these leaders to a level of competency that ensures they can hold their employees accountable for rapidly adopting new processes, methods, tools, etc.  You’ll need to train end users in the details, of course, but ensure that their business and operational leaders know enough to lead change. These leaders are your best influencers of change — people will look to them for signals on whether innovation is important and worth the effort to change. Some leaders may resist training so use your sponsors to help make the case for this.
• Retire obsolete processes and products when you implement new ones. Planning for innovation must identify the processes and other assets that will be made obsolete. Get sign up for these retirement plans including who is accountable for disabling the old once the new is in place. This is not extra work – innovation implies retirement and replacement; also, much of the ROI will be predicated on simplifying processes, retiring underperforming products, etc.
• Hold sponsors and owners accountable for achieving the ROI in the expected time frame. Once implemented, track the value achieved by the innovation – do this at least through the first year of life of new processes and products.

Finally, organizations should reward rapid change adoption and good change management by business and operational leaders. What matters most in innovation is that there is real change by the people who use the new processes or products.

In some recent research, I discussed next generation jobs, specifically those aimed at engaging people through the Web, communities, and so on. Here’s an excerpt from that research: 

“… organizations will struggle to keep pace as they integrate rapidly changing behaviors and technology into already established business culture and infrastructure. To succeed in “consumerizing” corporate technology, organizations will need new talent and skills that blend a deep understanding of the business (the traditional and modern approaches); artistic talents in visual and social schemes that evoke the desired behaviors and reactions from consumers; and expansive knowledge of how to invoke and leverage the power of Web technology and models. Many of these emerging jobs and roles must not simply specialize in one skill area but will blend these business, artistic and technical skills.” 

Many organizations use their workplace as a laboratory for experimenting with technologies before rolling them out for external use – this is especially good for communities, social networking, collaboration and other social applications. In fact, your workplace is a tailor-made laboratory for testing ideas before extending them to customers, partners and the web community at large. And don’t let the “laboratory” and “experiment” labels scare you off – this is or should be a standard practice in organizations.  The employee stands in for the customer to test out new products or services.

Now, let’s bring the next generation jobs and skills together with the workplace as a laboratory. I want to suggest a new approach to managing the experimentation process. Usually, an organization’s technology laboratory is managed by IT with input and some level of participation by other departments – non-IT people may ask for frequent reviews of what’s happening or they may run some customer focus groups to test out the new ideas. And when a technology is validated by the lab, others will get engaged to develop the full go-to-market design.

What about a different approach? Take another look at the skills mentioned in the excerpt. Can you push the scope of the laboratory outward to include the next generation skills and applications? Specifically, can you establish your laboratory steering committee and work teams to include not just the IT or web strategists but also business units such as product development, marketing and human resources? And, instead of exercising only the technology requirements in the laboratory, can you also exercise the business and social processes such as marketing, human behavior, social engagement, social engineering and analytics?

I think it’s time to make your workplace laboratory test the full scope of the new social environments you’re building!

In a recent blog, I suggested that the rapid change in technical and business skills will force organizations to increase their employee education – perhaps to the point that employers become the main educators of the Web workforce. 

The risk in technical and business skills is high and is clearly top of mind for many organizations. However, there is a similar level of risk in management and leadership practices. These work styles are also under great pressure to change. The pressure may come from customers who say your organization is not flexible or responsive enough or your products lack leading edge features. Or your organization may fail to attract the best new graduates and talent – these prospective employees may want to understand your green strategy, policies on social computing or workplace policies on use of personal devices. They may also want to know if your company encourages web community involvement and open source participation.  Many companies don’t have flexible, modern policies so they don’t have enough to say about these topics.   

Organizations must prepare for management and leadership changes that come with a Web-enabled business, workforce and workplace. Now is the time to engage your best human resource professionals, key managers and lead employees to evaluate the current management disciplines and skills. Address these challenges head on:

• Do we understand the pace and scope of digital trends affecting how we lead and manage our business endeavors and people? 
• Are our current management development programs well aligned to the digital mindset of our current and future workforce and workplace?
• How can we adapt our current management and leadership environment to accommodate these trends and mindsets?

If broad gaps exist between the current and required capabilities, then organizations must rethink and redesign their management and leadership development programs. Both current managers and their successors need these development opportunities. And if the pace of change is rapid in your organization, then recruiting plans should be stepped-up to attract the needed talent.

 The risk is high and your organization’s competitive position may depend on fulfilling this new agenda.

With the current economic challenges, organizations still recognize the importance of innovation but “frugality” is the watchword – that is, organizations must innovate within their budget and with limited external spending. Alternative approaches include aiming innovation at cost cutting, confining their efforts to improvements rather than more disruptive change and identifying cost reductions to free up money for innovation.  So, frugality is feasible and valuable, but like any other management practice, it requires thinking and design before you act. 

The hot spot for innovation in most organizations is “ideas” — who to involve, where to find great ideas and how to get these people engaged. Innovation teams spend time building tools and investigating idea management, crowdsourcing, idea marketplaces and so on. Idea generation is an important process and it provides both business value and enduring social value. However, in a time of frugal innovation, organizations should stand back and look at the overall process model for innovation to determing how and where the money and time are spent. With an overview, it may be easier to attack all stages of innovation with the right frugal approaches. 

You’ll need a best guess estimate of your organization’s time and cost in each stage of innovation  - 1) ideation; 2)evaluation/selection; 3) development/implementation; and 4) socialization/diffusion. You’ll find that, as with most significant initiatives, the vast majority of spending occurs in the third and fourth stages. And, although stage 3 may require most time and cost, it is not the most difficult stage — socialization and diffusion is more difficult. If socialization and diffusion are not executed well, then innovations are not adopted, people don’t use the new processes, old assets and processes are not retired, and so on. The benefits may never materialize and the value of innovation is lost.  

There are other complications in applying frugality to the process model. Given the significant disparities in cost and time, another natural conclusion is that most effort should be focused on accelerating the last two stages. Yes on “effort” — it’s important to apply best practices and to overcome political or other obstacles and generally, to spend your time and money effectively and efficiently.  But, no on quality of “attention”, which must be equal in all stages. The success of the final two stages is not just dependent on good effort and execution, but also on whether the idea generation and evaluation/selection stages actually produced high quality ideas that are optimally aligned to business and frugality criteria.

So, as you would expect, all phases must be well defined and well managed despite their relative higher or lower costs. A good start is critical to a good ending. Some past blogs also offer specific topics and help on low cost innovation. Here are links to a few:

• Innovation in a Recession? Try A Lightweight Approach
• No Money? No Problem. Low Cost Innovation
• Want Innovation? Here’s a “Grassroots Pilot” Plan
• Cutting Costs to Fund Innovation – Application Retirement
• Innovation and Business Knowledge – The Right Mix

A few weeks ago, I developed a presentation on the skills needed to build the robust web sites and applications that enable modern business models and practices. Since its development, I’ve presented and discussed this work with many university and business people.  And, this past week, one audience included human resource professionals wanting to discuss the future workforce and challenges for HR. 

It should not surprise you that there’s a lot of interest in the topic of web skills. This story is just a prelude to the real subject of this blog.  From my discussions, I’ve concluded that in the future, organizations will be required to deliver far more workforce education than today. In fact, your employer may become the major provider of your education. 

Today, most professional hires require a university degree but the current pace, magnitude and nature of business and technology changes mean that this formal education is quickly outdated. A university degree is at best, a platform on which employers will build additional work skills with each new business model, process, technology or regulation. In fact, employers will not only provide substantial education to individual employees but will probably re-skill them multiple times during their work life. For example, to build sophisticated web experiences, technologist will need training in graphic design, community behavior and web design. Marketers will need education in rich media, interactivity, leveraging communities and web behaviors. Managers will need training on how to lead the new workforce, how to manage in a virtual enterprise and how to oversee web business models. Finally, we’ll need continuing education to sustain both our personal and professional responsibilities.  

So, employers need to act now to prepare for their role in their employees’ education.  If your organization has limited training and development capabilities, it may be time to assess current and emerging needs.  I predict you’ll be required to provide far more education and development opportunities in the future than in the past.