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Why KM Programs Fail
1. The Reinvention of Management Why do great KM programs fail? Steve Denning www.stevedenning.com http://blogs.forbes.com/stevedenningsteve@stevedenning.com 1
13. 1978 A second clue … Robert McNamara President, Ford Motor Company, 1960 Secretary of Defence, 1961-1968 President, World Bank, 1968-1981 “the smartest man I ever met” John F. Kennedy 6
14. Most management textbooks… Most business schools … Traditional management rests on seven shaky principles 7
15. 7 planks of traditional management 1. “The purpose of a firm is outputs” The firm produces “things”, i.e. goods or services World Bank = loans Today, customers have choices. Rapid change firm makes wrong “things” People want: outcomes, not outputs. 8
16. 7 planks of traditional management 2. “Management’s main job: improve efficiency” Focus on squeezing costs:Getting bigger cost reductions Economies of scale Result is declining returns Today: we need organic growth Efficiency focus kills innovation 9
17. 7 planks of traditional management 3. “The customer can be manipulated” The World Bank will make more loans, whether countries want them or not.E.g. we prepare the loans for the countries Michael Porter: “Parse and manufacture demand” Today, the buyer is the boss Instant information available to all. Customers have choices.Customers communicate with each other 10
18. 7 planks of traditional management 4. “Staff are human resources that can also be manipulated” External incentives: carrot and sticks. Today, most work is knowledge work:Disengaged workers don’t produce their best. 11
19. 7 planks of traditional management 5. Communicate by directives Tell people what to do Knowledge workers don’t perform well when they are ordered around 12
20. 7 planks of traditional management 6. “Traditional management practices are self-evident” Management reflects timeless truths of the universe. Evidence of management dysfunction is inadmissible. Bad managers? Yes!Management itself is bad? Impossible! 13
21. 7 planks of traditional management 7. “Managers don’t ask questions” A. Zaleznik: Managers & Leaders: Are They Different? 1977 HBR The source of the Dilbert manager Managers focus attention on procedure, and not on substance. Managers communicate to subordinates indirectly by signals, rather than clearly stating a position. Managers play for time. 14
22. The assumptions are interlocking Management principles are self-evident Management function is to squeeze out costs Managers don’task questions Purpose of a firm is to produce outputs Demand can be manufactured Communicate through commands “Human resources” can be manipulated The mental model is impervious to challenge! 15
31. In 1980-2005, established firms created zero net new jobs.1965 Today Sources: Deloitte’s Center for the Edge: The Shift Index; Kauffman Foundation 17
32. 2010 Many writers are concluding: Management has failed! 18
38. What we have learned Our hope in 1996 Traditional management culture: Top-down, authority based Traditional managementculture: Top-down, authority based Knowledge Management: horizontal, collaborative knowledge-based culture Knowledge Management: horizontal, collaborative knowledge-based culture The reality of 15 years in KM 20
39. Break for discussion 21 Do you recognize the world of management I have just described? KM isa low hangingfruit! Yes? No? Not sure? COO 21 CFO
40. Implication for KM & organizational survival: We have to generate a culture of continuous innovation 22
41. Five big shifts…and 70+ practices New goal for the organization New role for managers New coordination mechanisms Shift from value to values New way to communicate 23
42. 1 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders Deliver more value to customers sooner Shareholder Capitalism Tweak the supply chain Make money for shareholders The Age of Customer Capitalism We are entering Customer Capitalism Delighting customersThe customer becomes the bossMaking money is result, not goal Roger Martin, HBR Jan 2010 24
43. 1 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders Deliver more value to customers sooner Inside-out perspective Tweak the supply chain We are entering Outside-in perspective Understand the customer Solve the customer’s problems 25
44. 1 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders Not just satisfy them: Delight them! We are entering Everyone in the organization is focused on generating a continuous stream of added value sooner 26
45. 1 1 NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders The convenience of “the system” Public sector equivalents of “delighting clients” Education: “students first”Health: “patients first” 27
46. 1 1 NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders This changes the game completely Outcomes Outputs Complex People Simple Things 28
55. 4 4. FROM VALUE TO VALUES: radical transparency Bureaucracy Make the numbers, come what may! Radical transparencyFacing the brutal reality Get to root causes 31 Alan Mullaly CEO, Ford
65. The shifts are self-reinforcing & interdependent Focus all work on delighting customers From command to conversations From controller to enabler From bureaucracy to dynamic linking Radical transparency 35 WHAT’S NEW: doing all at once
66. Where did these shifts begin? In 1980s, the approach began spreading among auto manufacturers (“Lean”) In mid-1990s, the approach began spreading to software development (“Agile”) You can see current exemplars in firms like Apple, AmazonandZappos 36
67. The transition is inevitable Two- to four-times gains in productivity Economics will drive the change! 37
68. The transition is inevitable Traditional management0% to -50% Radical management+1,000% Ten year share price 38
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70. Disseminate the books that show howBecome leaders of the new movement: inspire! 39
77. Hang out with fellow revolutionaries: 2 day workshop May 12-13, 2011 Washington DC “Revolutionizing the world of work” “Join us to help reinvent the Fortune 500, government, & the health and education sectors” 41
