Why KM Programs Fail


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Why KM Programs Fail

  1. 1. The Reinvention of Management<br />Why do great KM programs fail?<br />Steve Denning<br />www.stevedenning.com<br />http://blogs.forbes.com/stevedenningsteve@stevedenning.com<br />1<br />
  2. 2. 1996-2000<br />Knowledge management<br />By all indicators, an apparent success<br />“A world leader in KM”<br />2<br />
  3. 3. 2000-2008<br />Knowledge management<br />By all indicators, an apparent success<br />Put on a back burner<br />Not just the World Bank<br /><ul><li> BP
  4. 4. Ernst & Young
  5. 5. IBM
  6. 6. HP</li></ul>Within a few years, it had been put on a back-burner<br />3<br />
  7. 7. In 2008, I began exploring:<br />Why do managers act this way? <br />(These are highly intelligent, educated people!)<br />4<br />
  8. 8. 2008<br />It’s not just KM<br />Why did management systematically kill all the creative things in organizations?<br /><ul><li> knowledge management?
  9. 9. lean manufacturing?
  10. 10. innovation?
  11. 11. marketing?
  12. 12. leadership storytelling?</li></ul>5<br />
  13. 13. 1978<br />A second clue …<br />Robert McNamara<br />President, Ford Motor Company, 1960<br />Secretary of Defence, 1961-1968<br />President, World Bank, 1968-1981<br />“the smartest man I ever met”<br />John F. Kennedy<br />6<br />
  14. 14. Most management textbooks…<br />Most business schools …<br />Traditional management rests on seven shaky principles<br />7<br />
  15. 15. 7 planks of traditional management<br />1. “The purpose of a firm is outputs”<br />The firm produces “things”, i.e. goods or services<br />World Bank <br />= loans<br />Today, customers have choices.<br />Rapid change  firm makes wrong “things”<br />People want: outcomes, not outputs.<br />8<br />
  16. 16. 7 planks of traditional management<br />2. “Management’s main job: improve efficiency”<br />Focus on squeezing costs:Getting bigger cost reductions Economies of scale<br />Result is declining returns<br />Today: we need organic growth<br />Efficiency focus kills innovation<br />9<br />
  17. 17. 7 planks of traditional management<br />3. “The customer can be manipulated”<br />The World Bank will make more loans, whether countries want them or not.E.g. we prepare the loans for the countries<br />Michael Porter: “Parse and manufacture demand”<br />Today, the buyer is the boss<br />Instant information available to all.<br />Customers have choices.Customers communicate with each other<br />10<br />
  18. 18. 7 planks of traditional management<br />4. “Staff are human resources that can also be manipulated”<br />External incentives: carrot and sticks. <br />Today, most work is knowledge work:Disengaged workers don’t produce their best. <br />11<br />
  19. 19. 7 planks of traditional management<br />5. Communicate by directives<br />Tell people what to do <br />Knowledge workers don’t perform well when they are ordered around<br />12<br />
  20. 20. 7 planks of traditional management<br />6. “Traditional management practices are self-evident”<br />Management reflects timeless truths of the universe.<br />Evidence of management dysfunction is inadmissible. <br />Bad managers? Yes!Management itself is bad? Impossible!<br />13<br />
  21. 21. 7 planks of traditional management<br />7. “Managers don’t ask questions”<br />A. Zaleznik: Managers & Leaders: Are They Different? <br />1977 HBR <br />The source of the Dilbert manager <br />Managers focus attention on procedure, and not on substance. <br />Managers communicate to subordinates indirectly by signals, rather than clearly stating a position.<br />Managers play for time.<br />14<br />
  22. 22. The assumptions are interlocking<br />Management principles are self-evident<br />Management function is to squeeze out costs<br />Managers don’task questions<br />Purpose of a firm is to produce outputs<br />Demand can be manufactured<br />Communicate through commands<br />“Human resources” can be manipulated<br />The mental model is impervious to challenge!<br />15<br />
  23. 23. 2008<br />Q. Why were allthe creative things in organizations systematically killed?<br /><ul><li> knowledge management?
  24. 24. lean manufacturing?
  25. 25. innovation?
  26. 26. marketing?
  27. 27. leadership storytelling?</li></ul>A. Management did it!<br />16<br />
  28. 28. 2009: Conclusive proof of the failure of traditional management<br /><ul><li> The rate of return on assets has fallen by 75% since 1965
  29. 29. The life expectancy of Fortune 500 firms down to 15 years, and is heading towards 5 years.
  30. 30. Only 1 in 5 workers fully engaged
  31. 31. In 1980-2005, established firms created zero net new jobs.</li></ul>1965<br />Today<br />Sources: Deloitte’s Center for the Edge: The Shift Index; Kauffman Foundation<br />17<br />
  32. 32. 2010<br /> Many writers are concluding:<br />Management <br />has failed! <br />18<br />
  33. 33. Although KM often makes temporary gains, eventually …<br />Management kills KM<br />KM isa low hangingfruit!<br /><ul><li> systematically
  34. 34. relentlessly
  35. 35. through business schools
  36. 36. through cost-cutting drives
  37. 37. despite claims to the contrary</li></ul>COO<br />CFO<br />19<br />
  38. 38. What we have learned<br />Our hope in 1996<br />Traditional management culture: Top-down, authority based<br />Traditional managementculture: Top-down, authority based<br />Knowledge Management: horizontal, collaborative knowledge-based culture<br />Knowledge Management: horizontal, collaborative knowledge-based culture<br />The reality of 15 years in KM<br />20<br />
  39. 39. Break for discussion<br />21<br />Do you recognize the world of management I have just described?<br />KM isa low hangingfruit!<br />Yes?<br />No?<br />Not sure?<br />COO<br />21<br />CFO<br />
  40. 40. Implication for KM & organizational survival:<br />We have to generate a culture of continuous innovation<br />22<br />
  41. 41. Five big shifts…and 70+ practices<br />New goal for the organization<br />New role for managers<br />New coordination mechanisms<br />Shift from value to values<br />New way to communicate<br />23<br />
  42. 42. 1<br /> 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders<br />Deliver more value to customers sooner<br />Shareholder Capitalism Tweak the supply chain Make money for shareholders<br />The Age of Customer Capitalism<br />We are entering<br />Customer Capitalism <br />Delighting customersThe customer becomes the bossMaking money is result, not goal<br />Roger Martin, HBR Jan 2010<br />24<br />
  43. 43. 1<br /> 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders<br /> Deliver more value to customers sooner<br />Inside-out perspective Tweak the supply chain<br />We are entering<br />Outside-in perspective<br />Understand the customer <br />Solve the customer’s problems<br />25<br />
  44. 44. 1<br /> 1. NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders<br /> Not just satisfy them: Delight them! <br />We are entering<br />Everyone in the organization is focused on generating a continuous stream of added value sooner <br />26<br />
  45. 45. 1<br />1 NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders<br />The convenience of “the system”<br />Public sector equivalents of “delighting clients”<br />Education: “students first”Health: “patients first”<br />27<br />
  46. 46. 1<br />1 NEW GOAL: from outputs to outcomes i.e. delight the clients and stakeholders<br />This changes the game completely<br />Outcomes<br />Outputs<br />Complex<br />People<br />Simple<br />Things<br />28<br />
  47. 47. 2<br />2. NEW MANAGER ROLE: from controller to enabler <br /><ul><li> Control can’t delight customers
  48. 48. You can’t control knowledge work
  49. 49. Work is done in networks ofself-organizing teams
  50. 50. Teams are empowered to decide.
  51. 51. Teams report to clients, not managers
  52. 52. Managers: set goals, remove impediments</li></ul>29<br />
  53. 53. 3<br />3. COORDINATION OF WORK: Dynamic linking<br />Boss driven <br />Hierarchical bureaucracy<br />Big plan<br />Start<br />Finish<br />Shortcycles<br /><ul><li> Specify the goal, not how the work is done
  54. 54. Work in short cycles: reduce risk & increase agility.</li></ul>Client driven <br /><ul><li> Deliver value to clients each cycle (not reports).</li></ul>30<br />
  55. 55. 4<br />4. FROM VALUE TO VALUES: radical transparency<br />Bureaucracy<br />Make the numbers, come what may!<br />Radical transparencyFacing the brutal reality<br />Get to root causes<br />31<br />Alan Mullaly CEO, Ford<br />
  56. 56. 4<br />4. FROM VALUE TO VALUES: continuous improvement<br />Bureaucracy = get the product out<br />The status quo is never good enough <br />Enable continuous improvement<br /><ul><li> Systematically identify impediments
  57. 57. Fix problems immediately
  58. 58. Identify and remove root causes</li></ul>32<br />
  59. 59. 5<br />5. INTERACTIVE COMMUNICATON: conversation<br />Command and control<br /><ul><li> Adult to adult conversations
  60. 60. Storytelling
  61. 61. Open-ended questions
  62. 62. Springboard stories
  63. 63. User stories</li></ul>33<br />
  64. 64. Two different mental models of management<br />34<br />
  65. 65. The shifts are self-reinforcing & interdependent<br />Focus all work on delighting customers<br />From command to conversations<br />From controller to enabler<br />From bureaucracy to dynamic linking<br />Radical transparency<br />35<br />WHAT’S NEW: doing all at once<br />
  66. 66. Where did these shifts begin? <br />In 1980s, the approach began spreading among auto manufacturers (“Lean”)<br />In mid-1990s, the approach began spreading to software development (“Agile”)<br />You can see current exemplars in firms like Apple, AmazonandZappos<br />36<br />
  67. 67. The transition is inevitable<br />Two- to four-times gains in productivity<br />Economics will drive the change!<br />37<br />
  68. 68. The transition is inevitable<br />Traditional management0% to -50%<br />Radical management+1,000%<br />Ten year share price <br />38<br />
  69. 69. The opportunity for KM<br />Educate yourselves<br /> <br /> <br /><ul><li>Master the 5 principles and 70+ practices of radical management</li></ul>Spread the word<br /><ul><li> Disseminate the Shift Index
  70. 70. Disseminate the books that show how</li></ul>Become leaders of the new movement: inspire!<br />39<br />
  71. 71. The opportunity for KM<br />Lead the revolution! <br /><ul><li>Embody the change yourself
  72. 72. Make your KM world a model
  73. 73. Learn to tell authentically true stories
  74. 74. Capture people’s imagination
  75. 75. Join with those who share the vision
  76. 76. Encourage and support them in their work</li></ul>40<br />
  77. 77. Hang out with fellow revolutionaries:<br />2 day workshop May 12-13, 2011<br />Washington DC<br />“Revolutionizing the world of work”<br />“Join us to help reinvent the Fortune 500, government, & the health and education sectors”<br />41<br />