Traditional Management Stopped Working!

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Luis Suarez: I was recently at a webinar event with Paul Greenberg, the coiner and father of SCRM and his arguments were more along the lines of instead of “managing the customer relationship” it would be all about “facilitating the customer relationship”; on helping the customer be at the center of the whole equation and to listening to what the customer have to say about one’s products. I think social tools have changed that perspective of CRM, since most of the customers are already interacting amongst themselves and out of the control of their vendors. Therefore SCRM, in a way, has got a lot more to do with engaging customers on that process of co-creation.

I am not sure it’s a legacy from the 20th century. I think it’s more an attempt to make CRMs more social, human, engaged and purposeful. More in line with what the customer wants and not what the vendor.

Stephen Denning: If SCRM means putting the customer at the center of the relationship, then I’m all for it.

However if you plunk such a SCRM approach into a traditional organization, in which the customer is not at the center, and the management is focusing on tweaking its value chain and achieving efficiencies through economies of scale and so on, then the life expectancy of that SCRM approach won’t be very long. It will be crushed by the traditional management.

What I am talking about in the book is not just adding a new system or approach or gadget or process to a traditional organization, but rather changing the entire organization from top to bottom so that the customer is at the center. There is a temptation to adopt something like SCRM because it sounds so un-threatening. You are able to sneak something into the organization on the basis that it’s no big deal. “Don’t worry; boss, it’s just an evolution of CRM, which never hurt anyone, right?” That’s an easier conversation to have than to say, “Actually, boss, we need to transform the whole organization from top to bottom. Almost everything you are now doing has to change. Here’s why and here’s how other firms have done it and here are the potential benefitis.” It’s a more difficult conversation. But eventually, that is the conversation that you will need to have.

Luis Suarez: However there is one particular aspect that I find rather important and which I think is going to shape the very same SRCM approach you describe above.

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Customers have smartened up; they know about each other; they talk to one another; they share insights on their experiences with vendors and they have learned to demand to be delighted by vendors based on the experiences of those very few firms who´ve already understood.

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As we move forward we will witness plenty more customers demanding not to just be part of the conversation, but to participate actively in designing and developing the products. That process of co-creation will help businesses finally to understand how innovation happens; right from the source of those who utilise their products.

Let’s turn to knowledge management (KM). For a good number of years companies like Toyota and BP have excelled for their impressive KM programs, which were considered top-notch by the industry and which have received various awards. Fast forward to 2011. It now looks like those KM programs haven’t been that successful in stopping the corporations from getting into trouble. Steve, where do you think they have gone wrong with their KM programs? How do you envision radical management will help them to get back on track, keeping a strong focus on KM if possible? Can they get their act together once more in the KM field?

Stephen Denning: There are several different things going on here.

One is that traditional management is essentially a top-down authority-based way of operating. KM is   essentially a horizontal competence-based way of operating. When we were introducing KM some 15 years ago, we all tended to assume that it would be possible to operate oases of KM within a culture of traditional management. It turned that the traditional management culture tended to kill the oases of KM and turn them into traditional management units. This happened in all the famous programs in various ways, including IBM, Ernst & Young, McKinsey and so on. What we didn’t realize back then was that for KM to flourish on a sustained basis, you had to change the culture of the whole organization. That’s what radical management is all about.

Toyota and BP are very different cases.

Toyota was very different from traditional management culture and in fact was an a forerunner of radical management. Work was team-based and collaborative. Knowledge was shared horizontally. The focus was on providing more value to the customer sooner, rather than growing the company. Nevertheless Toyota grew exponentially as a result, not as the goal. In the early 2000s, a change came over the top management and they started to focus on growing the company as the goal. This started to infect the collaborative knowledge-based culture. The problems with sticky accelerator pedals and wandering floor mats are symptoms of this straying from the Toyota way. My take is that the Toyota has recognized the  problem, changed the management and is getting back to the authentic Toyota culture. In Toyota’s case, it is a matter of getting back to its roots. There is a lot of noise about recalls but historically Toyota has had fewer recalls than other companies. It’s quality record is still among the best.

BP is an example of the opposite. BP was always a traditional top-down command culture. KM was an effort to graft KM onto that culture. IT was a fine effort by the KM team but in the end, the management gave priority to financial results and growth over values and knowledge. So it wasn’t much of a surprise that when BP merged with Amoco, the KM unit was killed. Nor was it much of a surprise to see the rash of accidents culminating in the Gulf oil spill. BP has one of the worst quality records in the oil business.

Toyota is a case of a knowledge based culture that experienced a brief deviation and is getting back on track. BP is a case of a culture that is antipathetic to knowledge and has to begin again.

Luis Suarez: How do you envision that new radical leadership will revamp the 21st century KM programs? Will they have learned from past “mistakes” and do KM properly this time? The reason why I am adding this is because if we look at the original KM and how it was envisioned and how Enterprise 2.0 was first put together, there are hardly any differences. In a way they seem to be walking similar paths and somehow today’s leadership doesn’t seem to have learned from past “mistakes”. So does KM need to reinvent itself to provide the next generation of Enterprise 2.0 collaboration and knowledge sharing strategies? Is that something that new radical leaders will need to provoke to move into the so-called knowledge  economy? How much does it take KM to adapt to this new kind of leadership? To me, it looks like we are still repeating the same mistakes we did back then! How do we stop it?

It’s undeniable that social computing has a strong influence on how radical management is perceived today in the corporate world. We’ve plenty of examples where we can see the impact that social media has been having in nurturing a new kind of leadership. However, Steve, I was wondering if you could comment on whether you feel that radical management would have taken place without social computing. If so, what shape or form would it have taken altogether? Could we still be talking about a new kind of leadership coming along with radical management?

Stephen Denning: By social computing, I take it that you mean social media, such as Facebook, Twitter and  YouTube.

I think it’s an overstatement to say that radical management “has taken place”. Management is being reinvented and and a number of organizations have adopted the principles and practices that I have called radical management. What I would say is that radical management is emerging as a better way to run an organization – better for the organization, better for the customers and stakeholders and better for the managers and people doing the work. There is still quite a bit of work to be done in converting the Fortune 500, governments, health and education systems to this way of thinking.

The driving force behind the push towards radical management is not social media. The driving force is that traditional management doesn’t work. The rate of return on assets is a quarter of what it was in 1965. The life expectancy of a firm in the Fortune 500 is down from around 70 years to less than 15 years and declining fast. Only one in five workers is fully engaged in his or her work. This is a record of failure. As a result, another way has emerged.

Social media is a facilitator of the change, by exposing the incapacity of traditional management to cope with social media. But by itself, social media is not the driver.

Will radical management work any better than traditional management? Stuart Slatter et al in Leading Corporate Turnaround said “Characteristics of the    appropriate remedy are that it must

•     address the fundamental problems;
•     tackle the underlying causes (rather than the symptoms) and
•     be broad and deep enough in scope to resolve all the key issues.”

I believe that radical management meets these criteria.

It will depend however on how it is implemented. If it is implemented by managers with a top-down thing-oriented mindset, it won’t work, It’s not just a set of tools and practices. This is a fundamental shift in the way people think and act in the workplace. When people make that shift, it works. It has to start with a change of heart.

Luis Suarez: I find it intriguing how you see social media as a facilitator for radical management.  I think it’s more than a facilitator; it’s more an enhancement, and augmentation, of what radical management and that new kind of leadership you mentioned sould be like. I am sure that without the role of social media, radical management would probably take decades more to sink in. Social media is accelerating this sense of failure big time. Specially when the knowledge workers get together, talk amongst themselves, rally around, network and collaborate with one another they showcase how traditional management and business are both broken and how a new change is needed. If anything, social media has transformed traditional managers into “leaders as servants”. I think this is one of the main paradigm shifts in today’s leadership.

I do agree with you that radical management will come about eventually. However, I still think that social media has played a key role in helping define the next generation of leaders.  Without social media I  believe we would probably not be talking about radical management today. Recent global events could probably help vouch for that. And along with it traditional businesses have changed the way they operate through social media. I just can’t conceive of a world of radical management without the high level impact social media had over the last 3 to 5 years and counting …

Stephen Denning: Social media have played a big role  in the transitions under way in the political sphere in Tunisia, Egypt, Libya and elsewhere. I have been among those who have disagreed with Malcolm Gladwell who predicted otherwise.

But when it comes to corporate change, we are not looking, so far, at a social revolution like that, but at something led by managers, who for the most part have not been connecting by social media. So at best, social media in this area has been a minor factor to date in the changes under way in big organizations.

It would be romantic to think of social media as the   irritating grain of sand that caused the beautiful pearl of radical management to grow within the oyster of management, but it’s not obvious that this romantic picture fits the facts.

I believe the truth is more mundane.

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Traditional management stopped working.

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Managers had to find something that did work. Hence radical management began to blossom.



Leading From The Edge
(John Hagel)
Leadership In A Flat Organization (J.P. Rangaswami)
A Wake-up Call For Despots (Lee Bryant)
When Brand And Corporate Values Meet (Hermann Demmel)

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