KM_and_Innovation by Simantov Assessoria

KM AND INNOVATION: CAN THEY THRIVE TOGETHER? Frances Horibe

DELIVERING HIGH-IMPACT SOLUTIONS Sharing knowledge should theoretically lead to the creation of new and innovative knowledge that an organization can leverage. So why do many KM programs actually prevent innovation from happening? Here, Frances Horibe, author of Creating the Innovation Culture: Leveraging Visionaries, Dissenters and Other Useful Troublemakers In Your Organization, discusses traditional KM projects and their tendency to inhibit, rather than foster, innovation.

KM AND INNOVATION: CAN THEY THRIVE TOGETHER? How certain KM-related efforts can inhibit innovation By Frances Horibe, VisionArts Leaders the world over would have no trouble agreeing that innovation is the single most important criterion for business success in the future. The Society of Management Accountants calls “innovation… fundamental to the quest for profitable, sustainable growth.” Peter Drucker deems it the one business competence needed for the future. And what’s Fortune Magazine’s advice to companies that want to be named to its Most Admired List? Innovate, innovate, innovate.1 Innovation currently accounts for more than half of all growth. And it’s enormously profitable. A 1999 study done by the Economist on the rate of return for 17 successful innovations showed a mean return of 56 percent compared with an average ROI of 16 percent for other projects.2 Organizations also know that managing their knowledge is critical to their present and future survival. They often point to the impending retirement of baby boomers as the compelling reason they need to find a way to retain their intellectual capital. In addition, there’s a growing consensus that developed nations can continue to enjoy their high standard of living only by concentrating on knowledge-dense products and services. The knowledge, or intellectual capital, of your company has become the most important aspect of your business. But since you’re reading this magazine, you already know that.

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Where’s the rub? A common assumption seems to exist that KM and innovation are intimately linked; that is, when you get one (KM), you get the other (innovation). So, when organizations launch their KM initiatives, the stated objectives are not simply the collection and sharing of company knowledge, but also the encouragement of innovation. However, my observation is that most organizations undertake knowledge management in a way that’s highly unlikely to foster innovation. They may see the collection and sharing of knowledge, but they won’t see high levels of innovation. One organization I worked with managed outsourced functions. In the past, the company had managed the functions with their internal expertise. But, they were running into two problems. First, the functions they were hired to manage were increasingly more complex. Instead of simply managing the pay lists of a company, they were now getting the entire HR function – recruitment, employee assistance and training. The second problem was size. The sheer volume of work was growing exponentially. They lacked both the number of people and the right expertise in the right places. The volatility of the business made senior managers reluctant to simply hire more staff that they might have to lay off if the market turned. Then, someone seemed to provide the answer: knowledge management. If everybody in the

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KEYPOINTS company knew what everybody else knew, both the expertise and the workload issues would be solved. The senior managers bought the idea. The KM practitioners worked assiduously to collect the company’s knowledge. Large databases were built, many practices and procedures were written down and employees were exhorted to share. Early on in the process, the idea had been floated that the company might need to restructure how it did business. One possibility was to become more of a broker of services – that is, internal employees would act as project managers to multiple outsourced functions. They wouldn’t do the work themselves, but would find the right individuals or small companies that could and put them together in an affordable package. But the KM staff assured senior managers that this innovation could be an outcome of the KM process and the executive group agreed to let the KM staff proceed. But after three years, little, if anything, had changed. While there had been an extra workload imposed on staff in collecting the knowledge, the positive effects seemed to be sparse. Workload and the shortage of the right expertise in the right place were still nagging problems. The broker idea had been put on hold while the thorny problems of collecting and disseminating all the important knowledge were tackled. This is an example of an organization so caught up in implementing big systems and in capturing knowledge that they pushed out an innovation that in fact might have solved the problem. My sense is that this is a phenomenon on the rise in many organizations – the way KM is implemented in most organizations is pushing out innovation even though innovation is one of KM’s stated objectives. This article will cover three examples of typical KM-related projects – teams, best practices, and capturing new ideas – to explore why most KM implementations are unlikely to produce breakthrough innovation and will point out how to increase the chances of having both effective KM and innovation. Dangers of groupthink Over the last 10 to 15 years, organizations have become incredibly sophisticated about how they get work done. They have discovered that although it may take more time up-front to build a team, it’s marvelously efficient in the longer-term to accomplish things. Teams are also the perfect venue for knowledge sharing, since there’s no better way to avoid hoarding of knowledge than by getting people to work on a collective goal. In this, there seems to be a fortuitous convergence. Not only are teams good for knowledge sharing; they are also

Team projects, best-practice repositories and capturing new ideas are common KM projects that perpetuate the status quo. If your organization needs to innovative to stay ahead of the competition (and who doesn’t?), consider re-thinking the way you approach KM projects. KM projects that were sold based on productivity and efficiency are, of course, being measured on that basis. But, productivity and efficiency pressures often prevent innovative ideas from surfacing. Organizations committed to KM are focusing on cultural and attitudinal changes, rather than technology and processes, to generate results. Cultures open to sharing and new ideas probably also embrace innovation. Imposed knowledge management won’t lead to innovation.

supposed to be great sources of innovation. So we are able to knock off the two big strategic objectives of most organizations with one stone. Teams really are productive and effective vehicles to get things done, often because they encourage and sometimes coerce, through peer pressure, the sharing of knowledge. But while they may be a great way to get things done, my observation has been that they rarely make startling decisions or come up with significant leaps forward. They don’t make worse decisions, nor have worse ideas than their managers; they just don’t have better ones. I was part of a group that was supposed to come up with an innovative way to restructure a company. Everyone worked long and hard, but in the end, the “new” organization looked suspiciously like the one in place. This group was as innovative and insightful as any other, but things like turf, fear of change and protecting sacred cows got in our way. Research discussed in the California Management Review shows that groups tend to be less creative than individuals alone.3 People are very influenced by others’ opinions. The public “yes” of some can override a person’s private “no.” This can be a downward spiral. Even though I’d prefer to say “no,” I feel pressured to say “yes.” My public “yes” encourages still others to disregard their own feelings and agree also. Groups are inclined to adopt the strategy the majority favors to the exclusion of other possibilities. Thus, they are relatively unable to detect original solutions. Groups will tolerate a range of opinions, but only if they stay within the boundaries of the accepted philosophy. That is, as long as you believe in quality, your opinions are welcome. If you don’t, your views will be censured. In democracies, the danger of allowing only certain opinions is wellrecognized and special pains have been taken to address the problem. Freedom of speech guarantees me the right to my opinion even if others vehemently disagree, even if my worldview is repugnant. But while we have this right as citizens, it’s not so clear this tolerance extends to our q

Frances Horibe is the best-selling author of Managing Knowledge Workers. Her current book is Creating the Innovation Culture: Leveraging Visionaries, Dissenters and Other Useful Troublemakers. She speaks to and consults with organizations frequently.

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DELIVERING HIGH-IMPACT SOLUTIONS KM AND INNOVATION: CAN THEY THRIVE TOGETHER?

t work life. In organizations, freedom of speech is a rare commodity. Thus, while groups are excellent vehicles to share knowledge and get things done, they are not necessarily stellar at coming up with the best ideas. They can impose the kind of groupthink that discourages innovation. There are some conditions under which teams can operate both efficiently and innovatively. When teams not only tolerate, but continue to listen to dissenting voices, they are more likely to come up with original solutions, without respect to whether the dissenter is right. But, as I outline in my latest book, this isn’t how most teams operate. Quite the opposite in fact. In order to maintain top efficiency, they often censure or shut down those who look like they are wasting the group’s time by not being “on board.” So teams, while they may be excellent for knowledge sharing, may not be so great for innovative ideas. Dangers of best practices “Best practices” have become a hallmark of a serious KM implementation. We all want to profit from past mistakes and avoid future ones. But, I have come to believe that the value of best practices may be more limited than we’d like to believe. They’re not necessarily all that good for KM, and certainly not good for innovation. As most organizations implement the process, best-practice sharing becomes fairly sterile and systematic. Typically, part of a company’s intranet is devoted to it. Employees are exhorted to write up either how they have been successful or what to avoid doing. A lot of money is often put into making best practices widely available. However, after the first big fanfare, people tend to stop contributing. They just don’t seem to find the time to think about what worked and what

Critically examining your KM efforts Horibe suggests that many KM programs are designed in ways that make innovation unlikely. Here are some questions to ask to determine if you’re unconsciously inhibiting innovation: • Who asked us to build our best-practice system? Employees or management? If management did, do employees see a reason to use it? • Do most employees recognize that they need to collaborate and share knowledge to do their jobs? Or do they see it as a chore? • Are true brainstorming sessions encouraged where new – and maybe even “crazy” – ideas are welcomed, rather than ridiculed? • Does management reward those who try new things and fail? • Are employees given “decompression time” to reflect on what’s working in their jobs, or what might be broken? • What messages do you hear from top management? The need for efficiency and productivity? Cost savings? Learning?

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didn’t. In addition, even if best practices are available, people don’t use them. My experience is supported by research. In interviews of team leaders, fewer than half (46 percent) regularly do any kind of in-depth, post-project analysis. Only 27 percent used that information to improve their own project and 13 percent shared that information with others outside the team. Obviously, if people aren’t contributing ideas and not using those of others, structures of best practices are an elaborate waste. We have a system all dressed up, but nowhere to go. When you think about it, the relative paucity of sharing makes perfect sense individually, but it might be deplored organizationally. First of all, stopping to reflect always takes more time than plowing ahead. Moreover, doing so opens up the possibility you weren’t perfect – a thought few pursue with vigor. Even if you do reflect, you don’t have to write it down or make it public to benefit personally; that’s only necessary to help others. But do I really want to disclose that I didn’t know which end was up and detail how things went wrong? Why would I? Because my boss thinks it’s a great idea? And there is a suspicion that even if you bared your soul, those reading it wouldn’t take in the full value because they hadn’t lived the experience. There are learnable moments, much like teachable moments. I’m not trying to suggest that best practices have no value. On the contrary. They are a great way to force everyone to stop and reflect on what happened rather than running wildly to the next task. But while it’s worthwhile for the group involved to reflect, are the big and complex systems some organizations have worth it? I’m not convinced. Best practices have another downside – they may suppress innovation. Best practices are really about improvement, not innovation. Innovation is a whole new take on something; improvement is making the status quo a little better. While both are valuable, a system aimed at one will not get you the other. Best practices are by and large about efficiency, not innovation. In addition, there’s a distressing trend that, to my mind, shows how talented people can sometimes take a good idea so far that it turns into a crummy one. Michael Schrage, a Fortune columnist, reports that some companies make the use of best practices compulsory: “In practice, … ‘best-practice’ databases create brave new infostructures that effectively enforce employee compliance with organizational norms.” If efficiency was the aim, that might not be bad. After all, if there really is one best way, why not require everyone to use it? It cuts out all kinds of messing

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around and arguing about what to do. But messing around and arguing are needed in an innovative organization. If you always do what you’ve always done, you’ll always get what you’ve always gotten. On the way to efficiency and in the wrong hands, best practices can be an instrument of conformity. So organizations need to temper their enthusiasm for the full-scale use of best practices. Encourage people to do it within their teams, by all means. Encourage them to share the relevant ones. Load them on your intranet, even. But don’t make their use compulsory, don’t discourage people who think they have a better way and don’t think you’re helping innovation. Pitfalls of capturing good ideas In working with senior managers to manage their company’s knowledge, invariably, someone will say, “I know there are a lot of great ideas out there, but we have no way of capturing them.” Organizations do need a way to profit from their people’s ideas. And finding a way to share knowledge is certainly one way to do that. However, when managers talk about “capturing” ideas, there’s a sense of encasing or corralling them. But, like yeast and wild horses, ideas tend to resist being fenced in. These managers would protest I’m making too much of a word – what they really mean is a process to capture – oops! there’s that word again – to gain control of (nope) – to be aware of new ideas. It’s understandable managers want a process to capture new ideas (new knowledge), since capturing is exactly what we’re attempting to do with existing knowledge. But, the generation of new ideas is not the same as the process to capture existing knowledge. Daydreaming, messing about, taking paths that don’t lead anywhere, research for research’s sake – these things are inefficient but are sometimes necessary precursors to innovation. It’s like you’ve got to keep the pot boiling with all manner of seemingly irrelevant things so that, every once in a while, a great idea will pop up. But daydreaming and messing about are typically what we try hardest to stamp out on the road to productivity. If there isn’t a direct line from what you are doing to something productive, you must be wasting time. But innovation is not a linear process. You cannot command it (“You will have a breakthrough idea”) or put it on a timeline (“By 10 a.m. tomorrow morning”). So trying to push the production of great ideas into a process doesn’t make any sense. While total chaos isn’t productive, neither is total order. A little chaos is a good thing when it comes to innovation. The orderly sharing of knowledge that’s encouraged by KM may not be the best vehicle for innovation.

The way out of sabotaging innovation I realize that if you buy what I am saying, you may be fairly depressed at this point. It looks impossible to get both innovation and KM. But, I don’t think that is the case and in fact, you already have most of the tools at your fingertips. You will note that throughout the article, I’ve been careful to talk about KM as most organizations implement it. In most organizations, KM has been sold and bought based on its ability to increase people’s productivity, with innovation as an added bonus. But because KM advocates promised this in order to get the funding and support needed, it’s not surprising that that’s where the results are sought. And unfortunately, somewhere along the way, productivity has been interpreted as a focus on technology and process rather than culture and attitude change. While I don’t want to denigrate the importance of technology and process, organizations that are committed to KM are beginning to understand that they’re not sufficient. An ideal KM implementation uses technology and process when appropriate, but recognizes that they’re both necessary, but not sufficient, conditions for success. You can build a Yellow Pages, but if no one will contribute, all you have is an out-of-date inventory. The culture change that promotes a willingness to share is the one that will increase the likelihood that KM will succeed. And the kind of culture that has willing sharers – one that’s open to different ideas, forgives mistakes, promotes autonomy and values contribution – will also probably encourage innovation. So, you do have what you need to promote innovation, but the emphasis of what you are doing may need to shift. Rather than looking at communities of practice, mentoring programs and rewards for taking risks as KM sidelines, they need to be its focal point. Unless and until KM practitioners recognize that culture is as important as technology, they may get KM, but they won’t get innovation.

References: 1. Stein, Nicholas. “The World’s Most Admired Companies”, Fortune, October 2, 2000. p. 183. 2. Valery, Nicholas. “A Survey of Innovation in Industry.” The Economist, Feb. 20, 1999. p. 7 3. Nemeth, Charlan Jeanne. “Managing Innovation: When Less is More.” California Management Review, Vol. 40(1), Fall 1997. p. 62

Contact Frances Horibe VisionArts, Inc. E-mail: franceshoribe@franceshoribe.com

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