Articles

In every large company, groups of creative individuals self-organize to explore and develop ideas that they care deeply about. These collaborative networks often include customers and others outside the company’s boundaries. Take, for instance, the automaker BMW, which posts numerous engineering challenges on its Web site, enabling customers and company designers to network and collaborate on developing various features of future cars. Now collaborative innovation is being extended from the realm of idea generation and product development to the very essence of doing business. In fact, some companies have based their entire business models on collaborative networks. The classic example is Wikipedia, the free online encyclopedia that relies on a swarm of people to write, edit and fact check the information listed in its entries. According to the authors, these “swarm businesses” pick up where the e-business craze stopped, with one crucial difference: e-businesses were primarily concerned with eyeballs (getting as many people as possible to visit a particular Web site), whereas swarm businesses strive mainly to create real value for the swarm. As companies like BMW, IBM, Novartis and others are discovering, swarm businesses require a completely new corporate mindset. Specifically, to reap the benefits of swarm innovation, companies must (1) gain power by giving it away, (2) share with the swarm and (3) concentrate on the swarm, not on making money. Although these principles differ from the traditional ways of doing business in a number of fundamental ways, they are crucial for companies to succeed in this emerging era of increased collaboration among innovators both inside and outside the organization.

Some weaknesses can be addressed with proper effort and resources, while others simply cannot be changed.

Organizations need to know the details about their performance in all areas of operations—customer service, order fulfillment, inventory management, and procurement—yet surprisingly few companies know what to measure or how to measure it. Most companies’ efforts at operational performance management fail because of common human mistakes; understanding these Seven Deadly Sins of performance management is key to correcting them.

Many corporations are failing to obtain the full value from their boards. This lost opportunity occurs not only in dysfunctional organizations but also in companies that perform well and are market leaders. Specifically, from a recent comprehensive study of board reviews, the authors found that many boards are suffering from the following fundamental problems: inadequate competencies, lack of diversity, underutilization of skills, dereliction of duties, and poor selection and assessment processes. To avoid those problems, organizations need to adopt a set of five basic practices: (1) Choose the right directors (four competencies are required: results orientation, strategic orientation, collaboration and independence). (2) Appoint the right chairman (in addition to the four competencies, candidates must be skilled in empowering others to encourage vigorous debate, coaching and mentoring directors, and holding key executives and other board members accountable). (3) Make succession planning the first priority (this starts with graduate recruitment practices at the organization and is complemented by management development programs). (4) Focus on a few key agenda items (at a minimum, boards should regularly address the following issues: conformance with governance codes and regulations, review of the CEO's performance and succession planning, discussion of ways in which the company will create and develop long-term value for shareholders, and monitoring of the company's operating and financial performance). (5) Review the board's collective and individual contributions (reviews should go beyond just compliance). Although these practices might seem obvious, the simple fact is that far too many organizations either neglect them or make costly mistakes in implementing them.

When conflicts aren't managed well, a company's ability to innovate may be at risk.

Today, as consumer choices on one side of the planet affect living conditions for people on the other side and complex supply chains span the globe, businesses are facing a host of “sustainability” problems & #8212; social and ecological imbalances created by this globalization. Beginning in the late 1990s, organizational members of the Society for Organizational Learning (including Shell, Harley-Davidson, HP, Xerox and Nike, among others) began a variety of initiatives focusing on collaborative solutions to a variety of sustainability issues. The group’s goals have included the application of systems thinking, working with mental models, and fostering personal and shared vision to face these complex sustainability issues. Through its work, SoL (of which two of the authors are founding members) has learned that successful collaborative efforts embrace three interconnected types of work & #8212; conceptual, relational and action-driven & #8212; which together build a healthy “learning ecology” for systemic change. In this article, the authors offer examples from particular projects in which this learning ecology provided an important foundation for substantive progress, and they draw lessons for companies and managers regarding each of the three types of work. Ultimately, the authors conclude that conceptual, relational and action-driven work must be systemically interwoven and that there is little real precedent for that. They offer several guidelines for how it can be accomplished, emphasizing leadership and transactional networks. Finally, they pose three questions that must be answered if systemic solutions are to be successful: (1) How can we get beyond benchmarking to building learning communities? (2) What is the right balance between specifying goals and creating space for reflection and innovation? (3) What is the right balance between private interest and public knowledge?

It can be good or bad, depending upon what kind it is and in what cultural context it occurs.

Organizations often try to include as many people as possible in the decision-making process, but sometimes it's just not possible to involve anyone beyond a small group. The need for confidentiality and speed are constraints, as is the sheer difficulty of polling an entire organization of thousands of employees regarding decisions that will affect the entire company. Managers or executives must sometimes "download" a decision to their people after the fact -- and this is where many a decision crashes on rocky shoals. Mergers fail as key employees leave and others resist change; union contracts are rejected after months of negotiation; and changes in employee benefits meet with strident protest. What's behind these failures, and what can be done to avert them? The authors lay out reasons for ineffective downloading: a disconnect between the two sides as the negotiating party fails to see the negatives of a decision; a failure to clarify responsibilities that result in rumor and word of mouth being the primary channels of communication; a desire to inform people quickly -- which often means superficially; and a paternalistic desire to protect members of an organization when people would prefer just to hear the truth. Against this record of mistakes and misguided notions, the authors set their four-stage process for a robust decision downloading. Their process is informed by survey research of several hundred employees in a variety of organizations, as well as interviews with dozens of executives.

Many multinational companies attempt to monitor working conditions in suppliers' factories in developing countries through corporate codes of conduct, along with monitoring to determine compliance with these codes. There is considerable debate about the merits of this approach. As part of a larger research project on globalization and labor standards, the authors conducted a comparison of two Mexican garment factories that supply Nike Inc. Both plants (referred to as Plant A and Plant B) received very similar scores on a Nike factory audit, and both manufacture T-shirts for Nike and other companies. Workers in both plants are unionized. However, a closer examination revealed that working conditions in the two factories are in some respects quite different. Compared to workers in Plant B, workers in Plant A earn more per week, report greater job satisfaction and have greater say in workplace decisions. Furthermore, in Plant A overtime is voluntary and kept within Nike workweek limits, but in Plant B both forced overtime and excessive overtime occur. What factors contribute to these differing working conditions? The authors conclude that, while there are a number of differences between the factories, a key variable is the way each plant is managed. Plant A has made the transition to lean manufacturing, and, in the process, workers received training and were empowered to participate in more decisions on the shop floor. Quality, worker productivity and worker salary all increased at Plant A. The authors conclude that global brands could help improve working conditions in supply chain factories by working with suppliers to help them introduce new management systems.

Since the 1980s, the percentage of obese Americans has risen from one-sixth of the population to nearly one-third -- and the problem is particularly acute among children and adolescents, where the obesity rate has tripled in 30 years. While this problem is certainly, in the first instance, one of personal responsibility and self-control, business leaders should be concerned, too -- for at least four reasons. The first reason is simple self-preservation: Food and beverage companies could find themselves in the trial lawyers' crosshairs. The second reason is closely related to the first: The food and beverage industry is the target of the public's increasing ire over portion sizes and unhealthy ingredients. Third, companies will not be able to function efficiently if a significant proportion of their current and future employees suffer from obesity. And finally, opportunity knocks: Companies have the chance to develop new products and create a positive brand image that will fatten the corporate bottom line while simultaneously helping obese Americans shed dangerous pounds. The authors explain how several companies are actively pursuing several strategies to help solve America's other "energy crisis" -- too much consumption and too little movement.