A lovely story .. make sure you read it all (won’t take long).

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Love in the Time of Stochasticity

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Love is random and it has no script. Kind of like conversations with cable service-providers.

“I give up, I don’t know what to do,” I told Mister (now super annoying) Super Tech Comcast guy who–honestly?–at this point (minute 49) was losing patience with me.

“I think you need a new router ma’am,” he said, oozing false politeness.

“But I don’t understand,” I cried, appealing to rationality in a world where it doesn’t exist (aka Comcast). “The router worked fine today. It only stopped working when we changed the modem!” I said (mentally patting myself on the back for using both “router” and “modem” in one sentence).

“I can’t explain it ma’am,” he said. I gritted my teeth. Of course you can’t, I thought.

“But sometimes, if you have had a modem and a router together for a long time, and you change the modem?”

Yes, I thought, waiting for some sort of fancy technical voodoo retort.

“Sometimes the router remembers the old modem…,” Comcast-Tech-Guy said, trailing off.

Sometimes the router remembers the old modem?

“Sometimes the router remembers the old modem…and misses it…”

Wow. My router misses my old modem.

They had been together for 5 years.

As long as I’ve been married.

Random.

What does it all mean?

Who knows.

Love is all around us. 

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Today’s networked era requires a new way to make investment decisions that incorporates intangible assets and more accurately depicts how value is created.

The industrial age has run out of steam. Look at General Motors. Look at Chrysler. We are witnessing the death throes of management models that have outlived their usefulness.

The network era now replacing the industrial age holds great promise. Networked organizations are reaping rewards for connecting people, know-how and ideas at an ever-faster pace. Value creation has migrated from what we can see (physical assets) to intangibles (ideas). Look at Google and Cisco.

Understandably, seasoned executives, chief learning officers among them, are having a devil of a time shifting from the industrial age mindset of logic, certainty and bounded constraints to the network gestalt of interaction, self-organization, unpredictability and fewer limits to potential. The pressure is constantly on to meet quarter-to-quarter revenue and earnings targets that in turn accentuate the need to take decisions that support achieving those targets. At the same time, we are shifting into an era in which knowledge work and learning occur where re-engineered business processes collide with a participative and interactive ecology of information flows.

How can a chief learning officer hope to make informed judgments in this continually expanding networked environment that’s flowing ever faster, spreading power among its members and producing outsized impacts in unpredictable ways? What to do?

One cherished industrial age concept that is proving particularly difficult to let go of is return on investment (ROI). But like Pontiacs and Oldsmobiles, old-school ROI’s day in the sun is waning. In an environment of continuous flow and interaction, there’s a need to consider an emerging metric: return on investment in interaction (ROII). The working definition of ROII is the observable development of capacity and capability to create economic values out of intangibles.

Consultants and smart-aleck MBAs will tell you if you want to sell a big project internally, you’ve got to talk ROI. It’s the language senior managers understand. Being fluent in ROI talk addresses the “hard” tangible returns stemming from an investment in a specific project or capacity. It is supposedly the secret handshake that gets you to the inner circle of those who control budget dollars.

Let’s look at what ROI was, how it needs to be changed and how to recapture its original intent in the network era, in which continuous learning and knowledge work are becoming inseparable. As Steven Forth of the LeveragePoint division of the Monitor Group puts it, “Too many people who talk about the ROI of learning are focused on being precisely wrong rather than directionally correct.”

Traditional ROI 

ROI is an accounting and financial management concept businesses use to decide where to make investments and to assess the success of investment decisions after the fact. ROI reduces both return — R, what you expect back — and investment — I, what you expect to put in to numbers — making it possible to compare one investment opportunity to another. The numbers tie back to categories on the balance sheet and income statement, (i.e. tangible assets and hard-dollar returns).

ROI is what you get for your money, divided by what you spent to get it. It’s R/I expressed as a percentage. In a business culture that is skeptical of nonnumerical reasoning, ROI implies disciplined, mathematical rigor. It ties actions to intended results. It shows the logic of how results will be achieved.

Companies set up ROI hurdle rates to gauge whether there will be sufficient payback over a reasonable and defined period of time to justify the capital invested to acquire additional capacity or produce a defined result. Companies also use ROI to evaluate past performance. In retrospect, what was spent and what benefits were received? This simplifies making the case for similar projects in the future. 

What You Can’t See 

In the network era, things you can’t see are more valuable than things you can. Thomas Stewart sounded a clarion call in his book The Wealth of Knowledge with his exhortation that building the capacity to create economic value through things such as innovating and enhancing brand reputation is as important, or more important, than generating specific results from a specific initiative. Twenty-five years ago, intangibles accounted for less than a third of the value of the S&P 500. Today, intangibles can make up more than 80 percent of that value.

On paper, Google’s net worth was about $30 billion at the end of 2008. That’s what it paid for computers, buildings and stuff you can see, minus debts and the expense of wear and tear. Stock market investors value Google at $125 billion. Where does the extra $95 billion come from? Intangibles.

“Intangible assets — a skilled workforce, patents and know-how, software, strong customer relationships, brands, unique organizational designs and processes, and the like — generate most of corporate growth and shareholder value,” wrote NYU Professor Baruch Lev in Harvard Business Review in June 2004.

Corporate decision makers say their goal is to increase shareholder value. In a networked, information-based environment, shareholders value brand, reputation, ideas, relationships and know-how. These assets don’t appear on the balance sheet, but more and more often they provide a corporation’s competitive edge. These most important aspects of the business aren’t recognized by old-school accounting and therefore aren’t factored into ROI calculations.

Organizations that make decisions based solely on things that are sufficiently tangible to be counted directly might as well consult a Ouija board to set their goals. Leaving the most important sources of value out of the ROI equation is not conservative — it’s foolish.

Measuring intangibles involves making judgment calls, so managers often exclude intangibles from their ROI calculations. Several purported authorities on calculating ROI suggest taking intangibles into account by putting them on a list but refusing to estimate their value. This leads you to comparing numbers to words, apples to oranges. 

You Must Manage What You Can’t Measure 

“You can’t manage what you can’t measure” was a mantra of industrial age management. Adopting F.W. Taylor’s brilliant research and models, generations of managers have carried stopwatches and pored over measurements in a continual quest to make things work better. Efficiency was the road to riches in the slower-moving, predictable industrial age, and measurement was the proof of the pudding. �
While the measurement meme works when your goal is to tweak the way you’ve been doing things and other operational decisions, it doesn’t apply to making judgment calls, strategic choices or disruptive innovations.

Executives manage immeasurable things all the time. The more powerful the executive, the more likely he or she is involved in effectiveness — doing the right things rather than doing things right. Intuition, judgment and gut feelings guide these more important decisions. Qualitative assessment often can make up for a concrete numeric result.

Make a hypothesis of cause and effect. Interview a statistically significant sample of the workforce to see if the hypothesis holds up. Often, results obtained from social science research methods will produce more meaningful feedback than solid counts of the wrong thing.

The old “can’t measure, can’t manage” dodge doesn’t free businesspeople from making decisions under conditions of uncertainty, and the network era ushers in uncertainty in spades.

Making Decisions in the Era of Networks 

A business network is a group of individuals or organizations that are linked together by factors such as values, visions, ideas, financial exchange and collaboration to further the ends of the corporation. Business networks share common characteristics with all networks:

• They multiply like rabbits because the value of a network increases exponentially with each additional connection.
• They naturally become faster and faster because the denser the interconnections, the faster its cycle time. 
• They subvert hierarchy because previously scarce resources such as information are available to all.
• Network interactions yield volatile results because echo effects amplify signals.
• Networks connect with other networks to form complex adaptive systems whose outcomes are inherently unpredictable.

Intangibles travel via networks, and networks are the infrastructure for doing business in the future. An overarching caveat here: Strategist and practitioner Stuart Henshall said trust is critical. “It’s the one qualitative factor all networks depend upon.”

ROI, the tool we once used to evaluate projects in stable times, clearly is not up to the task. The impacts of collaboration-based knowledge work are accelerating. However, the Western world is lurching from crisis to crisis, and executives are under constant pressure to perform. It’s difficult for them to give up models they understand well.

In the future, organizational effectiveness will be defined by the interaction of workers in a networked environment. Exchanges of information and knowledge are what make peoples’ brains work on a purpose and what gets the imagination going to formulate pertinent responses. However, the return on networked collaboration is less tangible than the results generated from stable and ordered sequential tasks that dominate the efficiency-oriented industrial era.

So we face the problem of convincing managers to adopt new mental models that incorporate the intangibles generated by a whole system, the organization and its interconnected networks. Making a business decision to invest in new ways of working is a complex process involving many factors and intricate tradeoffs, such as: 

• Risks must be weighed against rewards. 
• Short-term vs. long-term aims. 
• Alignment with strategic initiatives. 
• Scarce resources call for shrewd horse trading. 

Identifying and Measuring ROII

The focus in this new world of work is to do what’s important and involve those who know what’s important, why it’s important and what they know (or know how to find out) about a problem or issue. To begin measuring increases in productivity and value in a networked social computing environment, we propose return on investment in interaction (ROII), derived from the principles of Metcalfe’s law of networks.

Some core assumptions about ROII :
• Continuous flows of information are the raw material of an organization’s value creation and overall performance.
• Information flows are carried by links, alerts, RSS feeds, search engines, aggregation and filtering of content.
• All leading vendors’ productivity platforms now feature collaborative social networking and computing.
• These platforms’ architectures facilitate purposeful cross-silo communications and exchange.

In a June 2008 “The Network Thinker” blog post, social networking pioneer Valdis Krebs outlined four generic metrics that are becoming widely accepted as leading to observable, tangible measurable outputs:
• Increase in size of network. 
• Increase in internal network connectivity. 
• Increase in connection to valuable third parties. 
• Increase in number of projects formed from all three factors above.

It’s important to note here that we are not proposing a definitive answer, but rather the need to debate and clarify the issues. Each of the principles outlined above proposed by Krebs addresses the productivity of network activity. Unpacking them can help us understand how to begin to assess ROII.

Increase in Network Size

If we follow the logic of two heads are better than one, and therefore X heads are better than two, in social- and knowledge-building networks, we can expect to find:
• More engagement with an issue.
• More analysis by more people.
• More input from more people.
• More possibilities that may have been overlooked.
• Quicker and more comprehensive analysis.

CapGemini’s relaunch of its knowledge management initiatives offers a great example. Its initial program wasn’t working: 20 percent year-on-year usage decline, three and a half year average document age and an average of seven years to refresh current knowledge. It relaunched informally via word of mouth and within six months had 27,000 of 83,000 employees using it, involved in 900 communities exchanging information and pertinent knowledge on a daily basis. All that activity came without spending a single dollar on formal internal communications or training. 

Increase in Internal Network Connectivity 

Increases in network connectivity involve the degree, frequency, density and concentration of information flows between nodes in a social network. The organization is able to define better business and market intelligence, more frequent and tangible customer centricity and responsiveness, and clear instances in which cross-silo knowledge exchanges lead to tangible results.

At CapGemini, six months after the informal launch, the 900 communities of practice were using 500 forums, 500 wikis and more than 250 expertise- or project-focused blogs. Business results as defined in the previous paragraph are not long behind.

Increase in Connection to Valuable Third Parties 

In today’s increasingly interconnected environment, ignoring external parties that have an interest in products or services is a guarantee for trouble. These interested parties talk about brands or offer up opportunities, and organizations that respond rapidly and effectively to issues gain competitive advantage.

Ford Motor Co. opened up its launch of the new Sync service to customer input and conversation. With 1 million page views in less than 12 months, the company experienced a significant reduction in customer-service support costs as 10,000 customers began to offer each other tips, pointers and answers. Further, it began to receive significant tangible market intelligence as engaged users began to share product integration and compatibility experiences, tips and tricks. 

Increase in Number of Projects

ROII is obvious when the scope, degree and intensity of interaction increase due to implementation of the three above principles. An increase in the number of projects creates value as people learn to work together effectively in networks, putting informal learning to work on resolving issues, creating opportunities and generating activity that enhances an organization’s reputation for listening and responding effectively.

Fast Company recently published an article on Cisco Systems’ large-scale adoption of social computing as the main means of working with information and knowledge. CEO John Chambers said that as a result, Cisco has gone from being able to focus on three to five strategic initiatives at a time, to now working on 26-27 strategic initiatives in parallel. 

Informed Judgment 

The heart of the matter is providing decision makers with an informed business case that ties investment to the results that it brings. A solid case describes results in business terms, such as increased revenue, better customer service, reduced cost or speedier time to performance.

Network returns are asymmetric, so simplistic count-’em-up approaches are no longer viable. But how can one make a solid network-era case to an executive who is still playing by yesterday’s rules?

The answer is to improve the corporate network as a continuous process, not as a project with a hurdle rate. Improving network performance need not be all-or-nothing. It can be implemented in small stages. Break major decisions into numerous low-risk incremental decisions. Instead of making one major decision a year, CLOs might look at boosting network results as a series of monthly decisions. Continuous monitoring of the statistics of ROII would guide mid-course corrections.

Life was simpler when you could measure performance by counting the number of widgets produced, shipped or sold. Given that the networked workplace and markets are here to stay, how can managers begin to adapt and refocus long-standing mental models about what and where to invest precious energy and time? An effective response to this conundrum is qualitative assessment.

Create a hypothesis and use existing techniques — surveys, focus groups, facilitated brainstorming — to find out what employees and customers are doing and how they want to work together. Then, check it out with a wider sample of the workforce to see if it holds up. It’s clear we are moving rapidly into a networked world in which responsiveness, innovation, gaining competitive advantage through learning faster and embedding knowledge into products and services are all important.

In a world of intangibles, we need to contribute to the productivity, viability and profitability of any given enterprise. We should rethink and expand our methods for making judgments about where, when and how we invest in the ongoing interaction between our employees and customers. That is the return on investment in interaction.

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 … when paired with an on the ground process for innovation.

This sounds like a health and robust type of competition.

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And the Winner of the $1 Million Netflix Prize (Probably) Is …

After nearly three years and entries from more than 50,000 contestants, a multinational team says that it has met the requirements to win the million-dollar Netflix Prize: It developed powerful algorithms that improve the movie recommendations made by Netflix’s existing software by more than 10 percent.

The online movie rental service uses its Cinematch software to analyze each customer’s film-viewing habits and recommends other movies that customer might enjoy. Because accurate recommendations increase Netflix’s appeal to its customers, the movie rental company started a contest in October 2006, offering $1 million to the first contestant that could improve the predictions by at least 10 percent.

Teams have been working on the task ever since, with some coming tantalizingly close to the magic threshold.

On Friday, a coalition of four teams calling itself BellKor’s Pragmatic Chaos — made up of statisticians, machine learning experts and computer engineers from America, Austria, Canada and Israel — declared that it has produced a program that improves the accuracy of the predictions by 10.05 percent.

Under the rules of the contest, Netflix said that other contestants now have 30 days to try to do even better. If they cannot, BellKor’s Pragmatic Chaos will collect the $1 million.

The Netflix Prize contest has been hailed as prime example of “prize economics” and the crowdsourcing of innovation. Prize economics refers to running a contest to generate a new innovation at less cost than an in-house research and development effort, and crowd-sourcing refers to using the proverbial wisdom of crowds to accomplish a task. Netflix has said that $1 million would be a bargain price for an improved recommendation engine, which would increase customer satisfaction and generate more movie rental business.

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Concept : the real country in which we live is not the Internet, but the meaning created by the information about the information which circulates in networks.

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The media is dead.  Long live the media

I gave up on the mainstream media in 2002-2003, in the run up to the Iraq war. Every single channel in the USA was selling the prospect of war like a product, a new soap powder. I tried to find coverage of the over one million person protest march in London that I’d heard about via email, and it was barely mentioned. The last straw came when I got so angry I nearly threw a chair through my brand new plasma TV, which would have been an expensive outburst, but that’s what you get for watching Fox News for longer than it takes to flip through the channels on the remote.

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Peer-to-peer is the key. The shift that is currently taking place is from an old style of centralized network media, to a decentralized peer-to-peer media. You can participate. You should participate. The Internet is what makes this possible.

The change this is going to make in our societies I think will be profound, and I don’t even pretend to know what it will be long term. But I firmly believe it is coming. It’s really exciting to be alive in these times, to see such a major change going on all around us.

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Clearly something’s happening …

I’m not going to read them all.  I’ll bet you’re not going to either.

But it’s a noteworthy phenomenon.

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Google Blog: Citizentube tracking ‘way people using video to change the world’

Google plugs Citizentube, a Youtube blog ‘devoted to chronicling the way that people are using video to change the world.’ Google’s post uses these as examples of the type of material the blog will showcase:

“Did you know that a nine-year-old recently used YouTube to successfully campaign to save his local kickball lot? Have you seen the video of a Guatemalan lawyer who predicted his own assassination on YouTube moments before it happened?

Or did you know that YouTube and Google have launched a new technology platform for political debates, which allows you to submit and vote on the most important issues you want to discuss with political candidates?”

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“I’m always a little reticent to draw lessons from things still unfolding, but it seems pretty clear that … this is it. The big one. This is the first revolution that has been catapulted onto a global stage and transformed by social media.

 I’ve been thinking a lot about the Chicago demonstrations of 1968 where they chanted ‘the whole world is watching.’ Really, that wasn’t true then. But this time it’s true … and people throughout the world are not only listening but responding. They’re engaging with individual participants, they’re passing on their messages to their friends, and they’re even providing detailed instructions to enable web proxies allowing Internet access that the authorities can’t immediately censor. That kind of participation is really extraordinary.

Traditional media operates as source of information not as a means of coordination. It can’t do more than make us sympathize.

Twitter makes us empathize. It makes us part of it. Even if it’s just retweeting, you’re aiding the goal that dissidents have always sought: the awareness that the outside world is paying attention.

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For emphasis, Thomas Friedman in today’s NY Times:

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What is fascinating to me is the degree to which in Iran today — and in Lebanon — the more secular forces of moderation have used technologies like Facebook, Flickr, Twitter, blogging and text-messaging as their virtual mosque, as the place they can now gather, mobilize, plan, inform and energize their supporters, outside the grip of the state.

For the first time, the moderates, who were always stranded between authoritarian regimes that had all the powers of the state and Islamists who had all the powers of the mosque, now have their own place to come together and project power: the network. The Times reported that Moussavi’s fan group on Facebook alone has grown to more than 50,000 members. That’s surely more than any mosque could hold — which is why the government is now trying to block these sites.

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Much of what the average knowledge worker of today sees as “work” is the daily communion with the computer screen on her or his desk. They access the software with which they work and communicate with other employees through portals, on the company’s infrastructure of applications, or (increasingly) via the Web tools and services.

As we have learned more about how to integrate software-based capability into our daily work lives, we have seen various forms of employee portals, partnership portals, project management portals and, more recently, comprehensive real-time enterprise computing applications take root and grow in many organizations. The IT infrastructures of organizations, coupled with ongoing growth in the scope and use of smart software, will create a type of integrated nervous system, providing top management and workers with an improvement-and-learning focused feedback loop.

When software connects customers directly to business processes, and employees have “line-of-sight” responsibility for making a clear contribution or directly impacting business results – when most of an organization’s strategy and value proposition is directly coded into its CRM, ERM and B2B applications, will the types of supervision and management we learned in the ‘70’s and ‘80’s continue to be effective?

There’s a very real issue here that is helping to create a sort of conundrum – the more that work activities are encoded and embedded into integrated systems, the more the human will and spirit needs to surface, assert itself. This polarity is, I think, here to stay and is behind much of the ongoing discussion of conversation, collaboration and social computing.

The proliferation of information technology, business process re-engineering and wrenching changes to established business models created by the rapid development of the Internet is exerting significant pressure on long-standing business hierarchies. Top-down command-and-control management structures and dynamics struggle to maintain effectiveness in the face of free-flowing streams of content-rich information, coming from all directions. Nevertheless, it’s highly likely that hierarchical structures are here to stay … but it’s equally likely that the exercise of hierarchical power and control will be transformed over time.

The dynamics of how people relate – to work, to markets, to bosses and to each other – are changing. A new organizing principle posited on network dynamics – “wirearchy” – a dynamic flow of power and authority based on connections and conversations, may be emerging as a structural principle and a social dynamic for managing organized activities in both business and society.

Wirearchy is an informal but pervasive emerging structure of governance, strategy, decision-making and control based on knowledge, trust, meaning and credibility. Things get done and results are achieved through the interplay of vision, values, connections and conversation.

Wirearchy is generated by an open architecture of information, knowledge and focus, enabled by connected and converging technologies. It suggests a fundamental change in the dynamics of human interaction in – and with – organizations of all sizes, shapes and purposes, and represents an evolution of hierarchy as an organizing principle and dynamic. However, it will not render hierarchy obsolete, nor eliminate the need for direction and control; rather, it will render them more necessary. However, it will change the meaning of those terms and how they are used and experienced.

Many people won’t accept authority easily any more. While old-guard keepers-of-the-keys cling to authority and power, the older models of how to lead and follow are unravelling. Organization charts are still useful, but only if and as they become more fluid (for example, when supplemented by Organizational Network Analysis and a deeper understanding of information and knowledge flows, or streams).

Certainly, organization charts are beginning to appear in a much wider range of shapes than before, and often convey new messages about power, status and control. An example: “Organigraphs,” or pictures of the ways organizations flow and operate, are clearly more pertinent, accurate and useful in many instances when an organization’s activities are more transparent and porous to the external environment, according to strategy and organizational structure guru Henry Mintzberg. Organigraphs maintain a focus on the flow of an organization’s activities and processes, as opposed to the identification and location of decision-making power.

How do today’s leaders and senior managers respond to these forces? Clues are evident in initiatives emerging in the fields of customer and employee relationship management, organizational development, human resources management and organizational change: The use of techniques such as scenario planning, dialogue, open space, 360 degree feedback, emotional intelligence, coaching and mentoring have all grown significantly over the past several years. Together, these soften the rigidity of outmoded structures, and help people respond and adapt. Most organizations carry out ongoing initiatives to create, clarify and improve capabilities in each of these emerging areas. Indeed, a large percentage of the global consulting industry is focused on diagnosing, developing and implementing strategies for these goals.

Wirearchy is significantly different. While it insists that purpose and a focus on results towards that purpose is a core structural component, it also focuses on the structural and psychosocial dynamics generated by interconnectivity and access to knowledge. From the touchstone of purpose and objectives, it addresses not only with what’s happening at the top, but also what’s happening in the roots and branches of an organization. Where hierarchy created focus and meaning through the control of knowledge, wirearchy implies that the use and control of knowledge acknowledges and involves a much wider range of stakeholders.

Yesterday’s success factors involved secrecy and control, size, role clarity, functional specialization and power. Today’s emerging factors are openness, speed, flexibility, integration and innovation. The concept of wirearchy allows readers to develop a strategy for creating, implementing these factors in ways that respond with value to continuously changing conditions. Its core components are:

• a crystal clear vision and values
• a strategically designed and integrated technology infrastructure
• comprehensive, clear and completely open communications
• pertinent objectives and focused measurement
• characteristics of culture that create, support and enable responsiveness, adaptability and fluidity
• leadership that is clear, focused, open, authentic and shared

Nothing really new there for effective organizations, yet in this new era it will take time, experience and intelligent customizable metrics to know what “success” and “effectiveness” look like and mean. In such an era, where there is literal meaning in the phrase, “everything is connected to everything else,” we will have to watch, learn and imagine how to lead and manage in ways that foster continuous developments in the effectiveness of individual workers, small working groups, the organizations with which they work and the societies in which we all live.
Clay Shirky is a well-know Internet / Web expert who published a book titled “Here Comes Everybody” last year. While it does not focus exclusively on the workplace, it’s a decent bet that the concepts and dynamics Shirky addresses will have major impact on the future of work.
As the forces he describes continue to spread throughout society and grow in impact, this organizing principle – Wirearchy — is likely to impact the design of collaborative software, the structure(s) of organizations and the ways work and workers are managed in ways that we have not yet encountered.

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Sunday:  easy and slow 1,650 metres

Monday:  lunchtime training session with Ean "The Eel" Jackson = 1650 metres with intensity intervals

Tuesday (tomorrow):  the plan is alternate long slow sets with interval sprints, to a total of 2,000 metres

Wednesday:  a long slow 3,300 metres

Thursday: a rest day

Friday:  a long session, aiming for 4,000 metres

Saturday:  interval training totaling 2,200 metres

Weekly total:  14,800 metres

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