Issue 29, Weds 4 October, 2000
Made in New Zealand - twice winners of the America's Cup
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Companies can do three things -- in response to new technologies -- they can ignore the threat, they can build defences against it, or they can create a new organization that will supersede the old one. Our advice is to build the child that will eat the parent.
Peter Cochrane/British Telecommunications
Quoted in Fast Company


Award is a free fortnightly email magazine with the tools, techniques and best-practice models that deliver high performance in the new economy
In this issue
START – The culture of the new economy is ...
WarmUp – Firestone and Ford - lies, damn lies and statistics
Ten Minute MasterClass – Viant; the house that knowledge built
Baldrigeplus World Tour – first announcement
eZzay – forget constructive destruction – real change is incremental
Sixty Second Snapshot J.C. Penny – customer-coloured glasses
Resources

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START
The culture of the new economy is sign-posted in banner headlines – creative destruction, innovate or die, get big fast, size, scaleability, market space … the seductive but elusive words of tompeters, John Chambers, Peter Drucker and all their guru kin. But the reality is somewhat different.

We're not all cutting code in Silicon Valley, hustling banner ads in LA, trading gas on a world market or launching IPO's in New York. Most of us are still in legacy businesses, not in the USA, making and selling cars, computers, compost …

What does 'change' mean in that real world? Whatever it is, it's not creative destruction. More like applying a blowtorch to an Alaskan glacier.

In most organisations, change occurs at the margins. In small increments. And if you're standing too close to the heat, it can be risky.
WarmUp® – Firestone; the statistics
ASQ-certified quality engineer Steven S Prevette recently wrote a 'statistics corner' article for his ASQ Local. "I have been following the Firestone tire failure saga with considerable professional interest," he wrote (he's a statistician, you understand). "It is amazing to watch corporate and government people explain to Congress that 'Yes, we had the data on hand; but No, we didn't look at it.'"

We're overwhelmed with data, Steve says, and dealing with it can be as much emotional as technical. It's hard – for a company or a government – to step from the particular (Ford Explorer roll-overs as unique, individual events) to the systemic (oops, we've got a problem, and it's our fault), and accept liability.

So why do corporations and governments ignore their data? Maybe, Steve speculates, because 'looking good' is more important than 'being good.' It's an ethical dilemma – at what stage does a firm acknowledge a problem? As soon as they suspect they have one or as soon as they can 'prove' it? What if acknowledging what later turns out to be a non-existent problem removes millions, maybe billions of dollars from your market cap, damages your brand, and leads to job losses?

Which raises the question of statistical capabilities. "I watched C-SPAN while a person held up a chart with six different colors on it (one for each year of production) comparing quality reject rates at the Decatur plant to other tire plants," Steve said. "The congressman said that the data 'just leaps out at you'."

Wrong said Steve, it didn't. There were no criteria applied to say whether or not Decatur was significantly different. Maybe (especially with 20-20 hindsight) it was. But no statistically valid evidence was provided.

A more specific example was published in a Tri-City Herald September 24th AP story, where a tire consultant noted a 'trend of left rear tire failures.' Of the 63 cases of tread separation examined, 27 involved the left rear tire and 18 involved the right; the rest were on the front wheels or not known. So what do those numbers mean?

It's easy, Steve wrote, to run the calculations for a c-chart control chart, or the binomial distribution to determine if 27 and 18 are statistically different, or if this is just random fluctuation. The calculations are:

27 out of 45 is 60%. Assume left vs right failure is equally probable. The three standard deviation upper control limit for a p-chart is 0.5 + 3 x square root (0.5 + ( 1 - 0.5) / 45) = 0.72 (go here for further details of this calculation). 60% is less than 72%, and so the result (27 left vs 18 right tires) is within the limits of random fluctuation. There is no trend.

Firestone apparently claims that these data (differences between left and right tire failures) mean Ford's Explorer SUVs are at fault, not their tires. A Ford spokesman said the company was running tests to search for a cause at its Arizona proving grounds.

If the data quoted by AP represent all available data, then Ford is wasting a lot of time and money – there may not be any vehicle-related cause, just random fluctuation. That should have been resolved long ago, and the real cause of tire failure (at Firestone's plants, not Ford Motor Co) discovered.
Ten minute MasterClass® – the house that knowledge built
Sharing knowledge is important: It's one of three business processes for which General Electric CEO Jack Welch takes personal responsibility (the others – allocating resources and developing people. As long ago as 1991 he said, for example, that picking his successor was his most important job. Business Week, Oct 2, p 68).

It's also the most natural thing in the world, except in corporations.

Parents do it. Children do it tirelessly, once they can talk. And Thomas Stewart has been writing about it – a lot. He's looked at how powerful grassroots knowledge can be – and how needful of support from the top (Fortune, Jul 24th); and he's looked at KM 'by design' and how it needs to be nourished by emergent, informal communities (Fortune, Sep 4th). So when Viant's chief knowledge officer said 'you ought to come visit us. We've designed the whole company around knowledge sharing,' off he went.

Viant is a new-economy consultancy, public since June 1999, whose clients include old-line businesses like Schering-Plough and Sears; others, like WIT Capital and CMGI, were born with a silver @ in their mouths.

Viant's knowledge-sharing ideas are truly impressive, Stewart found. Some highlights:

Initiation – many companies flub the opportunity of orientation to give newcomers knowledge of the company, some firm-specific skills, and the beginnings of a network. Not Viant. Every new employee begins with three weeks in a QuickStart class. Day one, here's your laptop, fully loaded with off-the-shelf and proprietary software; that week, learn team skills, cram Viant's consulting strategy and tools; then for two weeks toggle between classroom work and teams, doing a mock consulting engagement. Bond; meet all the officers; hear lots of folklore; party with CEO Bob Gett; and drink Flying Fish Beer, a microbrew that's Viant's official 'tacit knowledge accelerant.' In any army, Stewart says, basic training works.

Location – layout works too. Viant people talk about a 'leaky knowledge environment' – not just the open-plan offices but subtler arrangements to encourage 'knowledge accidents' – like a snack area that just happens to stand where four project teams' work areas intersect. All the 'CXOs' (CEO, CFO, COO, chief marketing officer, chief people officer, and others) share one room.

Rotation – at any given time, Viant's leadership teams consist of a score of ex officio members and about an equal number of rotating 'fellows' nominated by their peers. Conventional reporting relationships don't work where people rotate, so consultants have no fixed relationship to a boss; instead, senior people act as 'advocates' for a handful of 'advocados.' Performance reviews (360 degree) emphasize growth in employees' skill levels, while stock options recognize knowledge shared.

Documentation - the forms are simple but inescapable: Before every project, consultants must complete a 'quicksheet' that describes the knowledge they'll need, what can be leveraged (picked up from previous projects), and what they'll need to create, along with the lessons they hope to learn. A 'sunset review' documents what did and didn't work. File and forget? Not here:
- almost every document ends up on Viant's internal Website, hot-linked every which way
- sunset reviews are done with a facilitator who wasn't on the team, which helps keep them honest
- every six weeks a KM group prepares, posts, and pushes a summary of what's been learned.

Agitation – Viant uses 'outside agitators' aka 'project catalysts;' picked from the top consultants in the company, pulled off client work for several months and assigned to 20 or so other projects. They don't 'supervise,' they're not passive 'resource people.' They meddle. What are you doing? How can I help? Looks as if you need an example for a business plan to adapt for your client, let me get one. In your face, not just 'call me if you need help.'

"Knowledge sharing might be human nature," Stewart says, "but the companies that do it best all have some kind of forcing mechanism, something that oils the jaw of the corporate Tin Woodman, something that lends urgency to the task. At Viant, that's the P-Cat's job."
Baldrigeplus world tour – first announcement
Your editor is planning a pilgrimage to the 2001 Baldrige Quest For Excellence conference in Washington DC, April, 2001, and is keen to do some missionary work on the way. If you know of any groups, organizations or firms that might be interested in a (low cost - sharing the burdon) presentation, seminar or master-class on the Baldrige Award, Performance Excellence, Leadership, or Anything in Between, all with a uniquely Kiwi perspective (Adventure Tourism! Rugby! … no, not sheep) please email.

Souvenir T-shirts, take-aways and signed CDROMs all available!
eZzay – forget creative destruction – real change is incremental Consider Maricela Gallegos. Working in HR for Hewlett-Packard, Maricela (an emigrant from Mexico) started to worry about affirmative action and workplace diversity. Her managers weren't interested, but did let her do some stuff on employees with disabilities.

It was a foot in the door, she recalls (in Practical Radicals, Fast Company 38, p162, by Keith Hammonds), “I knew that gender and race were important issues. But I needed to work on something that the organization was willing to support.” She organized a local network of workers with disabilities, then declared a disability-awareness day.

They didn't realize what I was going to do, she says:
- bring in people from 30 non-profits to educate employees
- borrow wheelchairs so that people could experience working in one
- get sound-blocking devices so that people could experience deafness
- blindfold employees and send them on an obstacle course.

She did the same thing every year for four years, then organized networks for women, black, gay and lesbian employees. She won the confidence and support of senior managers and produced workshops on racism, sexual harassment, and homophobia for thousands of employees. Risky things for a Latino woman to do – pushing the limits of the organisation's culture.

Now, a decade later, Gallegos is thriving. She has moved to HP's Global Diversity office, where she helps create worldwide programs. She is also working with the company's Latin-American operations to tackle diversity issues. She serves on both state and presidential committees serving people with disabilities. She has reached a place where 'it's okay to challenge.'

Professor Debra Meyerson of the Simmons Graduate School of Management; (and visiting professor, Stanford University), author of Tempered Radicals (Harvard Business School Press, April 2001, working title), has studied 'tempered radicals' like Maricela Gallegos. Operating deep within big companies, well beneath the cultural radar, tempered radicals are practically invisible to the top brass. They are part of their organization, yet somehow apart, professional irritants, tolerated more than embraced, typically waging small battles rather than epic wars, working slowly to change the rules.

OK, so stop for a minute. Think back to some of the things you're read in past issues of Award and in new-economy publications like Business 2.0: Creative destruction: Re-invention: Accelerated change: Startups vowing to overthrow big-company rivals. Doesn't sound much like Maricela Gallegos, does it?

Because they sympathize with their organization and must exist within its predominant culture, the changes tempered radicals introduce are mostly incremental. They are ambivalent, cautious catalysts, content with small victories. This is not a revolutionary style, Meyerson says, but it is the stuff of change. It is the true content of leadership.

And that's the reality, author Hammonds claims: Most real change doesn't occur instantaneously. Bringing about change requires people working patiently inside organizations, seeking only modest progress. It demands radicals, sure - but radicals of a more considered sort. It's not dramatic. It doesn't meet our craving for instant transformation. But it's how real leaders really operate.

Or consider Roger Saillant, a white man who grew up in a string of foster homes. Since the rules changed with every new home, he learned that 'the only rules that matter are the ones that are right for you.' So when he arrived as a chemist at Ford 30 years ago, he “couldn't accept blindly the things that I was told.”

Saillant went after his own agenda, rooted in his passion for the environment and his sympathy for the disadvantaged. Now, as VP and general manager of a division within Visteon (recently spun off from Ford), a leading supplier of integrated automotive-technology systems, Saillant has acquired the credibility necessary to put his ideals into place. He is trying to expose his top executives to principles of environmental sustainability – like, having people figure out how much material Visteon dumps into landfills.

Meyerson grew captivated by the tensions faced by tempered radicals like Saillant. To learn more, she studied 100 leaders and change agents, and found:
(1) there is no one template:
- Degree of radicalism may depend on perceptions of their own organizational credibility, or on their sense of financial security. Almost always, though, there's a deeper motivation, “a real impulse for personal authenticity. They say, 'I just want to save my soul. I don't want to sell out.'
- Many of them deny being radicals, even tempered ones. These people aren't challenging the whole system,” Meyerson says. “People have benefited from the system, and there's power in remaining inside it. So they just want to move it a little bit.”

(2) tempered radicals understand organizational limits:
- Kirk Tucker, head of planning and strategy for Harley-Davidson's York, Pennsylvania plant, was reassigned midway through his career when he pushed too hard for organizational changes. Push it too far, he now says, and you will become ineffective. “When you're ineffective, you put yourself at risk. One mentor told me years ago, 'Have patience. It's going to take them a while to figure out that you're right.' “
- PricewaterhouseCoopers partner Monique Connor is happy with the smallest of victories. She quit tax-consulting to get her MBA and rejoin the firm in human resources, hoping to press for cultural change. But such change, she understands, arrives in increments. “Just changing the language of an organization can be a huge success. In a lot of the work that we do with partners, we'll invent scenarios and populate them with 'she's. That represents a real cultural shift here.”

(3) At the other end of the continuum are people who assertively pursue organizational change. Often with less invested in the organization, they take bigger personal risks, trying to rattle the system. They're still concerned about their own authenticity - but they want bigger changes:
- Dixie Garr, Cisco Systems's VP of customer-success engineering, continually creates opportunities for herself and others. She mostly says exactly what's on her mind, aiming to 'shock people so that they think.' While she's tempered enough to have survived five big corporate employers, she's also an unabashed system rattler.

Sidebar: tips for tempered radicals
Seek small wins – bringing about deep-seated cultural change in a large organization is a big ask – and a long-term challenge. Better to break it into smaller, more manageable pieces and experiment to unearth resources, allies, and potential sources of resistance. That will also minimise fear and mistrust among peers and superiors.
Act locally and authentically – change rarely comes from the urging of outside consultants or as a result of bloodless strategic plans. Tempered radicals, acting solely from an urge to remain true to their own ideals, can unintentionally spark broader results.
Speak the language – often, people in organizations accept change more easily when it's expressed in terms that they can relate to. 'Diversity' may resonate louder for corporate managers if they get the business implications.
Build affiliations – radicalism can be isolating. Effective leaders develop networks of people who can provide information, resources, emotional support, and empathy.

Lessons
What can we draw from all this? First, there's the author's intended messages – that leadership is emergent, that it's powered by personal conviction, that leaders are often 'different' (interested in this 'difference' idea? Track down the Sep-Oct issue of the HBR and read 'Why should anyone be led by you'), and that change is incremental, accretive and driven as much from below as 'suggested' from above. Significant, liberating ideas – well worth thinking about in your own work environment.

But there's a higher-level, perhaps unintended lesson. Your editor has recently been exploring the culture vs innovation dilemma (here's a QNewz article, for example). The dilemma, in brief, is that the innovation gurus tell us it's about creative destruction, about a willingness to walk away from what works now and take a punt on what might work tomorrow. But the cornerstones of high performance and continuous improvement – team work, effective strategising, customer satisfaction, process superiority, leveraged by best practice and benchmarking – are often the result of years of hard work, deeply ingrained in the culture of successful organisations.

What Keith Hammonds and Prof Meyerson have described is 'innovation as evolution.' Darwinian innovation. Organisational 'sports of nature.' Their theme, and the stories which support it, is that ideas with value can and do survive in the most conservative organisational cultures. Care to push that thinking a bit farther? What if really radical ideas NEED a well-established, confident, robust culture?

If innovation is a business process (see my article at Stickyideas.com on this subject), and new ideas are important to your organisation, then maybe these are things to talk about at your next brainstorming session. Innovation is not aprocessual. It's not necessarily destructive. Don't abandon the old. The new-economy is within us!
Sixty second snapshots®
Brutally short summaries of material too valuable to junk

Customer-coloured glasses
In J.C. Penney: Anybody Home? Business 2.0 columnist and marketing 'stirrer' Jim Sterne says that newly on-line J.C. Penney has forgotten a principal tenet of retailing, online or off. That is, when you're selling something, you've got to wear 'customer-colored' glasses. Your frame of reference should be that of the customer's, and you should see your Website from the customer's side of the screen. This seems hard for a lot of companies to understand, J.C. Penney included.

“It all started,” Sterne wrote, “at the end of last year, when I received an email from CoolSavings.com about saving 25% on a J.C. Penney blazer. All I had to do was click.” Turned out the 'click' was pretty sick. Briefly, it went like this: clicked through. Got to the blazer. Discount nowhere to be seen, but lots of information to enter – 15 minutes worth. Got to the checkout – uh oh – "not available".

”Let me see if I got this straight,” Sterne wrote, “they contacted me about this swell jacket I could buy at a discount. They asked me to fill out pages of personal information before I could order it. And they never got around to telling me what a great deal I was getting, or that the blazer wasn't available?”

We've been saying since early in the year that 'customer experience' is the number one dot-com quality issue – here's our 'white paper'.
Resources
>> WHITE PAPER: Building an Effective Knowledge Base. E-business is only successful with e-service. But good e-service needs a knowledge base filled with useful and timely information. This paper teaches you to collect, organize, and publish online answers your customers need (they say – Ed).
>> SERVICE – THE KEY TO SUCCESS: Improve your quality and business performance through world-class customer service.
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In recent issues
Competing for the future - Hamel is THE MAN, embrace innovation!
Women and leadership - for real progress ... give men the nappies
Quick case study/Jennifer White - on picking winning teams
tompeters! - new economy DNA. Flaky? Irresistable! The survival kit
Snapshots of the new economy - from Seybold to Subramanian
eStrategy - best, first, fastest, lastest ... just watch out for Wal-Mart
A better way - but don't try this at home
Gen II - who wants to be a CEO
Interested in hiring a coach?
Give us a call. We'd love to talk to you about it! Or any other proposals. Here's Malcolm Macpherson's resume.
Next issue 17/18 October - reader contributions warmly received

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