Business Value of Interaction? – The more the better

This post on the Enterprise Web 2.0 Blog – “Where is the Business Value in Enterprise 2.0?” is a very interesting exposition of an article in the McKinsey Quarterly, “Competitive advantage from better interactions.” (registration is required to read the McKinsey Quarterly).

The authors (of the article, that is, not the blog post – both are well worth reading) begin with the assertion that collaborative, complex problem solving activities are critical to modern companies, and argue that “companies that make these activities–and the employees involved in them–more productive will not only raise the top and bottom lines but also build talent-based competitive advantages that rivals will find hard to match.”

Fair enough, but what’s this got to do with Enterprise 2.0?

First, managing employees in order to foster tacit interactions is different than managing for other kinds of productivity, and looks rather like the culture O’Reilly described as Web 2.0’s architecture of participation:

Managing for effectiveness in tacit interactions is about fostering change, learning, collaboration, shared values, and innovation. Workers engage in a larger number of higher-quality tacit interactions when organizational barriers (such as hierarchies and silos) don’t get in the way, when people trust each other and have the confidence to organize themselves, and when they have the tools to make better decisions and communicate quickly and easily.

Of course, this (removing barriers, giving people tools with which they can organize themselves and communicate) is precisely what next generation collaboration tools (wikis, blogs, and other online knowledge management tools) are all about. The traditional need for a large, complex IT infrastructure was itself one of those organizational barriers. (This is one of the reasons hosted services have been so popular – no need to work through central IT – just write a check and turn it on).

Second, what they uncovered in their study was that there were large degrees of variance in company performance, and that those variances were higher in “relatively tacit-interactive sectors.” In other words, there is greater opportunity for improved performance (or, if you’re a glass-half-empty kind of person, greater threat of falling behind) in areas where the kind of tacit interaction described above are most important. Top performers can differentiate by managing tacit interactions more effectively.

So how do I, as a manager, enable tacit interactions? “The focus of managerial action is to establish conditions that allow tacit interactions to emerge and flourish rather than trying to engineer connections from the top down.” Give people the tools, but otherwise focus on getting out of the way and removing barriers.

They give a few specific examples of what “creating the conditions that allow them to emerge” might look like:

  • Google’s 20% on innovation policy for employees
  • Innovation portfolios which emerge out of internal and external interactions
  • Allowing and encouraging innovators to share their inventions and insights
  • Allowing information to be shared laterally, across reporting channels and silos

Finally, they close with a few statements about technology, focusing on collaborative multiparty workflows, decision support tools, and tools which “promote the collaborative and dynamic pursuit, capture, and sharing of knowledge.” These aren’t the tools, they note, that traditional IT department approaches excel at producing. We will need tools which “are easy to set up and tear down as projects and strategic experiments come and go.”

Agile, easy to set up and tear down tools which focus on collaboration and data sharing?

Sounds like blogs and wikis based on open standards. If you rely on open source frameworks and components you further break down barriers as you don’t have to worry about the cost of licensing as you scale your use of such tools, and you can customize precisely to user needs, rather than buying in to some “enterprise” package that includes everything anyone might ever need.