It is Time to Get Serious About Social [McKinsey]

Social Media ROI What would you say if someone offered you the opportunity to free up as much as 25% of the work week for more productive purposes? Would you be willing to explore this further or would you discount it out of hand as wishful thinking? What if the source of this claim was the McKinsey Global Institute, the management consulting firm’s research organization?

The McKinsey Global Institute has just released a new study, The social economy: Unlocking value and productivity through social technologies, that examines the potential impact of social technologies in four sectors: consumer packaged goods, retail financial services, advanced manufacturing, and professional services. This report makes the sit-up-and-take-notice claim that these technologies “could potentially contribute $900 billion to $1.3 trillion in annual value across the four sectors.”

That’s a lot of zeroes worth of added value. In fact, the study estimates that “by fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers—high-skill knowledge workers, including managers and professionals—by 20 to 25 percent.

For those of you tend to skip over claims like this, I’d encourage you to back up and take another look since one of the sectors examined in the study is the professional services sector. That includes your law firm. If you were to read the report from the perspective of a legal professional services firm, what might you learn? Here are some money quotes from the study’s abstract:

Two-thirds of this potential value lies in improving collaboration and communication within and across enterprises. The average interaction worker spends an estimated 28 percent of the workweek managing e-mail and nearly 20 percent looking for internal information or tracking down colleagues who can help with specific tasks. But when companies use social media internally, messages become content; a searchable record of knowledge can reduce, by as much as 35 percent, the time employees spend searching for company information. Additional value can be realized through faster, more efficient, more effective collaboration, both within and between enterprises.

The amount of value individual companies can capture from social technologies varies widely by industry, as do the sources of value. Companies that have a high proportion of interaction workers can realize tremendous productivity improvements through faster internal communication and smoother collaboration.

To reap the full benefit of social technologies, organizations must transform their structures, processes, and cultures: they will need to become more open and nonhierarchical and to create a culture of trust. Ultimately, the power of social technologies hinges on the full and enthusiastic participation of employees who are not afraid to share their thoughts and trust that their contributions will be respected. Creating these conditions will be far more challenging than implementing the technologies themselves.

I’m betting that the law firm that masters social technologies would be a very attractive place to work. I’m also betting it could attract the high-performing knowledge workers it needs to be hugely successful. McKinsey calls the potential impact of social technologies in the enterprise “transformative.” Have you considered what these technologies could do for your firm?

[Photo Credit: Mark Smiciklas]



Investing in Knowledge

Does your firm invest in knowledge?  Does it have an effective knowledge development strategy? Or is it simply paying lip service to the notion of being in “the knowledge business”?  Even if you believe that your firm has a strong commitment to investing in its knowledge, I’d invite you to keep reading.

Yesterday I had the good fortune to receive from Oz Benamram an interesting Harvard Business School case study entitled, McKinsey & Company: Managing Knowledge and Learning.  The case study recounts McKinsey’s journey from 1926 to 1996, viewed through the lens of McKinsey’s growing understanding of the value of investing in the knowledge of the firm. McKinsey is famous for its emphasis on internal training and knowledge sharing.  In fact, Rajat Gupta (the managing director of the firm at the time the case study was written) has been quoted as saying that “knowledge is the lifeblood of McKinsey.” This case study gives us a glimpse of how much consistent effort has been required on the part of members of the firm at all levels to create and sustain this reputation for knowledge investment and excellence. The case study portrays a firm that seems to be seeking constantly to improve the ways in which it helps its people grow professionally. It’s also clearly committed to maintaining its position as a thought leader. In reading the study, I was struck by several things:

  • When McKinsey created the position of full-time director of training, the person appointed to the position was one of the firm’s most senior and productive partners.  This sent a clear signal that the role was strategically important for the firm.
  • Fred Gluck (another former managing director of the firm) strove to create a more stimulating intellectual environment within the firm.  Accordingly, he “set out to convert his partners to his strongly held beliefs—that knowledge development had to be a core, not a peripheral firm activity; that it needed to be ongoing and institutionalized, not temporary and project based; and that it had to be the responsibility of everyone, not just a few.”
  • Professional development and knowledge management activities were natural outgrowths of each other:  “As the firm’s new emphasis on individual consultant training took hold and the Clientele Sectors and Centers of Competence began to generate new insights, many began to feel the need to capture and leverage the learning.”
  • Even before McKinsey had a formal knowledge management effort, the firm tried to lower internal barriers to knowledge sharing.  One of their first efforts was to encourage consultants to prepare two-page briefings that could be distributed firmwide.  These practice bulletins were used to spread ideas and helped elevate within the firm the reputations of the authors of these briefings.
  • McKinsey’s first formal KM project was  to develop a common database of knowledge gleaned from various client engagements and then developed within specific practice areas (the Practice Development Network).  Interestingly, they also undertook an informal project that initially proved to be much more popular than the electronic database:  a printed index of subject matter experts and core documents critical to each practice area (the Knowledge Resource Directory, aka the McKinsey Yellow Pages). While the case study does not state why this second effort was so popular, its rapid adoption might be due to the fact that the resource was concise, focused and highly portable.
  • Their approach to KM changed as the firm better understood how it needed to use the knowledge it was trying to manage:  “By the early 1990s, too many people were seeing practice development as the creation of experts and the generation of documents in order to build our reputation. But knowledge is only valuable when it is between the ears of consultants and applied to clients’ problems.  Because it is less effectively developed through the disciplined work of a few than through the spontaneous interaction of many,  we had to change the more structured `discover-codify-disseminate‘ model to a looser and more inclusive `engage-explore-apply-share‘ approach.  In other words, we shifted our focus from developing knowledge to building individual and team capability.”
  • KM is not just about size — a bigger database is not necessarily better.  The knowledge has to be managed for some useful purpose. At McKinsey, Fred Gluck “created a Client Impact Committee, and asked it to explore the ways in which the firm could ensure that the expertise it was developing created positive measurable results in each client engagement.”
  • While there has been vigorous debate about the single best knowledge development strategy, Rajat Gupta was of the view that it was better to try a variety of methods rather than spending firm resources simply discussing the issue.  This has led to a continued significant investment in knowledge development.  According to Gupta,  “We have easily doubled our investment in knowledge over these past couple of years.  There are lots more people involved in many more initiatives.  If that means we do 5-10% less client work today, we are willing to pay that price to invest in the future.  Since Marvin Bower, every leadership group has had a commitment to leave the firm stronger than it found it.  It’s a fundamental value of McKinsey to invest for the future of the firm.”

[emphasis added]

So now that you’ve learned a bit more about McKinsey’s efforts, let me ask if your firm’s commitment to knowledge and learning is comparable to that of McKinsey?  If not, why not?

[Photo Credit: Nilram]


The Dark Side of Collaboration

Every group has its mantra. “Four legs good, two legs bad”  helped underscore the proper social and political order in Animal Farm.  For proponents of social media behind the firewall, the mantra has been “Collaboration good, silos bad.” Like motherhood and apple pie, collaboration is one of those things it’s hard to criticize  — until you meet the dark side of collaboration.

What’s the dark side of collaboration?  Collaboration done badly.  Here’s what McKinsey has to say on this issue in their article, Using Technology to Improve Workforce Collaboration:

Unfortunately, the productivity measures for collaboration workers are fuzzy at best. For production workers, productivity is readily measured in terms of units of output; for transaction workers, in operations per hour. But for knowledge workers, what might be thought of as collaboration productivity depends on the quality and quantity of interactions occurring. And it’s from these less-than-perfectly-understood interactions that companies and national economies derive important benefits. Consider the collaborative creative work needed to win an advertising campaign or the high levels of service needed to satisfy public citizens. Or, in a similar vein, the interplay between a company and its customers or partners that results in an innovative product.

Raising the quality of these interactions is largely uncharted territory. Taking a systematic view, however, helps bring some of the key issues into focus. Our research suggests that improvements depend upon getting a better fix on who actually is doing the collaborating within companies, as well as understanding the details of how that interactive work is done. Just as important is deciding how to support interactions with technology—in particular, Web 2.0 tools such as social networks, wikis, and video. There is potential for sizeable gains from even modest improvements. Our survey research shows that at least 20 percent and as much as 50 percent of collaborative activity results in wasted effort. And the sources of this waste—including poorly planned meetings, unproductive travel time, and the rising tide of redundant e-mail communications, just to name a few—are many and growing in knowledge-intense industries. [emphasis added]

If you continue to read the McKinsey article, you’ll learn about their recommendations for matching tools with types of collaboration work, thereby reducing wasted collaborative activity.  But even as you think about improving the quality of collaboration, you need to remember the emergent essence of Enterprise 2.0 tools and strategies:

Furthering collaboration excellence demands mind-sets and capabilities that are unfamiliar and sometimes even counterintuitive to many business managers. It requires trusting your collaboration workers to arrive at creative solutions rather than enforcing top-down policies. Business managers should allow time and provide forums for collaboration workers to brainstorm solutions to productivity problems. Corporate technology providers will need to provide tools that are flexible enough to enable experimentation, so that usage and adoption are widespread.  [emphasis added]

As you roll out your new Enterprise 2.0 tools, pay careful attention to their impact on collaboration.  Have you provided the means for knowledge workers to experiment and create more productive collaboration?  Or do your systems lead to activity that is no more than wasted effort?

[Photo Credit:  gonzalo ar]


Maximize the Chances of a Web 2.0 Success

Do you sometimes get the feeling that there’s a little “irrational exuberance” surrounding Web 2.0?  If so, you’re in good company.  The McKinsey Quarterly has released a new report, Six ways to make Web 2.0 work, which takes an honest look at the results of a survey they conducted of early adopters of Web 2.0 technology.  Their survey indicates that the reviews are mixed on Web 2.0 deployments:

To date, as many survey respondents are dissatisfied with their use of Web 2.0 technologies as are satisfied. Many of the dissenters cite impediments such as organizational structure, the inability of managers to understand the new levers of change, and a lack of understanding about how value is created using Web 2.0 tools.

For those of you at the early stages of Web 2.0 or just contemplating jumping into social media, the authors of the report helpfully suggest six strategies that should improve your chances of a successful Web 2.0 deployment inside your organization:

  1. The transformation to a bottom-up culture needs help from the top. Even though this is an emergent process, don’t underestimate the huge benefits from having organizational leaders model use of the tools.
  2. The best uses come from users—but they require help to scale. Management doesn’t always know exactly how best to use the tools.  Therefore, give the users lots of scope to experiment.  And, when they find a productive use for the tools, give them the support necessary to scale up.
  3. What’s in the workflow is what gets used. “Google is an instructive case …. It has modified the way work is typically done and has made Web tools relevant to how employees actually do their jobs. The company’s engineers use blogs and wikis as core tools for reporting on the progress of their work. Managers stay abreast of their progress and provide direction by using tools that make it easy to mine data on workflows. Engineers are better able to coordinate work with one another and can request or provide backup help when needed. The easily accessible project data allows senior managers to allocate resources to the most important and time-sensitive projects.”
  4. Appeal to the participants’ egos and needs—not just their wallets. Lee Bryant recently referred to ego projection as the key to ensuring lawyer participation in Web 2.0 technologies within law firms.  According to McKinsey, addressing the need for recognition and status is a more effective means of ensuring participation than offering financial incentives or performance feedback for participation.
  5. The right solution comes from the right participants. “Targeting users who can create a critical mass for participation as well as add value is another key to success.”
  6. Balance the top-down and self-management of risk. “Prudent managers should work with the legal, HR, and IT security functions to establish reasonable policies, such as prohibiting anonymous posting. Fears are often overblown, however, and the social norms enforced by users in the participating communities can be very effective at policing user exchanges and thus mitigating risks.”

While these survey results and the attendant advice aren’t completely unexpected, they are a good reminder that the technology cannot by itself solve all your problems.  You do need to plan carefully for success.  That said, there is a little magic that happens when you connect people across a network using well-designed tools and then allow those folks room to bend the tools to their needs. Once you’ve experienced the magic, it’s hard to contain your enthusiasm.  So I ask you to please forgive my occasional lapses into irrational exuberance.

[Photo Credit:  TONI.R, Creative Commons license]