That was the topic for my talk at Social Media in Enterprise (#SMiE) at Cass Business School – with much thanks to David Terrar and Alan Patrick for putting on a great event.

Recently someone said to me “Two types of people look at you funny.” – those two types of people being undertakers and psychologists. The sad thing is that most businesses would rather see an undertaker than a psychologist, even though the heart of all of their business problems is people-related. Worse still, when businesses look to deploy social media or any other form of collaborative technology, they tend to tackle the technical-feature decisions, rather than the social-people ones. If you approach social media without the psychology, you just end up with the media – you may as well just pay your staff to watch TV. And, sadly, that’s what many businesses do with their communications – they broadcast information out, and don’t build in the vital return paths that provide the business intelligence that is needed to excel.

Is your business social? Or is it anti-social?

A distinction has to be made between process-centric and knowledge-centric businesses. All organisations feature both aspects, but the balance is radically different. For example, a manufacturer of commodity items in a market with little competition will tend to be highly process-centric. It is all about doing the same thing, those processes, faster and cheaper. Better and smarter would be good, but it isn’t mandatory. At the other end of the scale, a market analysis company in a highly competitive market is highly knowledge-centric. Cheaper and faster might be good in such an environment, but ultimately better and smarter win out. In a knowledge-centric business informal communication is a key component of value creation. As soon as you define that informal communication in its context you are talking about social interaction. The leap to seeing the business value of social software isn’t a big one, but before we go there it’s worth pondering the social nature of business a little further.

Hired for a purpose or for a higher purpose?

Even a cursory perusal of the literature that covers running a successful business is likely to convince you of one thing: Businesses that succeed, and continue to succeed, are driven by a big vision that reaches beyond the walls of the business itself, and towards some higher (social) goal. I challenge anyone to name many successful business where the initial staff were hired just to do a job. From Cisco Systems to Zappos, from Google to Innocent, you will find companies full of motivated staff who spend most of their time more convinced that they are changing the world than changing the balance sheet. Before you join, invest in or do business with any company, ask these questions:

What is the (social) purpose of the business? How does it contribute to society? How does it support community?

The answers will tell you more about the health of the business than any annual report. Businesses are, and have always been, social. Business leaders may have lost sight of the imperative need for a social purpose in recent decades, but consumers are marching to remind them that the right to make money is predicated on the responsibility to serve the society which the business is, in reality, totally reliant on. It has always been so. The social enterprise is not a new concept, and while Cadbury may now be Kraft, a new generation of socially aware businesses is starting to spring forth. Now, before I get accused of being a hippy, let me be the first to point out that running a business is fundamentally about bringing in the cash. However, the permission to make money is granted by the customers and their influencers (society and societies). Ignoring that is a guaranteed path to failure.

Does money grow on trees – or in networks?

Whenever someone engages with a new business, there is the inevitable, and sensible, desire to know how it works. What baffles me is that more often than not, the answer to such enthusiastic enquiries is to thrust an org chart into the inquisitor’s hands. Never, in my entire life, has one of these curious artefacts reflected the current employee reporting chain in any business with more than a dozen or so staff. Even if, by some miracle of information engineering, it did, that would still tell me precious little about how the day-to-day operations of the business proceed. That branch of the tree diagram on the right, that seems to have a cluster of titles related to accounting – do those individuals just spend their days talking to themselves, never interacting with the other parts of the organisation? Of course not. A functioning business is a network of people connected by communication channels and focussed around projects (points of purpose), documents (information) and meetings (interactions). It’s not about individuals, as much as an organisation may build its policies that way, it is about teams and teams of teams. It’s social.

Belief is the first step to behaviour

Social systems require trust, purpose and commonality to persist. They require other things too, but these three are key health indicators. Without trust factions form and fiefdoms emerge. Without purpose effort is applied in conflicting directions, or not at all, leading to dissipation and disillusionment. Without commonality, the social mesh is fractured and broken by misunderstandings. I’m sure you’ve never worked in a business that has been wrecked by fiefdoms, dissipation and continual misunderstandings, but let’s say that you have a friend who has. Now you know why. Putting the ship right requires changing what people believe, and that isn’t easy. And yet “just believe” seems to be the leading business case for most social software in business. That’s no way to make a business case. This is business, and it’s all about the Benjamin’s. Changing what people believe starts there. However, I have an issue with “ROI”. I’ve run a billion dollar P&L, which carried the joyous privilege of having to review ROI-based business cases every week. The problem? Randomly Ordered Integers, the lot of them. Admittedly they were sometimes created with passion and care, but every existing ROI spreadsheet is a case of garbage in, garbage out – or as one fellow exec put it “a barrel load of assumptions carefully chosen and arranged to summon up the letters Y, E and S.”

Let’s start with a different question: Where is the intellectual property in your organisation? If it is a knowledge-based business, a good guess is that it is in the heads (and conversations) of employees and buried in inboxes on laptops. Just before you say “but it’s on the server,” what’s the size limit on your employee’s mailbox? And where does it go after that? This is the fate of enterprise 1.0 software and mobile email. Email has to be one of the singularly most inefficient ways of moving information around a network of people. Almost any tool that frees employees from unproductive hours tending to their inbox will pay for itself in weeks. If it can rescue the millions of dollars worth of information that is lost each time an employee leaves an organisation, through the information that walks out of the door in their heads and the email archive that becomes deleted or inaccessible once they leave, you have a gold mine. That’s the ROI.

“Are you here to set up the socialist system?”

Neatly filed under “you couldn’t make it up,” the cordial greeting from an employee at a recent customer – “are you here to set up the socialist system?” – I wish I could claim to be such an idealist, but actually I was just there to train a few people to blog. This is about software, not politics, but social software deployments often cause more politics than an election campaign. Effective social software distributes communication across the human network. In doing so it can wipe out the power-bases of middle managers and those that exercise influence through the creation of information vacuums. Those folks are smart enough to spot the change coming and don’t take kindly to it. That’s no reason to avoid social software though. The scarcest resource in any business is not financial capital. Financial capital can be created from thin air, at least on a temporary basis (see compound debt products as a proof point). The scarcest resource in any business is human capital. Human capital does not appear from thin air, it has to be attracted, nurtured and maintained. If you can find the right human capital for a business, the financial capital will follow.

Making a change

To break down the fiefdoms and fix the dissipation and misunderstanding requires transparency, an emergent plan and building some common understanding within the organisation. Once these three take root, trust, purpose and commonality will emerge. The challenge is that transparency, emergent plans and common understanding can be highly illusive when all you have are fiefdoms, dissipation and misunderstanding. Time for a plan B. That plan B is to look through the organisation for groups that already exhibit the very behaviour that social media promotes and equip them with the tools. It will usually be in the most innovative areas of the business. Enable the teams and let them lead by example.

Business is changing, and success rests in enabling change to propagate more quickly, and that happens through more efficient human networks. Business is social. It needs social software.

Benjamin Ellis by SylwiaPresley (cc)

Last week I shared some thoughts at MediaCamp London #3, which seem good to offer up here. Coffee in hand, I talked through the things I’ve discovered about the management of knowledge-driven and creative businesses over this past decade. I can’t say that they are complete thoughts, but in the way of a blogger, I’ll share them here for you for agree/disagree/clarify/extend. The slides I used are on slideshare already:

I use the phrase “cat herding” because it is about the best I have to describe managing very bright, creative people. For the avoidance for doubt, the term isn’t meant to be derogatory, it’s simply one I’ve come to use for the skills involved in leading highly-autonomous, bright folk – The kind of people you don’t realise the potential of by providing a to-do list. There were three sections to the talk: Being a great cat herder, being a great herd member and being a great cat. I’ll cover the first in this post.

Being a great cat herder

Whenever I ask people what makes a good manager, and what makes a bad one, a standard set of themes emerge. For the good manager, it is around emotional intelligence – “being understood/understanding”, “supportive/encouraging”, “being fair”. For the bad it is around process: “not explaining things”, “being absent/being overly present – a micromanager” and so on. Good managers are people rather than process oriented. They get the process things done, but they don’t let them dominate. Perhaps they are better referred to as leaders? I’m increasingly convinced that you manage things, but lead people. They are different skills.

Knowledge workers and creatives generally don’t like being told what to do or how to do it. And rightly so. If you hire people for their skills and knowledge, then you aren’t going to go far if you don’t use them. In a knowledge-business, the boss is no longer the smartest person in the room for every (or any?) given question.

Realise the Potential

One of the biggest failings of managers – or perhaps one of the differences between a manager and a leader – rests in realising the potential of their team. If you’ve hired bright people, you don’t need to tell them what to do, you need to explain why you want them to do it, and then provide them with what they need to be successful. The ‘what’ that needs doing may be different than you at first thought, and in today’s real-time business world it might change while it is being done too. The ‘why’ rarely shifts, and if it does, generally the need for the project goes away with it.

Give your team a clear purpose. Explain what is happening, provide the background, and an explanation of not just what is happening, but why it is happening. The key to an outstanding business is unlocking the discretionary effort of its staff, and that means giving people the motivation to go the extra mile and do their best, rather than “what will do”. Enable people to give their all, and throw their full selves into the business. To borrow from Maslow, that means meeting their needs, from the physiological, through providing stability and certainty, to providing a sense belonging in the business and an appreciation of what they bring to it.

Traditional business management looks at people, processes and systems – although mostly processes and systems. Today’s business environment has simultaneously commoditised processes and systems, so that there is no competitive differentiation in them, and become so fast moving as to render most of them useless before they can be implemented.

Differentiation in today’s market place rests in having great people, and building an environment that lets them operate at their highest level. In my early working life, in retail, the businesses were driven by process, but all of the businesses I have worked in over the last few decades have been driven by skills and knowledge. It’s a big shift in the way that a business is built, and in the kind of systems that are required.

Be More Than Slightly Better

The scales that balance Innovation and Execution have also shifted, tipping relentlessly towards innovation. Being competitive means constantly disrupting your business to create better products and services, and more closely meet the needs of those all-important customers. Small incremental improvements in process are no longer enough to keep up with the competition, and differentiation comes from the philosophy of the business as much as from strategy – witness Toyota’s recent retrenchment back to its core philosophy. Philosophy drives strategy, and strategy drives execution, and the latter two are subject to a rapidly changing market place.

It shouldn’t be a surprise that Milestone Planner resonates with much of this thinking. It enables emergent planning, balancing clear ownership with shared responsibility for what happens, and the ability to change tactics in real-time. In recent years I have become convinced that social media, or rather social technology, IS the new process, or at least that it is the scaffolding around which the necessary process can be built. Putting people in the middle of everything, and connecting them with the relevant information, propagated via their social graph, is the core of a knowledge-intensive business. Connecting all of this with the mission of the company, and a clear vision of where it is headed, creates an unstoppable force that drives great execution, and that is the responsibility of every good cat herder.

Next, part 2: Being a good member of the herd.