Clay Shirky: How the Enterprise Moves to 2.0

The consultant, author and professor says businesses are just beginning to understand the value—and challenges—of social technologies.
pagebreak title = 'The Promise of Knowledge Management'}

This all sounds great for certain kinds of workers and certain kinds of companies, but what if I'm an old-school manufacturer trying to compete with low-cost offshore production? What's in it for me?

Shirky: Think of the famous story about Cemex, the Mexican cement company. It turns out that dealing with cement is an IT problem. When you send the truck out with wet cement, it had better dump that cement on schedule or you've just bought yourself a big rock with an engine. The competitive advantage is about managing where the trucks go and when they go.

Over and over again, this turns out to be the case with robust and long-lived manufacturing processes. Managing information about downstream demand and upstream supply, which plants are online and offline, how do we continue to retool without disrupting supply-those kinds of questions are the competitive ones, and the people who know best are your employees. But they can't all get in a big room every day and talk to each other. A big part of the answer is, what if you took the 10 people who know the most about 10 different bits of that problem, and you put them together, with a mailing list or a wiki, nothing fancy, all of this stuff can be set up and tried basically for free. What would happen if those people started talking to each other?

The really radical statement of this in a business context is in a paper by Ron Burt, Social Origins of Good Ideas. Burt says good ideas are not typically the province of an individual having a brainstorm, they're often an import-export business, they involve people who see across multiple lines of business and understand, ah ha, if the engineers knew what the designers knew and the designers knew what the engineers knew, we could actually do 10% more at 10% lower cost. Those kinds of intuitions can only be had when people are talking to each other outside the traditional lines. And the easiest way to do that is to use these tools.

The promise of knowledge management is quite extraordinary. What a company like Proctor & Gamble understood [in starting to use social tools] is that the issue is not storing all possible information in a database, but increasing the peripheral vision of the employees. That gives each employee opportunities to see something outside their immediate area of focus, so that they can say, we ought to talk to somebody else in the company who has faced this kind of problem before. The likelihood that somebody in a meeting knows what to do next is much higher when you work on creating peripheral vision rather than databases.

So a lot of this is about knowledge management, but without the big, expensive rule-bound systems that people hate to use. How do you motivate people to use these newer tools?

Shirky: The cynical view is that it's simply the company getting something for free, but that view assumes that all value is or should be rolled up in financial value. It's increasingly clear that that is not the case, that people are able to keep in mind multiple kinds of value, including the respect of their peers. People participate in communities of practice to get better at what they do. So, if you want to back it into the financials, the financial stakes are going to be, I can get better at my job, and you ought to be thinking about keeping me, because if I go somewhere else, all of those skills are going to transfer with me.

It's the dilemma of managing a smart group of people anywhere, which is that it's very difficult to keep them from walking out the door if they don't like their work environment. If you have identical salaries for a terrible job and a good job, you aren't going to have any trouble attracting people to the good job.

This article was originally published on 04-27-2008
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