Sunday, March 23, 2008

E2.o as the Catalyst for Organizational Evolution

Last month, Fast Company’s Fast 50 highlighted Google as the top selection in their list of the world’s most innovative companies. This past weekend, I read through Harvard Business Review’s April 2008 cover story titled Reverse Engineering Google’s Innovation Machine by Bala Iyer and Tom Davenport.

Noting these two recent cover stories from two of the more popular business management periodicals of our day, I would say that Google has captured the attention of the best of today’s business management minds. We are preoccupied with the company because they are unflinchingly trying (successfully at that) to manage complexity using a nontraditional management approach - an approach which encourages flexibility and widespread experimentation in the face of chaos. The HBR article goes on to highlight six traits that Google has embraced to “Build Innovation into Organizational Design”.

The article states, “Innovating on internet time requires dynamic capabilities to anticipate market changes and offer new products and functions quickly. Google has made substantive investments in developing the capacity to innovate successfully in this fast-changing business environment. The company is pioneering approaches to organizational culture and innovation processes …”

One of the six traits that the article highlights is Google’s ability to “Use Data to Vet Inspiration”. The company is known to be very analytical but the article cites their advanced use of both internal prediction markets (300) and an idea management system to vet their thoughts. Google is using the foremost of E2.o tools to democratize the management input process and to fully harness the intellectual capital of their entire company.

This makes Google very interesting to me. First because I am an advocate of E2.o and want to study any business that is attempting to incorporate social computing to augment business management!

However, the second reason is because I want to understand Google’s management approach, itself - a unique culture that encourages innovation - or adaptation. To this point, I refer to Eric Beinhocker’s book, The Origin of Wealth, in which he expounds on organizational adaptation. In our world of increasing complexity, we must use all of the information available to us as a means to educate our organizations to the evolving dynamics of the marketplace. Only by understanding one’s changing market does an organization stand the chance to survive and adapt to the next generation. This organizational learning is fueled by equipping all aspects of a business to “exploit and explore” their interactions within their current marketplace.

Briefly, I see E2.o tools as the catalyst to our getting to this fully-enabled next generation approach to business management. With E2.o tools, our organizations can harness, prioritize, and make sense of all of the information that is bombarding us on a daily basis. By doing so, we can begin to adapt continuously. Google may actually be leading the charge on something quite remarkable.

Join the dialog. What do you think?

(As an aside, Google will be joining us this May at DIG2008. I am excited to hear from Bo Cowgill on the company's use of internal prediction markets. Check out the short case study overview.)


bob i said...

This leads to a thought about prediction markets, the "fitness landscape" and the "capabilities" that you and others have evangelized in the context of performance management: visibility, leverage and responsiveness - specifically, visibility.

Consider visibility for a moment: in the context of a "fitness landscape," it's easy to define external visibility - what does the market look like around me? Are the neighboring peaks higher or lower than the one I'm on now? This kind of visibility is traditionally generated via market research, information providers, (e.g. Gartner, Forrester) benchmarking, etc.

And internal visibility is simply the data about your organization's execution - of a strategy or process, for example - displayed on a dashboard of some kind. Are we satisfying our high-value customers? Are we migrating high-potential customers to be more valuable?

(the point is coming soon, I promise)

My point is that one cool way (to me, anyway) to think about prediction markets is that they create a kind of visibility, out of nothing more than the knowledge and opinions of an organization's employees. It works both internally (e.g. a pharma's prediction market regarding likelihood of drug trial success) and externally (e.g. a market on competitor results or macro-economic factors).

I'd bet, if there were a market for it, that Google-related content will be among the most well-attended topics at DIG :-)

George Veth said...

Yes - I hear your point about internal "visibility" and the benefit of prediction markets to harness the knowledge of the employee base. The challenge I see is to somehow gain access to the full value chain of a process or specific market opportunity. I think that real value comes once we combine the insights of the market combining both the internal and external actors. This poses many challenges.

It will be fun to hear more about Google's experience with prediction markets and the accuracy and biases that they are finding.