Category Archives: rants

Another Headline from the Land of D’oh: Knowledge Management New Source of Competitive Advantage

A recent SCMR blog post reviewed The New Edge in Knowledge by Carla O’Dell and Cindy Hubert of AQPC that describes the Knowledge Management (KM) concept and provides some real-world examples of leading companies that have mastered KM. The post, like the authors of the book, states that the right knowledge enables the right decisions that improves organizational performance. Well, duh!

Knowledge has been improving performance for thousand of years in all sorts of organizations — corporate, religious, government, and military. As Sun Tzu wrote, so it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss. Churchill said that battles are won by slaughter and maneuver. The greater the general, the more he contributes in maneuver, the less he demands in slaughter. And Hannibal said I will either find a way, or make one. Thousands of years, and thousands of miles, apart, and all of these great military leaders understood the importance of knowledge, and managing that knowledge, to achieve success.

Knowledge is arguably one of the two greatest sources of competitive advantage (with the other being innovation). But this is nothing new. So don’t get lost in the hype.

Beware the Perils of Hyperspecialization

A recent article over on the Harvard Business Review on the age of hyperspecialization said that we are entering an era of hyperspecialization and that it will convey a pulsating, world-spanning flow of knowledge work. Heraliding it as the continuation of Adam’s Smith division of labour, it notes that hyperspecialization reduces costs most dramatically when a company can turn to an expert instead of having to reinvent the wheel and alow the company to achieve a better utilization of their own employees’ time.

However, there can be just as many perils, if not more. The article, which clocks in at seven pages, briefly passes over these five perils:

  • Digital Sweatshops
    In developing economies, enterprising industrialists might use hyperspecialization to create “digital sweatshops” where workers, sets of whom specialize in specific tasks, are exploited for low wages by those who have the means to do so.
  • Astroturfing
    If work is divided into small enough parts, it is possible that a worker may not know what they are working on and may be contributing to something counter to their personal beliefs, or even the law. For example, a mathematician could design a new lottery game or a “greeting card writer” could be creating text for e-mail spam.
  • Electronic Surveillance
    Not only can every aspect of the work be monitored, but it may even reach the point where the work in progress, and the person doing the work, is monitored from start to finish.
  • Dull & Meaningless Work
    Even Adam Smith noted the deleterious results when a person’s work was reduced to “a few very simple operations” back in 1776. If tasks become so refined that they become monotonous, there surely will be ill psychological effects.
  • No Guarantee of Payment
    While spec work is not new, today, most spec work is confined to proposals. In hyperspecialization, workers will actually be doing the work and whether or not they get paid could be at the whim of the company that issues the task.

But misses the most important peril of all:

  • Loss of Vision
    If everyone works on a tiny little piece of a puzzle, over time there will be fewer and fewer people who understand how a puzzle is to be put together. This will seriously stifle innovation as the creativity that results from exploring beyond your horizons diminishes as horizons shrink.

1999


Oops out of time
So tonight I’m gonna party like it’s 1999
Yeah

1999, Prince

Somehow SI gets the feeling this song was playing on the oldie’s station when Aberdeen was penning their recent piece on “The State of Strategic Sourcing: Building a Context for the Next Decade”. In a nutshell, their required actions would have been okay if penned in 1999 as necessary actions for leading supply management organizations for the next decade (although, in reality, they would have only taken an average organization through 2007). But in 2011 for 2020? Let’s just say SI liked Ariba’s predictions that data will predict the future, outsourcing will explode, and sourcing geeks will go the way of the dodo better. (Even though I hope it’s just a ruse.)

Normally SI ignores Aberdeen, as they haven’t, in SI’s opinion, put out anything good in years (as they lost their last senior analysts in the space a few years ago), but after having this particular piece brought to our attention, SI just can’t ignore it and how behind the times it is. Let’s put it this way, if a supply management organization thinks that the required actions are new and next level, it belongs in the bottom of the barrel in the laggard category. Let’s look at these required actions from the executive summary:

Leverage e-Sourcing solutions to drive higher savings and automate manual strategic sourcing processes
Just like every leading supply management organization has been doing for the last 10 years? This is advice for 2020? An average supply management organization has already squeezed every penny they can out of simple automation and standard reverse auctions, which most e-Sourcing suites revolve around. e-Sourcing is still the foundation, but now it is just the beginning of your Supply Management journey, not the destination.

Utilize spend analytics to drive visibility into corporate spending and forecast savings for future planning and budgeting
Wow! Two big problems with this. First of all, after the last two years, every executive and his dog has a “spend analysis”, “spend visibility”, or “spend reporting” tool that tells him just how much the organization is spending. What he needs to know is where the savings opportunities are. Just because the organization is spending 50M on fuel doesn’t mean there are any savings in the category. Maybe supply management saw the sharp prices increases coming and locked in low rates just in time. Maybe the real savings is in temporary labour where only 10M is being spent but where rates are still, despite recent increases in average labor rates, 20% above the norm. Secondly, spend analytics can’t forecast future savings. That depends on demand and input costs. Basic spend analysis just tells you what you spent, not where prices are going or where demand is going. The organization needs a real data analysis tool as well as good demand and price forecasting tools to get that picture.

Align overall sourcing activities/processes with the goals and objectives of the greater organization
Really? And should we also put our underwear under our pants? Supply management leaders have only been saying this for how long? Maybe SI should lighten up a little as it’s the only piece of advice that’s right, as supply management must be aligned with the rest of the business to be successful, but if this is not common sense to any supply management leader (who is also a business leader), there’s a fundamental problem in the organization that no action will fix. Plus, it’s a requisite, not an action!

The only action for success that SI can give you where this report is concerned is to burn it. The same-old, same-old is not going to get your supply management organization through the next decade. That’s why SI is spending so much time discussing next generation supply management and highlighting the efforts being taken by thought leaders such as Greybeard Advisors, The Mpower Group, and The Hackett Group to get the word out there. Supply Management must get to the next level, and it’s not going to do that rehashing technology from a decade ago.

Is It Social Software or Collaborative Knowledge Management That Gets Results?

A recent article over on Chief Executive on Tying Social Software to Business Metrics that Matter indicated that one of the biggest opportunities a company has to drive operating performance to new levels, run lean, innovate, and accelerate talent development is to tap the full capabilities of social software. As proof, it references “social software” deployments by OSIsoft, that realized a 22% improvement in average time to issue resolution through customer support’s use of Socialtext wikis, and Alcoa Fastening Systems, that reduced compliance activities by 61% using an internal collaboration platform.

Seems to me that the author is confused. “Social” software, at least in the common vernacular, refers to the social networks like Twitter, that makes a twit out of you, Facebook, that is contributing to the downfall of western civilization as you read this, and similar sites that have no real value and only provide you with ways to poke, prod, ping, and tweet your valuable time (and intelligence) away.

Wikis and similar platforms are really collaborative knowledge management platforms that allow users to collect, share, and create new knowledge that can help them advance themselves and the organizations they belong to, unlike social sites that only help them flitter their time away through pointless games and photo sharing. Yes there is a social aspect, but its about collaboration for education and innovation, not to see who can get the highest poke per minute count or follow the most twits who spend their days tweeting about how great Britney looks in her new outfit.

Social platforms only increase endorphins. In order to get results, you need to increase serotonin. That’s what collaborative knowledgement platforms do. Don’t get them confused.