Digital hives: Creating a surge around change
Online
communities are helping companies engage with employees to accelerate change.
New lessons are emerging for executives striving to harness the power of social
media in the cause of wider employee participation. Clearly, there’s more to
success than just investing heavily in the latest Enterprise 2.0 technology
platforms. Large-scale engagement of the workforce requires, first and
foremost, a firm grasp of organizational culture and its social dynamics, a
psychological understanding of what triggers new behavior, a determination by
management to loosen if not relinquish its traditional top-down approach, and an
ability to demonstrate how digital activities complement offline or other
real-world events.
Those attributes are often absent,
so we find that many companies struggle to maintain the momentum of initiatives
to encourage broad- and digitally based employee involvement. Indeed, that’s
true whether these efforts focus on the formulation of strategy,
transformational change, customer service, or other business contexts where
fresh ideas or new ways of working are needed for competitiveness. Some
initiatives fail to “mobilize the masses” to any significant degree,
dissipating energy and effort as the message gets stuck in middle management.
Others get going but never reach the organization’s perimeter, thereby missing
an opportunity to collect valuable feedback and ideas from the front line.
Four ways to drive change
Here we present four specific
approaches to the creation of what we call digital “hives”—electronic hubs
bristling with collective activity and designed to solve a particular problem
or set of problems, to drive new habits, and to encourage organizational change
(exhibit). Digital tools to facilitate networking and collaboration propel
these “horizontal” cascades, which at their best can weave new patterns of
engagement across geographic and other organizational boundaries. In this way,
they make it possible to have new conversations around problem solving, unlock
previously tacit knowledge, and speed up execution.
Best practice in the formulation of strategy
and in organizational change has long been to craft a “story” at the top and
then to cascade it through lower echelons of the organization. Some companies
refine the message in the light of feedback from middle managers, but however
well communicated the refined story may be, it is still management’s
second attempt. Employees on the shop or office floor often feel like passive
recipients.
That’s beginning to change, though,
thanks to social technologies. In a 2012 Quarterly article, we described
the emergence of an approach that provides for extensive employee input and
modifications. Telling thus equates with sharing, so the
narrative grows as it diffuses throughout the organization. There are still relatively few social strategy-development processes, but the
tools are getting more powerful, and the scale and scope of such efforts are
more impressive.
Using the “management hackathon”
concept—an integrated multistage platform that allows participants to discuss
ideas, express opinions, and contribute expertise collectively —a successful consumer-goods company recently involved its entire organization
in an open-source strategy process. This effort started with an
organization-wide online discussion about risks to the company’s growth engine
from higher input costs, stagnant industry growth, and a growing competitive
threat from imitators to certain products and the business model. These risks
then formed the basis for a bottom-up process that spawned over a thousand new
strategic insights using a combination of in-person meetings and workshops as
well as online channels.
These insights were aggregated into
roughly ten strategic themes—from reengineering the retail experience and
digital technology to creating service ecosystems around the company’s
strongest brands. All employees were asked, via an online platform, to provide
a rank order for these insights and to suggest specific business ideas
embodying them. The input from the hive helped management to narrow the
strategic themes down to three and to identify several high-priority
opportunities. The company is currently developing them, leveraging both online
and offline channels to harvest more insights from across the organization and
to identify volunteers who want to be involved.
Early experience suggests that
better results follow when a problem is presented in stages to avoid
overwhelming the participants, when a company uses volunteers rather than
conscripts, when it offers training on how to think about innovation, when
energy- and community-building offline events (such as workshops or weekly
cafeteria sessions) supplement the online discussions, and when executives
strike an authentic tone.
2. Connecting silos with a social chain
One of the biggest organizational
challenges is to break siloed behavior and get employees talking to one another
and cooperating across intracompany boundaries. It’s one thing to diagnose a
problem and aspire to collaboration. It’s quite another, once the initial
excitement wears off, to maintain momentum through mechanisms that underpin the
new behavior and prevent managers and employees from slipping back into old
habits.
One promising social-technology
experiment we’ve observed is what we call the “social chain”: a digital
platform that links everyone working in a particular value chain inside a
company. (Value chains often comprise people in different silos or departments
working, say, to fulfill a customer order.) The social chain allows employees
to work “out loud” online by sharing how they do things. It also encourages
people who were previously isolated in part of the chain to identify areas
where they depend on others and to tackle problems or bottlenecks
collaboratively. Chain leaders can monitor these conversations and inject their
own insights when appropriate. The chain can help them to expose old behavior
and to highlight the sort of tacit understanding that drives more efficient
operations.
The Dutch bank ABN AMRO has been a
pioneer in using social chains. The banking crisis, a merger with Fortis, and
the ensuing nationalization saw the company embark on a sweeping change program
to cut costs, increase the efficiency of the value chain, and make employees
more responsive. In the group’s wholesale arm, for example, senior managers discovered
that there was no uniform approach to tracking and reporting problems:
employees could detect defects at the customer end more quickly through the
Internet than through the company’s internal systems. Needing a way to
stimulate proactive, real-time problem solving, ABN AMRO introduced a social
chain dedicated to employees working in its Acquiring and Issuing Cards unit,
who spanned different silos, including IT, customer service, and operations. To
push people into the hive, managers discouraged communication through meetings
and e-mail.
Eighteen months later, the results
were clear. ABN AMRO’s social chain had enabled its employees to share their
expertise, in real time, beyond a narrow circle of peers. They could therefore
become true ambassadors for, and identify with, the chain as a whole.
3. Enlisting key customers to improve the proposition
A company’s most regular and trusted
customers—a group we call the “client rim”—can be a powerful force for change
when they provide feedback on service standards or product quality. The opinion
of these customers counts; they have extensive experience with the company and
its ways of working, are generally committed to its success, know the people,
and are typically both its most enthusiastic ambassadors and its strongest
critics. Thanks to the power of social technologies, a company that mobilizes
such people can solicit specific ideas for improving its customer proposition
and demonstrate its client-centricity more broadly.
KLM, the Dutch airline, has
successfully used this approach to foster a stronger client-centric mind-set
among its employees. Operating in a highly competitive market with tight
margins, the airline decided to target the lucrative segment of small and
midsize enterprises directly. This approach required a significant shift in
perceptions, not least because KLM traditionally focused on larger corporate
clients and was often seen as distant, even arrogant, by smaller businesses.
Rather than taking the traditional
focus-group route to find new ways to improve the offering, the company’s
executives opted for a large-scale digital dialogue between KLM and its
emerging customers in this segment. The resulting Bluelab idea-management
platform involved 1,500 participants from small and midsize businesses, who
generated more than 1,000 concrete ideas and 4,000 other contributions. Both
management and customer-facing staff from KLM Netherlands actively participated
in these discussions. According to one senior executive, the initiative has
“opened our eyes to the possibilities of social media to build a far stronger
customer focus among our staff.” KLM has since become one of the airline
industry’s foremost social-media exponents.
Companies can embrace key customers
in a variety of ways. Mobile apps can transmit a continually updated stream of
client quotes on the product and service experience. A buddy system can allow
individual customers and employees to have online conversations—preceded,
perhaps, by a customer-experience event at which clients and employees explore
new paths to common goals. Idea-management platforms can solicit customers’
help in solving vexing problems. Or a company might create social “mystery
shoppers” who follow internal conversations anonymously and comment on them.
4. Uniting a dispersed sales force to drive higher sales
We’re all creatures of habit, often
reluctant to ditch comfortable routines and to apply new ways of doing things.
The desire to address exactly this problem recently prompted a leading beverage
company in Africa to employ social media to engage with its far-flung sales
force (1,000 reps servicing around 100,000 individual outlets) and win back
market share. These reps traditionally had spent several weeks at a time on the
road, rarely checking in with the head office and therefore operating in a
feedback and knowledge vacuum. Inevitably, they had become disconnected from
the organization, and performance suffered.
The turnaround started after the
company implemented a simple, low-budget system that uses the hive’s collective
wisdom to give each sales rep and call-center agent regular, real-time, and
personalized information. Given time pressures, cash constraints, and concerns
over the rate of thefts in African townships, the company opted to issue simple
mobiles rather than the latest smartphones with a specialized app.
Staff at the center collected ideas
based on intelligence gleaned from the calls and e-mails of the sales reps
themselves and from district managers familiar with current issues in the
beverage trade. The company also analyzed customer data highlighting pockets of
fiercer-than-normal competition or SKUs that were selling particularly well.
Such insights were then shared with reps and agents, who each received two or
three personalized SMS messages a day. Managers could further use this
rudimentary social platform to communicate with the sales force by, for
example, congratulating teams when they hit milestones and generally
celebrating success. The company also created a call-center “leaderboard”
allowing executives to track the agents most responsive to the new information
at their disposal. The executives then freed up time for these “early adopters”
to coach their peers, provide feedback, and strengthen the system with
additional insights.
The new network, implemented at
minimal cost, puts collective expertise in the hands of each of the frontline
reps, binds them more closely to the organization, and generates faster
performance feedback. Within a year of the start, the company has increased
cross- and upselling rates to more than 50 percent, from 4 percent, realizing
an increase in gross margins of $25 million.
A new mind-set for senior managers
The examples in this article
illustrate the range of business contexts in which executives are increasingly
making use of social media’s growing influence in their employees’ private
lives and their increased familiarity with new digital-communication tools. As
managers contemplate how to drive broader and deeper employee engagement in
their companies, they should bear in mind the following considerations:
Leading while letting go
Digital hives involve large numbers
of previously “disenfranchised” employees in setting strategy, company-wide
transformations, and customer-outreach initiatives. Creating these hives
requires a delicate balancing act—not least a willingness by top managers to
let go. Managers should not be afraid to commit themselves explicitly to acting
on the results of these initiatives and should encourage unrestrained
participation, however unpredictable the consequences.
But that doesn’t mean playing a
passive role. Our research consistently shows that without substantial
involvement by the CEO or other top leaders, the vast majority of such
initiatives fail to achieve their objectives. What’s more, change programs that
involve large numbers of people are up to two times more successful than those
that do not.3
When we ask change leaders what they would do differently next time, the top
three responses always include spending more effort on engaging people and on
developing and communicating change stories.
Looking inward
The growing use of social tools to
drive employee engagement provides particular opportunities for senior
executives to improve role modeling. When people reflect on their behavior,
they tend to rely on their own often sketchy perceptions and faulty memories.
With many digital technologies, however, people can now track their behavioral
footprint—for example, by analyzing conversational threads in microblogs and
comparing their actual behavior with the leadership style to which they aspire.
Managers at an international insurance company we know did so and found a clear
gap between the effect they thought they were creating as leaders and the
actual results.
Becoming more responsive
Mobilizing a crowd requires
companies to anticipate the crowd’s expectations. Executives can maintain pace
and encourage deeper engagement only through transparent feedback and rapid
follow-up. We often see companies respond too slowly and erratically, so that
employees can only guess what comes next. Radio silence or a prolonged hiatus
strongly diminishes any sense of urgency and disrupts the rhythm, or pulse, of
participation. Worse, it may spark lingering skepticism. Unleashing collective
intelligence through a hive will be more successful if managers think ahead and
develop an agile, scrum-like response capability outpacing that of smaller
offline programs.
Given the speed of technology’s
development, we recognize that digital hives are still an area of fertile
experimentation and that new models will evolve over time. What we know already
is that the hive’s transparent, inclusive, and egalitarian nature amplifies
well-established psychological mechanisms, such as peer pressure and social
recognition. Out in the limelight, with clear rules of engagement and a level
playing field, people tend to stimulate and encourage others, perform well, and
seek recognition. Collective adoption and participation can grow in hives as
each one of them becomes a catalyst for change and causes a wider ripple effect
throughout the organization.
by Arne Gast and Raul Lansink
http://www.mckinsey.com/insights/organization/digital_hives_Creating_a_surge_around_change?cid=other-eml-alt-mkq-mck-oth-1504
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