React before you assimilate
Although all organisations express some degree of responsiveness at all levels, from information management to instinct, they vary in the degree to which they proactively establish each level as an organisational asset in order to move closer to instinct. It gets harder to capture the myriad skills needed as they climb each rung of the ladder toward instinct. Yet in organisations, and likely in humans, instinct is built on the solid foundation of the other three rungs as a prerequisite. Without a credible approach to managing information, knowledge and intellectual assets, it is simply not possible to create an instinctive organisation - although such an organisation may still have an okay batting average, at least compared with a pool of competitors in the same league.
Share - don't impose - knowledge
Although information and knowledge are basic assets of our organisations, you would be hard-pressed to find a single income statement or balance sheet that lists either, much less one that even acknowledges the existence of corporate instinct. Yet the greatest value of any organisation in today's economy comes from these intangibles.
Information stored in a database can clearly be considered an asset. This same information linked together through a series of roles, rules, and process instructions could be considered a knowledge asset.
Instinct, usually reserved for the highest levels of the organisation, must not only be part of the organisations fibre and infrastructure, much like a corporate culture, but it must also be conveyed to the organisation in overt ways by putting tools in the hands of every employee that permit the organisation to share its awareness and responsiveness continuously.
In the case of Digital Equipment Corporation (DEC) during the 1970s and 80s, the tools were lacking, fads were rampant and contradictory, and instinct was reserved for the elite ranks of the organisation. DEC held management woods retreats (so named because the top management would literally escape to the woods) where DEC executives went to carve out new strategy, which they brought back to the company like the tablets Moses brought down from Mount Sinai. This is not what we are proposing. As with most faddish management techniques, their intent is to reserve instinct for a fortunate few, not to share it but rather to impose it. Imposing any singular strategy over a sufficiently long period of time will defeat the purpose of corporate instinct, which is rapid innovation, by limiting the organisations ability to sense the market with its extremities.
In organisations of this sort, where the instinct is reserved for the higher echelons of the organisation, only a radical extrication of top management can turn the organisation around, if at all. But this is risky business.
In most of these situations the CEO is either too tightly controlling corporate instinct or unable to overcome corporate memory. Vision has its place, but it cannot provide the long-term direction needed in times of turbulence if it is linked only with one person.
That's the second key criteria for an organisation to react to change continuously. It must sense the market with its extremities, not its head. This is what we will refer to as decephalisation. It is no accident that evolution has put our heads at the far end of harm, or that our most sensitive, agile, and acute sensory nerves are at our extremities, where danger most often meets us. Continuous reaction works when the organisation feels with the bottom of the pyramid and not the top.
To have enduring value, corporate instinct must be something deeper than the singular vision of a CEO or any single individual. It has to be part of the very genetic makeup of an organisation.
Think about companies you know, perhaps even your own, where over-rationalisation and over-analysis of problems creates competitive obstacles by slowing down decisions and responsiveness.
Even the slowest of these organisations has an imbedded memory, a form of shared understanding about the way things are done, but this is not the instinct we are referring to. It is, instead, a memory that was created for past markets, old economies, and outdated competitive factors.
While organisations are simply a collection of responses to their environment or market, every successful organisation attains success by its ability to perceive new opportunity. Opportunity that, although it exists, defies the ability of most organisations to capture it, despite the enormity of great marketing, engineering, and sales forces.
Why? Because large monolithic companies develop corporate memory, which creates filters between the company and the market. These filters do not allow the information that triggers creativity and responsiveness to pass through swiftly enough.
Companies whose instincts have gone stale are like patients with local anaesthesia let free to wander through the world, They are rational, coherent, and aware of their predicament, yet numb. They can no longer sense the world around them.
These anaesthetising filters are missing in smaller organisations. As organisations grow, their instincts almost always become stale. The magic is in keeping corporate instinct alive, fresh, and always as agile as the current market.
A strong-willed and visionary CEO may turn an organisation around, but effective CEOs such as Lee Iacocca and Jack Welch ultimately create much more than vision. They create organisations that can continue to turn themselves around. In these companies, instinct becomes part of the organisation, not just part of a person.
Become a knowing enterprise
Although corporate instinct requires a solid foundation of knowledge management, it also differs significantly from much of the current theory surrounding knowledge management, which focuses on explicit knowledge. Corporate "explicit knowledge" is formally expressed in codes of conduct, policies and procedures, and in other documents, manuals or databases that prescribe corporate behaviour. Corporate instinct is found in the way an organisation enables the complete knowledge chain of activities it performs. This includes the collective and accumulated experience, skills, and expertise of employees, the information repositories and systems that store the organisations knowledge, and how all of these affect the internal/external awareness/responsiveness of an organisation.
Although many corporate information systems managers and consultants have been advocating the benefits of "knowledge management" -gathering and managing intellectual capital that can be leveraged in order to boost productivity and reduce time to market - this focuses only on the internal responsiveness of an organisation. It answers the question, "How quickly can I get to existing information if I know what to ask?" but it does not deal well with the unknown, or the classic case of "you don't know what you don't know."
Knowledge and intellectual capital certainly represent one of the modern corporations most important assets, and interest in the area of knowledge management is bound to keep growing - as it should. By proposing the development of corporate instinct we are not attempting to dismiss the value of good knowledge management. But there is something much more important that has to encompass and govern the knowledge management, effort, with a knowledge chain of activities, in order to make the knowledge useful and contemporary - as opposed to limiting and stale, as in the case of the traffic pattern problem we described earlier.
Knowledge management is a valuable exercise that is perhaps long overdue, but it is incomplete as it is usually proposed or described. By the time practices or problems become codified as "knowledge," it too late to take full advantage of a situation. Also, many knowledge management techniques fail to recognise that a number of basic decisions are - and should be - made at the level of instinct. For example, managers may instinctively modify a manufacturing process to enhance productivity, instinctively reject payment on certain claims, or refuse the request for a loan based not on explicit criteria but according to more tacit implicit criteria that occur spontaneously. When asked, "What qualities were most important to managing knowledge?" one senior R & D executive at AT&T ranked taste as the most import. Taste, he said, was the ability to intuitively sense what technology investments made the most sense. This kind of knowledge eludes recognition, and will be difficult to capture and process. Can the traditional database or data warehouse adequately represent this sort of fuzzy, almost indefinable knowledge that we are describing? Not as they exist today.
The alternative has been to capture this knowledge purely in the gut or intuition of the employee. But this too is faltering as employees are replaced by free agents who consistently take knowledge with them to new jobs and companies. Individual instinct is sufficient only in cases where long-term teams bond and remain constant. That is no longer the case in the vast majority of organisations.
Anecdotal evidence from service companies that have restructured their staffs demonstrate how extensively companies depend upon this level of individual instinct. Insurance companies, for example, which have pared back staffing in their claims departments, have been shocked and dismayed to find that they soon began carelessly overpaying many of their claims. They traced the problem to the departing employees who had developed informal and intuitive methods of screening those claims. These unorthodox methods involving private knowledge and gut feelings went well beyond the stated policies or criteria for determining the legitimacy and size of payments, but they were nevertheless quite valid and effective. n
Corporate Instinct
By Thomas M Koulopoulos, Richard A Spinello & Wayne Toms
Published in arrangement with Van Nostrand Reinhold by Jaico Publishing House
Pages: 284, Price: Rs 750
