A recent Business Week article discusses IBM's new venture into "collaboratories" reported that the company:

Hammered out six deals for collaboratories in short order-in Saudi Arabia, Switzerland, China, Ireland, Taiwan, and India. Four more are in the works. John E. Kelly III, director of IBM Research, says there's enough demand for 100 more tieups. "The world is our lab now," says Kelly. "I figure I can have a much larger impact on the company and our research if I operate this way."

By collaboratories IBM means forming research partnerships with outside agencies rather than doing their research and development work alone and in secret. This whole approach, a different take on open source, is an interesting one to watch as generates a range of questions, including:

• How will intellectual property rights be determined?
• How will IBM cope with scientific challenges and different ideas?
• How will joint research ventures be funded and staffed?
• How will partners be idenfied and selected?
• How do partners learn to trust each other and work collaboratively?
• How will individuals and teams be rewarded?

Answers to these questions are likely to result in a very different form of organization design that will start around the collaboratories but will inevitably impact the parent organizations.

New designs for education

A couple of articles have recently talked about new designs in education. Fast Company notes that:

The edupunks are on the march. From VC-funded startups to the ivied walls of Harvard, new experiments and business models are springing up from entrepreneurs, professors, and students alike. Want a class that's structured like a role-playing game? An accredited bachelor's degree for a few thousand dollars? A free, peer-to-peer Wiki university? These all exist today, the overture to a complete educational remix.

The architects of education 2.0 predict that traditional universities that cling to the string-quartet model will find themselves on the wrong side of history, alongside newspaper chains and record stores. "If universities can't find the will to innovate and adapt to changes in the world around them," professor David Wiley of Brigham Young University has written, "universities will be irrelevant by 2020."

Home schooling in the US has doubled in the last decade according to a report in the Economist, estimating that 3% of school age children are now educated at home – in part due to easy availability of information both to teach with and to swap information with other homeschoolers.

And in another Economist article there is a report on Quest to Learn "a new, taxpayer-funded school in that city (NYC) which is about to open its doors to pupils who will never suffer the indignity of snoring through double French but will, rather, spend their entire days playing games"

The article notes that much of the teaching will be transferred from teaches to the video games that students will learn through studying, in 90 minute blocks, various game based 'domains'

A recent 93-page report on online education, conducted by SRI International for the Department of Education, has a starchy academic title, but a most intriguing conclusion: "On average, students in online learning conditions performed better than those receiving face-to-face instruction."

This change in the way education is provided (and/or the way people learn) appears set to shake up traditional educational institutions in new and unpredictable ways. Their designs require radical rethinks if they are to compete with newer ways of educating.

Short term or long term success

For commercial organisations in public ownership 'business success' is almost invariably taken to mean 'making the numbers' or giving a good financial return to investors. Analysts comment on business performance each quarter, and company executives are often under great pressure to meet market expectations.

Companies meeting financial expectations are hailed as 'successful' pretty much regardless of how they got the results. The consequences of complying with this short term thinking are "loss of sight of longer-term value creation for all stakeholders leading to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns, and impeding efforts to strengthen corporate governance". (See Breaking the Short-Term Cycle)

Long term business success is not achieved by an unremitting focus on short term profitability. Organisations that work for success in several dimensions are more likely to achieve longer term profitability and be more adaptive and resilient to changes in their operating contexts.

Designing organisations to be 'successful' means knowing what success is for that particular organisation.

There are several methods of aiming for business success in several dimensions: the Balanced Scorecard, the Malcolm Baldrige National Quality Award, and the European Foundation for Quality Management Excellence Award – are three examples of business results models that do this. Adam Werbach in his new book Strategy for Sustainability offers another way of defining business success. Which offers all sorts of possibilities for new organization designs.

Do older workers mean newer organization designs?

A year ago the Bureau of Labor Statistics released information on the employment of US workers aged 65 and over.

• Between 1977 and 2007, employment of workers 65 and over increased 101 percent, compared to a much smaller increase of 59 percent for total employment (16 and over).

• The number of employed men 65 and over rose 75 percent

• Employment of women 65 and older increased by nearly twice as much, climbing 147 percent.

• The number of employed people age 75 and over is relatively small (0.8 percent of the employed in 2007), this group had the most dramatic gain, increasing 172 percent between 1977 and 2007.

• Full-timers now account for a majority among older workers: 56 percent in 2007, up from 44 percent in 1995.

BLS data show that the total labor force is projected to increase by 8.5 percent during the period 2006-2016, but when analyzed by age categories, very different trends emerge.

• The number of workers in the youngest group, age 16-24, is projected to decline during the period the number of workers age 25-54 will rise only slightly.

• In sharp contrast, workers age 55-64 are expected to climb by 36.5 percent.

• The most dramatic growth is projected for the two oldest groups. The number of workers between the ages of 65 and 74 and those aged 75 and up are predicted to soar by more than 80 percent.

• By 2016, workers age 65 and over are expected to account for 6.1 percent of the total labor force, up sharply from their 2006 share of 3.6 percent.

So it is time to start acting on what this might mean for employers: more flexible work hour, different approaches to pay and rewards, more imaginative career development and talent management pathways, a greater opportunity for experience exchanges, younger leaders with older followers, changed employee/employer 'psychological contracts', changing of attitudes and stereotypes, and so on

inversions of leader age – younger leaders with older followers, changed employee/employer 'psychological contracts', changing of attitudes and stereotypes, and so on.

Cisco’s new organization design

Cisco's CEO, John Chambers, is taking the company into new forms of organization design. At least, according to an article published in The Economist on August 29. It describes the new design, which combines a functional structure with cross-functional groups, as

'an elaborate system of committees made up of managers from different functions. The job of most of these groups is to tackle new markets. "Councils" are in charge of markets that could reach $10 billion. For "boards" the number is $1 billion. Both are supported by "working groups", which are created as needed. There are about 50 boards and councils with some 750 members. Cisco has given up counting the working groups, because they come and go so quickly. '

Cisco was featured in a Fast Company article a year ago (September 2008) where the same design was discussed:

"The goal is to spread the company's leadership and decision making far wider than any big company has attempted before, to working groups that currently involve 500 executives. This move, Chambers says, reflects a new philosophy about how business can best work in a networked world.

Pull back the tent flaps and Cisco citizens are blogging, vlogging, and virtualizing, using social-networking tools that they've made themselves and that, in many cases, far exceed the capabilities of the commercially available wikis, YouTubes, and Facebooks created by the kids up the road in Palo Alto.

The bumpy part — and the eye-opener — is that the leaders of business units formerly competing for power and resources now share responsibility for one another's success. What used to be "me" is now "we." The goal is to get more products to market faster, and Chambers crows at the results. "The boards and councils have been able to innovate with tremendous speed. Fifteen minutes and one week to get a [business] plan that used to take six months!"

It's a bold experiment and one that traditionally designed organizations should be watching closely – far too many of them are timid about thinking differently about their organisation designs – they're willing to consider innovation in service delivery or product design but much less willing to consider (let alone adopt) anything that might upset established hierarchies, power balances, and practices.

Connecting organization culture and business success

Dick Clark, Merck's (a pharmaceutical company) CEO, when asked about his strategy for restoring the pharmaceutical company to greatness in the face of lawsuits over its painkiller Vioxx, expiration of patents and a weak product pipeline, said his strategy was to put strategy second and focus on changing the company's culture. "The fact is culture eats strategy for lunch," Clark explained. "You can have a good strategy in place, but if you don't have the culture and the enabling systems that allow you to successfully implement that strategy, the culture of the organisation will defeat the strategy."
The implication of his statement is that a 'good' strategy will bring business success (usually equating to solid financial performance). Further there seems to be an assumption that execution of the 'good' strategy is dependent on a 'strong' and/or 'healthy' culture.

Even without delving into notions of 'good strategy' or 'healthy' and 'strong' cultures there are conflicting views the connection between organisation culture and performance (business success) which is not surprising as there is little consistent empirical evidence of a link between the two, but plenty of anecdote and intuition making the connection.

A short academic paper Culture-Performance Research: Challenges and Future Directions* describes the issues and summarizes by saying,

"the proliferation of … propositions related to both culture and performance, has limited researchers' abilities to draw stable conclusions about these relations, most notably in the strategy management literature. While many attempts in the strategy literature find support for the link between culture and firm performance, generalizability, and thus construct validity, is extremely limited.

Specifically, the various measures of performance and culture provide limitations to understanding the culture-performance link (Denison, 1984; Petty et al., 1995). As a result of the inconsistencies in measurement, there is limited agreement as to how culture may impact firm-level performance of an organization."

So thinking there is a connection does not necessarily make the connection but it still seems an attractive proposition to pursue.

*Weinzimmer, L. G., Franczak, J. L. and Michel, E.J. (2008) Culture-Performance Research: Challenges and Future Directions. Journal of Academy of Business and Economics, Volume 8, Number 4, 2008 158

Innovation, Hertz, Zipcar

Someone suggested yesterday that organizations in different stages of maturity might need different forms of innovation. He'd defined innovation as a 'better but different' process improvement i.e. not just incremental improvement but something substantially different that meant a process was getting done more efficiently, cheaply, productively in a very different way. An example at a market level is the way car rental process.

The traditional way is of the Hertz. Budget, Avis business model, and a different, newer, innovative way is the Zipcar model.. Now Hertz is taking on the Zipcar model. Connect by Hertz which launched in December 2008 and is now in various cities in the US plus London and Paris. At the time of the launch Hertz spokeswoman Paula Rivera said plans were already in place to expand to other locations. "We plan to go after the car-sharing market in an aggressive way". (wsj. December 3 2008). By April 2009 Hertz was claiming that its pilot was successful and had signed its first corporate customer (Marriott) – adding car sharing to 'its business travel portfolio', and in June added Xerox as a corporate customer.

So how long will it be before other traditional car rental companies start to compete with Hertz? How easy will it be for them to change their business models to take on this new way (for them) of car rental? Going from one business model to another is a challenge for most companies – changing not just the systems, policies, practices, and processes, and measures changes but also the mindset and management style – and many don't think through the implementation and execution of the new model. A perfectly conceived innovation is useless if it can't be implemented effectively.