Social Sales and Operations Planning

In a post on his blog, Pretzel Logic, Sameer Patel put forward an argument Why Exception Handling Should be the Rule . His discussion of exceptions in the post aligns nicely with my recent blog post, The Happy Path.

Patel's model of the three Modes of Work - Process, Project and Exceptions provides a convenient way to analyze enterprise activities.

Whereas The Happy Path discussed Exceptions, in this post I will describe an example from the Process mode that illustrates the opportunities for enterprise collaboration through the integration of Enterprise Resource Planning (ERP) and social business collaboration (SBC) technology.
Sales & Operations Planning (S&OP) is one of the central ERP business processes.  In short, the process integrates the inputs from enterprise organizations and aims to set an agreed rate of production that satisfies the demand (sales) plan and takes into consideration inventory plans.  Although the process is typically managed by an individual, it is inherently collaborative in nature. The input and insights from sales, marketing, customer service, product management, operations, engineering and finance are combined to establish the sales and operations plans.

The Sales & Operations Planning Cycle

Imagine the potential to improve the quality of the planning process outcomes by expanding its reach to include inputs directly from the folks on the front lines of the enterprise. For example, customer service representatives can provide real-time intelligence on product use and acceptance before it shows up in the sales history. Sales representatives may have information about competitors and the steps they are taking to counter your moves in the marketplace.

I hope you agree that there are valuable insights from across the enterprise that through the integration of SBC technologies can be leveraged in ERP processes such as sales and operations planning.

Social Manufacturing

I read with great interest the recent special report in The Economist, The future of manufacturing - A third industrial revolution. In particular, as an enterprise collaboration evangelist my interest was piqued by the mention of "social manufacturing".

Several emerging technologies, including additive manufacturing (3D printing) and social business collaboration (SBC) are being combined with older technologies such as Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM) to dramatically lower the barriers to entry and enable innovations in products, services and business models that will disrupt the broader manufacturing industry.

Hacking is no longer solely the domain of software enthusiasts. The open source movement has expanded from software to product design. As the price of 3D printers has declined the prospects for artisans producing low volume, highly customized solutions have increased. While 3D printing adds the WOW factor, it is SBC enabled collaboration that will really drive the revolution. And I think that we will see the balance of market power shift from larger to smaller players.

Imagine for a moment your local hardware store or plumber, equipped with 3D printers, printing a spare part on-demand, essentially never running out of stock. It is the access to open source designs through a networked community of interest that really makes this scenario work. Many of theses folks will be self-taught or on a second career. They will need the help of like minded enthusiasts to iron out the inevitable bugs and maintain a complex integrated tool set. I have every confidence that a growing number will be successful and that we will see evidence of the change sooner than we think.

It has been said that the grass roots organizing skills of social movements in the sixties, such as the civil rights and anti-war movements, were critical to the success of women's, environmentalism and human rights movements that followed. More recently, social scientists are rethinking their theories of social movements to incorporate the impact of the Internet and to understand the forces that are enabling the emergence of thousands of transnational non-governmental organizations (NGO's).

I believe that we are seeing a parallel to the evolution of social movements in the emergence of social manufacturing as a viable form of enterprise. The collaboration tools available to individuals outside of large enterprises, such as LinkedIn, Facebook or the range of tools from Google, are in many ways superior to the tools available to those inside large enterprises. The advantage that large enterprises have with respect to the access to critical resources are rapidly being overcome.

I hope to play an important role in the third industrial revolution. What are your plans?

DARPA does Social Product Development

I believe that the application of social business collaboration (SBC) tools and practices will revolutionize enterprise business processes.  So I read with great interest the report Pentagon Pushes Crowdsourced Manufacturing in the New York Times on April 5, 2012 which describes a significant initiative to apply SBC to the Product Development process – from idea to manufacturing.

In the piece they quote LTC Nathan Wiedenman, a Defense Advanced Research Projects Agency (DARPA) program manager:

“… The goal, he said, is to “democratize the design process.”

They go on to quote Joseph Salvo, manager of the business integration technologies lab at G.E. Research:

“This is about changing the paradigm so you can rapidly design and manufacture complex systems of all kinds,”

In the graphic that accompanied the report we can see the prominent role played by the “crowdsourcing platform” and collaboration technologies, such as wikis and forums, in their strategy.

It is clear to me that DARPA is embracing Social Product Development as means to achieve their goal “to cut the design-to-production cycle to two to four years”. As a taxpayer and SBC advocate I plan to watch this program closely.

Social Procure-to-Pay (P2P)

I have been involved with business process analysis and design throughout my career, as a logistics and supply chain practitioner and as management consultant assisting clients with business transformation initiatives. More recently I have taken an interest in the adoption of social business collaboration (SBC) tools by businesses and other types of enterprises. In particular I am interested in the potential for changing business processes, practices and organizational structures to take advantage the opportunities created by SBC technologies.

The Procure-to-Pay (P2P) business process is one of the core end-to-end processes of almost every enterprise. As depicted below, the process usually begins with a requirement to procure goods or services and is completed with payment to the supplier. In many organizations this process is enabled by an Enterprise Resource Planning (ERP) system.

In a discrete manufacturing environment, where ERP systems were first deployed, the requirements are driven by a production schedule and determined by a bill of materials (BOM). The process is repetitive and often highly automated. In most cases, with perhaps the exception of approval workflow and exception management processes, there is restricted scope for social collaboration. The opportunities for social collaboration are upstream in the master data management, product lifecycle management and supplier relationship management processes.

However in most organizations the P2P process also supports procurement scenarios that are not repetitive and the requirements are not as clearly defined. In these cases there are real opportunities to change the way that work is done to exploit the capabilities of SBC tools.

For example if I have a need that could be satisfied by a range of different products then it would be useful to publish a description of my need to my social network, soliciting comments on the “best tool for the job”. This approach, often called crowdsourcing, is common practice in personal social networks, but current ERP solutions cannot easily support it. The ERP assumes that the requestor knows exactly what they want when they create the purchase requisition. In addition, if I share my needs with the network there will be situations when my needs can be met from existing unused inventories, much of which is not visible to the ERP system once it has been financially expensed.

These are but two examples of how the existing P2P process can be changed to take advantage of the capabilities of SBC tools. There are many more opportunities in this and other ERP business processes.

Today’s ERP systems carry with them the legacy of their past – their logical model of the business process is based upon the documents that manually flowed from function to function in the days before automation. The purchase requisition form feeds the purchase order, which in turn is acted upon to recognize the goods receipt. The supplier’s invoice is matched with the purchase order and the goods receipt document before payment is made. Each of these electronic documents existed as a paper document prior to ERP systems. In some cases the paper documents are still produced and filed.

In contrast, and in recognition of how knowledge work is done, the emerging SBC tools are people centric, not document centric. It will be interesting to see how the ERP software vendors choose to integrate SBC tools into their offerings. Can they bridge the people and document centric divides successfully?

Let me know what you think about the prospects for “Social Procure-to-Pay”.

Share more, Learn more

The other day a colleague of mine, Simon Scullion, posted a blog Balancing the use of our time which was built upon a quote from a post by Julien Smith, How to Change Your Life: An Epic, 5,000-Word Guide to Getting What You Want

the way your time should be spent is largely like a pyramid, with a wide base of learning, with a smaller level of acting on top of it, which is directed by the learning, and then on top of that, an even smaller level of writing about it. If you begin to live your life differently than the pyramid should be built, it becomes unbalanced and topples over

Simon re-interpreted the words “acting” and “writing” as “doing” and “sharing” and produced the image at left:

While I agree with their premise, the image that came to my mind was more of a cycle, where learning enables doing, doing enables sharing and sharing enables more learning.

At first it may seem counter intuitive – how does my sharing enable more learning?

It has been my experience that when I share my thoughts I have learned a great deal from the comments and feedback that follow. In some cases I have been challenged to explain my ideas more clearly or completely. In other cases I have had to respond to holes or inconsistencies in my argument. While I may not always agree with the comments, sharing my thoughts certainly has stimulated me to learn more. Sharing can be the driver of a virtuous cycle.

In their recent book Race Against The Machine; How the Digital Revolution is Accelerating Innovation, Driving Productivity and Irreversibly Transforming Employment and the Economy, authors Brynjolfsson and McAfee describe the accelerating rate of technology innovation and how it relates to the demand for labor.  

The New York Times have an excellent graphic that shows how the rate that technologies spread in our society has accelerated over the course of the last one hundred plus years.

   

One of the implications of this phenomenon is that the shelf-life of the body of knowledge for a particular technology is growing ever shorter. As a result what you have learned in the past becomes increasingly less relevant.

So, if I build upon Julien and Simon’s thinking and the observations made by Brynjolfsson and McAfee and the New York Times, then I conclude that we need to change the balance of our time spent learning, doing and sharing in favor of sharing and learning. We must leverage increased sharing to accelerate our learning and enable us to continue to perform the work and deliver the services that are in demand.

Is your organization encouraging you to share more? Are you changing the balance of your time spent doing, learning and sharing?

Please share your thoughts, I want to learn more! 

Internalizing Positive Externalities

In my last blog post, He just up and did it, I speculated about the potential to use employee education as a means to overcome the resistance of ingrained habits and a fixed mindset that have conspired to prevent potential users of social business collaboration (SBC) tools from investing the time needed to master the new technologies, change the way that they do business and share their valuable content.

A comment about that post from one of my colleagues, Mark Masterson, raised a good point:  

Because one thing you're overlooking here is that there is a cost/benefit analysis implicit in every single worker exposed to the potential change. For some, the cost (amount of effort, degree of education, psychology, whatever) will exceed any imaginable benefit. Every time.

I think that it is worth exploring the economic concept of Externality to see if it can help us to crack the cost/benefit nut.

In standard economic theory an externality occurs when a third-party is affected by a transaction between a buyer and a seller. As a result, the price of exchange does not reflect the full cost of producing or consuming the good or service. The classic example used to illustrate this concept is that the price of goods produced in a factory that emits air pollutants as a by-product of the production process does not reflect the costs to society of the negative effects from that pollution. As a result the prices of the goods are set too low and the goods are over-consumed.

In order to address the problem of the failure of the pricing mechanism there are public policy remedies that can be applied, such as a pollution tax. In theory, the funds collected from the tax could be used to mitigate the effects of the pollution, thus reducing the harm to society. An alternative approach is to establish regulations that require the producer to “internalize” the third-party costs by either paying for remediation or prevention, such as installing pollution control devices. As you can imagine establishing a fair remedy can be very challenging – it is not possible to precisely determine the actual external costs.

Externalities need not always be negative, they can be positive too – the third-party benefits instead of being harmed. However, when positive externalities exist the goods or services will be relatively under-consumed rather than over-consumed.  It has been said that public funding of education is justified by the positive externalities generated by education - the benefit to society of a more productive and innovative workforce.

At this point you may be wondering what all this economic theory has to do with the choices being made by employees and their cost/benefit calculations.

One of the key benefits that can be enabled by deploying SBC tools is access to the Network Effect. As the number of users of the network increases the value to its members, and the enterprise as a whole, increases at an accelerated rate. The network effect is an example of a positive externality scenario.

It is reasonable then to consider what policies can be employed to internalize the positive externalities – to make them part of the employee’s cost/benefit calculation. Should an organization create an incentive for individuals to share content with the network, such as rewards or recognition programs? At the very least, shouldn’t the organization incorporate a discussion of externalities and the network effect into their education curriculum? Can we use these or other approaches to bring the employee cost/benefit calculations into alignment? There may not be a perfect solution to the cost/benefit problem but there are things that can be done.

Before you say “not so fast Henry”, I am aware that there are challenges and potential side effects of creating incentives for sharing. Since it is not possible to determine the actual value of sharing content, then how do you determine the correct level of incentive? Additionally, some employees may game the system for their own benefit, sharing more content just to qualify for incentives. This behavior would degrade the average quality of content and effectively impose a tax on their colleagues. 

It is my experience that social networks have evolved cultural responses to the “over-share” problem, with active policing by the members of those that violate the group norms. Failing that there are means to “turn down the volume” on repeat offenders. I have also found that SBC tools, such as content ratings and “likes”, can be used to highlight the valuable content, allowing it to “bubble up” and separate it from the mundane. The usage pattern for SBC tools is different from earlier collaboration tools. While the norm for reviewing your email inbox may require reading each message, this is not true for an SBC activity stream. I rely on keyword tags and “top liked” widgets to keep me informed of valuable content. I certainly don’t review every document, discussion or blog that passes by in my activity stream.

What is your organization doing to address the challenges of motivating employees to share their valuable content with the enterprise? Have you tried any of the approaches mentioned or perhaps something else? 

I would be pleased to hear what you think.

He just up and did it

In her recent report, Making the Business Case for Enterprise Social Networking, Charlene Li of the Altimeter Group explains that although organizations are embracing social networking inside the enterprise, they are experiencing mixed results.

“Some organizations have deployed social-networking features with an initial enthusiastic reception, only to see these early efforts wither to just a few stalwart participants.” 

She goes on to explain the problem.

“Most companies approach enterprise social networks as a technology deployment and fail to understand that the new relationships created by enterprise social networks are the source for value creation.” 

If you are interested in social business collaboration (SBC) in the enterprise then I suggest that you have a look at her report.

In this posting I would like to begin to explore how our habits conspire to limit the degree to which we unlock the value creation potential of SBC technologies.

We all have heard of the Digital Divide between the Digital Natives and the Digital Immigrants. In his seminal article, Digital Natives, Digital Immigrants, Marc Prensky, said

“It’s not actually clear to me which is harder – “learning new stuff” or “learning new ways to do old stuff.” I suspect it’s the latter“.

I agree.

More recently, in Carol Dweck’s book Mindset: The New Psychology of Success the concepts of fixed and growth mindsets are explored, including their relationship with the ability to change and learn throughout life.

As I assume many of you have, I have seen examples of colleagues failing to use the new ways to collaborate. Some resist the use of instant messaging in favor of the more familiar email messaging. Others insist on sending documents as email attachments instead of simply providing a link. On occasions when a number of colleagues have needed to collaborate in real-time, we have limped along using only a teleconference, painfully describing to a remote participant the contents of a document projected on the screen, when a webinar would have been quick and easy to organize. Ironically, many of the same folks that complain the most about the difficulties of finding content on an SBC platform also fail to use the tools that facilitate search such as tags, likes and ratings.

The people that I refer to are intelligent, hardworking and dedicated to their profession. So, what holds them back? It appears that their ingrained habits and fixed mindset have conspired to prevent them from investing the time needed to master the new technologies and change the way that they do business. For many years as an ERP implementation consultant I have extolled the benefits of a combination of education and training when deploying technology. I believe that an educational curriculum required for successful SBC deployment must include a healthy dose of social psychology, an area which I have not recommended in the past.

If an organization employs a coordinated program of education and change management initiatives, then it is possible to change works habits and to adopt a growth mindset. It does not happen by accident. How-to training will not be enough.

I am interested to know what your organization is doing to help its Digital Immigrants succeed. Please share your comments.