We're all in this together. Unless your Business Unit stinks...

I'm sure you have heard something in the news about the current strike at Verizon Communications, notable for not only the sheer numbers of workers involved (about 45,000), the seemingly irrational timing of calling a stike in this economic climate, but also for the nature and nuances behind the dispute.

The striking Verizon workers represent and support Verizon's landline business, a business that according to the company is in decline. Whether it is due to more consumers choosing to simply forego a fixed home landline in this age of mobile telephony, or the simplicity and low cost of services like Skype, the facts seem to be clear that the landline business is not where growth and increased profitability for the company will lie.

Most of us these days when we think of Verizon, see it only as a wireless/mobile company, with a national presence, constant broadcast advertising, (Can you hear me now?), and retail locations popping up all over the nation. In fact my local Krispy Kreme establishment was closed recently and now has re-opened as a Verizon Wireless store.  Sadly, the conveyor belt that used to carry the tasty donuts for their sugary glaze coating is gone as well.

But the 45,000 striking workers from the landline side of the business point to the overall growth and success of Verizon Communications (the consolidated landline and wireless sides), to argue against management's insistence on concessions and increased contributions to health care and retirement plans. Why should we, they argue, have to 'give back' when the organization overall is performing so well?

I don't really know enough about the details of the contracts and the proposals to come down on the side of either the striking workers or Verizon management as to the specifics of the dispute, but to me the interesting angle is the internal division at play here.  While most of us have not been caught up in a strike like this one, I bet we have all been part of organizations with variations in performance (and contribution to profits and growth), across lines of business, regions, product lines - whatever.

Once the enterprise achieves a bit of scale there are bound to be some parts of the organization that simply perform better than others. And while sometimes individual contribution to the success of these better performing business units is recognized (unit specific bonuses or awards), often it really isn't singled out, particularly when for many organizations it can be difficult to fairly and accurately allocate shared corporate overhead costs to product lines or business units.

So while compensation might be tied to business unit success, things like benefit plans, retirement programs, PTO policies and the like are almost never variable inside and across competing business units within a larger organization. Whether or not you are a high-flying sales rep in a growing product line, or a administrative support person in a declining business, most companies treat you the same way with respect to benefits. After all we're all in this together, right?

The Verizon situation is certainly complicated by the fact that the declining landline business is unionized, and the growing and more exciting wireless business is not, but the larger issue that seems to position one side of the business against another is certainly fascinating.

I am sure we have all had different times in our careers when we looked at a business line in our organizations and thought - 'Man those guys are killing us'. But I doubt we ever as HR or Talent pros advocated for whacking their benefits or PTO because of it. Seems kind of a tough position to defend.

What's your take - should non-compensation related items vary inside organizations according to contribution to success?

Can Innovation be Departmentalized?

It has been an exceedingly dreary few days (weeks, months, years?), here in the USA, with the seeming inability of our government leaders to find solutions for significant issues like the national debt crisis, the ensuing downgrade of US Treasury debt, and the most recent and horrible loss of soldiers in Afghanistan. 

Unemployment remains unacceptably high, many large organizations while reporting strong profits, are choosing to sit on cash stockpiles, rather than increase or expand their labor forces. It is a very uncertain climate, and in this uncertainty it seems like for many companies, caution and restraint make a more prudent choice than more aggressive expansion. Sure, there are still (and always will be) exceptions to this rule, and we have seen several successful tech companies like Apple, Google, and Zynga (and more), continue to increase revenue, create new products, and expand hiring. But for all the high-flying tech successes, there are perhaps more news reports of organizational contraction and mass layoffs, (RIM, Cisco, HSBC, to choose just a few). Image - smithsonian.com

What marks the key difference that allows some companies to succeed and thrive in these tough economic times compared to ones that struggle to survive, or that hope to endure through this sustained period of economic malaise with exercises in cost-cutting, hiring freezes, and even workforce contraction?

Might one of your answers be 'The ability to innovate?'

It makes sense right? Apple wins because they created new and better ways to buy and enjoy music with the iPad, transformed the mobile phone experience with the iPhone, and re-invented and continue to dominate the tablet computing space with the iPad. They have simply out-innovated (and executed, and marketed, and managed), their way to success and dominance.  Heck, they might still have more cash on hand than the US government.

So the question is then, if 'innovation' is the prime cause or factor for sustained growth and success, can organizations and nations simply declare 'We are going to become more innovative', and set up a department, task force, blue-ribbon panel - whatever; and sit down and commence innovating?

I thought about this while reading some articles on a new blog on the Smithsonian.com site called 'Department of Innovation', a resource that describes itself as follows:

"...in the spirit of banging the drum for new ideas and fresh thinking, this blog will track all things innovative, not just in science and technology, but also in how we live, how we learn, how we entertain ourselves."

And while that sounds like a worthy and perhaps even productive undertaking, (there are already a few cool articles on the site), I can't help but think by (at least by name), compartmentalizing innovation into its own 'Department', might not be the right way to frame the discussion, and certainly not the right way to try to advance innovation inside organizations. 

My sense (and this is completely unresearched, so if I am off base, please feel free to bash me in the comments), is that the most truly innovative organizations don't try to box up or to departmentalize innovation. They realize that innovative concepts or even creative ideas can come from anywhere and at anytime in the organization. 

It seems to me that the pre-requisite for improving the chances for innovative ideas to spring up and take root in any kind of an organization is to create an environment where people feel free and safe to share ideas, explore new concepts, and have a real chance to see their work and effort impact the organization, their colleagues, their customers, and their communities. The first step to becoming more innovative might just be granting permission.

For real success today, I wonder if every department in the organization needs to be the 'Department of Innovation.'

How Cities Outlast Companies

Last week on the Fast Company site, a piece titled 'How Short-Lived, Slow-Moving Companies Can Become More Like Fast, Creative Cities' , a review of some of the research of physicist Geoffrey West on the growth and development of cities, caught my attention. It was a familiar read since I had previously blogged about West and his research in December 2010 in a post called 'Physics, Cities, and Corporations'.

By way of review, West describes a theory, based on extensive research of world cities and over 23,000 companies, that cities tend to follow a pattern found in other complex ecosystems; most often, they grow in stability, success, and creativity as they increase in size and grow more diverse. With rare exceptions, cities tend not to disappear. In contrast companies tend to look more like mammals, getting slower as they increase in size and bureaucracy, and then growing old and fading away entirely.

Why did I want to essentially re-post on the same topic once more? Well, the original piece ran a few days before Christmas 2010, and somehow I get the feeling that physics and demographics were not really all that compelling for most readers who might have had visions of sugarplums and all that going on. And second, last month a talk given by Professor West about his theories and presented at the TedGlobal2011 event was posted on the Ted site. A copy of the 17-minute talk is embedded below, (email and RSS subscribers will need to click through to see the video).

While West's theories are highly provocative, they don't really start to offer organizations, particularly large ones (or ones that aspire to grow large), ideas on how to prevent that inevitable slide into the kind of growth stagnation and slow decline of vibrancy, creativity, and energy that seem to ensnare so many large and mature organizations. Why does it have to be that with increased size, organizations seem to be destined to slower rates of growth, and eventual disruption at the hands of smaller, faster, more agile competitors? While cities, on the other hand, seem to thrive with growth, and when you dig into West's data, see increases in efficiency in many measures - energy use, infrastructure requirements, creativity, etc.

Obviously this topic is interesting to me, since I've posted on it twice, (and watched the TED video a couple of times), so hopefully this will resonate with some of you that might be inside organizations that seemed to have lost a step as they have grown larger. 

What are some of the ways that you can help instill some of that energy and agility that most of your smaller competitors are using against you? What, if anything can you take from the growth of urban areas and city ecosystems that might apply? 

The Unfamiliar and Scary

Submitted for your consideration, three pieces of news from the last week or so:

Maryland Department of Corrections subjects job applicant to a social media strip search by making him turn over his Facebook login and password.Flickr - soonerpa

New Jersey Police Chief offers tips and advice to parents on how to hack into their kids' social media accounts, to snoop and spy, sort of the 21st century equivalent of reading their diaries, (man, that is an old fashioned reference, does any kid keep a diary anymore?).

Spanish nun who had served for over 35 years expelled from her order due to 'Too much Facebook.'

While the three stories all have social networking in common, specifically Facebook (aside, are we getting close to Facebook becoming the generic term for 'social networking', like 'Kleenex' now essentially means any facial tissue?), this post really isn't about Facebook at all.

To focus too much on how organizations, be they public or private, approach and adapt to Facebook, Twitter, and whatever comes next is, I think, to take too narrow a view of what is important and common about the above three situations. 

It is sadly for leaders and institutions of limited courage and vision a short and straight path from the unfamiliar to the scary.  What they don't understand, what they can't reference in a policy or by past experience, what in their narrow world view seems at all out of the ordinary can quickly evoke feelings of discomfort, angst, anger, and in the cases we see above, result in seemingly irrational reactions. 

Yesterday I posted about trust, or at least a form of trust.  I more or less said that external measures of influence can only be guides at best, and that ultimately the value and influence one exerts upon you is a highly variable, highly personal evaluation. And I think we all can kind of agree on that, at least in theory.  'Trusting' an algorithm to give you sound advice that is to be used as a meaningful measure inside organizations does seem like too much of a stretch.  We love our machines, but we are not quite ready to trust them. Even you Watson.

But in the cases above, trust between people is lacking, and in the kinds of relationships we would normally expect trust to be assumed, a given, and only to be withdrawn in the case of some kind of egregious action.  A long time employee attempting to obtain a better role in the organization, a public safety official (who we ought to be able to trust), advising parents to spy on their kids (who the parents ought to be able to trust), to finally, of all things, a nun who somehow ran afoul of her order by discovering a new way to spread the good word.

I don't want to be too hard on institutions and their leaders, often challenged by a flood of new tools, technologies, and issues that they simply can't process quickly enough to adequately address in their customary manner.  It has to be difficult for the Mother Superior of the 'Facebook nun' to know just what exactly she should do.  

But in these cases the leaders, the decision makers might be absolved from nuanced understanding of this new world, they are not absolved from retreating immediately to a position of fear and mistrust.

The unfamiliar might indeed be scary, but people are still people, and by placing your trust in those that you know you have earned that trust, the unfamiliar becomes less scary, and more exciting. 

Physics, Cities, and Corporations

Last weekend's New York Times magazine ran a lengthy piece titled 'A Physicist Solves the City', in which the physicist Geoffrey West is profiled and his theories that the growth, prosperity, and occasional demise of urban centers can be quantified and analyzed by the correct application of the right equations.Old City

For example, given the population of a city, West claims to be able to accurately predict the miles of sewer systems and the average income of its inhabitants. The main idea is that beneath the surface differences in architecture, food, and sports teams, is that all cities are fundamentally the same, and once you understand this 'sameness', you can make better decisions for allocating investment and resources for infrastructure and public and social services.

It is an interesting, if long, piece that makes for thought provoking reading.  But the most interesting portion of the profile is towards the end, as West turns his attention to the study of the corporation, and more precisely the large corporation. West theorizes that as cities grow they become more successful, mainly by leveraging economies of scale and the relative energy efficiency associate with dense populations. He states, 'In city after city, the indicators of urban “metabolism,” like the number of gas stations or the total surface area of roads, showed that when a city doubles in size, it requires an increase in resources of only 85 percent'. This increased efficiency of resource use is one benefit, but the other, and more apparent one to the city's inhabitants is that big cities make possible more human interactions, frequent opportunity for the exchange of ideas, and development of enhanced collaborative enterprises

Simply put, as cities grow larger, they become more energy efficient and more intellectually powerful via the simple process of jumbling and scrambling lots of people and ideas in a small space.

So you would think the same 'laws' would apply to the corporation, right?  Larger organizational size come withs better purchasing power, longer production runs that reduce marginal cost, and the benefits of ideas and innovation that accrue naturally by bringing more and more diverse (hopefully) and talented people together in the corporate context. But according to West, the opposite happens. As companies grow in size, they become less efficient, at least measured by a widely applied metric profit per employee.

From the NYT piece:

West discovered that corporate productivity, unlike urban productivity, was entirely sublinear. As the number of employees grows, the amount of profit per employee shrinks. West gets giddy when he shows me the linear regression charts. “Look at this bloody plot,” he says. “It’s ridiculous how well the points line up.” The graph reflects the bleak reality of corporate growth, in which efficiencies of scale are almost always outweighed by the burdens of bureaucracy.

Why should it be such? If cities, more or less unruly and only lightly regulated places seem to get stronger, more sustainable, and vibrant as they grow, why shouldn't the same general rules apply to corporations as they grow?  Why go big companies (generally) seem to stagnate, with ideas and changes taking forever to implement, and exciting new innovations often left to wither and die as they progress from manager to higher manager, from committee to focus group to forgotten?

Again West offers a theory - 

Unlike companies, which are managed in a top-down fashion by a team of highly paid executives, cities are unruly places, largely immune to the desires of politicians and planners. “Think about how powerless a mayor is,” West says. “They can’t tell people where to live or what to do or who to talk to. Cities can’t be managed, and that’s what keeps them so vibrant. They’re just these insane masses of people, bumping into each other and maybe sharing an idea or two. It’s the freedom of the city that keeps it alive.

Interesting idea.  As cities grow they become more unruly, more free, less managed, and despite all this more successful.  As corporations grow they devise and develop more rules, more processes, more top-down control, and erect more barriers in the form of internal structure to random and serendipitous collaboration.

For organizations struggling with growth, or large companies unable to rekindle their agility and excitement of their formative years, could the answer really be to act more like wild, unruly, and insane cities?