This week I am interviewing Rod Collins. Rod is the Director of Innovation at at Optimity Advisors, a US management consulting firm. He is a leading expert on the next generation of business management and works with forward thinking executives who understand that managing great change means changing the way we manage.
Previously Rod was Chief Operating Executive of the Blue Cross Blue Shield Federal Employee Program, a business alliance consisting of over 39 separate businesses with currently a combined revenue of $28 billion. Based on his own experiences and the examples of other great companies that are rethinking business Rod wrote Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World. I reviewed that earlier.
Q: Rod, you have been thinking about the need to radically rethink business for a while now. Can you give us a bit of your background on why that is?
A: I first saw the need for rethinking business, especially management, in the mid-1990’s when I was asked to lead the operations of a multi-billion dollar health insurance alliance that had experienced two decades of low growth and low performance. As we contemplated what we needed to do differently, we thought perhaps the way we managed might be at the root of the problem. We had been following the principles and the practices of traditional command-and-control management because it was the only method we knew. However, because our business was an alliance of 39 independent companies, these companies didn’t necessarily follow our directions. Rather than devoting our energies to trying to get these companies to understand and accept that “we are in charge”, we decided to put our efforts into learning how to manage differently. We would reinvent our management model and learn to lead by consensus. We created new principles and practices - many of which are outlined in the book Wiki Management - and, in a very short time, turned the business around, resulting in the single largest five-year growth period in the 54-year history of the business alliance.
Q: The first part of your most recent book ‘Wiki Management’ talks about the changing environment we are currently operating in. What do you feel are the main drivers of that?
With the sudden and rapid emergence of the digital revolution we find ourselves in a new world with a completely different set of rules from the old world of the Industrial Age. This new world, a product of the digital revolution, has been brought about by the unprecedented combination of three factors.
The first is accelerating change. We now live in a permanently fast-forward world. That’s why I call this new world the wiki world. “Wiki” is the Hawaiian word for “quick” or “fast”. While most of us know that the pace of change keeps getting faster, few of us have made the connection that the increment of time for market change is much faster than the increment of time for moving information up and down a chain of command. That’s why hierarchical organizations are having so much trouble keeping up with a torrid pace of change.
The second factor is escalating complexity. This factor is important because it means the fundamental nature of business issues has been radically transformed. Industrial Age issues were, for the most part, issues of complication. Thus, when something was wrong, the challenge was to identify the few items among a myriad of details that were causing the problem. Once these items were identified, the work could be divided among different functions, each working independently on its own part under the supervision of a single central leader. Digital Age issues, however, are more likely to be issues of complexity where problem resolution involves crafting a holistic solution that creatively integrates a collection of interdependent elements. This means that work can no longer be distributed among unrelated departments. All elements of the problem are interrelated, and thus, must be solved using holistic work processes. More and more the context of work is shifting from functional departments to cross-functional teams.
The third factor is ubiquitous connectivity. The twenty-first century world is a hyper-connected world where we now have the technology to connect with anyone on the Internet without having to go through a central organization. There are no more gatekeepers for our individual content. If someone is unhappy with a company’s service, one YouTube video can undo a multi-million dollar ad campaign in one day. In hyper-connected world, power is more likely to be derived from “being connected” than from “being in charge”.
Q: Why is Ubiquitous Connectivity such a game changer?
Ubiquitous connectivity is the game-changer because it is this third factor that makes the combination of factors unprecedented. There have been times in the past where we have experienced both accelerating change and escalating complexity, especially during the early days of the Industrial Revolution. However, the sudden emergence of a hyper-connected world is truly unprecedented. For the first time in human history, we have the technology that makes mass collaboration possible, practical, and pervasive. Mass collaboration is creating entirely new ways of working together, such as Wikipedia, that only twenty years ago would have stretched the limits of believability.
Q: In your book ‘Wiki Management’ you describe 50 practices companies and individuals in them can try immediately. What is your favorite practice and why?
A: My personal favorite is “Solo/Team Balanced Goals.”” A popular axiom of business is “You get what you measure.” If you want to build a collaborative organization then you need to measure for collaboration. By holding people accountable for a combination of individual and team goals, workers have an incentive to take responsibility for both their individual contributions and for their team’s performance. This broader sense of ownership is a key ingredient for creating a collaborative work environment.
Q: Can you name a few examples of companies who grasped this new way of working and what they do differently?
A: Companies that grasped the new way of working understand that to meet the challenges of our new wiki world, they need to design their organizations as collaborative networks rather than as top-down hierarchies. Notable examples include Google, Whole Foods, and W.L. Gore & Associates (the makers of Gore-Tex). Each of these companies is designed to leverage the collective intelligence of the many rather than the individual intelligence of the few at the top of a hierarchy. Google does this by using the “wisdom of the crowd” to rank their search results. Whole Foods relies on the collective judgment of fellow workers rather than the solo opinion of a supervisor to decide who’s hired. And Gore, which has no supervisors, relies on the collective judgment of the workers to decide what work to do and how it will be done. When companies design their organizations as networks rather than hierarchies, they quickly discover that nobody is smarter or faster than everybody.
Q: Why is it so hard for established companies to change? And what happens if they won’t?
A: Established companies have difficulty making the change because redesigning organizations as collaborative networks means changing the way power works. Power is no longer derived from “being in charge”; it now comes from “being connected.”” In a network, people don’t tell other people what to do or how to do their work. Instead, self-organized teams make these decisions. In collaborative networks, the leader’s role is not to give directions, but rather to be a catalyst for the team to come to its own sense of direction. This is a radical change in the concept of leadership. While it may be a difficult transition, it’s nevertheless critical because, in a time when networks such as Wikipedia are putting two-hundred year-old institutions like the Encyclopedia Britannica out of business, change is not an option; it’s a business imperative.
Q: What other authors and books would you recommend to your readers?