Technology and Organizations

Last night I had the pleasure of introducing John Hagel at a TEDxBayArea event.  He came to talk with us about The Power of Pull, his new book with John Seely Brown and Lang Davison, and the broad-based shifts in our organizational and social environment.

Others have written great general reviews about the book (e.g., here & here) , so I don’t feel guilty about putting a systems savvy filter on my comments.  I see The Power of Pull as emphasizing the need for systems savvy management.  That is, the environmental shifts described in the book demand that you use a solid understanding of available technology tools, organizational practices, and human capabilities to weave together effective organizational and personal action. The Power of Pull also gives us examples of what this weaving might look like.

The Big Shift: Environmental Changes That Demand Systems Savvy Management

Before, the pattern of how technology tools, organizational practice, and people were woven together was generally pushed down from above, and not always effectively. Things have changed.  We have entered a period where important patterns (everything from organizational innovations to personal work strategies) can come from anywhere.  The Power of Pull describes three waves of this Big Shift:

• First wave of the Big Shift: New platforms built on the Internet.  This wave has already arrived.
• Second wave: Focus on flows versus stockpiles of knowledge.  Our feet are wet on this one.  Facebook, Twitter, corporate and employee blogs, customer-built technical support — these are at the forefront of this wave.
• Third wave: Organizational changes that result from the forces of the first two waves.  The emerging business relationships built on communication from throughout organizations are examples of this wave. SAP, for example, opened enough of its technical “secret sauce” to engage a number of partners who could then develop SAP innovations independent of SAP own engineers.  Turns out these efforts are beneficial to all.

The Power of Pull

With these shifts we have the opportunity (need) to “pull” rather than waiting for opportunities to be pushed down from above. We can pull by gaining access to people and resources in ways we never could before, attracting people and resources through our own participation and personal and project branding, and then using these resources to contribute by achieving new outcomes from our own potential.

How we do this is where I see the value of systems savvy management.  How do we decide what pieces of the technology infrastructure to use for our access?  How do we decide how to best build systems that help us attract the right people and resources?  How do we design organizational systems that will help us achieve our goals (working with the people we’ve attracted, the technology systems we have at our disposal, the organizational policies and procedures that distribute benefits to all involved, all with and understanding of our specific context). Systems savvy can help us weave these components together into something that can surf these waves of transformation.

John suggests five steps to start with (my weaving suggestions in italics):

1. Master the strength of weak ties. Use technology tools like LinkedIn or Facebook to access people outside of your usual circle.  Then find or create opportunities to meet face-to-face in ways that support your passion — just sharing coffee is not enough, you need to focus on work-related issues to understand each others’ relative strengths and who else you might want to bring into the network.
2. Grow your personal ecosystem. Use technology tools both inside and outside your organization to find activities that can support your tasks (perhaps a community of practice).  If you don’t find any, build one.  Use technology and organizational practice to strengthen the infrastructure in terms of its focus on learning, building a common language, being a repository of good ideas). Have a system in place for finding new members over time.
3. Choose wisely where you live and spend time to be in the right place at the right time. Use your technology tools to track the right times and places.  Start relationships before you get there and use your tools to maintain the relationships over time.
4. Find environments where people share your passions. For me the critical term is “share.”  Find the environment and then share.  This may be face to face, over the Internet, or a hybrid approach where you meet occasionally.  The conference behaviors John describes are great for keeping your (and others’) enthusiasm high.
5. Join a creation space. My favorite. Be it face to face or virtual, engage with people to create along the lines of your passion.  For me this is finding the opportunity to engage with others who use systems savvy on the job.  By working together we can tackle the bigger problems or use our diversity of background to solve the tricky small ones.

My summary: Use available (or acquirable) technology tools and organizational practices to build your ecosystem and then do something with it.  Play fair — be a producer as well as an acquirer from the social network.  Appreciate that small twists and turns made at the right time result in strong, beautiful, work.

Yes, the fulfillment center.  You don’t think the Zappos family hits its Wow! service standard by drop shipping do you?  (Drop shipping is where orders start with the retailer, but then are sent to the shoe company, that then sends the order to the customer.)  Zappos did start out that way, but drop shipping didn’t give them the kind of control they needed to provide their extreme form of customer service.  Though the team didn’t have experience in complex inventory systems, they jumped in, got their hands dirty, and created a organizational (warehouse facilities & team) and technology (inventory management) system that can hit their service goals while still managing costs.  The iterations they’ve gone through show deep systems savvy driven by their focus on delivering a Wow! experience to their customers, as well as great shoes and other products.

© 2010 Zappos.com, Inc. or its affiliates

I’ve had the chance to correspond with Keith Glynn about how they came to do things the way they do.  Keith is the guy who (story from Zappos CEO Tony Hsieh’s new book, Delivering Happiness) jumped on a plane to Kentucky, without going home pack, to help for a couple of weeks with 3rd-party warehouse issues — and ended up staying for two years.  At the point where Keith and Tony decided they needed to run their own warehouse, Keith went back to San Francisco to pick up his truck.  He and Tony then drove the truck 36-hours non-stop to Kentucky.  This is serious commitment to warehouse operations! Many thanks to Amelia Smith and the “Ask Anything” team at ZapposInsights for the connection.

I asked how Zappos came to run the fulfillment center the way they do.  I’d read that they randomly stocked the shoes as this actually made things easier to find! Keith’s response:*

In a traditional brick and mortar store stocking was done based on Brand, Style, Size and Color.  At Zappos originally there was no intent to stock inventory. As Zappos grew we realized we wanted to own the customer experience, so we started to hold inventory.

We started with a small space in our office. It held a couple thousand pairs of shoes. This consisted of static racking and the shoes were stocked based on what other stores were doing.  Brand, Style Size, Color.  We learned early on that this was a laborious job. You would have to continually shift brands because you did not account for seasonality and future growth.

[In 2000] we moved to a larger warehouse in Willows, CA…. We would receive a shipment, let’s say from Ugg. We would have to unbox the shoes. Lay them out in a large area on the floor based on style, size and color.  Imagine hundreds of shoe-boxes laid out on the floor and the amount of space needed to do this.  And this was only one brand.

Once you had them organized you would have to now figure out how to put them on the racks for storage. In order to get everything to fit you most likely had to shift thousands of shoes to get everything in the proper place. There were other brands on each side which had to be moved as well.  We would review our processes and come up with some small wins as to efficiency but it could cost us in space or other areas.  We thought it would be great to have a system where we did not have to rotate the inventory every day when the shipments came in.  We had the idea but did not have the resources or know how to make it work.

*Keith’s quotes are © 2010 Zappos.com, Inc. or its affiliates

In 2002, they thought they had a solution when warehouse service provider eLogistics offered to take over the warehouse and fulfillment operations.  eLogistics had a warehouse next to the UPS Worldport hub and this would speed up shipping.

When we moved to the Kentucky eLogistics location they did things quite differently. They had large static racks about 25-30 feet high. This probably worked for most of what they were shipping but there was no way it would work for us. We had large volumes of shoes, thousands of SKUs [stock keeping units - product identifiers].  The need for speed and accuracy was extremely important to us as this was our business’ “customer service.”

We had many conversations with UPS on how to improve what they were doing. We even had them install shorter racks so it wouldn’t take as long to put shoes away or pick for shipping. They only wanted to use this space for the faster moving products and felt the need to grow upward since this space was available to them. Imagine having 30’ ceilings and only 6’ racks.  I could see their rationale but it would not work for Zappos. Another challenge was that we were paying them for space. Basically this was a cube that varied in size. Let’s say 1’L x 2’W x18”D. They may have had only one or two shoes in the space based on Brand, Style, Size or Color that we had in inventory. This left a lot of empty space that we were paying for since we paid for the entire cube.

This is a problem that requires serious systems savvy.  At this point they are trying to work with building space, types of storage racks, costs, alliance partners, customer perception, and human heights (note the comment about shorter racks and stocking).

They eventually decide to again have their own warehouse.  According to Delivering Happiness, Keith went shopping for a warehouse and found one only fifteen minutes from Louisville airport. Again, good for shipping, and thus, customer service.  They signed the lease and take the crazy road trip mentioned above in preparation for moving the inventory.

In Delivering Happiness, Tony Hsieh tells the story of how they gave eLogistics a last chance to keep the business.  They designed a competition pitting Zappos’ new warehouse operations against eLogistics’.  For every week that the Zappos system beat eLogistics on shipping and inventory accuracy, 10,000 pairs of shoes would move from the eLogistics warehouse to the new Zappos warehouse.  It took only a month for the Zappos warehouse to win all the inventory into the new Zappos warehouse. “It was a valuable lesson.  We learned that we should never outsource our core competency.  As an e-commerce company, we should have considered warehousing to be our core competency from the beginning” (p. 118-119).

Keith continues:

While receiving the inventory, Tony came up with a quick program that would allow us to scan the UPCs [the “universal product code” you see with a barcode on many products] into a location on a shelf. This allowed us to put any shoe anywhere in the racks and we would be able to find it based on the UPC and the rack location.  We realized that this system would give us a higher density of storage and allow us to store items randomly.

Random storage is good for the people in the warehouse.  They can more easily grab the right box when its randomly stored — think about having to grab the right box if it were stored next to boxes that all were identical except for a color or size designation — random is good for people as the boxes are more distinguishable.

But they needed yet another innovation.  UPCs are not unique to a particular pair of shoes.  That is, the pair of size 7 Chocolate Leather Fitflops that I bought would have the same UPC code as the pair of size 7 Chocolate Leather Fitflops that you bought.  No good for managing inventory or returns.  That and some boxes have multiple UPCs printed on them. The warehouse team wanted a unique identifier for each and every unique box of shoes.

Keith:

Tony initially came up with the LPN (license plate number) system.  He then created some initial coding to test the system… [and] went to our development team and asked them to scale the code.

The LPN turns out to be a excellent example of a systems savvy outcome.  It’s a great way for Zappos to track the location of every item accurately in the warehouse and have a higher density of storage — Technology.  They are able to track specific items through receiving, shipping, and returns (Fun fact: 1 out of every 60 overnight packages shipped by UPS is a Zappos box) and as a result be amazingly responsive to customer service needs (and so be true to the Zappos Family Core Values) — Technology & Organizational Practice. Random storage takes into account human perception — People. It’s the intertwining of these dimensions that makes the LPN so powerful.  All from a number!

The warehouse story also shows what happens when a system isn’t built on systems savvy.  Keith and Tony realized that the technology eLogistics used wasn’t a fit with the Zappos products or the Zappos Core Values; the “pay for space” system wasn’t a fit with the Zappos business model; and as an e-commerce company, they couldn’t outsource warehousing.  All the parts have to be aligned if they are to “deliver Wow through customer service” (the first of their Core Values).

Note that they didn’t come to this approach in one giant leap and it didn’t come for free.  From 1999 to 2010, Zappos has had four different warehouse locations and inventory/shipping systems. They continue to grow their warehouse space in Shepherdsville, Kentucky and have added large carousel storage systems that rotate like the racks you’d see at a dry cleaners.

Systems savvy is built into the  Zappos Family Core Values, even if it isn’t there by name:

1. Deliver WOW Through Service
2. mbrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

This list of values is a well woven together platform for how to achieve your organizational goals, create one of Fortune’s “100 Best Companies to Work For,” and hit a $1 billion in gross merchandise sales goal — ahead of schedule (p. 210 of Delivering Happiness).  Zappos openness to learning, change, and communication means to me that they are constantly considering how things (technology tools, organizational practice, and people) might work together in new and different ways to better deliver Wow! experiences to their customers, employees, vendors, and everyone who interacts with Zappos.

More on this soon.  I’m taking the Zappos “Tour Plus” in August.  What questions would you like me to ask? Please add as a comment below.

Don’t let the words get in your way.

Using systems savvy in organizations often means helping others develop this capability for seeing both technical and organizational opportunities, and then finding powerful ways to weave them together for a better, faster, smoother work design. I’ve had the pleasure of highlighting the experiences of a variety of leaders in prior posts (compilation here). Each of these leader’s stories shows the value of helping others develop systems savvy through hands-on effort rather than by direction. That’s the way most of us learned systems-savvy and it turns out to be a fine way to help others in their own development. Today I’m adding another of these stories.

Stewart Mader, Director, Enterprise Client Services at Social Media Group and Founder and Editor of Future Changes helped me see the value of a new, but parallel theme: Don’t let the words get in your way. That is, don’t let the terms (e.g., wiki, open innovation) put a barrier between you and the people you’re helping to understand systems savvy. Focus on the work.

Stewart focuses on the work in his Wikipatterns book (my review) where he talks of project and community support that happens to use a wiki. For example, in thinking about how technology tools and meeting practice might work together:

Instead of emailing the agenda, put it on a wiki page and email people a link to that page. If changes need to be made, anyone can do so and everyone will have immediate access to the same, up-to-date version. Then, record minutes on the wiki so all information pertinent to the meeting is in one place. The further advantage here is that the responsiblity to take minutes doesn’t have to rest with just one person. No matter how carefully one person listens and takes notes, it’s really difficult for one person to accurately capture everything that happens during the course of a meeting. One person may pick up on a certain detail that another person misses, so using the wiki can give everyone a place to contribute, resulting in a more comprehensive account of the meeting.

Keeping meeting agendas and minutes on the wiki can be the perfect foundation for project and task management. As various topics and items from a meeting are discussed and need further action, new wikipages can spawn from the agenda or minutes and be used to manage them. (p. 31)

His description isn’t about a specific technology or philosophy, it’s about getting the work done. He describes how to integrate the technology and the organizational practice, but the focus is on the work outcomes rather than the trendiness of the approach or talking through the differences between a wiki or a blog.

Stewart highlighted in a recent conversation the importance of helping people realize, technology or not, that they’re interdependent with others. If they don’t think about this interconnectedness, then they’re less likely to provide an electronic, or any other kind, of agenda.

He noted that people can spend too much time debating what the terms should be (e.g., Enterprise 2.0) and that bad terminology (I gave the example “socio-technical systems”) can distort peoples’ views. For example, “cyber security… negative: cyber bullying, terrorism, Hal [from 2001].”

Regarding Enterprise 2.0:

People are so caught up in ideological arguments around what it should be called. All are weak. When I go into an organization I help them find the best content that people write internally and then amplify that using their social media. I help people structure their job responsibilities, line them up to their personal goals — measured the same way as any other job. Making sure the internal organization is properly equipped in terms of [technology tools, organizational practice, people skills] to support that work — it doesn’t need a term applied to it becuase it’s part and parcel of their work. Makes it as efficient as possible.

What I find useless about whole [Enterprise 2.0 terminology] discussion is that when you create a new term for something you create a distinction that makes the casual observer think it’s totally different. For example: Blogger vs. Journalist… There are some variations in research, ethics, pay, but functionally they’re the same.. When people get caught up in the terminology, they lose focus on the part that’s the same…

Slows down implementation as they think it’s about adoption. But in reality in an organization, you want people to get work done, first and foremost. If you create a divide, Enterprise 1.0, 1.5… you have people thinking that they need to do additional work to drive adoption of each “new” thing. This creates a false conflict between “management mandate” and “grassroots effort” when in reality all you need to do is find the best examples of strong, coordinated team work and help them become standards throughout the organization.

Experts often use jargon to signal their expertise. That is a great way to set yourself apart — but is that your goal when you are trying to share systems savvy? That’s not the approach I heard in my conversation with Stewart:

T: When you first talk to a group about an engagement. What words do you use?

Barn Raising is often the first term I use to describe a session designed to help a group structure their collaborative efforts. It sounds nothing like a technology jargon term because it originated in farming communities in the mid-1800s. People would get together to pool efforts and build each farmer’s barn in time for the harvest. By working together, barns were constructed in less time, and the best construction techniques made their way into more structures than if people worked individually.

It’s not about the words, it’s about the work. Help people see the value of systems savvy from the perspective of their work. Don’t lose the part that’s “the same” while demonstrating the part that’s different.

Delivering Happiness, Tony Hsieh’s book of the founding and nurturing of Zappos, and the Zappos community, releases today. From Twitter (@Zappos, @dhbook) to the CEO/COO blog, I’ve had the chance to follow the Zappos management story for a while (hiring & on-boarding, marriage to Amazon, starting a movement). With Delivering Happiness, I feel like I’m getting to play a part.

Earlier I reviewed Delivering Happiness. Here I’m focusing on the the Delivering Happiness movement more broadly.

We’re asked on the Delivering Happiness site to:

Join the Delivering Happiness Movement!

One of the reasons why this book was written was to contribute to the existing happiness movements out there, all towards the cause of making the world a better place.

Over the next several months, the site will evolve to become a place for you to read and share your own stories about Delivering Happiness, passion and purpose, in business or in life.

In time, we hope this site will become a place people can play a part and learn about the ongoing movement of delivering happiness to ourselves and one another.

We have the chance to share our “experience and help others make actionable steps towards making positive changes in their lives.” You can read featured stories, or browse contributer stories by industry, region, company size, or core values. I searched on the core value of “Build Open and Honest Relationships With Communication” and was surprised that there weren’t any stories posted in that category yet.

So, I posted my own:

Transparency has been an important management topic (how much, with whom, about what) for decades — but now it has a chance of being more than a topic. I think we’re entering an era where transparency is going mainstream. Technology, organizational practice, and employee expectations are aligning in a powerful new way.

I expect this last point crosses roles and industry. Increased transparency will require management and employees to make adjustments. Increased transparency will require management and employees to make adjustments. As long is the communication lines stay open and we all are open to adjustments, I think we have a chance.

…now to see if my contribution is accepted. Turns out it’s not automatic: “We appreciate your time and generosity in sharing your story. While we won’t be able to publish every story we receive, your feedback means so much to us. Thank you for being a part of the Delivering Happiness movement.” I’ll link here if it goes live on the Delivering Happiness site.

What do you think? Are we in an organizational environment where a movement to more transparent organizations can take place? What evidence do you have that this is true/not true? Please comment below (by June 11, 2010) and I’ll draw a winner for my extra advance copy of Delivering Happiness.

This is my second post focused on Providence Regional Medical Center of Everett, Washington and how I see their innovations as evidence of organization-wide systems savvy. That is, their efforts show that they understand both technical and organizational opportunities, and that they have the ability to weave them together into innovations — in this case, life saving innovations. I read about Providence in a BusinessWeek article and am thankful to Kim Williams, the Chief Nursing Officer of Providence and Judy Espedal, a Cardiac Critical Care staff nurse, and Dr. James Brevig, Director of Cardiac Surgery, for taking the time to tell me their story. Their examples are valuable because they give hope for healthcare innovation, they show us an exceptional process over a long span of years, and they help us see technology tools beyond computers and email. Here I will look at their approach as an overall practice of systems savvy, in Part 1, I provided a more detailed view of their “single stay” innovation.

Providence Medical Tower

Why am I certain that the Cardiac Surgery team has systems savvy? Because they haven’t made just one transformation — but several — each drawing on both technology and organizational practice to provide improvements in patient care. It is also important to understand that their innovations have been triggered by different forms of observation. In Part 1, it was the nursing staff’s observation of problems associated with how patients transferred to different units during the course of their care. In today’s examples: Blood conservation (less transfused blood is better in many cases) and skilled nursing education – the changes were triggered by statistical analysis suggesting room for improvement. Statistical techniques are themselves technology tools to apply in your organizational setting.

Blood conservation: In 2004 Dr. Brevig began the blood conservation program based on published research. He pushed for changes in surgical technique to reduce blood loss, changes in bypass machine settings to reduce the use of transfused blood, added a blood conservation coordinator to the staff, and worked with the critical care nurses on how to provide blood on outcomes, rather than routine. Follow-on analyses of patient outcomes verify the program’s success. From 2003 to 2007 the transfusion rate has decreased from 43 to 18% and the hospital stay time has been reduced by a half-day.

Skilled nursing education: In 2007 the cardiac surgery unit saw a bump to 12.2% of patients being readmitted to the hospital within 30 days. They used their analysis tools to dig into the issues and found that many of these patients were from skilled nursing facilities. Kim Williams says the team looked to what they could do to help these facilities take on patients after surgery. Providence developed an education program where a cardiac surgeon/critical care nurse team visit the skilled nursing facilities to help educate the staff on how to take care of cardiac surgery patients — teaching them about the common problems associated with readmissions — at no charge to the facility. In 2009 the readmission rate was down to 8.1%.

Once could be a fluke. Twice could be coincidence. Three times (single stay, blood conservation, skilled nursing education) is demonstrated skill with systems savvy. I would stand by this assessment even if there have been failures in the mix (though I’m not aware of any), given that their methods include long-term tracking and adjustments based on data.

This data appears to flow freely via collaboration, attention to communication, and long-term commitment. I asked Dr. Brevig about the distinguishing characteristics of the group – what, in his opinion, enables this team to be distinctively different in terms of their approach? He replied that the collaborative nature of the hospital pushes for buy-in and input across all members of the unit. My interpretation is that when true collaboration occurs in such a complex organization, technology and organization practice opportunities will both end up in the mix. We form teams to get diverse input, and sometimes, as in this case, it actually works.

Judy Espedal also emphasized the time and focus needed, noting that transformations take years and that you have to apply yourself from start to finish. Commitment is more likely given the Providence environment: With collaboration and communication, commitment is more likely.

From buy-in to showing that the innovation works, instituting the new practice, and on-going evaluation… these are conscious, explicit applications of systems savvy. No one functional area is making a decision. No one layer of the organization is making a decision. No one technology or practice stands above the rest. Providence takes a long-term perspective working with their full system of opportunities.

Summary of Providence’s systems savvy:

1. Ability to use different methods for identifying opportunities (not using just one lens).

2. Application of both technology tools and organizational practice to address the opportunity (the basics of systems savvy).

3. Long-term focus and tracked outcomes to suggest further adjustment (savvy, wisdom, is more than a short-term activity).

The doctors, nurses, and staff of Providence Regional Medical Center have a clear ability to see room for improvement and to find ways to do something about it. They draw on physical and analytic technology tools and make adjustments in their organizational practice given the variety of skills available, and they increase skills when needed. They do not try to fix a problem with a single “silver bullet.” The team uses an integrated approach where technology and practice support one another to reach specific goals.

I thank Providence for taking the time to share their story. This is health care reform.