Institute for Metanational Learning Research Forum,
Fontainebleau, June 25, 2004

FROM EFFICIENCY TO EFFECTIVENESS:
THE NEW LEADERSHIP AGENDA IN DISTRIBUTED ORGANIZATIONS AND EXTENDED ENTERPRISES

Key Learning Points and Implications for Research

The broad starting point: in a global economy in which knowledge and innovation are the key competitive differentiators, and where relevant sources of knowledge are increasingly diverse and geographically dispersed, efficiency won’t suffice for sustainable competitive advantage. Instead, successful companies are likely to converge toward parity on efficiency drivers. Thus effectiveness becomes key.

Areas of interest

The most relevant aspects or dimensions of effectiveness will vary between industries, and also among competitors in any given industry, but it was felt that several areas are likely to deserve attention:

  1. Knowledge Sharing

With success now requiring both competition and cooperation, often among the same firms, learning how to both foster and regulate knowledge-sharing within and between companies will be important, in particular around innovation and strategy making.

A better understanding of the factors which condition the successful decontextualization and recontextualization (or re-creation) of knowledge, in the process of knowledge sharing and integration, is required. First, we need to recognize the importance of contexts and define their characteristics and properties in better ways. Then, we need to understand the processes and tools that allow us to represent contexts, and the knowledge present in them, across distance.

  1. Innovation, Collaboration and Value Creation

Different scenarios and hypotheses must be articulated and their consequences on the need for distributed innovation and remote collaboration assessed. Some of these will be relatively generic (such as various globalization and technology scenarios), and others will be very specific. Making these hypotheses explicit would help consortium members to both provide guidance to the research and obtain tangible benefits from it.

Different types of barriers to collaboration may call for different approaches. There was wide consensus among participants that the cognitive differences across functions are stronger barriers to collaboration than geographic distance and local contextual differences within some functions. Likewise, collaboration may be easier between strategic partners than among business units in the same group. Overcoming these barriers may call for different approaches to collaboration. Social and cognitive barriers may be the most difficult to crack.

Oracle, the first consortium partner, expects an increasingly “joined up” economy, where connectivity and ICT will have a profound impact on the future. The effective use of skills and talents in a dispersed organization, to provide strategic resilience, will be key.

In many traditional companies now poised to rekindle innovation and growth, a framing in terms of innovation-driven growth options and growth platforms would help. Although the group acknowledged the importance of tools, infrastructures, mechanisms, and processes, there was wide consensus around the fact that the attitudes, roles, skills, values and motives and aspirations of individuals in these processes needed further research, and would be key in enabling effectiveness in distributed settings. Why some people collaborate or not, or why and how they do or don't build social capital, are examples of critical questions to address in fostering effective collaboration and innovation.

  1. Technology, Tools and Behaviours

The interface between technology and individual and collective behaviors is not a static given. In fact, the use of technology and the ways it changes co-evolve with behaviors and skills dynamically. We need to ask ourselves: What would be the right architectures to enable the recommended ontology, contexts and processes? The interaction between the evolution of the social and the technical systems of an organization, and individual reactions and emotion vis-à-vis new technologies, are fruitful areas for research.

  1. Language and Ontology

We need a better language. The ontology of effectiveness, and of collaboration and innovation in distributed efforts, still need to be created. We need to look at establishing a common lexicon. We also need to investigate the circumstances triggering particular types of collaboration, and the frameworks within which they operate.

  1. Metrics

Although it would be easier, and tempting, to try to develop effectiveness metrics of the same nature as efficiency metrics, this cannot be done. If effectiveness is about innovation, change and better strategies, its value can only be compared to the (opportunity) cost of lower effectiveness. This would require managers to be able to measure the value of the “road not traveled”. So, to some extent, the time value of effectiveness can only be assessed imperfectly and ex-post. We need to understand what can be measured, and what can’t.

  1. Social networks

Social networks are the real, but often unseen, structure of how things get done in an organization. Change initiatives of various types, starting with knowledge communities and going all the way to “mega-mergers” like HP-Compaq, need to recognize this.

  1. Experiential learning

Some of the findings likely to come from the work of this research consortium are likely to be most useful through experiential learning and other forms of active-involvement simulated situations. Hence we should plan the development of games and simulations as part of the agenda from the start, and staff the effort accordingly.

Next Steps

The aim is to create a core research consortium of no more than five organizations. They would come together under the project and academic leadership of INSEAD to explore the above issues in more detail. Given the natural diversity of needs the final research agenda cannot hope to cover 100% of any one partner's issues, though in the process of co-creation the agenda will be designed to cover as many as possible. Around the core consortium may well be a “community of interest” who would contribute/share experiences and best practices. The development of this community would depend on members' levels of energy and commitment.

If you were present at the conference, click here for presentations and transcripts.


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