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Disintermediate the Digital Organization

What constitutes the knowledge asset? Unlike information, knowledge is less tangible and depends on human cognition and awareness. Measuring the knowledge assets and as a consequence managing those means putting a value on people, both as individuals and more importantly on their collective capability, and other factors such as the embedded intelligence in an organization’s computer systems, Skyrme, D.J., 1994, The Knowledge Asset, David Skyrme Associates, In, MIT SMR 1998 feature, Successful Knowledge Management Projects, Thomas H. Davenport, David W. De Long and Michael C. Beers writes, “Manage Knowledge as an Asset - A fourth type of project focuses on managing knowledge as an asset. One way an organization does this is by treating knowledge like any other asset on its balance sheet. Skandia, the large Swedish financial services company, internally audits its intellectual capital every year for inclusion in its annual report to stockholders. One goal is to persuade investors of the value of Skandia’s knowledge capital. Another is to focus the organization on how to increase or decrease its effective use of knowledge assets over time. Some companies focus on managing specific knowledge-intensive assets more effectively to improve their return. By carefully reviewing and managing its patents, Dow Chemical, for example, saved $4 million during the first year of its new program and expects to generate more than $100 million in licensing revenues that it might otherwise have forgone. Of these two approaches to knowledge assets, we are more positive about managing assets than measuring them. Efforts to measure knowledge assets, while laudable, will eventually require major changes in worldwide accounting systems if they are to become institutionalized; we view such changes as unlikely. Efforts like Dow’s yield immediate monetary benefits and can improve investor perceptions, if adequately publicized”.

Digital Knowledge Management (KM) is a conscious strategy of getting the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance. It is a framework, a management mindset that includes building upon past experiences and creating new vehicles for exchanging knowledge. (Knowledge enabled Intranet sites, communities of practice, networks). KM will be a foundation like TQM or ZBB that lays the basics for integrated quality management or looking at financial accounting from ground up.

Digital is an Asset

Digital Knowledge is an asset that is unique and unlike any other comparable asset definition. Knowledge emerges as it is used and absorbed by more and more people. As an idea is absorbed and discussed, experimented, improved upon knowledge upgradation is consequential. Knowledge grows in value as it is absorbed, understood, standardized and documented for the use of others. As we grow knowledge it disperses across user groups depending upon individual or collective understanding of that particular knowledge. This in turn makes knowledge break itself into parts not visualized by the creator. Each holder of this part knowledge, if you will, now has the obligation to complete the whole and submit it for further people processing. One idea has now because of its usage by different people become multiple ideas. An initial state of fragmentation concludes into a larger whole.

Figure – Leading to Digital Asset Outcomes

Digital Asset Defined - Today, a CHRO is dependent on a next generation of employee engagement. Not driven by power or control, but those that help your staff to connect with one another. A solution that is “Digital” - built around mobility - (anytime anywhere, anyway), Social Collaboration, Cloud Enabled, SaaS, Embedded Analytics, Artificial Intelligence - Smart Thinking Machines, that are going to be focused on how easy it is for employees to engage with one another as leaders, contributors, teams or friend and foes.

Digital Asset is not System of Record – Sure enough the days of record managed HR function is passé. There was a time, not too long ago, when it was still a time keeping and personnel function, when a CHRO was dependent on a non-digital talent – HRIS management solution, (clipper/excel/Dbase) those that first came to market 30 years ago, where the solution was built around being a system of record, document management, automating, storing, retrieving, and managing HR processes and information administrated by HR staff. These forms of HR Management Systems (HRMS) are now largely focus on self-maintaining and used as a self-service tool for employees. CHRO’s were happy with a control centric system, a tool that provided employee information, complex programming to generate long reports, disjointed processes delivered payroll, with minimal errors, rarely first time right but life moved on. It is a system of networks, connections and Internet of things.

Digital Asset is Control in our hands - This new gen staff are called the MTV - New Founders generation, wanting to take control of their lives......assimilate, internalize, institutionalize, commercialize and effortlessly will it fit into their daily workflows. CHRO’s have now to cope with employees for whom work and social life has inextricably mingled and become inter related. And today's HR actions are used by managers, employees, candidates, vendors, trainers, consultants, family, trusted assistant, recruiters, social media, part time, temps and part time or full time contractors, so everyone "uses" them. CHRO is no longer just a CHRO for full time FTE. But all employment types and contracts. As the needs of talent changes so do processes that help manage talent and disruptive ideas and best practices come to market to bring a solution to managing talent. It's an exciting space, and every year it surprises us with new directions.

Digital Asset Talent technology landscape, which is now more than a $15 billion market, is exploding with growth and innovation and a CHRO needs to know what is out there in the market (On boarding solutions, succession simulated org design tools, competency linkages to all HRM processes, real time scorecards, video on demand learning, content consolidation, multi device adaptability, continuous learning, digital assessments, APPs etc), that become useful for her to make her talent engagement effective. Fueled by this new cycle of innovation, private equity and venture capital firms are investing heavily in the space, so why not CHROs through their time, learning and effort?

Digital Asset Talent issues continue to dominate enterprise leadership. Institutions are working, with engagement levels as low as 15%, a poor motivation index, short term mindset, Quick Fixes, Self-Aggrandizement, fulfillment mindset, (I Want that) attrition levels at all time high and a continuing war for talent. from baby boomers to Gen X to Gen Y or Millennials. But a caveat! Just because organizations have a digital talent management solution does not surely mean that CHROs manage their talent effectively. But it is a starting point.

Digital Asset Acting on Speeches - What of course is a consistent pattern in several poorly managed organizations is the near pathetic - deplorable quality of their business managers and leaders mandated to lead people. These cultures pontificate, in engineering and business schools’ recruitment drives, the need for world class employees in their institutions telling their customers of the several thousands of talent staff that they have at their disposal to offer for deployment on to customer site, yet their leadership and talent management processes would barely reflect good practices in managing such talent. Effective leaders recognize that what they know is very little in comparison to what they still need to learn. To be more proficient in pursuing and achieving objectives, one should be open to new ideas, insights, and revelations that can lead to better ways to accomplishing goals. This continuous learning process can be exercised, in particular, through engaging yourself in a constant dialogue with your peers, advisers, consultants, team members, suppliers, customers, and competitors. Leading others is not simply a matter of style, or following some how-to guides or recipes. Ineffectiveness of leaders seldom results from from a lack of know-how or how-to, nor it is typically due to inadequate managerial skills. Leadership is even not about creating a great vision. It is about creating conditions under which all your followers can perform independently and effectively toward a common objective. For the CEO at KPMG, for example, 50% of his time is spent in coaching his high potential talent to learn leading people! If that is the way his time is spent, a CHRO perhaps need to be spending 90% of their time on inspiring talent.

Digital Asset is Customer Connect - “What makes global companies great? Great customer solutions! And who makes great solutions? Great people!" But great people struggle, when by contrast, we have learned that they fail to identify exactly who in the business of people management effort they intended to serve - meaning if you don't know your customer you are unlikely to have them actively engaged. You need to know your talent to engage them! If they have no plan, or “blueprint”, for how their people and the communities of practice to which they belong, should work to share, develop and apply know-how to achieve their goals, they are back to understanding basics.

Figure - Technology and Economic Impact (McKinsey Global Institute)

Digital Asset Simulates Cultures - CHROs would need to find ways to Simulate their Organizational Culture. They need to predict cultural issues and challenges as their institutions globalize, acquire companies, merge or demerge. “I don’t think Peter Drucker ever actually said, Culture eats strategy for breakfast.”, says Kinni in SMR (Using Predictive Analytics to Enhance Your Company Culture – MITSMR 2016 Theodore Kinni). But he certainly recognized the influential role that culture plays in corporate success and failure. The problem is that nobody really knows how to measure culture’s effects, let alone what levers to pull and how hard to pull them to get a great one. But todays APPs are finding ways to study employee pulse through real time surveys. So it is not as complicated as a CHRO may think. The don’t need to deploy once a year engagement surveys which are passé – Instead, one can now obtain that same analytics through the deployment of a CULURE AMP or TINY Pulse APP.

Digital Asset Simplification - For many traditional CHROs, complex, long winded policies, programs, several HR staff deployed as Business HR Partners or Shared Services HR, complex and long processes, several levels of approvals, centralized decision making have been a way of their life. But today, Simplification is a starting point in employee experience -"Companies are forced to rethink the way they are deploying HR processes – For example, performance management. In a study we did at KPMG, (Mark Spears – Global Lead – People & Change), we found only 40 per cent of employees were satisfied with the bell curve system and thought it fair. Another 98 per cent of HR managers thought the yearly evaluation process wasn't useful and were considering simplification and new ways of doing the evaluations. Companies are experimenting with different ways of doing things. For instance, they're saying, 'Let's have a guided distribution instead of a forced distribution of reward'. And let us do an integrated talent system that embodies goals, achievement, feedback, coaching, learning and rewards.

Digital Asset Scalability is a Reality - CHRO’s need to appreciate the fact that HR Technology is Scaling rapidly and digitization is disrupting many talent management technologies and processes. For example, PeopleSoft, once a market leader is fast being replaced by Workday or Success factors and to that extent Oracle Fusion (Cloud) is meant to cannibalize its own PeopleSoft solution. One of the most disruptive changes is the trend toward automating HR culture, attitude, embedded practices and integrating systems, making them so easy to use that people think of them as part of their daily life.

Digital Asset Embedded and Internalized Analytics - By embedding, built in modules, automating HR processes, policies, practices into people management applications employees use every day, HR 'actions for record' are becoming 'actions for engagement. That makes it digital as it integrates with social collaboration, employee engagement, people use methods, culture and predictive analytics and SaaS enablement. At the same time, these cloud based talent platforms give CHROs the real-time information, embedded analytics (not a binary – X and Y axis graphics but scenario predicting outcomes) they need to adapt to changing business and labor conditions.

Digital Asset Digitalizing Succession and Careers - Careers are not built by bosses but by a staff engaging with a mentor and designing a career path for herself with digitized information, wisdom and on line interactivity. "HR technology is in a state of disruptive innovation. Multiple & significant market forces (talent expectation, social revolutions, war for talent, learning style changes, top talent retention pressures, lack of specialist skills, acquihiring) are keeping HR functions on their toes; and at the same time, these market shifts are providing great opportunities for HR departments to deliver more value. (See Disruptive innovation in HR - Adapting to survive and thrive – PwC 2013 Research Study)

Digital Asset Machine Learning – Neural Networks a reality - It may come as a surprise to many that it is possible to run advanced simulations, learning programs and skill development through effective us of Machine Learning as a reality of today’s market place. Significant investments of over $ 1 billion of private equity of 2015/2016 (YTD) has been made only in making learning systems more adaptive to the change learner profiles, learner behaviors, content filters, E Experiences, Real Time Encounter Groups, APP based learning, peer learning forums etc. McKinsey said in 2013 that automation of knowledge work is going to have the one of the largest economic impacts around the world of any of the most disruptive technologies over the next 10 years, impacting the $9 trillion dollars that makes up 27% of global employment costs that go to knowledge workers. Interestingly, at least as of 2 years ago, the hype-to-potential discrepancy that McKinsey saw was intense. McKinsey: “Advances in artificial intelligence, machine learning, and natural user interfaces (e.g., voice recognition) are making it possible to automate many knowledge worker tasks that have long been regarded as impossible or impractical for machines to perform. For instance, some computers can answer ‘unstructured’ questions (i.e., those posed in ordinary language, rather than precisely written as software queries), so employees or customers without specialized training can get information on their own. This opens up possibilities for sweeping change in how knowledge work is organized and performed. Sophisticated analytics tools can be used to augment the talents of highly skilled employees and as more knowledge worker tasks can be done by machine, it is also possible that some types of jobs could become fully automated.”

Digital Asset is Physical & More - Morgan from Chess Media Says, "With wearables and enterprise-level social network platforms, HR teams are able to collect an enormous amount of information on employees. These technologies will provide HR professionals with insights into where skill gaps might exist, when employees are most productive and much more". One should ask, can "Fitbit" become an integral part of a talent management solution?

Digital Asset Compress Learning - This particular approach to HRD (Working on hard issues, work outside of classrooms, multi-cultural, real problems, global issues, cross functional – global teams. Experimental, experiential) was based on the work of Tichy (1994). He terms it ‘compressed action learning’ as it seeks to use shorter cycle-times rather than traditional training in accordance with the need for reduced cycle times in other areas as a consequence of globalization. It seeks to blend management and organization development and transfer learning directly to the workplace, Deutsche Aerospace AE (DASA) has used this mode to develop its transnational capabilities, viewing cross-cultural HRD as a core skill, to be developed through a variety of transnational management, team and organizational development programs. These include recruiting and developing high potentials, exchange programs, conferences and meetings, and cultural awareness and intercultural skills programs. Learning is tied to corporate strategy and integrated into ongoing business activities (Sattelberger, 1994). Following this line of argument, in order to achieve team and organizational development, not just individual development, and in order to achieve fundamental change, not just awareness and cognitive understanding, organizations need to move their HRD efforts further along the path from individual-oriented cognitive methods to corporately-oriented transforming methods using many of the methods described as ‘experiential’ For example, one management development initiative using a culturally diverse team assessing community and conservation projects for Operation Raleigh employed a multi-cultural, multi-national (though not obviously multi-lingual) team working on a ‘real’ project with ‘real’ consequences for Operation Raleigh. It also involved team building and outdoor development activities as preparation, and the team focused on hard issues (business planning, opportunity assignment) as well as soft issues (leadership, communication, teamwork, cross-cultural skills, etc.). It seemed to have been an important developmental experience for many of the participants personally (Iles, 1995a). However, though the participants were operating in a situation of some risk to themselves, it would appear to be one of only moderate risk - would their careers ‘back home’ really suffer if they failed? And how much is the sponsoring organization getting out of this? Ideally, according to Tichy (1994), a team from the same organization would produce greater transfer of learning to the workplace.

Digital Asset Device Agnosticism - Market is speaking of a unique way by which device uniqueness should be maintained. "Organizations will be able to anticipate employee needs and more effectively plan how work gets done,” says Morgan, who authored The Future of Work. “Ultimately all these things boil down to data that can be collected and shared”. See Also, when employees use these enterprise-level social network platforms through their devices to share ideas, passions and feedback, using special Apps, they can help shape their own learning and consequently their career paths. At KPMG, we have often said that today’s corporate world needs, “People Leadership (Driven by purpose, leading from the front, experiential, living your life, active engagement, connect, touch, reality bites etc.) Versus Managing People (passive, controlled and reactive)”. Genuine Leaders lead by doing it themselves. It's for others to follow. We need to look at failure as learnings and need to encourage people to innovate & think long term. Fear of failure propels people into inaction.

Digital Asset Digitized Disruptions - By 2025, says, McKinsey, "it is possible that productivity gains of 30 to 40 percent could be achieved for the 50 million knowledge workers in this category, which would lead to economic impact of $0.8 trillion to $1.1 trillion per year".

Digital Asset Learning Middleware (bridging content) – Degreed (Synergy Platform), Pathgather (Aggregated Access), Intrepid Learning, Xyleme (Authoring tool for the uninitiated), Fuze (Device unification), Wisetail, and OpenSesame (LMS Search Engine) are trying to address this need by bringing a wide range of affordable, easy to use learning programs.

Digital Asset - Devices control capabilities and learning attitudes - Just in Time and Embedded - With traditional legacy learning management systems, the learning module usually sits in a silo by itself. HR or the learning department then drives employees to the platform to complete their training. You may invest a lot of time and effort into creating a great learning experience, but there will always be some employees who don’t tap into your platform unless they absolutely have to. The modern LMS, however, embeds “just-in-time learning” in the context of your business process. This way, your organization can share learning in the business process, right where your workforce needs it. Let’s say you have a new manager who needs to conduct performance reviews. You can define some rules to automatically embed a step-by-step video on how to give effective performance reviews into the page she is viewing, so she has access to the information she needs without leaving the business process, write In, Oracle “Future-Proof Your Learning Management System” paper authors June Farmer and Kautul Mehta. They continue further, “With simple business rules, you can target and personalize content across your organization using different criteria. And to ensure the embedded content is relevant, the modern LMS can pull in media from a variety of content providers such as YouTube, TED Talks, Udemy, Coursera and more.

Hindsight is 20 20 – What devices did we have 50 years back? Writes Alfred D Chandler (1992).(Organizational Capabilities and Economic History - Journal of Economic Perspectives, Summer92,) “In office machinery, such first movers as Burroughs Adding Machine, National Cash Register, Remington Typewriter Company, and the Computing-Tabulating-Recording Company (renamed International Business Machines in the early 1990s) dominated their industries worldwide. In sewing machines the Singer Sewing Machine and in agricultural equipment McCormick Harvesting Machine (it became the core of International Harvester, a 1902 merger) were the world leaders. Indeed, in 1913, the two largest commercial enterprises in imperial Russia were Singer and International Harvester. By then Singer produced 79,000 machines annually in its Moscow factory with a work force of 2,500 wage earners and 300 salaried employees; while its salesforce of more than 27,000 covering the vast territory from the Sea of Japan to the Baltic. At the same time, Harvester distributed through a network of branch offices in 11 cities that encompassed 80 percent of the implement dealers in Russia. For both companies, their Russian operations were smaller than those of their other European business based on Singer's factories in Scotland and Germany and Harvester's major plant in Germany. By World War I, American firms had achieved comparable global competitive power in the production of elevators (Otis Elevator), pumps (Worthington Pump), boilers and other steam equipment (Babcock & Wilcox), printing equipment (Merganthaler Linotype), and heating equipment (American Radiator)”.

Digital Asset Predictability - hiQ Labs can predict attrition based on external data using open jobs, social media activity, questions pertaining to exit formalities, engagement score etc. KPMG conceptualized a "Predictive Analytics Index" for their clients using quantitative analytics.

Digital Asset Does cross-cultural training work? To operate successfully in a global environment it is essential that expatriates are prepared for their assignments. Yet research in the area of work-related cross-cultural interactions have found that such interactions have not always been successful, particularly for American expatriates. On an average, between 20-40 per cent of all American expatriates have returned home early because of their poor performance and/or their inability to adjust to the foreign culture. Nearly half of those who did not return early functioned below their normal level of productivity. The costs of unsuccessful cross-cultural interaction are high. The direct cost of failed expatriate adjustments to organizations in 1985 was estimated to be as high as $150,000 per employee. Today is in excess of $ 250,000. These costs can run into millions for a typical multi-national organization that has hundreds of expatriates all over the world (Tung, 1982, 1988). One means of facilitating effective cross-cultural interactions is cross-cultural training. Various studies have examined if such pre-departure training can help expatriates deal with people from different cultural backgrounds. One argument used in favor of cross-cultural training is that such training allows participants to adjust more rapidly to the foreign culture and thus enables these subjects to be more effective in their new work environment. This process, termed adjustment, enables a person gradually to develop expected behaviors in the new culture. However, in spite of the strong arguments presented for the use of cross-cultural training, only about 30 per cent of US managers sent on expatriate assignments actually receive it. This is because many organizations are still not convinced of the importance of such training. Some believe that a manager who performs well in one place will be effective anywhere. Others believe that there is no conclusive evidence that such programs are effective. However, the research evidence shows that cross-cultural training does seem to allow participants to adjust more rapidly to a new culture.

Digital Asset Challenges CHROs- The question is: Will CHROs position themselves to take advantage?" Monolithic large companies that believes that size mattered are rethinking their cultural disadvantages, to connecting with people, given their loss of agility, speed, employee experiences, responsiveness, customer care and appropriate platform.Succession has never been as Strategic as it is now for CHROs – Just as fast do we build capabilities to hire with equivalent speed and agility is our competition poaching from us too. Again, in an enterprise experience context, Succession begins where career planning concludes. Ian Welsh, HR Tool Box, says, "A succession planning strategy, however you define it, is critical to the continuity of an organization and its ability to respond to loss/need of critical skills. There are many approaches, many conventional programs, but most of them are not effective, particularly today”. There are many challenges that must be taken into account before implementing an effective succession management plan.

Ganesh Shermon

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