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Q&A with Peter Novins December 3, 1999 "People Who Go off and Build a Whole Knowledge World" Ernst & Young's Peter Novins talks about how companies can harness the Web and their own small teams of passionate innovators There can be more to the World Wide Web than just cutting costs and speeding up communications. Today, increasing numbers of companies are using the Internet to stimulate and manage innovation -- and to put the brightest new ideas into the hands of the people who can turn them into products the most quickly. In management circles, it's being called "knowledge markets." The notion is that large companies can harness the Web with small entrepreneurial teams to drive innovation at a rate they've never before experienced. Some are starting to identify, formalize, and harness their in-house online communities of workers to spark innovation. Peter Novins, partner of Knowledge & Learning Solutions at Ernst & Young consulting, recently talked with Business Week's Marcia Stepanek about the trend. BW: Consultants for some years now have been talking about how companies might use the Web to "manage their knowledge" -- that is, find a way to harness the collective knowledge of their employees and databases and customers for competitive advantage. It sounds great, but few companies, if any, have actually figured out how to use IT to gather that kind of intelligence -- and put it into the right hands at the right time. Do you see this changing now? Novins: There's an overriding shift. And that is, in my mind, a transformation from thinking about doing this, as a religious proposition, to actually doing this as a business tool, an actual application aimed at direct results. All companies have this kind of valuable knowledge. The successful ones know they now have to do something with it and move it around. There was a conviction that there was an opportunity cost if you didn't move this stuff around. Now people are beginning to come around to see that harnessing this knowledge is a key way to solve problems. Another big change is that so-called knowledge management is starting to drive some value now, and innovation is the hot new application. BW: Some companies are starting to see that there might be a value in harnessing the informal communities of workers that have sprung up since the start of the Net, quite by happenstance -- workers within the auto industry, for example, who are experts in drive trains. Is there a trend there, too? Novins: I think we will see the formalization of these communities. More companies will start to see them as an asset. They will ask, 'What can I do to maximize what I can get out of these?' They'll start giving them resources to do their own research. And they'll get more people involved with these communities as one more thing in the kit bag of corporate tools with which to manage the company. Also, if the communities aren't yet there naturally, I think that leading-edge companies in a variety of areas are pushing very hard to strategically create the communities they need. BW: What do these communities typically look like? Novins: I see typically two models. There's the innovation model, the knowledge-market model. It's usually a group of people who have separated themselves from the norm, driven often by a tremendous passion for doing something that they believe the rest of the organization doesn't understand. And typically these things are very knowledge-intensive and often involve technology-intensive solutions or products or services. These would be comprised of people who go off and build a whole knowledge world. The idea: Create small, 10-to-15-person groups, or larger, inside a company, give them their own budgets -- funding autonomy -- and then let them develop their own cultures and ideas in the service of innovation. And then, there's a whole other model that's much more integrated into the company. It's more a community of people that have naturally come together over the Net due to a shared interest in better understanding information technology and in creating knowledge about it. We're seeing lots of those in companies across the country. For example, there's a learning community in a company with maybe two, three, or four people in Cleveland, and some in Tokyo, and some in Australia and maybe one or two others scattered in other places inside the corporation -- all of whom are dealing with the same set of issues and could help when it comes to problem-solving. Historically, that's not a community that could work very well together. Now, companies can enable these groups. BW: How are these faring? Novins: Knowledge markets are working at a lot of places, but they're tough to do well. At some places, the track record is mixed. In some cases, these groups get treated like an external virus. Antibodies surround it and cut it off until it dies. I just spent two days with a client -- an executive team that's trying to solve this problem. In other cases, there's a tremendous passion among people who see the potential to create something of value, but either they don't have enough of a picture to commercialize it, or some of it is answers looking for a question. Ruthless attention to market realities, though, is one way to fail at this. Companies aren't using these right unless they're willing to let them fail now and then. For example, if you're only supporting innovation markets that prove there's a real market out there for what teams are trying to create. In other words, some of these fail because it's got to be either an idea that's promising or that the mainstream likes and got funded -- or it's something devised by nuts in a corner, and the top brass isn't going to give them more than office space. These teams have to be allowed to fail and to have maximum creative room and support, regardless. Companies that get it provide a safety net, so the really good people can go and try things, take risks, and it's not a career threat if it doesn't work out. These groups tend to start small -- a very few people with a deep passion and vision of something that could be quite different. BW: How do they differ from traditional R&D teams? Novins: They're small, autonomous, get funded well, can take risks, and report directly to the CEOs in most cases -- and don't generally result from market research or a "perceived customer." And they're fast, nimble -- and less concerned with the way they're going about developing what they're doing. And they use the Web to collaborate and innovate. Culturally, too, they're much different. They're shoot-from-the-hip. When suits meet people with orange hair, in other words, wonderful things can happen. You tend to see all kinds of mixes of people, ages, and backgrounds filling out these teams. I'm seeing 5 to 10 times as many of these types of groups as I did a year ago. The Net makes all this really possible, and fast and collaborative. Unlike some traditional R&D, these teams aren't cut off from the rest of the organization. And the access to information they have is vastly greater, as it is now for everyone. And information gathering is very much faster now, too -- 10 times the speed and scope and geographic reach throughout the corporation. The second group, communities, for example, basically harness the power and knowledge of the gatherings around the coffeepot, digitize it and distribute it. These emergent communities are global in reach, enabled with tech and organizational support from executives who value them. And they create and share and collaboratively solve problems. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS BW e.biz Nov. 13, 1999: "Using the Net for Brainstorming"