I joined APQC’s 13th annual KM conference in Chicago between 30 April – 2 May 2008. A good gathering of practitioners from both private and public organisations with great presentations from thought leaders such as Larry Prusak and Steven Denning as well as interesting practitioner case studies. Here’s an overview of the conference. APQC also took this opportunity to launch a new KM site: www.kmedge.org

I also shared a bit about what we’re doing at Vodafone and clarified the concept I call ‘the Shadow Organisation’. Let me briefly explain this concept as the slides don’t really do this – by the way you can find the presentation at the bottom of the page or here. By connecting various participants across the company around the execution of our knowledge strategy we’re cultivating a meta network – the shadow organisation – that enables the company to enhance the value we dervie from the knowledge we have. Framing knowledge management in economic terms^1., the shadow organisation in effect is ‘making the market for knowledge’ by connecting otherwise disparate parts of the company around knowledge needs. This shadow organisation consists of the change agents that help us execute the knowledge strategy and embed sustainable change in all parts of the company.

The 5 key groups within the shadow organisation are:

1. Global Knowledge Champions in the functions (i.e. Finance, Marketing, Technology, etc.) – these are global senior leaders responsible for a major functional area.
2. Operating Company Champions (or business unit) – managers that support local execution of the programme and often have a senior staff function (i.e. local CEO office member).
3. Local Ambassadors/Brokers – these are employees (with varying seniority) recruited by the operating company champions within the various functions to support local execution with an emphasis on the function they’re part of.
4. Global Community Leaders – we have nearly 100 global knowledge communities in Vodafone and the leaders of these are a critical link as they structurally bring together people around specific knowledge domains. Where it comes to finding knowledge on a particular issues, they are often the initial experts responding to the need. The Global Knowledge Champions are often guardians/sponsors of these communities within their function.
5. Central KM team and project leads – we have a small central KM team that leads the execution, enables coordination and acts as an expertise area on KM matters. On specific projects (i.e. incentives & recognition, enterprise search, etc.) this is strengthened with leads and resources from other parts of the business such as HR and IT (these resources are often arranged by the Knowledge Champions).

While I wouldn’t argue that cultivating a shadow organisation is easy or that we’ve executed it perfectly, it does deliver a host of major benefits. Without spelling all of them out in detail let me highlight 2 which I believe touch the core of the most common and hard challenges practitioners face when executing a holistic knowledge strategy: securing funding and delivering sustainable change.

• Low centralised costs equals easier funding: a small central team means low costs and hence eases funding discussions. Almost without exception do KM leaders come across the challenge of having to continuously justify KM initiatives and my experience is that while most people acknowledge the potential high gain of KM, they get more adverse when high investments are required to achieve benefits that are inherently hard to measure, quantify or attribute directly. Some large multinationals have central KM teams topping 30 to 40 people and while this can definitely help accelerate initiatives it is unlikely to succeed in the long term as the real pay-off of strategic KM initiatives often goes beyond current or near-term budget rounds. Besides jeopardising funding, it also often means that the central teams takes on operational KM tasks (i.e. working with teams to learn from experiences with methods such as ‘after action reviews’ or ‘retrospects’) which I strongly believe should be taught and embedded across the business rather than done centrally.
• Widely distributed and empowered change agents enable sustainable change: enhancing value from knowledge requires sustainable change which from my experience requires a non-hierarchical network of change agents across the business. Especially when widely spread and enabled to ’self organise’, discrete activities from change agents start to reinforce each other. While there is also a good case to be made by focusing effort one part of the business to change with the aim of making success contagious, I believe that a company wide approach with small success stories everywhere not only increases the ability to achieve sustainable change for KM but also increases the overall value from the network effects that more rapidly can be tapped into.

I hope this clarifies the concept a bit more. Since the conference I had some interesting discussion with fellow participants – I’m looking forward to experiences from others on cultivating a shadow organisation.

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1. see the McKinsey Quarterly Article by Lowell Bryan “Making a Market in Knowledge” for a nice description of this

Find below the presentation I gave at the conference: “Demonstrating the value of Knowledge Management” in London mid October.

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Find below my presentation at KCUK 2007 in London earlier this week. Clearly only covering some elements of this broad topic (considering the 20 minutes available). It was a good discussion afterwards guided by David Gurteen.

The research I led at the end of last year in cooperation with Professor Ben Bensaou of INSEAD on innovation in the European mobile telecom sector: “Recharging Mobile Innovation: how European Operators could create new market space” , has now also been published in INSEAD Quarterly (it was also previously released as a whitepaper by Capgemini – abstract here). I’m pleased that in the same publication there is also an article by W. Chan Kim and Renee Mauborgne (actually an abstract from their book ‘Blue Ocean Strategy’) whose HBR articles on value innovation were the foundation of this research.

The research is largely based on in-depth interviews with strategy executives at 27 operators across Europe and a survey 1,216 consumer and concludes a significant misalignment between what operators focus on and what consumers find important.

I’ve published a small piece on the way forward for the music industry:    Downloading is the future of the music industry – BIOS : Technology For Business

Let me know if you have any thoughts on this.

Here is the full text:

Before the launch of iTunes, music was already becoming a download market. The proliferation of MP3 players and illegal file sharing services such as Audiogalaxy and Kazaa paved the way for a legitimate download industry. As a result, by the end of 2003 the US iTunes service had delivered around 70 million tracks, demonstrating that it is possible to download music legally and make money for artists in the process.

Despite this, iTunes has less than 1 per cent of the music retail market and this isn’t expected to reach more than 1.5 per cent by the end of 2004. Although sales rose sharply over the first week of launch in both the UK (450,000 songs) and the US, for the last 10 weeks in the US they have remained static at 3.3 million a week. This indicates that the legal download market is not a mass market activity just yet.

One of the key issues the iTunes launch raises is format. Currently the iTunes store is only compatible with Apple’s iTunes software, with the iPod used as the portable player. If its competitors can find a way of selling music in multiple formats this could give competitive advantage in the long run.

One such competitor could be OD2 (On Demand Distribution), based in Europe, and recently acquired by Loudeye Technologies, a digital media services provider. The acquisition means that Loudeye is now the largest B2B digital media firm in the world. OD2 already owned the European market, providing a content and payment platform for companies like HMV and Coca-Cola, but faced serious competition from Napster and rumours of services being launched by Microsoft.

OD2’s success will rest on its ability to provide music in multiple formats, independent of playing software. OD2 can then capitalise on the 1.3 million tracks Loudeye is planning to provide, overshadowing iTunes’ 750,000.

Another potential advantage for OD2 could be to expand pan-European copyright arrangements. This means that it could offer music to the whole of Europe, something iTunes and Napster currently do not do. European users may want to download music from their native speaking bands, and local independent labels – something that currently isn’t available on any of the other legal download sites.

Pricing is the final differentiator. The market is still very unclear here. OD2 has recently lowered the pricing for tracks and this price point will become ever more important. Currently the iTunes pricing is 79p per track in the UK, $0.99 in the US. This equates to a 22 per cent discount on buying an album. Will this be enough to stop people using illegal sites to download for free, or to stop friends clubbing together to buy the albums in the shops and then converting these to MP3 files?

However, while some analysts don’t expect music downloads to be worth more than 20 per cent of the music retail market by 2008, their impact should not be underestimated. Music retail sales have been falling at 15 per cent for the past 2 years – a fact that cannot be explained by piracy alone, as a recent Harvard University study showed. Downloads could be just the tonic the industry needs.

A recent survey by the NPD group of 4,000 online customers found that 94 per cent of people downloading music online tend to download less than two tracks per album. This suggests that consumers tend to see downloads as a way to ’sample’ an album, rather than a way to purchase an album itself. This can only be good news for the CD album format, and possibly bad news for the CD single. However, with sales of the latter only equating to 8 per cent of total offline CD sales, this should not be a major concern. Instead, with better marketing of music to specific users, the industry could see a rejuvenation in album sales.

Clearly, it is a real time of change for the industry, and it could be that the best innovations are yet to come. But I truly believe that downloading is the future of the music industry.