Zero Space: Moving Beyond Organizational Limits

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What would happen if you could achieve business success without owning any assets, but could simply enjoy the benefits of them? What if companies were able to react instantly to changing circumstances by operating in negative time? What if you didn't need management to run your business? Zero Space defines a business model in which an organization achieves success without owning assets or needing management. In a zero space organization, knowledge is the only true currency and people are the business's assets and its investors in future success. Through eight new organizational principles the authors illustrate how "zero-mindedness" is essential for the new economy. Just as organizations will have to exist in less tangible, less prescribed forms, so will thinking have to become less departmentalized, less closely guarded. This new open-mindedness or "zero mind-set" targets knowledge so that an organization applies it when and where it is really needed. The authors-two top executives at one of the "big five" accounting and consulting firms-show how to create a zero-space organization: a value-adding, quick-reacting, non-centralized, non-standardized, innovation-generating workplace for dedicated talent.

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1 ZERO RULES

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MARKETPLACES ARE CHANGING. Even our definition of doing business is changing. And unless organizations change too, their chance of success decreases by the minute. This is something fundamentally different from the reorganizing that many companies did too much of in the past. The focus is now on sustainable growth and unlimited potential.

Traditionally, a company involved a number of employees who worked in a series of corporate buildings and supplied a product or a service in a well-defined marketplace. Today, that is no longer how companies are defined. They are in constant flux, looking for new ways to add value anytime, anyplace, anywhere. And it is obvious that this new fluidity cannot be put into an old organizational bottle.

The most significant reason for this change is the move to the knowledge-based economy. Knowledge-intensive companies are no longer the exception; they are the norm. And knowledge companies find that they cannot hem themselves into traditional buildings and rigid organizational structures. Today’s business possibilities seem endless—and so do the work possibilities. With the rapid dissemination of IT, professionals are no longer bound by time or space. The twenty-four-hour economy has made the former archaic; working on-line or off-line has made the latter meaningless. Mobile phones, laptops, Internet access, e-mail, these are far more important in the knowledge-based economy than are buildings or desks.

 

2 THE CURRENCY OF ZERO SPACE

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TWO FRIENDS MEET FOR A DRINK. As they leave the bar, one of them realizes he has no cash on him. His friend gives him $10 for his cab fare home. So now that friend has $10 less while the other has $10 more. During their evening together, the two shared a lot of thoughts. One friend told the other about an idea of his, and the other did the same. Now both friends are one idea richer, but neither is an idea poorer.

Sharing knowledge enriches people, and it also enriches companies. It is a situation in which one plus one is always infinitely more than two. So companies must allow ideas and knowledge to move freely, for then this knowledge can multiply and add value.

But many managers still believe that knowledge withheld is power. So companies in which knowledge is shared freely must prove that they have the advantage over those that hoard or hide it. Furthermore, they must understand when to share and when not to share knowledge.

Sharing knowledge is a critical business success factor because it raises the level of quality thinking. But in any organizational setting—whether off-site or on-site, off-line or on-line, physical or virtual—the longer knowledge has been around, the less valuable it usually is. The so-called decay factor makes knowledge stale, out of date, obsolete, superseded, or even incorrect.1 Every individual’s knowledge is strongly challenged by the decay factor. The sell-by date of certain professional knowledge (about stocks, information technology, people) is extremely short. That’s why a brain-connecting approach that focuses on freely communicating valuable knowledge can inspire and persuade people to share their views and their knowledge.

 

3 ZERO SPACE— INFINITE POTENTIAL

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ORGANIZATIONS ARE FLUID AFFAIRS, reflecting the changing needs of business and society. Ideally, they are flexible and reactive; unfortunately, in reality they are often cast in stone. But as we move further into the knowledge-based economy, any old ideas that we may have held about organizations must be cast aside.

The idea of companies as fluid entities is not new. As long ago as 1972, M. D. Cohen, J. G. March, and J. P. Olson introduced the so-called garbage can model into organizational science.1 What this suggested is that organizational space is nothing more than a mixture of people, solutions, choices, and problems that simply float round aimlessly until they happen to coincide and create a solution. This was a cynical commentary on the organizations of the old economy but there was much truth in the observation. Many companies spent increasing amounts of time trying to organize the garbage can.

Today, things are different. As we already discussed in Part I, the invisible, the intangible, is now what counts.

 

4 ZERO MATTER

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MATTER USED TO RULE THE WORLD, but it doesn’t any longer. We may have lived in a material world once, but now we live in a world that is virtually matter-less. In fact, the less matter you have, the better. As G. Wolf wrote: “The fewer atoms you move, the more money you make.”1

In the old economy, tangible assets were at the heart of a financially solid company. But in the knowledge-based economy, intangibles are the key to success—intangibles and the market’s perception of the company’s potential. For today the value of a company is increasingly determined by market traders rather than accountants.

At no time has the gap between book value and market value been so great. Yet this is not surprising. Book value concentrates on historical data, whereas market value concentrates on a company’s potential to generate profit. In their book Weightless Wealth Daniel Andriessen and René Tissen wrote: “Financial reporting systems reveal little of the assets which today, in the knowledge economy, play a vital role in the success (and continued success) of the company. Nor do present financial indicators give any true picture of the key factors for success. And a balance sheet says very little about future success.”2

 

5 ZERO TIME

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WE LIVE IN A TIME in which there is never enough time. As the speed of business accelerates, we are becoming a click-and-go society. Impatience, instead of the exception, is now the norm. We no longer have the time—or the inclination—to wait. A recent management book encapsulated the customer expectations in the title: Free, Perfect, and Now.1

The impact of the Internet cannot be underestimated in the changing attitudes about time in business. With a click we can travel around the world, gaining instant access to information and items for sale. We order an item and then wait for weeks for it to arrive. There is a time lag between our expectations and the ability of the company to deliver.

A company that can deliver faster than its competitors enjoys a competitive edge. This need to move faster is highlighted by a war currently taking place between two Dutch mail-order companies. In a new offensive, the number two company is committed to delivering any ordered item within twenty-four hours.

 

6 ZERO VALUE GAP

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HOW OFTEN DO products and services disappoint because they do not meet the customer’s expectations? How big is the gap between promise and result, expectation and reality? Is there a difference between what a customer wants and what a company thinks that customer wants?

This has always been a great concern for all manufacturers and service providers. But in a time when the window of opportunity has become so small, it becomes more crucial than ever. You only have one opportunity—and if you get it wrong, you won’t get another shot at it.

Any value gap threatens the very existence of a company. This is why so many companies invest enormously in getting to know their customers and understanding them. The true value of customers as a major competitive asset is gradually seeping through to all layers of business.

But customer satisfaction—as important as that is—only comes into its own when it leads to customer share. Yeh, Pearson, and Kozmetsky define this as the volume of business a customer does with a certain company versus its competitors over the course of the customer’s lifetime.1 In other words, a company must determine the extent of a customer’s loyalty and how it can take steps to ensure that loyalty over time.

 

7 ZERO LEARNING LAG

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TRAINING PROGRAMS, management courses, seminars: we are inundated with learning opportunities everywhere. This is essential if there is to be a match between the information and knowledge a company has and the work done by its employees. We have long passed the era of the “mushroom management method”—keeping employees in the dark and feeding them mush. But learning is still too often considered an add-on rather than an integral part of the business process.

As we move further into the knowledge-based economy, knowledge and brainpower are given an ever-higher premium. Yet we are also facing a crisis of learning. Rather than producing people well-equipped to enter the new economy, the school systems of both the United States and Western Europe are allowing their standards to drop to worryingly low levels. The new economy is not helped by an old education system!

In an interview in the magazine Fast Company John Taylor Gatto said: “Schools… are built to supply a mass production economy with a docile workforce; they ask too little of the children, and thereby drain youngsters of curiosity and autonomy.”1

 

8 ZERO MANAGEMENT

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ARE MANAGERS IMMUNE to the changes taking place in their markets and their businesses? Obviously not. Yet based on the evidence, it often seems that they are. Training programs are aimed at employees; the higher up in the traditional hierarchy you go, the more you see the urge for empire-building. If the obstacle to a free and ongoing exchange of knowledge is a practical one at the lower levels of an organization, at the management level it is largely intellectual. “Knowing” is seen as a strategic advantage—not necessarily for the company, but for the personal career of the manager concerned.

As we move into zero space, we must redefine all our existing concepts of organization and management. The old hierarchical mindset has little place in an economy where brainpower is at a premium. Smart professionals know their value and are prepared to make demands that go outside traditional structures in which the lines of responsibility are rigid and working hours and places are regimented.

People today move frequently between companies and industries and inside companies. The workforce is becoming increasingly transient, and consequently organizations lose important elements of permanence. They become more temporary, as reflected in the ad hoc construction of focus groups, project teams, virtual teams, and communities. Such combinations of people will become an increasingly common component of organizational life. As organizations rely on temporary arrangements, 66management itself will become such an arrangement, and will therefore be limited both in scope and duration: they will become what may be called disposable leaders.1 A person will normally serve as a leader of a group for the duration of a specific assignment or project because he or she has a competence that is important for that particular project.

 

9 ZERO RESISTANCE

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HOW OFTEN DO CUSTOMERS want one thing while the corporate process produces another? This mismatch between expectation and performance is one of the main reasons a company loses its competitive edge. Often such mismatches can be traced to bottlenecks and barriers in the corporate process. For example, when a customer requests information from a Web site, that information should be sent out as quickly as possible. A three-week wait for a brochure is unacceptable today, when customers expect instant responses to their demands.

We believe that one of the principal causes for the bottlenecks and barriers is resistance.

People and companies have a built-in resistance to change. Everyone understands the need for change. Everyone knows that it has to happen on an ongoing basis. Yet everyone is also convinced that it’s “the other person’s” concern. Change, when it happens, always has to begin elsewhere.

This built-in resistance kills change. It is a force that slows or stops movement. It is, once again, like the obstinacy of a mammoth tanker: the pilot turns the wheel to change direction, but it takes a very long time for the tanker to respond. Successful change often is the result of many actions and perspectives at once. Simply continuing on the same course, proceeding “as we have always done,” creates an inertia that at times seems almost irresistible.

 

10 ZERO EXCLUSION

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IN TODAY’S WORLD companies are competitors in the morning, partners in the afternoon, and friends at night. Peter Senge and Goran Carstedt believe that “our real future lies in building sustainable enterprises and an economic reality that connects industry, society, and the environment.”1 Leadership in the twenty-first century is a matter of inspiring, motivating, and challenging people, many of whom are not employed by the leading enterprise and not under the influence of formal leadership. Leaders must be able to trust and “let loose” the operations of partners and employees, without having full control over them. What worked well when those companies were going it alone may not work in a collaborative environment. The competencies needed for leaders to make progress are co-sensing (jointly “tuning into” emerging patterns) and co-creating the new.2 Often there is not a lot of time to comanufacture or coevolve. In high-velocity markets, leaders neglect to update their collaborative links as businesses and markets emerge, grow, split, and combine.3 They become OECs—Operating on the Edge of Chaos—instead of CEOs.4

 

11 ZERO TECH

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ZERO TECH? You are surely saying that technology is everywhere, so how can we talk about zero tech? And of course, you are right. Technology is everywhere. But we are convinced that zero tech will happen when computing and technology become so ubiquitous that they are simply taken for granted. Indeed, we are gradually approaching that phase today.

The term ubiquitous computing was first coined by Mark Weiser in 1988.1 The concept places technology on the periphery of our lives, rather than at the center. It becomes a tool, something we use. It does not require our attention, it is just there. Like the information system in a modern airport, it is where we want it when we want it. Airport information relies on a sophisticated IT network, in which enormous amounts of data are processed and exchanged with only one aim in mind: to give passengers the information they need. It is ubiquitous, not an end in itself but a means to an end.

When businesses become zero-minded about technology they can concentrate on what they should be doing: finding ways to add value to their operations and to the lives and work of their customers. But how tempting it is to concentrate on other things! Do we need the Internet? Do we need a LAN? Do we need… ? Of course, in the knowledge-based economy, the answer is always yes. But we have to get beyond such technology-based issues and put technology in its proper place. When we put the 86ignition key into our car and turn it, we don’t expect to have seventeen committee meetings to decide if the car should start!

 

12 ZEROING IN ON REALITY

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IN THE CHAPTERS IN PART II we examined the building blocks of the zero space organization and the obstacles to achieving the sort of flexibility and customer service that spells success in the knowledge-based economy. In this chapter we look at the changes that a company must consider in order to launch itself into zero space.

One of the greatest obstacles to the organizational changes that must happen is in the managerial mindset. As we discussed in earlier chapters, managers who build their careers and achieve success, power, authority, and respect become convinced that “the more you know, the higher you rise.” Sharing knowledge is not a sign of strength, but of weakness.

But this, of course, is in sharp contrast to the zero-mindedness required for success in zero space. It will continue to be a stumbling block unless managers realize that they must not only initiate change but also participate in it. At the same time, employees must realize that change is essential if they are to gain ongoing satisfaction and fulfillment from their work and they must also try to remain flexible and adaptable to emerging needs.

 

13 NETWORKING WITH NETWORKS

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THERE HAS ALWAYS BEEN something suspect about networks. The word suggests exclusive clubs, sects almost, to which entrance is not by ability but by circumstance: the old boys’ network, the golf club network. Membership is taken for granted by those who “belong” and looked upon with envy by those who are excluded. There are even networks of directors, without whose help things rarely used to get done in business.

Today, that negative association is receding. Managers understand that all organizations are part of a greater whole. They exist thanks to relationships, associations, and connections. There are relationships with stakeholders—whether they are employees, suppliers, customers, or shareholders. Indeed, any company that cannot boast a recurring network of associations is unlikely to exist very long.

According to James R. Lincoln, professor at the University of California, “ To assert that an organization is not a network is to strip it of that quality in terms of which it is best defined: the pattern of recurring linkages.”1 This definition—a pattern of recurring linkages—applies at all organizational levels. There are links within teams or departments or business units, links between suppliers and customers, links between disciplines, links between customers and markets and between innovation and R&D. Many of these links—these networks—are formal. There are contracts with suppliers, for example. There are (one hopes) long-term, ongoing relationships with customers. Other links are more ad hoc, such as teams, 106for, as we discussed in the previous chapter, teams should change with changing circumstances.

 

14 PARTNERSHIPS: RELEASING THE POWER OF UNLIKE MINDS

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THE SECOND ASPECT OF ZERO SPACE ORGANIZATIONS is that they are built on a fluid structure of partnerships. This involves an enormous change in mindset. After all, the corporate mindset has always held that the only way to succeed is to be independent of everyone and everything, to handle the whole industrial chain from A to Z, to leave nothing to chance, to do it all.

This was particularly true of many of the great industrial giants. In the automobile industry, with its revolutionary production line, companies literally did everything from scratch, right down to selling the car to the customer. Many multinationals grew large thanks to their ability to turn in-house innovations into market successes. Own the knowledge, own the technology, own the process: this was the guiding philosophy.

Today, this philosophy is naïve. Knowledge emerges, accumulates, and declines in a matter of months, hours, or even minutes. In this ever-changing world, this is the norm rather than the exception.

As we have seen, zero matter demands a new way of approaching knowledge, skills, and expertise. Don’t own it, pluck the benefits from it. The strategic aim of all companies must no longer be to acquire knowledge but rather to ensure access to it anytime, anyplace, anywhere.

 

15 COMMUNING INTO ZERO SPACE

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ANEW WORD IS CROPPING UP with ever-increasing frequency in current business jargon. The word is community. We are being bombarded with new communities: communities of practice, knowledge communities, communities of commerce, communities of learning, communities of interest, and professional communities. Some people, including Jim Botkin, president of Interclass—a knowledge community of companies in different industries seeking to understand and implement organizational learning—maintain that it is “the next big thing” in organizational theory and practice.1 Communities weave the organization around knowledge independently of any existing structures. In ten years’ time, some predict, communities will be as natural to our concept of organization as teams have become.2

With so much attention focusing on communities, one could be forgiven for thinking that the idea is something radically new. In fact, nothing could be further from the truth. The concept of communities has been with us for almost as long as humankind has existed. In the beginning, a community was generally a tribe—a group of people sharing their lives, hunting and cooking together, raising their children together. Tribes grew into village communities, then town communities. People started participating in school communities, local communities, recreational communities.

 

16 INFORMATION TECHNOLOGY: SPIDER OR FLY?

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ON-LINE COMMUNITIES offer a powerful way to uncover, exchange, share, and most importantly, leverage the knowledge available throughout an organization. Yet they require considerable investment—not only in the time and energy that running a good community demands but also in the infrastructure that allows the community to operate constantly and without interruption.

Of course, on-line communities would not be possible without information technology. Certainly, IT has had an incredible impact on the way companies do business. Despite its relatively recent origins, the business community would now be lost without all the advantages it offers. While IT isn’t everything, little progress will be made without it. E-mail has started replacing the telephone as the main method of information exchange. How many answering machines now contain the message: “I am not available, please leave a message—or send an e-mail to…”? E-mail has become the communication tool of choice in many companies. Although busy executives may “forget” to return a telephone call, they seldom hesitate to reply to an e-mail. Six years ago it was rare to see an email address on a business card. Today, those without an e-mail address are out of the loop, disconnected from reality. The Internet has made us impatient people: just one click, that’s all it takes. Install a network, an intranet, and enter the promised land.

 

17 WHAT’S IN STORE?

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SOME ORGANIZATIONS ARE ALREADY EVOLVING toward zero space. We see many companies working in zero time with zero matter, forming networks and communities, and enjoying the benefits of knowledge rather than owning it. This is inevitable. Zero space organizations offer the flexibility that is essential in the face of new—often unpredictable—circumstances. As windows of opportunity increasingly narrow, organizations will need to be able to adapt swiftly and anticipate the direction in which potential gain and success lie.

Yet although there are signs that some companies are moving into zero space, it would be inaccurate to suggest that all are moving in the same direction. Some are actually moving backwards, retracing their past.

This is, perhaps, understandable. Companies and managers today are under enormous pressure. Shareholders are demanding ever-higher returns. Managers must try to satisfy the competing claims of shareholders and the other stakeholders who demand “good corporate governance.” Costs are under constant scrutiny. IT promises increased productivity, which is necessary to defray the investments that IT systems require. Balancing people, planet, and performance is the name of the game. With increased accountability and transparency, there is greater pressure on executives to meet targets. In consequence, many are turning back the clock—and so they centralize and standardize.

 

18 MAKING PEOPLE THE NONZEROS OF ZERO SPACE

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HUMAN RESOURCES IS FIRMLY GROUNDED in the industrial organization. For this reason, it must undergo far-reaching changes if it is to be of any value to the knowledge organization. This is why many companies are turning to electronic networks on which they can put all HR-related data, information, services, databases, tools, applications, and transactions.1 Such information is then available to employees, managers, executives, and HR professionals.

Launched in April 2000, British Petroleum’s myHR.net was jointly designed and implemented through a partnership with Exult. BP describes it as the global platform for a human resources service delivery model that links HR products and services to business objectives by deploying best practices and Web-voice technologies. myHR is branded around several “my” elements:

David Latin, global delivery manager of e-HR at B P, says myHR is significant in becoming the employee’s thumbprint of personalized information, which, when fully rolled out, will be unique to each of one hundred thousand individuals who work at B P. They will get self-service, on-line benefits—exactly what they need, wherever they need it.2

 

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