Encouraging and constraining collaboration

By

In one of those cases in which there is a whole world of implications behind a seemingly small news item, an article in the Financial Times recently stated that banks are in danger of insider trading by sharing information inside the bank on credit derivatives. Trading in credit default swaps (which are essentially financial instruments that represent the credit risk of corporate borrowers) has always being done based on the privileged knowledge that banks have of their clients. Now banks are being told that if they want to trade these instruments, the parts of the bank that know their corporate debt clients well, can’t talk to the parts of the bank that trade these instruments. In the first instance, given that this development represents a broad, long-term trend to regulation on similar issues, this suggests that diversified financial institutions – which are based substantially on sharing knowledge between their operating divisions – may have far less justification for existence than in the past.

In the context of the issues addressed by the Collaboration in Financial Services Europe conference I am chairing in London this June, this has crystallized some of my thinking about the future of collaboration. In a nutshell… Every organization is experiencing the imperative of collaboration. To survive, we must enable information flows and collaborative work. At the same time, there are many ways in which we must disable communication and information flows, inside and outside the company. This is particularly pointed in financial services, with old and new regulations constraining who can share information, from investment banking and research, to lending and trading. However similar dynamics apply to companies in every industry in that they both have to actively share information, and also have constraints from intellectual property, privacy, regulation etc., in how they work both internally, as well as with suppliers, clients, and other external partners. This tension between encouraging and constraining collaboration and information flows will be central to the evolution of organizations over the next years and decades. More on the Collaboration in Financial Services conference soon – this will be drilling down into detail on some of the leading initiatives in collaboration the financial services sector in Europe – there are some very exciting developments.

Wall Street’s view of collaboration

By

The BDI Collaboration in Financial Services conference in New York went extremely well, so much so that we intend to run it in London in late spring next year as well as in New York again exactly one year later on September 29, 2005. The conference review describes what happened on the day. Taking a few quick top-of-mind reflections from the event…

The success of the event shows that collaboration and collaboration technologies are recognized as critical issues across financial services. In an industry driven by information flows and deep expertise, allowing professionals in financial institutions and their clients to integrate their work and thinking is clearly the way things are heading. We began to touch on some of the implications for bank strategy and value-creation in the industry in the event; this theme will play a bigger role in our future conferences. However a dominant issue on the day was the regulatory compliance framework as blocking collaboration efforts. For many reasons this is the context within which financial institutions are currently working. In addition to regulators ensuring they are not blocking innovation in financial markets, banks must not allow the regime to put them off implementing approaches that will differentiate them in the eyes of their clients.

I was delighted that we had Steve Wallman as our lunch keynote speaker. I have long admired Steve’s work since when he was SEC Commissioner in 1994-97. This article in Forbes magazine from 1997 shows some of his deeply insightful thinking on intellectual capital, which is still integral to my perspectives on the future of intellectual capital reporting. At lunch the day before the conference someone told me Steve was the best speaker he’d ever seen. I used that anecdote when I introduced him, setting high expectations from the audience, but ones that he definitely met. See the conference review for a few more details on what he covered.

Collaboration in Financial Services conference in NYC

By

Collaboration – technological and otherwise – is central to the future of the financial services. In order to address these issues, in conjunction with Business Development Institute and Michael Ross Associates, I am designing and co-organizing a one-day conference in New York on September 29 on Collaboration in Financial Services. Full details are at http://www.bdionline.com/cfs.

We have got a tremendous response to the event. The current key sponsors are Intralinks, I-Deal, Microsoft, Interactive Data Corp, Vignette, Broadvision, and FaceTime, together covering the key technologies that support collaboration in institutional financial services, including real-time collaboration such as IM in a trading environment, document collaboration in deal-making including M&A and syndication, and internal collaboration systems. Many of the leading investment banks, including Goldman Sachs, Merrill Lynch, Deutsche Bank, CSFB, Bank of America etc. etc. are involved. Banks now see collaboration as a key driver both internally, and externally with clients. While there are significant compliance and security issues in the short-term especially, the core issues are first technological, and then process, organizational, cultural, and strategic. Banks are recognizing these will be major shifts, and there is lots to do in gearing themselves up to address these issues.

The reality is that we are far from achieving the potential of collaboration technologies in the financial services industry. Much of the reason is standards battles have at times dramatically slowed progress. A classic example is instant messaging, which is already at the core of communication in many of the financial markets such as bond trading, but the reluctance of AOL, Yahoo, and MSN to enable interoperability between their instant messaging systems has placed severe constraints on how banks can implement these technologies. Many similar issues remain in other domains, including establishing collaborative workspaces for M&A and other complex deal-making.

Part of my vision for the conference is to contribute to the industry – comprising both banks and vendors – acknowledging and beginning to address some of these standards issues. The last high-level panel session of the day will focus specifically on creating an industry roadmap to enable greater benefit from collaborative technologies in the near future. This conference will be run annually, and we may also establish some kind of working committees to help further these agendas on an ongoing basis.

Hope to see you there!

The Future of Knowledge Management

By

I recently wrote an article on The Future of Knowledge Management for the Australian Financial Review which has attracted substantial attention. It also been slightly adapted to be published in the current edition of the leading knowledge management journal, KM Review, as “The Five Key Frames for the Future of KM”, and once I get a moment free (!) will also adapt it for some other publications that have requested it.

The basic theme is that “knowledge management” is no longer the most useful name to apply to much of the work that has flourished in this broad domain. It’s always been too unwieldy a term and concept, and today we have a number of emerging frames that are more relevant and practical to today’s business challenges. The term “knowledge management” still has a long, solid future, however several of the more focused disciplines it has spawned offer more traction for business. One leading practitioner said that he is finding that companies are referring less and less to KM, with one of the terms succeeding it being “organizational effectiveness”. Indeed, that’s a central objective, and more focused thinking is more likely to get us there.

In October I’ll be speaking at KMWorld in Silicon Valley and ActKM – a leading government KM community and conference – in Canberra. During the late 1990s I was strongly associated with KM, and it’s around five years now that I’ve been endeavoring to move beyond that. It’s interesting that I’m being drawn back a little into that domain. Despite my misgivings on the terminology, there is much in KM that will continue to be immensely valuable in what absolutely is a knowledge-based economy.

Living Networks Forum debrief

By

The Living Networks Forum in New York the other day was great fun and went extremely well. Both anecdotal and formal feedback was excellent. The official commentary on the event is here. When you’re trying something new, you never know quite how it will work until it happens, but the reality was a very good match with my original vision. The core concept was creating connections between people and ideas at the event, and that’s exactly what happened in a very rich fashion. In the end the way in which we created serendipitous connections at this event was more based on innovative facilitation processes than technology, however in future events the technology will gradually be integrated to take this “enhanced serendipity” to the next levels.

The major sectors respresented at the Forum—because of the location and the representation of both my and Business Development Institute’s core communities—were professional services, financial services, and technology. All these sectors are grappling with similar issues in the event’s core themes of developing client relationships, enhancing collaboration, and creating partnerships, so the cross-pollination was invaluable for participants. We began the session with a space-based facilitation process, in which people position themselves in a room according to their relative interests in key themes, enabling immediate connections with people with similar profiles. For each of the themes we had a brief presentation of core material, and then demonstrations, syndicate group discussions, and break-out exercises. All of the groups for both syndicate discussions and exploring potential partnerships were carefully designed around participants’ profiles. In this way the connections were not “engineered,” but facilitated. Before lunch we played a game between teams based on game theory, which was used to explore some of the dynamics of trust development over time. Much hilarity and some confusion here—it went well but perhaps a little redesign required for next time.

The overriding theme of how technology can enhance personal and organizational networks drove much of the very tangible excitement at the event. While by this time most attendees had come across the concept of social software and some of its implications, being able to see and experience the technologies helped to bring to life how these can be applied in business. Earlier in the week I’d been to the Christmas party of SDForum—the leading Silicon Valley technology networking organization—where the interest in social software was immense.

The social software space is hot, Hot, HOT! I frame what is currently happening as phase two. Phase one began with the now defunct sixdegrees.com and a couple of similar initiatives. After a lull and some nascent initiatives last year, this year has seen the space take off big time. Living Networks Forum gold sponsor Spoke Software has recently secured another $11.7 million in funding. Business is waking up to the fact that not only is this a new technology sector with strong promise—because of its ability to create value—but also that these technologies could transform how businesspeople communicate, form relationships, and develop trust. I’ll be writing a lot more about this later—this is a seriously important topic.

Perhaps not surprisingly, both Business Development Institute and myself have had numerous enquiries since the Forum about designing and running innovative events. There is an increasing recognition that it really is possible to create conferences and events that are far more valuable to participants than what we usually experience, by carefully designing for rich sharing of knowledge and ideas and forming connections in valuable ways, fully integrated with novel and useful content. We’ll probably run at least one other public Living Networks Forum somewhere in the US next year, however it seems as if more of the demand will be for creating similar events for professional associations, user groups, vendors, and inside organizations that need to create richer connections and exchanges between divisions and locations.

Help me find the music I like!

By

Apologies to all my readers – it’s been way too long since I posted here. I’ve been frantically busy and on the road, but these are no excuses. I resolve to do better, and have no shortage of interesting stuff to write after my recent travels, so here we go…

“Collaborative filtering” – systems that allow us to collaborate with others to find what is relevant to us in a world awash with information – will rapidly become central to our lives, whether or not this is visible to us. One of the best single implementations I’ve seen is Last.FM, a personalized online radio station. It builds a profile of your preferences based on your nomination of your favorite artists, albums, tracks, and music labels, as well as what you choose to listen to. When Last.FM is playing on your desktop, you can either let it run if you like what it’s playing, or if you don’t like the song you can press skip to go immediately to the next one, or let the system know you love or hate a particular song if you wish. As it builds an increasingly accurate profile of what you like and don’t like, it can identify other individuals with similar musical taste to you, and play you what they like. In this way you both hear what the music you like, and get to hear new music you like that you wouldn’t have discovered otherwise. There’s an article on Last.FM on Wired News that got it a lot of attention at the time.

Investment banks lead the charge on Instant Messaging

By

I opened Living Networks with the examples of Macromedia using blogging to get messages out to its developer community, and the institutional bond market on Wall Street using instant messaging to enhance information flows. Stowe Boyd has written a very interesting piece on financial markets instant messaging (IM) in his publication Message, looking at some of the drivers of adoption, and incorporating an interview with the co-chair of the Financial Services Instant Messaging Association (FIMA).

There are a whole suite of interesting issues here. One is simply how the investment banks have become enormously more collaborative over the last five years, largely as a result of technology drivers. When I speak about how very high levels of collaboration are becoming mainstream in business today—even in intensely competitive industries—one of the most convincing examples to many is how the notoriously aggressive investment banking community is now working closely together on a whole variety of issues.

A key interest for me in the adoption of instant messaging is how it changes buy-side – sell-side (client-supplier) relationships. The commoditization of information and research means that increasingly the value to fund managers of interacting with financial market salespeople is in “knowledge-based” interactions, in which they gain highly relevant knoweldge and perspectives that integrate into their portfolio decision-making, rather than generic information. A good example of this is CSFB’s Locus product, that enables salespeople and fund managers to look at the same analytics screen on possible trades, and to jointly play with assumptions to make them relevant to the client’s portfolios, and provide a basis for useful discussion of risk and return parameters. Thomson Financial—having bought WorldStreet just in time for me to update the coverage in my book—has integrated it into its Connect product, which provides a peer-to-peer XML-based platform for customization and filtering of content delivery. All of these new tools shift the client-supplier relationship, and force the development of new skills, processes, and strategies for the investment banks.

Another interesting angle is that while SMS has played a major role in changing interpersonal communication in Europe and Asia, IM has played a similar role in the US. IM still has low adoption outside the US, just as SMS is only picking up in America now. Different levels of familiarity with these emerging communication technologies affect how they are being integrated into business applications. However all around the world, it’s good to see that investment bankers are leading the charge in taking instant messaging out from teenage girls’ bedrooms into the world of business.

Social Network Analysis and alliances

By

I recently shared the platform with David Ewbank, head of knowledge management and alliance management at pharma giant Aventis, at the European Business Information Conference in Paris. I spoke on the living networks, while David spoke about how Aventis is using social network analysis to undertand better how knowledge is flowing within its R&D team, and its joint R&D projects with other pharma companies—these topics tied together very well. Social Network Analysis (SNA) is not new, but it has seen an immense surge of interest in the last 6-12 months. As society and work processes become increasingly interconnected, gaining insight into the dynamics of personal networks becomes critical. However it is often not evident what “interventions” in shifting organizational structure or personal behaviors will enhance performance. We are now in a phase of experimenting with how to bring out the positive network characteristics of organizations, with Aventis doing some very interesting work in this area.

Since I believe that the the next decade and more of management will be dominated by working in a world of increasingly blurred organizational boundaries, I’m delighted by David’s dual role. The Wall Street Journal commented on this in an article on how knowledge executives are reinventing their roles. The juncture of knowledge and alliances (which to my mind includes client and supplier relationships) is an immensely important domain that will see far greater attention in coming years. One of the themes in my keynotes and work that has attracted particular interest over the last months is that of “information policies”. Organizations are subject to opposing forces. On the one hand, there is an imperative to share information and knowledge actively with key clients, suppliers, and partners. However there are still limits on what can and should be shared. The challenge is to create a culture and policies that enable effective sharing within appropriate boundaries. Extranets are now standard practice, helping to bring this issue to a head. More on this later.

Making the global brain – à la Google

By

I believe one of the most important themes for our future is collaborative filtering – I will keep on coming back to and developing this theme on these pages. This is fundamental to the formation of what we can think of as a “global brain”. As I describe in Living Networks, one of the most important functions of the human nervous system is to filter the massive sensory input it receives so that we are not overwhelmed. Similarly, in a world of massive and increasing information overload, we need mechanisms that make what is useful obvious, and what isn’t useful invisible. By collaborating on this task, each of us can benefit from the perceptions and judgments of us all. (Read the book sampler on “free downloads” page for more info.) Those that help create a higher level of collaborative filtering will add massive value – and with the right business models can extract part of that value. Discrete examples include Amazon.com’s book recommendation system, the Movie Lens film recommendation service, and Media Unbound music personalization system, used by Pressplay and mentioned in my book.

Which takes us to the much-discussed Google acquisition of Blogger. Steven Johnson has written an extremely interesting article on this for Slate. In short, he suggests that Google can pick up how people navigate the web in order to draw meaning for themselves and others. The analogy with the brain is that our repeated trains of thought are not only remembered more easily, but are also the very foundation of our neural pathways and thinking. I’d go further than Johnson to suggest that applying these approaches on a global scale could be critical in creating an information architecture that is far closer to that of a brain, providing highly effective filtering and the early stages of sense-making.

One of the key issues that emerges from this is that whoever monitors our information usage patterns to create useful tools, holds intensely personal information about us. Who will we trust to do this? Google-Watch for one doesn’t trust Google.

How many degrees of separation?

By

Microsoft is about to release a beta of software for peer-to-peer social groups, called Threedegrees. Here is the CNET article. (The Threedegrees website currently is only taking email addresses to notify when the beta will be out.) The intention is to extend the functionality of instant messaging, and to create trusted communities. Users can form groups of up to just 10 people, with whom they can instant message, share photos, send animations called “Winks”, and playback (but not share) music. Users can join multiple groups, but the idea is to create more intimate fora for interaction than the usual free-for-all chat groups.

I believe strongly that technology has the potential to bring people together, and that is what people want to use it for. I’ll be very interested to see the software when it comes out – if it’s good I think it could do very well. The “killer apps” are increasingly social in nature. As readers of Living Networks or my blog will know, I see the famed “six degrees” of separation shrinking dramatically. The inner city area of major cities can now largely be spanned by three degrees of separation. These sorts of tools will shrink this further.