I came across How to measure effect of communities at the macro level? by Mukund Mohan at the Future of Communities blog this weekend at the same time that I've been thinking about the reasons organizations look into communities. These ideas fit together nicely.
Firstly, Mukund Mohan's thoughts started with this realization:
It is absolutely fascinating that some metrics can capture the imagination of the masses very quickly. Some examples include the airline industry (which I am told before the advent of SouthWest) did not care about cost per passenger mile until this new metric has become a key determinant of profitability. Similarly the Hotel industry used to care more about Occupancy Rate until a few years ago, when RevPar became a more important number.
The question that I have been asking several experts in the community area is:
At the macro level what impact will communities and social networks have in economic terms?
Mohan then mentions three possible measures: employee productivity, transaction friction loss, and degree of separation. Note the each of these looks at a different aspect of what might result from a communities effort. I note that these might result from activities that have no direct relation to communities.
I suggest backing up a step and thinking about why people explore communities in the first place. What problem do they think "community" will solve? What will be better due to the enhanced focus on community? I'm familiar with several possibilities: innovation, speed to market, customer response, supplier integration, and company integration. What other reasons drive organizations to focus on communities? My detailed thoughts below:
- Innovation. A frequent driver is the need to enhance creativity and innovation by helping people connect across the organization. A measure here could be the fraction of sales from products that have been introduced recently (five years).
- Speed to market. Rather than creating new products, this issue is more interested in getting the valuable work within the company out to the market faster. In this setting, communities are thought of as being a mechanism to grease the wheels of internal activities and help things move from discovery to development to the market more quickly. There is also a lot of expertise to be shared along these community paths. A measure for this concern would be the time from discovery to market. The pharma industry uses this, but more significantly uses first-in-man (first human trial) to market, as many drugs drop out of contention before they get to human trials.
- Customer response. Once you have customers, how do you ensure they remain your customers. Buckman Laboratories is one of the better-known in the knowledge management scene for changing how they thought about customer interactions. They created a company metric that encouraged everyone to be in contact with customers, rather than strictly the sales staff. As a result, engineers and scientists are regularly solving and answering problems for customers directly. This gives a much faster turnaround for customer questions, and gives the scientists a better view into what new products and services are needed.
- Supplier integration (or supply-chain integration). This is almost the flip side of customer response / integration. Reed Stuedemann of Caterpillar has been talking about their knowledge networks and the significant value they have found in creating product-specific communities that include everyone involved in the product: designers, sales, marketing, customers, suppliers... Stuedemann looks directly at dollars saved as a result of the discussions within their communities, and the results have been prodigious. (I wrote up a conversation with him from Jan 2005.)
- Integration (of companies / divisions / acquisitions). Rather than integrating customers or suppliers, this one frequently arises when companies realize that they are too heavily siloed or that their acquisitions are isolated and need to be brought into the fold. Communities are thought to help here in building cross-boundary relationships that will strengthen ties to the organization and help the transfer of knowledge (either for Innovation or Speed to market). However, there is a big caveat in situations where acquisitions or significant reorganizations are involved: Trust. Communities rely on the good faith of the people involved and the organization that is promoting the concept of "working together." I'm not sure of a good metric associated with this issue. A nebulous measure could be the speed with which ideas spread through the organization with a particular focus on jumps across perceived silos or divisions. Obviously, the social network analysis crowd should have a lot to say about this question.
Disclaimer (of sorts): The blog at which Mukund Mohan was writing is for the Future of Communities conference, which is run by Corante. I am a member of the Corante Web Hub.