Double Blind Technology Trap

Business publications are by and large optimistic about the contribution of emerging technologies to growing healthier companies, work environments and even countries. For example, McKinsey Quarterly published a stimulating discussion of how advancing technologies are changing business models from linear to multisided ones, in Clouds, big data, and smart assets: Ten tech-enabled business trends to watch .

The first technology the authors, Messrs. Bughin, Chui and Manyika, discuss is the mainstreaming of “distributed cocreation,” which is essentially the ability for communities to organize on the Internet to develop, sell and support products and services. For example, they cite P&G’s Vocalpoint network of mothers sharing experiences with selected products with their peers, which enables P&G to significantly increase market share vs. markets without the Vocalpoint network.

The authors also examine “making the network the organization” through which the Web forces companies to open the boundaries of the business, allowing non-employees to offer their expertise in novel ways. They envision future managements seizing on these flexible networks to help manage volatile demands on assets through peak and trough periods.

Examples are given like Dow Chemical using its own social network to help managers find talent in other divisions, even in external talent pools such as retirees.  Amazon.com’s Mechanical Turk uses online labor markets external to the company to solve business problems. Thus, the authors conclude that, in the longer term, networked organizations will focus on harmonizing tasks to get things done versus focusing on the “ownership” of workers.

We arrive at the first trap that new technologies set:  New technologies need to be understood, analyzed and considered in business plans. To be competitive in an asymmetrical world (where physical boundaries or  historically unrelated businesses gave established companies a natural advantage), all top executives need to define strategies that identify where technology opens opportunities for them to create multifaceted revenues and creates threats that may not have existed before.

We get immediately to the second, blind, trap. Gene Killian , Esq. of The Killian Firm, P.C. found that new technology gives birth to new legal problems and by extension threats to the business.

In a cautionary newsletter (you may have to register to read), Gene questioned: “What happens, for example, if you have a restrictive covenant with a key employee? What if that employee is prohibited from “poaching” your current employees? What if that employee leaves your company? And what if that former employee becomes a “contact” of your current employees on LinkedIn? Or a friend on FaceBook?”

He cites actual cases where the “what if” happened. Employees left one company for another and continued using social media based conversations to recruit past co-workers, clients and prospects from a prior employee. Digital networks, while a new technology, are also now indigenous to most  relationships. Intentional or not, the use of these networks is a constant potential threat to business operations, from employment covenants to  poaching employees, damaging brand good will, or publishing company secrets or plans.

Gene offers common sense pointers that it is time to review employment manuals  and standard agreements, giving clear rules when it comes to LinkedIn, FaceBook, Twitter and other social media.  In the firm’s newsletter he mentions Bayer Corp. having a 13-page policy that covers employee use of social media. It reminds employees about confidentiality and proper communication with customers or others online. The company also monitors its online reputation.

He says H.J. Heinz Co. has a written policy distributed to all employees. The policy specifically spells out that employees must be transparent when publishing material online that references the company or when speaking with bloggers, and reminds employees about not commenting on confidential company information. It is also important to state that post-termination restrictive covenants may be violated by contacting clients through social media “friend” or “link” requests.

So the double blind trap of fast emerging technology is that to stay competitive and grow, executives need to understand and selectively capitalize on technology while, at the same time, remembering to proactively manage the technology by understanding the unknown and unintended consequences on behavior that these technologies create.

Future sustainable competitive advantage and wealth comes from the hard work of combining an understanding of the strategic use of technology with leadership that reinforces the legal and ethical values of the company among all stakeholders.

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