Chapter 15. Communities of Practice for Consumer Connection and Open Innovation
• How can communities of practice improve internal and external communications?
• Can communities of practice improve product development and speed to market?
• Why is a corporate culture change necessary to make communities of practice effective?
• Can communities of practice facilitate the organizational culture change necessary for rapid innovation?
We have proposed that a different partnership with the consumer is essential to marketing success. One of the most exciting emerging processes to enable this transformation is the development of communities of practice (COPs); however, business management must adopt a different mind-set to make COPs work. In addition to enhancing the relationship with the consumer, COPs can be applied to improve cross-functional teams within a company as well as create value networks with external resources.
In this knowledge era, technology has contributed to rapid change. Customers now demand products and service capabilities that few organizations can speedily develop, produce, distribute, and service independently. Value-creation networks, such as those we profiled in the Procter & Gamble Connect and Develop program, provide new organizational values, capabilities, and structures to support the constant innovation imperative demanded by consumers. These networks are a prime example of COPs serving as a constellation of expanded capabilities to augment the vertical staff organization.
Here are guidelines that enable linkage among all employees from different functions and markets as well as a real-time partnership with consumers:
• Innovation is constant and supported with resources.
• Insights are the basis for any initiative.
• A dialogue drives the development of capabilities.
• Learning and feedback are part of the marketing process.
• Collaboration improves capabilities.
• Technology, process, and the application of metrics improve our agility.
Naturally, any organization that adopts these principles needs to encourage collaboration to support this business model. The new rules change the corporate culture into a different organization.
Larry Huston, P&G VP of Innovation, provides a useful distinction between communities of practitioners and COPs. Communities of practitioners, such as trade groups or referral networks, have support and perhaps education, but the focus is on practice development of the members. True COPs share methods and solutions that transcend the interests of the individual practice. In a sense, wikis are a good reference for the COP model because they build on collective wisdom and experience.
Larry defined COP and discussed with us how COPs work at P&G.
Larry Huston, COP Defined
“To have an effective COP, you have to have a mission and an output you are really trying to drive. COP is all about creating results in such a way that the best learning and skills of a bunch of like-minded people can be transferred amongst each other toward some end result. So at P&G, the people who sit in the Colloid Chemistry (how particles stay in suspended solution) COP will work with outside experts. If someone is formulating shampoo products or liquid Tide (both of these involve chemistry and solution), they have a common agenda.
“The bottom-line objective at P&G is to create superior products that consumers are going to love. And if you are involved with the Colloid Chemistry COP, you are sharing amongst each other the best way to do that, whatever business you are in. So for me, COPs are really focused on generating shareholder value, where learning of skills can be applied, thereby transferring learning among each other.
“Best communities are not about rules at all, but sharing what works and letting the things that work take off by themselves. At P&G we developed tools and infrastructure to engage people in Connect and Develop. People in the business units, who found cheaper, better ways, improved upon our processes. Some of the things we used early on were dropped by the wayside, since the people in the field could adapt, learn, and find better ways to do it. Part of the challenge for companies like Nine Sigma, InnoCentive, and YourEncore (innovation networking companies via the Internet) is to stay at the leading edge of COP with what people out in the field and companies are doing, and re-create their networking processes, so that they are at the leading edge of innovation. We are seeing that the costs are coming down with better ways and technology tools. My job is to find what is working, try and standardize that, and move it quickly across the whole organization.
“It is becoming more difficult for me to create the buffet of tools and say here it is every year. Our strategy is shifting now toward when you get 70 creative people out there, with a huge global ecosystem of suppliers and things available, is to pick the winners and to move them really fast, and be more learning-based; it is much more opportunistic.
“We are very much a learning culture. P&G management values the quest for new ways and to reinvent the company. That has always been a part of our DNA. Having a learning strategy, a systematic set of tools and capabilities. We figure out what is working and redeploy them really quickly to an area that we need to improve.
“If we could get all of P&G up to speed the same way as our innovation operation, the company would be even more successful. There are always some parts of the organization that are ahead of the other parts. There are mechanisms in place that help us to accelerate learning, and COPs help us to do that.”
COP leverages technology so that you can be ahead of the curve for change rather than lag behind. Then give people the time, attention, and resources so they can work together to solve problems. This takes knowledge and collaboration, facilitated through technology, to create value. Value, rapidly developed to improve product and service capabilities, translates into increased ROI.
Partnership with the Consumer
Customers will have greater loyalty to an organization that enables them to enhance their own capabilities, thereby enhancing the relationship between the customer and the organization. The organization must implement a strategy in which the following occurs:
• Employees are encouraged to learn and increase their own capabilities.
• Increased capabilities are used to bring new solutions to the marketplace.
• The organization works with customers to improve their own capabilities to effectively utilize the organization’s solutions.
• Customers become more knowledgeable and self-sufficient.
Consider the online systems in Amazon, eBay, and Dell, which enable the customer to become better equipped to make the company work for them. The interaction of these companies with their customers increases individual and organizational capabilities.
Technology is the conduit for this knowledge network; it is the pipeline through which knowledge flows throughout the organization.
The Power of Cross-Functional Teams and COPs
More companies now recognize the power of cross-functional teams. Consider this all-too-familiar scenario:
Traditionally, the contact point between the manufacturer and the retailer was a salesperson for a buyer. This was like two triangles with apexes touching. The salesperson had to do a lot of work that he was not qualified to do, such as answer the question, “Where’s the truck?” Salespeople spent half their time on logistics and resolving billing questions.
Companies such as P&G reversed the triangles so that the logistics people interact with their counterparts to locate the trucks and the finance people interact with their counterparts to resolve discrepancies in billing.
In addition, manufacturers provide real marketing benefit to the retailer, whose marketing had been historically underdeveloped, supplying it with information about the consumer. Conversely, the retailer could supply the manufacturer with information about the consumers’ habits in the store. This is the power of cross-functional teams between organizations.
If multifunctional teams provide the power of breadth of information and knowledge, COPs provide the depth of knowledge within a specific discipline by having professionals collaborate, even if they work for competing companies.
COPs enhance the momentum in knowledge transfer. Often, the work that someone else is doing answers the questions in different areas of inquiry, speeding up getting to a solution. One engineer can provide answers to others in solving a technology question. On a COP site for e-learning, an HR person in the U.K. may suggest a report or case study to a marketing executive from a different company and industry located in California.
Increasing the speed of knowledge acquisition is a powerful competitive advantage. Therefore, the organization’s ability to acquire, process, and apply new knowledge is a key factor in introducing new solutions to customers.
Mike Keyes, the Global Managing Director for Jack Daniel’s®, uses COP to improve the marketing efforts of his global marketing team. They share best practices and ideas to improve specific marketing programs such as the mobile “Jack Daniel’s experience.” Another example of COP improving ROI is the way Jack Daniel’s European marketing management has been able to improve its rock concert event sponsorship program in Europe through consolidation. Mike discussed with us how COP has benefited Jack Daniel’s global marketing efforts.
Mike Keyes, Communities of Practice: Taking Lynchburg on the Road
“We have always believed that the town of Lynchburg, Tennessee is one of the reasons Jack Daniel’s® is really special. Sammy Gully, one of our tour guides, says, “If you give me a whiskey drinker for a day in the Jack Daniel’s hollow, I will give you a Jack Daniel’s drinker for life.” We have about 250,000 visitors to Lynchburg a year, but it is hard for people in Australia or most anyone to visit Lynchburg. So we try to bring the story of Lynchburg to the people. We do it through advertising, and the last ten years we’ve done it through the web, but now we have actually built a mobile experience, and we’ve taken some of the character from Lynchburg that makes our brand so special, and we have created a state-of-the-art mobile experience. We display at rodeos, NASCAR races, motorcycle rallies, and industry events. We send our tour guides from Jack Daniel’s, so people at these events get our branded experience.
“Now our Australian counterparts discussed with us how to improve it. In the last two months the Australians have created their own Jack Daniel’s experience, and it travels all over Australia for sponsored events there. It is a better version of the U.S. branded experience because they had the benefit of learning from us. One of the lessons from the States was that it took too long to construct and dismantle, so we were not getting enough display days.
“They partnered with MAC trucks in Australia, a good fit because MAC is a brand with similar core masculine attributes as Jack Daniel’s, and they built this hydraulic trailer. Instead of three days for setup and breakdown, they just push a button and the walls expand. So, the next Jack Daniel’s experience we make for China or Europe will take that learning and continue to expand on that.
“Another example of COP is in our global cultivation of the relationship to the rock music industry. Our marketers have capitalized on that through promotions in their diverse markets: the U.K., France, Greece, South Africa, China, and, of course, here in the United States. Our global team explored lessons learned. One practical application from this is our consolidation of programs in Europe, so now all of Europe is tied to the same programs compared with having seven different programs in Europe. They now put their effort behind one major themed event located in a different European market every year. This is a good example of applying benchmarking to increase the bang for the buck through the use of the COP for concert events.”
Building a Value Network
Technology makes transactions within and between organizations cheaper and faster. So, many participants can create new value networks, with each organization or component in the value network contributing its expertise. These value networks are replacing value creation based on an exclusively vertical integration within the organization. So, external partners bring together their expertise, creating a network, with each contributing iteratively in their particular area.
The organization can thrive, rather than merely cope, with the rapid changes in the market environment. The network model (organizations partnering to create an integrated solution for a customer) then becomes a strategic resource, in addition to improving organizational productivity. It helps facilitate the organizational cultural change necessary to create the purposeful connectedness, so a collaborative infrastructure can be developed. Collaboration in an open environment is contagious. Once infected, most good professionals can unleash their creativity to move the business ahead in ways that cannot be foreseen.
It is like the Rosetta Stone phenomenon. In the Napoleonic era, the Rosetta Stone was deciphered in Egypt. One guy has the top half in hieroglyphics, and someone else has the bottom half in Greek. Put the two together, and you can translate the hieroglyphics and understand a whole language. With COP, a similar process is now accelerated and ubiquitous through the global linkage provided by the Internet.
Preserve Peasant Wisdom, Yet Break Down Walls
Another use for COPs is to preserve practical knowledge or “peasant wisdom”—ingrained knowledge within the organization. Some organizations are on the cusp of losing an enormous amount of peasant wisdom from sales and marketing people who are baby boomers about to retire. COPs provide a vehicle to transfer the experience and knowledge of older people to the newer executives. It may also be to counsel and help them not to do things that may be impractical. “We tried that several years ago. It didn’t work, and here’s why. Don’t go down that path.”
But COPs also break down the walls of the organizational culture so that people can question their mind-sets about the business and change the model. One example provided by Mike Keyes is Jack Daniel’s recognition that its advertising portrayal of rural simplicity, which is perceived as a virtue in a frenetic urban lifestyle, may not work in Eastern Europe. There, the countryside is too close to reality to be perceived as idyllic relaxation. Brown-Forman executives in Tennessee modified their globalization effort in advertising by listening to their Eastern European regional managers, and HQ opened its mind-set to the market reality.
Mike Keyes, Rural Images
“Our Lynchburg-based messaging has to be balanced with the drinkers’ world messaging. We are doing very well in Eastern Europe right now. We send our Lynchburg Southern tour guides. Many of them are middle-aged, in overalls and straw hats; that’s how they dress. But in some markets that rural message may hit too close to home.”
The More Knowledge You Have, the More You Realize How Much More You Need to Know
Picture knowledge as an area of a circle of light on a desktop in a dark room. We know the size of the spot of light, but we do not know the circumference of the room beyond the light. As the area of light increases, the circumference increases. COPs help management know what they don’t know. IWIK (I wish I knew) can identify what they don’t know and focus on attaining that knowledge. One of the major benefits of a COP is figuring out what we don’t know.
Summary
Communities of practice can do the following:
• Change the corporate culture to become more collaborative.
• Speed up knowledge transfer.
• Leverage technology to stay ahead of the curve for change.
• Improve your relationship with the consumer.
• Utilize industry knowledge and improve cross-functional teamwork.
• Collaborate through a value network to create better products.
• Preserve and transfer accumulated wisdom and adapt to a global marketplace.
• Help you recognize what you do not know.