BankerVision

Five IT-Shop Sacred Cows

1. Myth: If you get more “efficient” at IT, you will get a more “efficient” organisation. Reality: The more cost you take out of IT, the worse it is for users and customers. Optimising your cost  base to the point, for example, where users have a PC that is orders of magnitude less capable than their delightful home consumer experience will just cause them to bring their own laptops to work. Then they’ll break all your security rules in order to use them. And what are you going to do about it? Fire them?

2. Myth: You must have IT security people who must approve everything you do in order to secure the organisation and manage your risk. Reality: Most Some IT security people don’t have much understanding of the new stuff they’re asked to adjudicate on. They just make it up as they go along. The worst ones can’t be bothered to keep up because it involves too much work, and anyway,  they always have the ability to just say “no”. This doesn’t manage your risk, all it does is slow you down.On the other hand, count your blessings if you have been lucky enough to get a security group that know how to show you what you can do to do new things safely and efficiently.

3. Myth: High quality on-time and on-budget delivery are the development objectives and this will make you an IT leader. Reality: Who cares about whether you’re an IT leader or not from a development perspective? Superb delivery is a waste of time if what you’re delivering is crap in the first place. Forgive me the arrogance, but my observation is that many traditionalists don’t get the way the new world is changing as a result of technology, so what makes you an IT leader is if you can help them understand that, actually, what they’re trying to build is rubbish.

4. Myth: Most IT projects fail or are late, so we have to improve our failure rate to be successful. Reality: Causing any change whatsoever to happen is a success, since everything is optimised around stopping change in an IT organisation. If improving the “success rate” means doing less new stuff, then you’ve got a big fail coming up when your organisation fails to adapt because IT stopped it doing so. All in the name of improvement.

5. Myth: Governance is the key to discipline and control in an IT organisation. Reality: Governance is like a virus. It grows as swiftly as possible to consume all available resources, and then declares success when there are no project failures. Usually, this will be because there are no projects, or at least, none that have much way of progressing. Why does this happen? Because Governance is a licence for people without much capability to drive change themselves to get in the way of those who can and declare that they’re “part of the journey”.  ‘Tis a rare Governance person who knows when not to govern.

What other sacred cows do you have in your IT-Shop?

The rise of Open Source Hardware

Last week, I attended a speech by Chris Anderson, author of the the Long Tail, and more recently, of Free. In his spare time, he’s also the Editor of Wired.

The speech was not about, however, Wired, or Free, or Long Tails – he was talking all about Open Source Hardware, which is this astoundingly interesting trend which is doing the same for atoms as the previous digital version did for software.

His point was just as the economic barriers to creating digital products have dropped to practically nothing, the barriers – economic mainly – to doing real atoms are dropping to nothing as well.

He started out by explaining how, over the course of the last few years, he’d created a group of enthusiasts who build unmanned aerial vehicles, complete with sensors, GPS, and every other thing that a typical military version has. This group now produces components for others to make UAVs, and they’re in constant evolution. The current generation, apparently, is very sophisticated.

Everyone contributed their time and expertise for nothing, including the world’s pre-eminent expert on model plane GPS, who apparently (according to Chris) dropped out of high school and then proceeded to get a pH.d level education using little more than Google.

All the tools they use are open source, including the printed circuit board layout software, the CAD, and simulators they use before starting to make real hardware.

Then, came the interesting part, and it was about turning all these designs into real atoms.

As it happens, its simple these days, apparently, to manufacture practically anything. For example, there’s the MakerBot (pictured) which is a kit you can build (also open source!) that can extrude anything in plastic, supposing you give it a design.

Chris talked about how he and his kids dreamed up some new device over the holidays to do something-or-other, and how they just modelled the whole thing in three-d, and then hit print. Then he explained how his kinds just assumed that being able to print out any object was quite a normal thing, and they were already being frustrated with the limitations of plastic extrusion.

I checked MakerBot Industries, the group who’ve been working in this machine, and the kit is only $900 USD. That’s a pretty amazing price for a device that can make, well, almost anything.

The discussion then moved on to more active components, and how simple it is just to upload electronics designs to firms that could do small, one off runs of boards and components. For practically no money. We’re talking dollars per unit here.

Even at the manufacturing stage, things are changing. Apparently, there are now sites in China where you can upload your designs (which you’ve prototyped and made work, obviously, using things like MakerBot and the other tools) and they’ll give you, 24 hours a day, an immediate price to manufacture a set quantity of product in a certain time frame. In fact, the sites he showed me enabled Chinese manufacturers to bid against each other for the work.

If anyone is interested, I’ve got the list of the sites, but as am on a plane right now, can’t list them off the top of my head.

You can see where this is going.

With the barriers to entry for companies making new physical products falling, everything becomes about talent and innovation, rather than control of industrial age assets such as finance and manufacturing capacity. This is a world shift we’ve already seen in digital products, obviously. Now we have it for physical ones as well.

Unconference Crowd Sourced Strategy Pt. 2

CIO Magazine were interested enough in the discussion about our approach to using unconference and crowd sourcing methods to do IT strategy, that they asked us for a write up for their magazine. Its published here, for any of you who are interested in a few more details about what we did.

The future of Australian banking

Over the past week, I’ve had the chance to reconnect with some of my Australian banking colleagues. Australia is very unusual from a financial services perspective – they were largely untouched during the global financial crisis, and my suspicion is this has made them a bit complacent.

Whilst the rest of the industry has started its thinking around the future of the industry, and in some cases, has started to modify itself, I couldn’t help but feel I was stepping back in time a bit last week. Nothing much has changed in Australia since I left it six years ago.

Mind you, not all that much has changed in the thinking of traditional banks here, either.

For example, everyone is still parroting on about “customer experience” and “customer relationship”. I say parroting because both of those terms imply something which just doesn’t exist in banks: a cultural imperative to put the needs of customers first.

Working in banks, it is never first about the customer. It is first about revenue and share of wallet. Anything a bank does in terms of relationship and experience is all about making more money under the guise of helping, and this sets up a relationship which is false. Its like the motor mechanic guy who says he wants to help you to your face, but actually cares about working out how to get as much money possible out of you for as little effort as possible. That situation feels false to customers, and when you translate it to banks, it feels just as false.

I mean, why not just admit to customers that you’re out to make money from them, and get rid of the falseness about it all? Banks aren’t there to help customers, they’re there to help shareholders. Would anyone really mind a bit of candour about this?

So I actually said all this to banking people when I was visiting last week, and most of them didn’t get it. Not only did they not get it, they didn’t even agree that their first imperative in all things was to make more money and reduce cost, not to service customers.

Theirs is the extremely dated view that “bank at centre of financial universe” is still appropriate today. It might have been the way things have been in the last several hundred years, but today things are changing.

Banks, today, should be aiming to be invisible, not the centre of all value. When you get a mortgage, the point is the house you’re buying, not the financial services product. You go to the bank as a consequence of house-buying, not because you want a multiple decade loan for its own sake.

Bankers should try embedding the loan into the house buying process so that the money part was as invisible as possible. Why is it even necessary that the bank has a brand on that, anyway? Loans are all about price, and you care about brand and stuff only if you’re going to have a “relationship”. That’s all part of the falseness, of course.

Clever institutions – including one in the UK -  are already starting to get the fact that the best strategic option is to integrate their stuff into things customers really care about, not be the centre of the universe themselves. If nothing else, it removes them from the falseness of their traditional approaches to customers.

Yes, that means giving up on owning the customer. Yes, it means giving up these dated notions that customers actually want a relationship with a bank beyond it working properly. And, yes, it means that the new game is courting people who will integrate your services, not those who will eventually be using them.

This last is the most important point, actually. I’m of the view that the bank that gets the largest number of organisations to integrate with them will win in a particular market. They’ll have a critical mass that makes it more attractive for more people to join up with them. Everyone else will be left in the dust to pick up crumbs.

Now, of course, in Australia, this is not going to happen any time soon. They haven’t had the burning platform the rest of us have had to make change. It is simple and easy to continue the way things always have.

But I will say this: the time is coming when a global major is going to show up and do this. It may not be soon, because there are bigger profit pools available right now. But it will happen, and they will be great at integrating businesses with them.  They are already working out they need to be invisible, not the centre of everything.

So, Australian Banks, if you want to play in this new world order, you need to start getting to this stuff soon. The problem you have is you don’t know how much time you have.

An open letter to the business

My dear Colleague,

I heard on the grapevine the other day that you think your information technologists are getting a bit above their station. Apparently, they’ve made some suggestions which don’t have much to do with technology. I realise that’s outrageous, and I quite sympathise with your annoyance.

I mean, how dare they. They may actually have business and management degrees, but they work for information technology. The very idea that they’d know anything about the way business works is patently absurd. After all, you can only trust an information technologist to plug wires into a wall, I quite agree with you on that. You certainly don’t want them to take on anything more complicated, because lets face it, when you’ve given them complicated tasks in the past, all you got was fail, fail, fail.

That big system that didn’t deliver? You know that if you’d just had different technologists, everything would have been fine. Or maybe they were personally OK, but they chose the wrong technology. Whatever the reason, the IT folk are personally, absolutely to blame. I mean, you tried to tell them what you wanted, didn’t you? But they were all too bits-of-tin and spools-of-wire to understand.

The best thing to do is treat your IT colleagues like glorified order takers. Like, for example, you’re in some really expensive restaurant. You want them to show up, and ask you what you want, and go away and get it. You want them to do it often enough that you never want for anything, but not so often you get annoyed by all the attention. I mean, the best IT person is the one that just does what they’re told, right? Even better if they’re like that perfect waiter in the perfect restaurant that knows what you want without  even being told.

Oh, and I know you’ll agree with me that you can’t ever like the price you’re charged no matter what. Yes, its an expensive restaurant, and you can, like, buy the whole place if you want, but you have a duty to drive value. Because you just know, no matter what you say, that once your IT folk and their vendor friends get together, there’s going to be some kind of cash-spend party where they buy just anything with a few blinking lights that takes their fancy.

But anyway, lets get back to the point, which is ensuring that IT doesn’t get out of its box.

You know, there was a time when we didn’t even need the box. But now, all these upstarted IT people think they know the business as well as we do. They imagine that just because they’ve built a few systems that happen to work and which we now rely on completely, they understand what it was they were doing when they designed those systems.

So I understand how offensive it is when they come yammering away at how they can improve a particular business process, or implement a new customer channel or something.

And don’t even get me started on the subject of digital. Yes, I get the fact that the internet is, well, technology, but lets not forget that we know more about the business and the customer than anyone. That makes us uniquely qualified to be the font of all knowledge on how we will do digital, even though I know that some of those techies have actually run scale digital businesses of their own.

Anyway, any kind of business that techies could be involved in are not the same as the ones we’re involved in, right?

Anyway, I think I’m at the point where we almost don’t even need the techies. I know that you – like me – are on twitter constantly, have our own Facebook pages, and can even build workflows on Sharepoint. I know we used to ask the techies to do that stuff for us, but these days, I just get a few business grads in who’ve done a few technology subjects to do the work.

So much easier than asking those people with business degrees over in the IT group. Somehow, I just feel better knowing that they aren’t employed there.

Frankly, its obvious the time has come for us to stand up for ourselves. Just the other day I caught our CEO having a business meeting with the IT guy. You know that if we don’t take action soon, its going to be totally game over.

Anyway, dear colleague, I just wanted to write this to show my support for you. The way those people in Information Technology are going, they’ll think there’s no difference between them and us soon. Next, they’ll be wanting to our jobs directly. Or, even worse, build things we didn’t ask for and don’t control. We can’t have that, now, can we?

We face the sundering of the great wall we built between us and them during the nineties. I know you agree with me when I say I can’t imagine anything more awful than it come down whilst on our watch.

My best regards

Your fellow IT user from the business.

How to crowd source an IT strategy

1.5 days. 100 people. 20 design sessions, and 200 ratified decisions.

It’s the reason I went dark last week online. We were running a crowd sourcing un-conference event to work out the details of IT strategy in as short a time as possible.

It was an event that showed me the reputation the public sector has for being bureaucratic and unable to do anything quickly is unfounded.

Lots of people doubted us when we said we wanted to crowd source strategy development. “Crowds won’t give you anything you can use”, someone said. “They don’t have all the background” someone else told us.

The thing is, they may not have all the data my strategy team had, but collectively, they had deep insight that we would never have gotten ourselves. All we had to do was provide this big group with a way of expressing it in a reasonable way. 

Just like most organisations, whenever there is a decision to be made in the Department, lots of people like to have their point of view. The traditional approach is to call various meeting with various stakeholders until you reach what passes for consensus. This can sometimes take a long time. Everyone complains about it, but nothing seems to make things go more quickly. It was exactly the same at Lloyds Banking Group. Big organisations are challenged when you ask them for quick decisions.

But none of that happened at the strategy event last week. In each design session, the subjects were discussed in detail, but since we made it a rule that anyone making a proposition would automatically trigger the chair to call a vote, people naturally put their cards on the table quickly. It worked well.

Now, I don’t propose to go into the IT strategy we’ve come up with here, though I have to say it is a very powerful document, and vastly more detailed that you could expect to get when you task a small secret-squirrel team to do the work, who then do a big reveal once everything has been watered down appropriately.

But for those of you who are interested, I though I’d explain exactly how we ran the day. Several of you who’ve been reading my Tweets have been asking.

So we started out by doing PowerPoint to the whole group. We laid out the problem we were trying to solve, and provided some stimulating material that people might liked to consider across the event. This was the only time we did Powerpoint, actually.

Then we moved straight into propositions for the first design session, using the basic format pioneered by unconferences. We asked the question “What do we need to design”, in order to prompt proposals for sessions, and then voted as a group on what was needed. The top voted four sessions were immediately scheduled in breakout rooms.

At this point, I’ll pause to let you know that we decided to use electronic voting systems throughout. There were a couple of reasons: firstly, there 100 people in the room, so it was too hard to count hands every time we wanted to put something to the group. But secondly, we were hoping there’d be a bit of contention and provocation, and we wanted the anonymity of electronics. Plus, it gave us the ability to get actual metrics on how positive people were about each thing that came up.

Each design session used standard unconference principals. You got to move freely between sessions as the mood took you, and could interject at any time once the preliminary points were made. In each room, the discussion eventually got to real proposals – and we asked the group to vote if they “agreed to add it to the strategy”. With a majority vote, it was tentatively added. I’ll get back to that in a minute.

We ran screens in each room so that attendees would know what was going on in other sessions, updated live as the tentative decisions came up. The idea was that people should be able to bolt from one room to another if they felt things were going on they had to be a part of.

We realised pretty early that walking out of meetings  for some people normally constrained by traditional formats didn’t come easily. We had to get specific in encouraging people to do it, actually. Perhaps they felt it was rude, or something.

Anyway, we ran 20 design sessions of an hour each over the 1 and a half days, and you’d not believe the breadth of topics. Or perhaps you would, if you’ve been to a BarCamp.

And the final step, after each design session, was we brought everyone back into the main room and had them ratify, electronically, every single tentative proposal that came out of the breakout sessions.

Just as a side note, I have to admit I was very, very nervous about how this format was going to be received. Firstly, we didn’t know if it would work in a corporate setting.  As in, when the outputs have to be more than networking and learning. We wanted a real document, and who knew if people would engage enough to do that?

But there was another worry as well, and that was that we’d find people in such violent objection to each other that we’d never get any decisions at all.

What actually happened was that most of the propositions were carried by a landslide. There were some, the especially contentious ones, that didn’t of course. I rather liked that, actually, since it showed that people weren’t just pushing the Yes button every time.

But I think the big learning is this: if you put people in a room and give them a novel way to make decisions, you will get decisions. It has proved to me that struggling against the big corporate stakeholder machine (which is highly optimised not to make any decisions) need not be the only approach one takes when trying to introduce change. At least, it seems to work for us.

If any of you want more details, feel free to reach out.

Innovation backlash

One of the interesting things about the group I run at the DWP is that we’re accountable for both innovation and strategy.

This, you might imagine, ought to be a nirvana that anyone who cares about innovation would dream about. Practically speaking, however, it introduces a few issues that you don’t expect.

Consider this scenario. You use the tools of innovation to create a pile of new thinking that results in new prototypes or experiments getting built. Everyone is excited, and loves the new approach. New things start happening, so everyone declares the exercise a success.

In the meantime, however, the approved and mandated strategy that was previously being followed gets changed in subtle, but unexpected ways. For those whose responsibility it was to implement the strategy, this is annoying at best. At worst, it represents a threat to them that must be taken out as soon as possible.

Now, I know immediately that everyone will start screaming that strategies must be flexible to new thinking and new goals, and of course I agree with that.

But the situation is illustrative of something that you always see when you send an innovation team into the wild: the new ideas getting created threaten someone’s interests, no matter how well the innovation team influences those around it.

You get a backlash that is as inevitable as it is hard to manage.

In fact, I’m not certain it is possible to manage it. If you’re about changing the status quo and you don’t ruffle some feathers, it is surely inescapable that you’re not really changing anything at all.

My conclusion is that you have to invest your innovators with sufficient political clout that they can – in their own right – protect themselves from the backlash when it happens. If the clout is invested via proximity to a powerful senior figure, then so much the better

Talking with innovators across sectors, I’ve found there are some common signs that innovators haven’t got the clout they need to do stuff.

You know they have no clout when people around them say “the innovation team don’t do anything”. Clearly, what’s happened is that the innovators know they can’t withstand the backlash, so they do busy-busy little projects that don’t ruffle any feathers.

You know the innovators have no clout when things that are ordinarily business-as-usual start being called" “innovation”. I’ve talked to an innovation group that managed to get RSA tokens deployed for security purposes. Ramping up security using off-the-shelf-products is not innovation. But the innovators, fearing the backlash, go where things are safe, and the need for change is self-evident. Tokens are a good example of going where things are safe.

The innovators have no clout when their diaries don’t have meetings with senior people. They know they can’t “deliver” (they are scared the backlash will take out their projects) so they only commit to things which are small enough not to get noticed. Of course, being small, they are also not worthy of the attention of senior folk, so no meetings get set up.

But here is the number one thing that tells you your innovators have no clout: talk with them about innovation, and they’ll tell you how their organisations aren’t innovative. No matter that they are in place to make their organisations innovative. No matter that all their training and professional experience suggests the raw materials they need are all around them. They give you an excuse instead. They’ve been hit one too many times by a backlash for which they had no defence.

There is a downside to giving innovators clout, of course. The downside is they then have the ability to disrupt strategy and “get distracting”. My own view, though, is that a strategy that doesn’t know how to deal with the new stuff without falling apart isn’t very much use anyway. It’ll only be current in the short term.

Try this: give your innovators their head and protect them from harm. You’ll be surprised as the results you get.

Its the users, stupid

Last night, when I was at this event, I met a couple of people who are involved in helping start-ups turn ideas into reality. These were quite senior people, working for a large software vendor, one that makes it’s revenue mainly from licences.

One comment from a particular individual struck me. He was saying that he sees a lot of start-ups who have no IP, nothing at all they can protect. Nothing, in fact, that makes their idea valuable. “They are interesting ideas for a websites”, I think he said.

Never have I heard a more telling statement from the old school. The ones who think that building new technology – technology that can be protected with patents and then licensed – is the only way to build successful businesses.

Actually, you see this all the time in lots of industries. Banking went through this phase (and some banks are still doing it) of trying to protect their processes and products with patents some time ago. It didn’t really result in much.

Anyway, the point was, he said, a good idea has to be supported by something you can put a moat around. Otherwise, it’s not a good idea.

Apparently, he hasn’t noticed Facebook or LinkedIn. Neither have much defensible intellectual property in them. They’re just good websites.

Or Twitter. If that had any IP in it at all, I’d be surprised. Its a service that lets you record 140 characters! What do you need for that? A web server and a database?

What about Threadless? They make t-Shirts, with designs open-sourced from users. Apparently, quite successful thank you very much. OR MoonPig, who make greeting cards?

Or Mint? Just sold to Intuit for millions, and all they have is a user interface on top of the bank website scraping software from Yodlee. I suppose there could be some defensible IP in Yodlee, but how on earth does that justify the valuation of Mint?

These sites are all quite easily replicable. I think I could build myself a Twitter-thing in about 2 days using MS Access if I wanted. They are replicable, yet they are valuable.

In the end, a new idea doesn’t need a lot of patentable IP to be successful, it just needs users. Why is this fact not inherently obvious to everyone?

I kept my mouth shut, because when you are confronted with “licence thinking”, there’s really nothing you can do to convince anyone they’re wrong. With several decades of success behind them, its hard to argue with history.

So we then we went on to discussions of “business models”. The argument here, from the same individual, was that so many “nice web sites” didn’t have any clue how to monetise themselves. Apparently, this is a cardinal sin.

Firstly, I’d suggest that anyone that’s worked for a large corporate has no clue how to monetise anything. Big successful corporations got that way because of clever people at the start. Once the model is in place, the product developed, and the users recruited, what’s left? Yes, operations. Doing the same thing, day after day, following a template that someone else has defined. Most big software companies, populated with licence-thinkers, work that way.

I know, because I used to work for Microsoft. I loved working there, but everything is a template you just fill in within very narrow parameters of accountability.

But it seems to me the sin of failing to have a monetisation strategy is much less terrible when you have millions of users who like your “nice website” and use it regularly. Having millions of users is a high quality problem with lots of monetisation solutions available to it. 

Having a website with no users, but a great monetisation strategy, on the other hand, is only nice for licence-thinkers who need to see the money before they can see the money.

The upshot of all this was I had an interesting conversation. But it illuminated the growing divide between those who were successful yesterday, and those likely to be so tomorrow.

Should you do only things that are “strategic”?

I've had a couple of emails from readers in the last week complaining that an initiative they are passionate about was either slowed down, or cancelled altogether because it was deemed "not strategic".

In one case, it was an architecture function that said this when the project wanted to implement something not in the standards. And in the other, it was a new business initiative stopped because the opportunity wasn't aligned to existing revenues and failed to meet the "adjacency" test for new markets.

As a general rule, my own thinking is that lots of little initiatives that aren't part of the strategy can get distracting. Usually, the benefits associated with such non-strategic initiatives are microscopic compared to the amount of bandwidth they take up to generate those benefits. And the strategic projects, big as they usually are, tend to have equally large benefits associated with them.

But does that mean that non-strategic projects don't have any value at all? By no means.

Whilst it is true enough that when you factor in all the long-term costs (i.e, the operating costs of non-standard, the dis-synergies you get from complexity, and the increase in potential legacy, for example) of these non-strategic things, the business case usually collapses, those few times when it doesn't are highly illustrative.

Such cases tend to tell you that the strategy, not the project, is wrong.

People always tend to think that that strategy, once defined, is inviolate. That it should be fixed over some long term planning period, and must be adhered to rigorously.

I, on the other hand, prefer strategy to be flexible. The overall objective can't change every few seconds, of course, but the way those objective ought be achieved should have a degree of flexibility, a flexibility that increases the less course-grained the decision level is.

So, for example, I wouldn't like to see a new platform introduced to a technology estate just because a single project wanted to do so. On the other hand, if the benefits outweighed all the long term costs, I can't see any rational reason to prevent it. Even if it meant a new standard had to be created.

The fact is, if the new platform can stand alone and pay for itself, it actually represents a new capability that can reasonably be added to strategy.

Here is the fundamental failure I see so often with strategy, and strategy-related functions like architecture: as custodians of the one-true-vision, it is often the case that such teams fail to consider the inputs from teams they feel have no stake in the "big-picture". Small business lines, and smaller projects fall into this camp. Because their overall contribution is demonstrably less impactful to the whole how could they possibly have any idea of what the overall picture should look like?

The thing is, those small projects and business lines, when added together, are often much bigger than even the biggest of the big-ticket items in any organisation. How, then, is it reasonable to fail to consider their views in the overall scheme of things?

What I am really describing here, of course, is ivory-tower-ism. That's what you get when groups are entrusted to keep the "one-true-vision" and aren't forced to justify their decisions to those who are entrusted with implementing them. They go ahead and publish their positions to the organisation, without very much acceptance of the do-ability of those positions.

All this leads me to a diagnostic question: when were the architects, or the strategic folk, or the business development people in your organisation last asked to prove their statements were valuable? If the answer is never, I bet you have lots of documents, but not much coherence to them. I bet your organisation spends a whole lot of time getting around all these people rather than working with them. I bet, in fact, that they represent a consistent drain on progress, a brake to any move forward that anyone ever proposes.

On the other hand, I've seen working strategy functions. Even working architecture functions! They all have one thing in common: they have to prove that what they're saying is worthwhile doing. And they have to prove it to everyone, not just management.

What kind of organisation is yours? Strategy as hand-break, or strategy as accelerator?

Update: Peter Evans-Greenwood adds some interesting points in this comment. Refer to his blog posts on the value of strategy and enterprise architecture and how the new name of the game is moving from velocity to acceleration.

The Emergent Enterprise

Two of our initiatives at the bank (widely available internal social media, and Innovation Market) have the interesting ramification that individual staff members in our institution now have an ability to broadcast their opinions to large groups of people, largely without much management-level control of the messages they're putting out.

As you'd expect, there was initially very great resistance to this, especially from managers. "Why", they wanted to know, "would we allow anyone to write just anything? What if they are negative or derogatory about our bank? About me?".

Unsurprisingly, a year on, none of the doomsday scenarios hypothesised when we made it possible for staff to create their own internal communities have come to pass. Of course, such a fortuitous outcome would largely be expected by everyone who participates in broad web based communities externally. It was not, however, to long term traditionalist used to iron control, but they have largely been mollified by the lack of significant negative consequences.

But now we are beginning to see a new phenomenon. I call it the Emergent Enterprise: staff are not only having their say, they are actually changing the way things work in material ways.

You see, along with social media, we gave our people the ability to create rudimentary business process and publish those as well. The idea was that workgroups would be able to automate things they did on a day to day basis easily, and without any input from the central IT function.

Interestingly, in such an environment, a business process is rather like a piece of media. Its success is determined entirely by how many users it has, just as a blog is successful if it has many readers. Where several choices exist, the process that has most chance of becoming the "one true way" is the one which is used by the most people. A process has an audience, and big audiences give the process owner significant say in how things are done.

We are beginning to see situations where workgroups have defined their own little workflows, and these are being adopted by other groups as well. Popular processes that help get work done spread relatively quickly.

Now, as a trend, workgroups sharing clever ways to doing things is nothing new. In the past, though, such sharing did not actually change things. When you add a bit of a social business process to that mix, however, real change can easily be the result.

I'll give you an example. In my team, we have a little business process we made that lets us send a small gift to anyone who has gone out of their way to help make our jobs easier. The gift is only a box of chocolates or similar, but you can go to this web page, request it with a personal message, and a few days later, it arrives. It has been a useful tool to encourage people to say "thankyou" when someone has gone above and beyond. It is also inexpensive.

I've now seen similar processes duplicated in other places in the bank, with minor local variations, of course. It seems the practice of minor gift giving may spread through word of mouth and ease-of-implementation.

Now, gift giving does not have significant strategic ramifications for our institution. But the Emergent Enterprise does, because very large changes are often brought about through very small incremental steps. It is not hard to imagine that a decade from now, socially chosen business processes will be the thing that defines how well an institution performs in the market. They are fast and responsive, not governed at the pace that large strategic decisions must be. Market-appropriate behaviour "emerges" as the result of lots of people adding their ideas for improvement.

My real interest in this "emergence", however, does have to do with the strategic questions which face us going forward. As innovators, we know the biggest long-term threats to institutions rarely come from large, established competitors. No, it is the start-up crowd, with their nimbleness in responding to boutique opportunities and niche segments which are the competitive issue here. The problem is there are so many of them that a strategic level response is neither possible nor appropriate.

But an "emergent" response, forming and norming by itself is just what is needed. Then, when a competitor becomes strategic, our own response will have grown to the point where it can be strategic as well.

Now, going from gift-giving, or workgroup level travel authorities, or team level content approval to an emergent-led response to a market threat is somewhat further than we've gone at present, and no doubt our ability to respond in this way will be an emergent behaviour in itself, something that will likely take years to develop.

What I don't doubt, though, is that emergent behaviours in enterprises – especially banks – will be one of the most powerful competitive weapons we'll have in the future. You see, everyone always says that "people are the most important resource" and that "the war for talent" will be one of the great competitive battlegrounds in the coming years. The thing about the Emergent Enterprise is that it allows all that great resource to actually make a difference.