Managing Information in the Enterprise

Hi everyone. I found an interesting Harvard Business Review blog today on Apple and thought it appropriate given our upcoming discussion. The author uses the iPad as an example to talk about some of the paradoxes of Apple’s business model. Enjoy! http://blogs.hbr.org/haque/2010/04/apples_strategic_iparadox.html

When Katzenbach Partners implemented HUB+, the firm’s new knowledge management system, it used a number of strategies that focused on both technology and human resources.  The management consulting company’s leaders saw the intersection of these two elements as instrumental to the success of HUB+ and the firm.

In terms of technology, the company planned to expand its HUB system, an intranet that Katzenbach created.  HUB enabled Katzenbach’s consultants to learn about the company’s projects and key areas such as staffing and finances.  This may have helped the firm with implementation, since employees were already familiar with the intranet.  The second key to the new system was Enterprise 2.0, the use of Web 2.0 tools in businesses.  Specifically, Katzenbach’s knowledge management system would incorporate a tagging feature that would enable consultants to identify projects based on keywords that the company’s leaders anticipated would foster communication, collaboration and knowledge sharing.  This was critical as the company planned to expand the number of offices from four to eight or nine, including international locations, and increase employees by 233% from 150 workers to 500.

While the mechanics of knowledge management were critical, the firm’s careful management of staff was even more essential to its success.  The system’s success would be measured by such factors as whether employees use HUB+ and tag their documents, as well as other documents.  In order to accomplish this, HUB+ needed to provide a sense of ownership and be user-friendly.  Katzenbach attempted this by establishing both formal and informal structures.  The formal structure provided a company-wide taxonomy of tags that all users would learn and use to label documents, which would prevent the system from being disorganized.  The informal nature provided the sense of ownership, enabling employees to add tags that would help them to categorize documents and conduct effective searches.  A key challenge for the firm is whether the formal and informal structures can truly co-exist, or if it will create confusion and chaos.  In terms of a user-friendly system, HUB+ was designed to only take 30 seconds to tag a document.  The screen shots in the case study also show an easy-to-read list of filters for different project categories.  The list of resources, meanwhile, displays tags or projects that have been used the most, by font size.  This is certainly creative, but could frustrate or confuse some users.

The human resources side also included a slow, natural implementation.  Some critics may question whether Katzenbach should have piloted the program to first work out any problems.  However, the company felt the slow roll-out would enable employees to ease into HUB+ and not feel forced to learn a new system.  In addition, the company tried to be fun.  For example, they organized social events and games around the system roll-out, such as tagging parties.  This helped make the implementation seem less onerous for the firm’s employees.

A system like HUB+ has great potential for companies, especially since the case cites only 12% of senior executives are satisfied with how their employees share knowledge within the firm.  However, companies need to be careful, because the case study also notes that 50%-70% of knowledge management systems fail.  In order to avoid this trend, it seems evident that companies must be sure to focus on getting staff buy-in and making the system user-friendly, in addition to acquiring good technology.  It will be interesting to see if Katzenbach Partners is successful with its knowledge management system.

When Amazon launched the Kindle electronic reader in 2007, the company introduced a product that would disrupt a diverse range of industries.  These disruptions have further elevated Amazon’s ability to compete and helped it to grow from an online book and retail store to a competitor in entertainment, publishing and the distribution of knowledge.  The major industry disrupted by Amazon is publishing, including books and newspapers.  The Kindle is lighter than most books and can contain an estimated 200 books.  In addition, the built-in wireless feature enables one to buy a book anywhere. Amazon also wisely priced it compared to other books and even e-readers. For example, the book The Lucky One is listed at $24.99 for hardcover, $14.99 for hardcover for Barnes and Noble members, and is only $9.99 as a download for the Kindle.  Of the seven price items listed in the top part of Exhibit 3, the Kindle price is the cheapest by $2.00 from its nearest competitor.  In terms of newspapers, however, Amazon is not the cheapest.  Although significantly less expensive than buying it every day on the newsstand, a subscription on WSJ.com is still cheaper by $20-$30, depending on the package on purchases.  However, the Kindle also does not have the mess and clutter of newspapers and is more attractive for those who value recycling.

The Kindle has also disrupted the book store itself.  At $9.99 a book, the Kindle provides strong competition for new releases.  It also reduces a company’s need to build or rent stores, which saves significant funds for other critical areas.  Barnes and Noble, for example, has 750 stores that average 26,000 square feet and have long-term leases.  A third industry that Amazon and the Kindle challenged is the electronic devices industry.  Sony has spent decades as a leader in producing stereo equipment, DVD players and other devices.  They tried to take the lead in the electronic book market with the Sony Reader, but Amazon’s expertise and its relationships with the publishing industries gave it a quick advantage.  The case study notes, for example, that the Kindle occupied 60% of electronic reader sales within a few months of its release, compared to 40% for Sony. 

Amazon is currently the leader in the electronic reader industry, but it already faces stiff competition.  Apple’s iPad, which was launched after the case study, has an e-reading system that appears more attractive than the Kindle.  For example, the iPad is in color, which makes pictures and graphs more interesting than the Kindle’s standard black and white photos and charts, which can be hard to enlarge and see at times.  You can also “turn” the pages by touching the iPad screen.  In addition, it is a multi-purpose device and it has wireless capability.  Apple has learned a lot from its experiences negotiating with music companies for iTunes and will likely offer competitive deals with publishers for the rights to sell electronic books.  The Kindle could also face a threat from Google given its efforts to scan all books; however, the company will need to address the copyright infringement issues it faces.

The Kindle is a great example of how a company can use technology as a tool to expand its current business and still remain in line with its core mission to sell books.  Their use of proprietary formatting for the electronic books also adds an element of exclusivity.  This is similar to Apple, which uses proprietary formatting for iTunes and clearly has not been hindered by the maneuver.  It is also critical for companies like Amazon to not let the technology overtake the mission; companies always need to evolve.  Amazon’s expertise with technology, as demonstrated by the Kindle and Amazon Web Services, has enabled it to strategically use technology to enhance its business.