Memo to the CEO: Why we need an annual report for technology

This lead into an article in The McKinsey Quarterly caught my attention:

“Memo to the CEO: Why we need an annual report for technology

Although most companies realize that business units and the technology organization must be much more integrated, many don’t know how to make this happen. Business leaders sometimes have only a vague sense of technology’s value, while technology executives often fail to address issues in terms that businesspeople find meaningful. In a hypothetical memo to a CEO, a chief technology officer proposes a solution: an annual report for technology, analogous to the annual report for investors and the broader market.”

The article goes on to succinctly capture a point that I think is true for IT and, as I have been trying to point out, even more of an issue for those evangelizing the adoption of social media and other manifestations of the broadband networked era we are moving into …

“The basic problem is a lack of shared understanding. Our business unit leaders … just see bits and pieces and don’t seem to grasp the interdependencies. It’s understandable that they get upset when things go wrong, but it’s less understandable that they hesitate to invest time and energy to sponsor solutions. Our technology leaders, for their part, often fail to address issues in ways that businesspeople find meaningful and therefore lack credibility … “

Well, the idea of an “annual report” is dead.  We would be looking for something that can be updated frequently or reported in real time.  And, despite a good effort to tackle a major problem, McKinsey’s language still highlights the chasm in thinking.  Taking a org chart and process approach to management instead of a network view leads to compartmentalization instead of integration.  Increasingly, the “value the technology organization delivers” is not somehow distinct from the value that the entire organization is delivering.

In any event, their point is spot on.  There is a need for tighter integration between day to day business and the technology that is already available.

As we have completed the Design Phase proposal of a research and development program that will test Social Capital Value Add in three to five Fortune 100 companies, I have had a chance to talk in depth with others for the first time about some of the far reaching implications of the method.

Social Capital Value Add does not try to measure all of the social capital of a company.  It zeros in on this new form of scaled up social capital that is attributable to broadband empowered individuals.  In this way, it is a leading indicator of how corporations are integrating broadband and the associated applications into their operations to postion themselves to maintain stable earnings and achieve breakthroughs in productivity and innovation.

Where will co-creation lead us?

I have been seeking some constructive feedback on “Introducing Social Capital Value Add” at a leading forum “Serving the Quantitative Finance Community”.

There I have learned that I am “not a kook” and that “Your writing sucks. In a world of people with no incentive to tell the truth, I am giving you the gift of honesty.”

Tough crowd, eh?

Golly gee whiz, I guess that the quant finance set hasn’t heard that its time to come together Web 2.0 style?

I am still hopeful that the discussion there will improve “Introducing Social Capital Value Add”.

UPDATE, Aug. 2008: The forum that I am referring to is at www.wilmott.com and since then Paul Wilmott has invited me to write something to introduce SCVA in his small but influential magazine that serves the quantitative finance community.  I don’t know how that is going to work out yet, but it is encouraging.

One post has been helpful and noted “This manifesto only speaks about demand-side social capital. A more complete theory would estimate internal social capital, supply-side social capital, and government social capital.”

Most of the examples that I use in the paper focus on “demand-side social capital” but I do point out that the change in media paradigm from broadcast to the Individual as Medium has implications throughout the corporate ecosystem:

click for link to slides

click for link to slides

A link showed up in my inbox a few days ago through an investment banker friend (investment bankers are so much nicer than those quant finance folks!) and the McKinsey quarterly newsletter that provides some good examples of these effects playing out in product development, etc.

It is entitled: Where will co-creation lead us?

Check it out here: http://www.mckinseyquarterly.com/Information_Technology/Networking/next_step_in_open_innovation_2155

Add to FacebookAdd to NewsvineAdd to DiggAdd to Del.icio.usAdd to StumbleuponAdd to RedditAdd to BlinklistAdd to Ma.gnoliaAdd to TechnoratiAdd to Furl