In the past few weeks I have been in a couple of meetings with Don Tapscott where he talked about his latest research project, which focused on IT and competitive advantage. The project was just completed by a team led by Don and New Paradigm, the Toronto-based consulting firm he founded in 1993. Don has extensively studied the impact of information technology on business strategy over the years. He is an excellent speaker and prolific author, with ten books to his credit. I have known Don for many years and have followed closely what he writes and says, because he has an uncanny ability to clearly articulate what is going on at the intersection of information technology and business strategy.
Undoubtedly, IT and Competitive Advantage will be the subject of Don's eleventh book, but in the meantime this recent interview in CIO Insight is a very good summary of the study and some of its findings. "We came to the conclusion that the corporation is arguably going through the biggest architectural change in a century," he says. He sees that the Internet is giving rise to a new business model, one where the boundaries of the corporation are far more porous than in our previous, Industrial Age model. "Vertically integrated companies are unbundling into business webs, or what I call the open networked enterprise. These are companies that think and act differently, that take a new approach to doing business in a highly networked world." New Paradigm's research found ten key principles that companies must embrace to become open networked enterprises, and which are summarized in the CIO Insight interview.
Something really caught my attention in Don's recent work. While he gives great prominence to IT and the Internet in particular as the key enablers of the open networked enterprise, he places an even greater emphasis on the need for trust in all of the actions of the corporation. He sees this as a major by-product of the increasingly transparent environment of our Internet age. In fact, this was the subject of his latest book "The Naked Corporation: How the Age of Transparency Will Revolutionize Business," written with David Ticoll.
Speaking of transparency, Don says: "It's a force that changes the way you build a business. It's tough to do, but when you open yourself up as a company, a lot of good things happen. You improve collaboration, deepen loyalty among employees and customers, and decrease transaction costs with supply-chain partners. If you don't behave according to the values of integrity, you will be unable to build trust. And without trust, the open networked enterprise won't work as well."
When you think of it, the importance of trust should not come as a surprise. As we leverage the Internet to create "outside-in" enterprises and build open, integrated industries and economies, lack of trust is an even greater impediment to progress than lack of industry standards. After all, we can only make progress in defining those standards and building open, globally integrated industries if people trust each other and work together in open communities -- what we have been calling collaborative innovation. Trust is an absolutely necessary ingredient for collaborative innovation, whether among communities of scientists collaborating on advanced medical research, open communities building Grid infrastructures, or enterprises working together with all their constituencies, including employees, partners and customers.
I really think that building a culture of trust should be top of mind for any business that wants to be a leader in today's environment. In the summer of 2003, IBM employees around the world engaged in an online "ValuesJam" - a sort of internet-based town meeting -- to shape and define the values that should guide the company and its people in the years ahead. Several thousand comments were analyzed and follow-up interviews were conducted to distill the essence of what jam participants had said into three principal values to inform everything we do. "Trust and personal responsibility in all relationships." was one of the three chosen values, along with "Dedication to every client's success" and "Innovation that matters - for our company and for the world."
IBM Chairman and CEO Sam Palmisano talked about the practical importance of values and trust in a note to employees: "Clearly, leading by values is very different from some kinds of leadership demonstrated in the past by business. It is empowering, and I think that's much healthier. Rather than burden our people with excessive controls, we are trusting them to make decisions and to act based on values - values they themselves shaped. To me, it's also just common sense. In today's world, where everyone is so interconnected and interdependent, it is simply essential that we work for each other's success."
What Don Tapscott has been finding out in his marketplace research, what our people at IBM were telling us in ValuesJam, and what Sam Palmisano said in the referenced note above is that trust and values are much more than platitudes. They are essential operational ingredients to building a successful 21st century business.