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Reliance is key to enterprise performance

Abstract from an opening Keynote by Jean-Yves Prax at KM Forum 2001, on Sept 25th 2001 (Palais des Congrès, Paris, France).

Reliance, or trust, is key to enterprise performance, especially when you talk about teams that produce mainly immaterial goods such as services. We all know that, based on our own experience as managers. However, the mechanisms that create and nurture trust are difficult to understand and to control. How do we build and maintain trust within an organization ? What creates it ?

Analyzing reliance requires dealing with one of the most critical aspect of a community.

What is reliance ?

Lots of books have been written on this topic, and theres a variety of definitions and methods :

- One would say that reliance can be analyze from a rational perspective, like a choice dictated by reason. It can be the effort versus benefit ratio for any individual contribution to a global operation. This can be assessed, as a trust rate.

- Another approach is to define a certified trust level with norms and specifications : we all agree to rely on a Medicine doctor for our health and our lives, not because we know him, but because he owns a recognized diploma. And we do that without checking our MDs diploma. On the other hand, were not easily willing to give up our car keys to a car wash employee because we have no certification to rely on. We act the same way with our purchasing. We trust brands we know and recognize as quality certifications.

- We often face emotion or intuition based reliance. This very irrational mechanism is beyond analysis. We may grant or deny some benefit to someone only because we feel we can trust him, or that we cannot.

- Reliance can also be considered from a social perspective, as the expression of a shared ethic core, including common duties and moral values. Although we see ones failure, we may consider that one has done everything he could to succeed. This is exactly the kind of situation where social based reliance is at play.

A rational perspective

Reliance, as a rational perspective, is described as an expectation that somebody will act like it is expected in a given situation. In this approach, the individual actions are foreseeable, they matches with the objectives. As a result, their rationality is emphasized by their success and their usefulness to the global objective. The individual is near to be the one youre proud to have bet on. We all see this kind of trust at play in enterprise environments. Although this approach has some benefits, it also has significant limits.

- One of the key benefits of a rationalized reliance is that theres no confusion between trust and other human relations. You buy a book on rather not because you have some feelings to this company but only because he trusts the online payment and delivery system. We all have experienced this. We feel impressed by the professional skills of an individual, we trust him, although were definitely not ready to spend Sunday fishing with him.

- The limit is the forecast of the expected rational behavior. Faced a complex environment, uncertainty, constraints, or difficult choices, an individual may not react the way we expect, missing the desired result.

- In economy, rational theory states that individual choices are based on utility assessments such as :

- if one prefers A to B and B to C, then one would prefer A to C. With this model, each decision is motivated thru a benefit/cost assessment, and a risk analysis. But in the real life, pure rationality simply does not exist ! When choosing between several options, human beings do not behave like Bayesian laws state :

- individuals rate too heavily the last piece of information theyve got ;

- they are not sensitive to the scale of a sample. In fact, we often see an opposite posture [1],

- they tends to pay attention first to the more obvious facts and less to the hidden fundamentals.

Social perspective says that no individual is evaluated by its productivity but also as a social player. That means that anyone can match the forecast or miss it, but he has to comply with the moral obligations and codes of the given group.

Limiting the scope of reliance to the operational field

As an all, the field investigation is extended far beyond corporate analysis capabilities. However, it can be reduced if we accept the hypothesis that reliance can be limited to a given operational field. In fact, this is something we do everyday, were limiting the scope of trust. When we decide to trust someone, we do not trust her or him for everything, but in a given situation which defines the operational field. This field dictates a set of criteria, or expected skills and behavior. For instance, we do not expect the same from the next COO of a worldwide company and from a mountain guide.

We now entering our subject, that is, analyzing trust in a corporate environment. Although we understand that this limit is not absolute, we want to focus on collective action within a corporate community. It includes several aspects such as team work, knowledge sharing, competencies gathering, collective decision processes&

Providing the fact that we keep in mind the difference between reliance and friendship, we understand that reliance between team members is strongly related to competencies. It means that each team member trusts the others for their ability to perform some tasks or to provide some advices.

This leads us to a single question : how to create an environment that nurtures mutual trust between team members ?

Building reliance

Analyzing competency management [2], Wittorksi describe the reliance creation process within a given group. Wittorski distinguish 5 key building blocks :

- Knowledge component : it is a mix of implicit theories (paradigms) and cognitive figures, which can be divided in two categories, one encompass collective knowledge and its understanding schemas, while the other refers to how knowledge help one to assess a given situation.

- Persona component : this is a key driver for competency. It covers individual self esteem, individual implication in a collective action, and motivation. We understand easily how this key driver is related to the social environment. The group acceptance or denial affects directly individual self esteem, nurturing or destroying individual motivation (see below Pygmalion effect).

- Social component : it describes the groups recognition of the actions of an individual, and how each group member values the group recognition. This emphasizes the fact that the social component is key to an individual when he has to choose what knowledge or competency can be displayed. The knowledge strategy is not that much about what we know but about how to communicate about what we know.

- Cultural component : it indicates how the social culture can influence competencies.

- Practice component : it refers to the processes that are to be evaluated by the group through their results. In other words, this is the obvious part of competency.

Pygmalion effect

Our approach is a mix of rational, social and personal aspects of trust. It encompasses all the building blocks that enable the collaboration between team members, based on mutual respect, integrity, personal relationships and collaboration reliability. These five components are part of the individuals self esteem, and self image as the others see it. The group acts like a magnification factor. This effect is called Pygmalion effect by psychologists : if an individual A predicts the behavior of an individual B, this prediction comes to reality through a subtle process. The individual B tends to adapt its own behavior to the unspoken expectations of individual A.

At a group level, such a mechanism amplifies itself : if individual A emits a negative conclusion on B, B is loosing self esteem to an obvious point that amplifies individual As initial thought [3].

Reliance and knowledge sharing

Working on knowledge management projects, weve discussed with lots of professionals, assessing what encourage, or discourage knowledge sharing in a working group. Most of them have spontaneously emphasized trust as primary criteria of success. They also defined what creates this trust.

1. Reciprocity (win-win situation)
The individual agree to share his ideas, his creativity and his experience with the group only because he expect that other group members will do the same in return. Each team member pays attention to participate as equal to the achievement of the common performance goal. This self control mechanism excludes clandestine like behaviors, and people willing to benefit from the group but not to contribute to its works.

2. Relationship (identity, recognition)
The individual agrees to share a good idea with his enterprise, and he is proud to see it becoming a major innovation. But he will not accept to be deprived from the property of this idea to the benefits of his manager or team leader. This behavior emphasizes a strong need that individual contribution is namely recognized at the group level.

3. Feed-back
Mistake is the first way you learn, providing the fact that you have a feed-back on it.

Kids learn with a repeating process : they try, they do mistakes, and they see the consequences of it :

- try : organization should encourage initiatives, search and try strategies to help develop autonomy and creativity. A baby would never learn to walk if he feared to be ridiculous ?

- Mistakes : it should be explained so it helps everyone to avoid it later on

- Consequences : this is the main point. The group ability to learn is measured by its ability to deliver to its individual feedbacks on their actions, so that everyone can immediately assess the effectiveness of its contribution to the group work. This function is generally difficult to handle in very large organizations : the individual can do everything, effective or not, he has no feedback from the organization, no means to evaluate how he contributes to the common goals, no way to assess its own progresses.

Within a group, mistakes should be accepted. It is a matter of trust. And it indicates the effectiveness of the group. But on the other hand, no one should accept to let mistakes hidden, unspoken.

4. Meaning (common language and core values) Personal knowledge can only be shared through syntax or a code that has been adopted by the social group you want to exchange with. This code schema can be verbal or not, made of symbols or not, technical or not, political or not. Whatever it is, this language is part of the groups collective memory. This language provides to each groups members some of the building blocks he needs for its personal development, as well as it contributes to enforce the group core values and rules. Simultaneously, this language is an individual asset, a communication tool, and community building block.

The main issue there is not about translation. Two individual may share point of views easily when they establish a cooperation process, which is made of active listening, interest, semantic adaptation, feed-back, questions and answers reformulations& A word, as a symbol of a group, may belong to a linguistic and semantic community ; the meaning of the work is purely individual and directly related to the individual experience, and to a definite cognitive environment.

Incremental building of Trust

Experts analysis and years of field experience leads to this first conclusion : reliance building is a very incremental process. In sales related activities, it is said that it requires 10 years for a customer to trust you, and 10 minutes only to loose it all.

This notion is detailed with Tuckman model which distinguishes four chronological and ontological states in group development : creation, confusion, normalization, performance [4].

Trust must be created and maintained ; although it is difficult to define a standardized process, it is possible to distinguish five states of trust : instantaneous, calculated, predictive, resulting, long hall.

Instantaneous reliance
When meeting someone for the first time, anyone gives an initial trust credit ; its an instantaneous process but with a limited effect. It has no foundation and no reason. This trust is weak and always under surveillance ; this kind of trust enables individuals entering project group to work together on a temporary basis, for making a movie, flying a commercial plane or setting up a medical emergency response team.

This instantaneous reliance is based on two elements :

- each individual assess that other members have been selected based on their reliability, their professional skills and their value to the project. Everyone relies on a certificating third party that often plays a key role in certain situations.

- Each individual is expecting reciprocity : if you do not trust, no one will trust you, and no relationship can be established.

Instantaneous trust based teams can be set up very rapidly and reach a significant level of performance without a long maturation process.

Calculated reliance
This state occurs when all group members expect some individual benefit from contributing to the group. The reliance is then linked to a well defined collaborative task execution model. For instance, a customer may trust a house building company as long as some control mechanisms and penalties exists that prevent execution drifts and unwanted behaviors.

A way to build such a calculated trust is to define rules, to identify responsibilities and to set up reporting mechanisms.

Predictive reliance
In a predictive process, trust is mainly based on individuals who know each other well. This trust is based on the knowledge of past behaviors, and the assessment that can be made from them. When team members do not share common experience, they usually require training sessions, meetings and other activities leading them to a better understanding.

Results based reliance
In that case, reliance is based on performance. At the beginning, the trust is based on passed achievements. It will be further validated when an individual will succeed to its mission, but it will be annihilated if the individual fails to fulfill its task. This trust mechanism is key amongst virtual community members, as individuals do not know each other and cannot see how the others do their job. They only can assess the result, its quality, or the delivery delay.

Extensive reliance
The extensive reliance encompass the objectives, the goals and the core values of group members

Reliance within virtual communities

The abstract below is the result of an experiment with four groups of students. They had to work together remotely, using groupware and video conference tools.

This experiment has shown that trust is key criteria to reach a high quality collaborative work. It also emphasized that using software tools could lead to significant difficulties, eventually destroying the group. Here are some of these dangerous behaviors :

- to irritate oneself and abandon oneself in a long and useless comments on the group activity ;
- ask or assign unrealistic tasks ;
- ignore others requests ; leave emails unanswered ;
- criticize other team members ;
- not being committed

We all understand that these behaviors do not nurture trust. However, it can occur more easily in an online environment, without face to face interactions. When two individuals meets face to face, a lot of small scale conflicts are solved with discussion, exchanging point of views. An online environment may facilitate group crisis because of misunderstanding.

Trust building/disaggregating factors within a group

Reliance is nurtured by :

+ : frequent communication : members are kept up to date with information and are able to share their understanding of it.

- : insufficient communication, ideas are not shared.

+ : information messages respect some rules, categories and formats, enabling group members to optimize their time
- : Members lack of reactivity ; urgent messages remain unanswered.

+ : Tasks, roles and responsibilities are clearly defined, each team member knows is own objectives
- : Objectives are not yet defined.

+ : Members hold to the group working schedule
- : Delivery or project delays are unset.

+ : A positive group spirit provide to each team member with the encouragement and feed-backs he needs.

- : Theres a negative group spirit, no feed-back or an always negative one.

+ : Team members are supporting each others
- : Team members always try to escape their duties to the group.

+ : Individual expectations and group objectives are clearly identified
- : Individual expectations and group objectives are not defined

+ : Every group member is equally committed
- : No one is really committed

+ : Group performance is high
- : Group performance is low

Depending on these behavior, the group performance is high or low. This performance level itself nurture the motivation of the group members to further collaborate to the group. This is a cycling effect.

The trust cycle

Based on these elements, we can identify a cumulative process, spiral like, that can be either positive or negative :

- At the beginning, each player contributes to the group with a limited but instantaneous reliance ;

- based on other group members contribution and behavior, based on the positive feedback and, eventually, the group performance, the player will be encouraged to further collaborate.

On the other hand, we can imagine easily that a counter productive process arise when a groups social dimension has a negative effect on individual competency and will, and leads to individual under commitment. In other words, if a skilled individual is facing a failing organization, the organization always wins.

Individual competency, the 6th factor in a row

A recent US survey has demonstrated that individual competency is only the 6th factor of group performance ; product specifications, organization schemas, feed-backs quality, all play a more significant role in global efficiency.

- Detailed specifications (products sheets, standards )

- organization support (resources definition, priorities, processes, duties)

- Personal benefits (recognition within the group)

- organization feedback (actions result assessment)

- Individual behavior (physical, mental, emotional)

- Individual knowledge and competencies

This tends to demonstrate that, although training programs are necessary, they can be very costly if they are not integrated in a global approach, including not only the review of the organization as a all (team work processes, management models), but also a renewed feed-back and recognition system, and the building of new models for tasks, processes, competencies, and products specifications.

Team work rules

Speaking of virtual teams, we believe that several protocols and rules help to establish trust at a sufficient level to execute efficiently a group task with remote team members. These rules are classified into five categories

Characteristics : honesty, ethic, loyalty, respect, reliability and commitment
Behaviors : being honest, committed, reactive, a good and a loyal person, being reliable

Characteristics : knowledge, know-how, individual and group competencies

Behaviors : being able to use successfully group knowledge and competencies, ability to share experiences and to communicate on best practices

characteristics : Will to share ideas and information with the other, open-minded, ability to learn from its own mistakes

Behaviors : inform the other, share spontaneously ideas and information, being curious from the others thoughts and opinions, give a positive feed-back, recognize its own mistakes and analyze it.

characteristics : empathy, conscientious being, goodwill, generosity
Behaviors : being ready to help, courteous, having consideration for the others, being friendly, enjoying team work

characteristics : potential benefit, coherence, evaluation
Behaviors : opened to expectations, seeking for consensus or compromises, committed to stay in line with expectations

It is key to understand that these various aspects do not have the same level of influence in the global cumulative process of building trust within a group :

- some of theses are minors and will be corrected down the road : if someone forgets to share an information, the group is still able to ask for it. This kind of tuning process cannot be anticipated.

- Some factors depend directly on individuals abilities : not anyone has the same charisma, however, the group effect still occur.

- Some factors are essential and crippling : they are all related to loyalty and integrity. Betrayal is always seen by the group as crippling, and sometimes lethal, to the trust.

Conclusion : the role of reliance in maintaining group knowledge

Now that we understand how emotional we are in establishing group like relationships, we see easily that a collective representation building process is always preceded by a melting phase, where every group members representations are shared, evaluated and negotiated. This very human process requires therefore a high level of empathy and a strong reliance, and, to a lesser extent analysis capabilities.

We now see clearly that building a knowledge system is not that much setting up information management architecture, but creating a collective and shared knowledge. This is where Knowledge Management is, above all other aspects, a very human challenge.

From Knowledge Management to Knowledge enabling
What weve learn here is that because knowledge is a very human and a very individual process, it is not manageable as other enterprises assets are. Knowledge is not an object. We all say that we manage Knowledge but we do not. This is a language misconception. We can manage the environment that help collective knowledge to arise, to be formalized, to be exchanged and validated but exactly thats how far we can go. What we do here is knowledge enabling.

That said, the scope of knowledge enabling is almost clearly defined : managing collective knowledge, our job is to deal with flows. What we have to do is to manage knowledge transfers from its different states : unspoken, informal, formal, individual, collective, and so on. All the tools we have in Knowledge Management, including socialization tools, formalization, communication or training methods, should be solely focused on a single goal, optimizing these very critical transition flows.

[1] It is often said that « one individual found dead is a tragedy, 10 is an accident, a thousand dead is statistic »

[2] R. Wittorski, Making competency, Education permanente , n°135, 1998-2

[3] The Pygmalion effect is widely at play at college. Based on the 5 first minutes in the class, the teacher can stimulate a student for the all year or put literally him off.

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