By connecting to the marketplace to produce a rich dialogue of perspectives and experiences, the company expects to foster additional sources of innovative ideas.

OVERVIEW: As companies look for ways to grow their business, the application of all the intellectual capital from both inside and outside the organization will play an ever increasing role. Technology is providing unparalleled opportunities for connecting the various constituencies that have a stake in the success of the enterprise, both inside and outside of the formal organization. Forming knowledge communities devoted to growing the business by sharing innovative ideas, and building on the ideas of others, is one way to bring to bear all the idea-generating capacities of the organization in the pursuit of innovative growth. It is a way that Hallmark is pursuing.

Every company is looking for ways to grow. Mergers and acquisitions are popular ways of growing the top line, and managing costs has always been an element in growing the bottom line. Ultimately, however, both measures must make room for more imaginative and inventive ways to create value for consumers. Many believe that ideas are the new capital of growth.

But, if ideas are the new capital of growth, then where are the ideas going to come from? Where are the ideas for growth in your business? The fact is, ideas are everywhere in virtually all organizations. To paraphrase Fox Mulder, of The X-Files, "The ideas are out there." The intent of this article is to relate our experience at Hallmark in reaching out, capturing and then capitalizing on those ideas.

The Nature of Knowledge

It is worth spending a moment to consider the nature of knowledge. Without boring the reader with a philosophical discussion about knowledge, or epistemology, a couple of points seem in order. Drawing on the work of Denham Grey (1) it is useful to think about knowledge the way that we understand light. Just as light can manifest itself both as a wave and a particle, knowledge can be considered from both the "objective" and "process" perspectives. Table 1 illustrates some of the implications of each perspective.

Table 1.--Knowledge Perspectives

                        "Object" Perspective    "Process" Perspective

Knowledge is ...      a tangible thing         constructed socially
It is ...             captured, stored,        through dialog
It's Value            accessed                 collaborative,
 Added is ...         as intellectual          dynamic as a means
Learning is           property                 to problem-solving
 facilitated by ...   giving people access     conversations,
Focus is ...          technology               networks of
                                               connections culture

Adapted from Denham Grey, Knowledge Ecology Network (1).

The issue is not that one of these perspectives is wrong and the other right. Both are important. The issue is that the perspectives will lead you in different directions in attempting to make use of and improve knowledge sharing. However, the "process" perspective is the one that has shaped our thinking on knowledge sharing, community building, and learning efforts. Our goal has been to try and create a dialogue and connectivity to foster the collaboration and community sufficient to enable knowledge to be collected and used to help drive business growth.

The Time Dimension

There is another useful distinction to make with regard to knowledge creation and sharing, and that is the time dimension (see Table 2). When we looked at the vast repositories of data and information that we had available to us at Hallmark, we were overwhelmed with the necessity to try to make sense of it all. Our question was, "So what do we know?" All of the research we had conducted and all of the data we had collected was all in the past. Studying it was like looking in the rear-view mirror. We were looking backward in time. We had to organize it, synthesize it and share it.

Table 2.--The Time Dimension of Knowledge

"Knowing What You Know"           "Learning As You Go"

Rear-View Mirror                  Moving Forward
Gather Content                    Focus on Business
Integrate ("What's the Story?")   Collaborative Environment
Present-Share with others         Work in Real Time

We have referred to this as, "Knowing what you know." But what about moving forward where the knowledge content doesn't yet exist in explicit form or at all? We refer to this forward-looking aspect as, "Learning as you go." This forward-looking "knowledge creation" process seemed like a missing component of creating ideas and solving business problems in a real-time, collaborative manner.

Using Knowledge to Create Value

While discussing Knowledge Management with an executive at a conference, I asked him to tell me what business he was in. He replied, "I'm in the business of selling electrons!" I was surprised by his answer; I had never thought about a power utility as being in the business of selling electrons. He further commented, "Think about it. Electrons have no value to you or to me unless I can get them to move from me to you. Until I can move them across a wire, no heat is generated, no light is available, no work can be done."

As I have pondered his observation, I have been forced to conclude that the same is true of many things in our lives. Money has no value unless it moves, or is exchanged. I concluded that the same must be true for knowledge, or what I shall call useful knowledge. The value of knowledge is established and built in direct proportion to how well we can get it to move around within our organizations. Thus, knowledge can create value within our organizations to the extent we can move it around, just like electricity. This should not be a "shocking" revelation to anybody, but its importance is often overlooked in the quest for growth.

The Nature of Communities

All of this knowledge floating around in our organizations can be collected into bundles called "knowledge domains." Knowledge domains are bodies of knowledge, both explicit and tacit, around a particular process or value-creating area of the enterprise. The problem with knowledge domains is that they more often than not do not correspond to the neat lines and boxes on organizational charts. Knowledge domains tend to cut across organizational boundaries.

How does knowledge get created, shared and used within these knowledge domains? Unless there is a way to facilitate interactions among those in the knowledge domain and across the organizational boundaries, the value of the knowledge will be sub-optimized in the organization. This is where communities come in.

A great deal has been written lately about communities in business. Distinctions such as "communities of interest" and "communities of practice" have been made to describe current collaborative activities. The question one gets asked most often is, "What's the difference between a work team and a community?" A few observations:

Within a business context, community participation can be achieved many ways. Our experience suggests that active communities are usually made up of volunteers, or invitees, instead of assigned participants. People usually volunteer to be part of a community, or will agree to participate if invited, because they are interested and passionate about a particular topic, issue or business problem. People seem naturally attracted to the notion of communities as a way to learn, participate and contribute. Many participate in communities because they believe it is a way to make a difference in the business. This is a fundamentally different motivation than being assigned to a project team or committee. We have discovered that the most effective communities are ones that are motivated by passion, although rewards do play a significant role. Therefore, HR policies and procedures need to recognize and provide rewards for those who participate in communities as a way of bringing about fundamental changes in "the way we work."

In the case of a project team or committee assignment, the effort is likely to be part of someone's objectives and thus be supported and recognized. In the case of community involvement, participants may not be recognized--no one may ever know; hence, the need for recognition that communities represent a viable way to get value-added work done throughout the enterprise.

There is a lot of debate about the role of sponsors for communities. The typical model is to have a senior executive sponsor a community effort. However, it is also desirable to have a champion. While it is possible for a sponsor to be a champion, the major difference is that sponsorship usually involves funding, and funding involves control. A champion is more likely to provide support and protection for an effort without the requirement of control. Our experience suggests that much can be accomplished with the support of a champion without the requirements or resulting control of a budgetary sponsor.

In addition to being facilitated by a champion, communities can and do exist and flourish outside the traditional command-and-control structure. There is evidence to suggest that successful knowledge-sharing initiatives advance from bottom-up successes, or through grass-root efforts, and not necessarily by executive flat (2). It is sufficient to note that communities may be, and in fact are, self-organizing, and may arise and perform value-added work without a great deal of management direction or support.

One final difference in communities and other forms of work group arrangements is that in a community, not everybody will participate. The general rule, validated by our experience, seems to be that there will be a small percentage of active participants (10-20 percent), a large group of "lurkers" (50-60 percent) who participate but don't contribute, and a small group who want to be members of the community, but never participate (20-40 percent). In work groups, or project teams, everyone is usually motivated to participate because it's in their objectives. During the course of the project, the team remains fairly constant. With communities, the membership may change over time as those who don't participate either drop out or are asked to give up their seats in the community. This makes the dynamics of teams different from the dynamics within a community.

There appear to be no formulas for communities. What works in one community may not work in another. The communities at Ford may function differently from the communities at Hewlett-Packard. Whether a community is successful or not depends on the purpose of the community, how the knowledge content is managed, and how participation is rewarded. I review these principles at the end of this article.

Rethinking Boundaries

Traditionally, there have been many boundaries that have separated the typical organization from the various stakeholders in the value chain. Organizational structures within organizations create boundaries that impede the flow of knowledge and the sharing of ideas. Hierarchy, by its very nature, tends to create boundaries.

The traditional view of marketing has been what we call "Inside-Out." That is, the enterprise develops the product "in here" and puts it "out there" in the market and hopes it sells. While consumer research is essential to this process of knowing what consumers want, the onus for new product development usually falls on the firm. This has been described as "Field of Dreams" marketing where "if you build it, they will come." With the exception of the consumer research excursions into the market "out there," there have existed boundaries between producers and consumers.

What if we could make those boundaries permeable? What if we could use technology to "reach out" and bring the constituents who are outside the walls of our enterprises inside? What if we could connect our artists, writers and researchers more closely with consumers? What if we could engage in an ongoing dialogue with consumers who are out there in the marketplace? What if we could create a community that crossed over the boundaries of the enterprise and reached out to include the marketplace? What if we engaged this community in helping us to grow the business? We have come to refer to such an effort as a "permeable membrane strategy," and we see it as a major factor in supporting innovation.

We applied this strategy when we reached out to consumers to create the Hallmark Idea Exchange. The Idea Exchange is a community of "consumer consultants." We believed that if we could engage them in an on-going dialogue about issues of importance to both Hallmark and consumers, we would gain insights into their unmet needs. We also believed that there were a lot of innovative and creative ideas out there on how to grow the business. And finally, if this really is to be a networked economy, we needed to establish some of the network connections that we would ultimately need to increase our success.

Stimulating Innovation

Knowledge communities are not only a new way of working, but they are an important support for innovation. As Thomas Koulopoulos, CEO of the Delphi Group has stated, "Innovation is a function of the rate of knowledge acquisition." Where and how does knowledge acquisition occur within organizations? The same connectivity that facilitates the formation and functioning of a community allows knowledge to flow back and forth between the members of the community. When success stories or suggested innovations are shared across a community, a richer environment is created for knowledge acquisition.

A study of significant innovations suggests that innovation occurs at the boundaries of overlapping disciplines. Many scientific breakthroughs have occurred when individuals work on problems outside their disciplines. Communities can help create a climate for innovation by stimulating interactions and connecting individuals with overlapping skills and disciplines. A mixture of perspectives is more likely to result in insightful questions being asked by participants of the community.

We believe that innovation has a strong serendipity component. Innovative ideas can occur anywhere in the organization at any time. Within a community environment where everyone's opinion and perspective counts, the cultural environment is ideal for innovative ideas to emerge. If the community can produce a rich dialogue of perspectives and experiences, the likelihood of innovative ideas emerging is increased.

Sharing of knowledge is fundamental to innovation. While this is obvious, the issue is what environment best contributes to knowledge sharing? The connectivity available to communities that can share freely across boundaries is a fundamental prerequisite for innovation to occur.

Finally, consider that the people within the community are the source of innovation. If the community can draw upon a variety of perspectives, experience and disciplines, then innovation should be a result of the ensuing collaboration.

The Innovation Formula

I would propose that the following three factors are basic in the quest for Innovation. Consider these three factors as overlying a business problem or issue that needs solving or resolution.

Connectivity + Content + Culture = Innovation/Learning

Connectivity.--This is the condition of the internal and external information networks. How well connected are people? How well connected is the value chain? How well connected are all the constituencies that contribute to increased value creation for all shareholders? This is predominately a technology infrastructure issue; however, there are also cultural issues with regard to who feels safe talking to whom, what is safe to share, etc.

Content.--This is the nature, availability and procedures for creating, owning, managing, and valuing content. Content can be both explicit and tacit. Content can be both dynamic and static. How is content created, verified, refreshed, represented, owned, and culled to make sure that the enterprise has the necessary nutrients flowing in its information infrastructure?

Culture.--This embraces the organizational and reward structures that either enhance or reward the sharing of valuable content. The primary metric here is Time. Does the culture provide for and reward time spent in knowledge creation, knowledge sharing, knowledge acquisition, and knowledge usage? Or has all of the time been engineered out of all business processes? This is often referred to as the "paradox of reengineering." Over the past 10 years, organizations have been furiously taking time and its associated costs out of business processes. Now they demand innovation for growth, but no one has the time. Things are moving too fast and everybody is stretched to the limit. So, time has become the greatest constraint on innovation and learning.

Given the formula, it would not be hard to evaluate an organization on its capacity for innovation. An assessment of each term in the model would reveal where strengths and weaknesses reside and would perhaps suggest where resources could be best applied to improve innovation. Suppose, for example, that you were to rate your enterprise on a scale of 1 to 10 on each of the three dimensions. A 1 would imply limited or nonexistent Connectivity, and a 10 would suggest that all parts of the enterprise and the value chain were connected with each other in a collaborative network. The same could be done for Content, and Culture.

If such scores were provided, how would the three factors be weighted? Our experience suggests that Content is twice as important as Connectivity, and Culture is five times more valuable than Connectivity. If this were to be true, how would that coincide with the level of attention and resources devoted to improving each? The fact is that all three areas must contribute to the innovative capacity of an organization.

The Hallmark Idea Exchange

Here is how we have taken the foregoing perspectives on knowledge, marketing and innovation, and attempted to "operationalize" them.

We wanted to reach out and connect with consumers in a way that gave us an on-going opportunity to dialog about a variety of issues. We began by recruiting a group of about 150 consumers using traditional telephone screening criteria. In addition to meeting certain demographic criteria, we asked that they be "Internet savvy," that they had been on the Internet at least six months, and that they had participated in some on-line chat or bulletin board. We also recruited them based on their interest in and willingness to share their thoughts and ideas with others.

About half the community were consumers who had made Hallmark purchases, and the rest weren't. We wanted to avoid a community that was full of Hallmark loyalists. We wanted to hear from those who were not currently our consumers. We let them know that the community was sponsored by Hallmark, and that it would be facilitated by Hallmark. Each participant signed a legal agreement concerning the intellectual property rights of the content generated by the community. A very small percentage refused to participate based on this agreement. Those who agreed to participate supplied us their email address, and we sent them the URL for the site and the initial password.

We needed a web-based collaborative environment that was simple and easy to use. We also needed expertise in how to set up and administer a community. We partnered with Communispace Corporation in Cambridge, Massachusetts. Communispace provided the software platform, the hosting of the site, and the training of the Hallmark facilitators. There was a small group of consumers who reacted to the initial site and gave us feedback on things to improve. Following the necessary modifications, the remaining consumers were recruited and invited to participate. The Community was officially launched in November 2000 (Figure 1).

[ILLUSTRATION OMITTED]

Research on communities suggests that once community membership exceeds 100-150, the sense of community cannot be maintained. Obviously, there were some who wanted us to make the community bigger. Some on-line research companies boast of having hundreds of thousands of consumers in their on-line panels. We specifically wanted to foster a sense of community and so kept the group small. The issue was neither representativeness of the sample nor sample size. Our focus was to provide a more qualitative look into consumer's lives.

Members of the Hallmark Idea Exchange access the site from their homes. We asked that they devote at least one hour a week to participating in the site. Because the site is hosted externally, we avoided security problems inside of Hallmark's firewall. The community site allows the members to participate in bulletin boards, on-line chats, and send email to one another. The Bulletin Boards (Figure 2) can be started by the Hallmark facilitator, or any member of the community. Some of the most interesting discussions have been around topics that were started by the members. This was exactly what we hoped would happen. We have learned much by observing these member-generated discussions.

[ILLUSTRATION OMITTED]

In addition, we have the ability to post surveys. Again, these can be posted by the Hallmark facilitator or by any community member. We have been intrigued by some of the surveys that have been posted by members. The topics and questions contain learnings, as well as the answers.

The site also includes a Library, or resource center, where community members can post articles, favorite web sites, or other information they think will be of interest to others in the community. There is a brief taxonomy associated with each entry such that the resource center can be searched. Also, each piece of content that is accessed gives the user the opportunity to rate the usefulness of the content. Over time, a top-ten list of resource content can be viewed by the community and Hallmark. The resource center has grown to include everything from a host of favorite recipes to books on parenting, fun ways they have celebrated events, and other content that community members find helpful.

One interesting aspect of the functionality of the software platform is the Gallery. The Gallery is where images are posted. Community members can create galleries by scanning in pictures, or posting images or photos. If they do not have a scanner, they can send their material to Communispace, and they will load it to the site. This feature has been most helpful in having consumers send us pictures of their holiday decorations, or of their kids, or pictures that represent various topics to them. In addition, Hallmark has the ability to post pictures of product concepts, e-card designs, or ad-slicks to get consumer feedback on. The Community has not proven shy in telling us exactly what they think, which is what we had hoped.

Experience to Date

The initial community launched in late 2000, took off like a rocket. Consumers were excited and delighted to participate. It seems that the opportunity touched a need among consumers to "have an active voice" with a major consumer product company. Initial participation has exceeded all our expectations. We had developed an elaborate incentive scheme whereby members would earn "points" for various contributions to the site. These points could then be redeemed for various incentives. What we discovered is that the participating members would have contributed without any form of incentive. They were that excited to have the opportunity to provide feedback, and to share ideas and experiences with others in the community. The initial community has been so successful, that in April and May of 2001, two additional communities were launched, one focused on grandparents and one on Hispanic women.

Our experience with participation has confirmed that not every member invited to participate will do so--even with incentives. The most active participation is the result of a passion to contribute and participate, not a particular incentive scheme. However, there will always be some who, for one reason or another, accept the invitation but never come to the party. Thus, we have instituted an on-going recruiting activity where periodically nonparticipating members are invited to "give up their seat" in the community, and new members are invited to join. It is important to note that the facilitator makes telephone contact with the participants, as well as with those who are not participating. This has made the members of the community feel like they are connected to something and someone real. Thus, it is not a surprise when non-participating members are contacted, and we have had no problems uninviting members to participate.

These conversations have given us an opportunity to conduct "exit interviews" with members and learn their reasons for non-participation. The number one reason, as we suspected, was that they just don't have time, emphasizing the importance of time in innovative activities.

Another frequent mention for non-participation has been that the site wasn't what they had envisioned it would be. This finding led us to engage the active community members in creating a statement that accurately described the experience of participating in the community. This user-generated statement has been used very effectively in subsequent recruiting efforts.

While the membership of each community has been increased to 200, participation levels vary. A core group seems to develop of around 15-20 percent of the membership (consistent with research previously mentioned). However, for surveys, we may get 40-50 percent responses. While we still don't pass these results off as statistically significant, it does seem to indicate that there are some who will respond if they don't have to write anything. So, in subsequent recruiting, we have tried to understand how comfortable they feel expressing themselves.

Another interesting dynamic has been what happens when new members are invited into the community where existing members have already established a relationship with one another. One early experience involved a new member posting a bulletin board topic that the community had already addressed. A couple of existing members responded a little unkindly to the new posting. This is where facilitation is essential. The facilitator intervened immediately and informed the new member where the bulletin boards were archived. She also telephoned the new member, making a personal contact. She then called the members who had been unfriendly in their replies and asked them to refrain. The facilitator then sent a message to the entire community asking them to welcome the new members and to volunteer to be a "mentor" to each one. Thus, a "buddy system" was started where each new member was assigned a "buddy" who personally guided their introduction into the community and showed them around. Now we have no problems with adding new members. As a matter of fact, the community openly welcomes and acknowledges the new perspectives and energy that new members bring.

As we gain experience with these consumer communities, we have been learning how to use them. What is the community input most useful for, and what is it not useful for? Obviously, the small sample size does not make the community suitable for large-scale projects where projectability is an essential outcome. We have concluded that the community is best at generating "insights." In addition, the community provides very quick turnaround. We can hear from 30-40 consumers on a particular issue in 48 hours.

We have also discovered that the community is very helpful in informing our thinking on things ranging from high-level strategic issues to advertising messages. The community has helped us identify major strategic opportunities that had been overlooked. The community came up with a very intriguing suggestion based on a discussion that was generated entirely by the community, with no input from the facilitator. As a matter of fact, the communities are generating "content" faster than we can analyze it. This is a new source of "data" that we are just learning how to analyze. We are encouraged that we have tapped into something fundamental to any quest for innovative ideas with which to grow the business.

Thus, these communities represent an attempt to treat knowledge creation as a process by establishing an on-going dialogue and collaborative environment with this important constituency of our business. The communities help us tap into "out there" in our product development process and invite the consumers to be participants with us in growing the business. Finally, the communities create an environment for innovation by providing the connectivity, creating the content, and establishing a culture of trust and sharing necessary for innovation to flourish. It is our first attempt to bring all of these various concepts together in a real application environment focused on real work and value creation.

Lessons Learned

A facilitator is essential to the success of a community such as this. Communities need to have energy put into them to keep them alive, viable and active. We devoted one full-time person to manage and facilitate the community from inside Hallmark. This full-time headcount was essential to the success of the community.

Trust is an essential element in the success of a community. There will only be sharing of knowledge if there is a high degree of trust among the members of the community.

Knowledge sharing may need to be incented to get it started. There are numerous examples of this that I am aware of. There appears to be a content threshold. Community members are more likely to participate and contribute if they can find value in the community's content. Thus, some seeding of content may be necessary when a community first starts up. When we started the first Idea Exchange community, we seeded the resource center with some interesting material, put some photos in the Gallery, and started a half-dozen topics on the Bulletin Board. As members begin to participate, the content grows and becomes more valuable over time. As previously mentioned, the members of the Idea Exchange have told us that they would have participated and contributed without incentives, so great was their excitement and passion over being "consumer consultants" to Hallmark. This kind of enthusiasm may not exist in every attempt to build a community.

Having a strong sense of purpose is essential. A community must have a strong sense of why it exists in the first place. Whether altruistic, or business-results-driven, the purpose must be clearly communicated and bought into by all the community members. This has become clearer over time as some consumers dropped out of the community because they were not aligned with the purpose.

What's Next?

Internally, learning and development may best be accomplished within communities organized around knowledge domains. These communities would not only have access to traditional training content and success stories, but, perhaps more important, have access to subject matter experts. These communities would be where knowledge workers go to get the knowledge they need in real time to solve problems they are working on.

Internal innovation efforts may be greatly enhanced by creating internal communities of individuals who are interested in and skilled at (both are important) coming up with ideas. Or, if there are pockets of innovative individuals, connecting those pockets together into internal innovation communities may prove fruitful. Just as the external consumer communities give us access to ideas that are "out there," so can internal communities prove effective in harvesting the ideas that are "inside" the organization.

Another possibility is to connect all the constituents in the supply chain to create a community focused on more efficiently and effectively creating value through the supply chain process.

If, as this writer believes, communities are how work will get done in the future, and how learning and development will take place in a natural environment for innovation, then organizational structures, compensation and other aspects of the human resources domain will clearly need to be adjusted to reflect these new realities.

References

(1.) Grey, Denham. Grey Matter. Inc., Indianapolis, Indiana. http:// www.voght.com/cgi-bin/pywiki?GreyMatter

(2.) Delio, Michelle. "Grass Roots are Greener." Knowledge Management February 2000, pp. 47-50.

Thomas Brailsford is manager of knowledge leadership at Hallmark Cards, Inc., in Kansas City, Missouri. Hallmark's Knowledge Leadership Team focuses on creating "knowledge products," making that knowledge and information quickly and easily available to business decision makers, and stimulating changes in the way workers relate and share knowledge in an effort to help Hallmark become a learning organization. Brailsford holds both graduate and undergraduate degrees in statistics and mathematics. He is a member of the Conference Board Council on Knowledge Management and Learning Organizations (1999 chairman), and a member of the Advisory Board of the Mind of the Market Lab at Harvard Business School. tbrail@hallmark.com