About 15 years ago the CEO of the company where I worked decided that it was important that employees should learn to use the technology they were writing about. He asked my business unit to build a computer lab that employees could use at any time to play and experiment.

A large rectangular block of space was annexed in the middle of the open office and a spacious facility was constructed with spot lighting, tinted picture windows and all the latest PCs and Macs with large color monitors, color printers, a flatbed scanner and Bose speakers. There was even a NeXT machine.

The lab was christened with fanfare and highlighted in the company newsletter. It then sat unused for two years before it was quietly torn down and converted back to practical office space.

Why did the directive from the CEO of the company go unheeded? Because it was neither supported nor enforced by the managers below him. The managers – myself included – were given no incentives to make the CEO’s vision real. None of the executives used the lab themselves. Anyone who did could be observed by the entire office, as if to advertise that they had nothing else to do. The message was clear: Using the lab was equivalent to goofing off. Needless to say, people stayed away.

Unrealized Promise

That story popped into my mind last week as I was participating in a webcast with The Conference Board about internal social networks, their promise and the significant impediments that many organizations face to adopting them.

The social networking metaphor is increasingly expanding into the enterprise as a means to encourage knowledge-sharing among employees. Last month I attended Lotusphere and heard presentations by companies like 3M, Caterpillar, TD Bank North and Cemex about their successes in using Facebook-like technology behind-the-firewall.

Their stories, however, may be the exception. Recent research by InformationWeek found that less than 40% of users of internal social networks rated their usefulness as good or excellent. McKinsey reported last fall that only about half of the companies that met their definition of fully networked enterprises were able to maintain that state over time. “It appears that it is easier to lose the benefits of social technologies than to become a more networked enterprise,” McKinsey wrote.

This is despite the fact that internal social networks offer unprecedented opportunities to unlock the knowledge capital within organizations. For example, a sales rep trying to close a deal with a German company can discover an accounting employee who speaks fluent German and leverage that person’s skill to help get the business. The marketing department can discover the manufacturing employee who has outstanding Web design skills by simply posting an inquiry to the network. When employees can freely share knowledge and needs with each other, knowledge tends to bubble up in unexpected places.

Unfortunately, social networks challenge entrenched political boundaries and threaten the managers whose support is needed to make them work. They’re also incompatible with conventional organizational structures, which actually work against information sharing.

Factory Thought

Most businesses are still built upon management structures that were conceived during the Industrial Revolution to optimize operational efficiency. Job descriptions, reporting structures, departments and business units were all needed to ensure that organizations produced the necessary goods on schedule and that each participant in the process was accountable. These structures have become a burden today as challenges have shifted from process management to knowledge management.

In most companies managers are rewarded based upon the output of their group. Incentives to share resources are few; in fact, such behavior is more likely to be penalized than celebrated. The accounting manager has no reason to share the German-speaking employee with the sales rep because gains nothing from doing so and others in the department have to pick up the slack of the absent employee.

Knowledge sharing initiatives don’t work if the organization doesn’t change. Executive vision must be supported by line managers who have goals and incentives that encourage them to share their treasured resources.

Getting started isn’t that difficult. Spot bonuses, recognition in company awards programs and articles in the company newsletter can highlight desired behaviors at little cost. However, to really optimize knowledge sharing within an organization, executives need to think bigger. They need to institutionalize practices that encourage the smooth flow of information and skills across the workplace. They need to rethink the knee-jerk approach to departmentalizing everything and rewarding line managers solely on the basis of departmental performance. They need to let teams form fluidly without penalizing people who wish to contribute outside the confines of their job description. They need to let people experiment and play without fear of recrimination.

The reward is a smarter business with happier employees who are engaged in work they love. That’s a concept the architects of the Industrial Revolution never even imagined.