When I was young and even more naive than I am today, I used to believe that if you did good work it would get recognition. If you did something that made a contribution and were able to prove it with hard numbers, rational people would inevitably recognize your success.
I was therefore somewhat surprised when I found that most of the great knowledge management programs that I observed in organizations were eventually closed down, sidelined or shifted to the periphery. The managements of these organizations didn’t seem to appreciate great KM accomplishments right in front of their noses.
I am not talking here about badly managed KM programs, such as programs with unclear goals, or no communities of practice, or an excessive reliance on IT to address human problems. I am talking about well-run internationally-recognized KM programs.
I saw the phenomenon at BP. I saw it at IBM. I saw it at Ernst & Young. I saw it at Hewlett Packard. I watched it happen to a certain extent after I left the World Bank. These were world-class programs, with demonstrated results that were not understood appreciated by the management. In due course, they were closed down or undermined or sidelined. Why?
These great KM programs would flourish for a while, and even receive some internal recognition. But then something would happen. For instance, there would be a merger: in the name of rationalization, the KM program would be declared a success and the leadership unit of the KM program would be gutted. Or there would be a cost-cutting drive, and the KM program would be one of the sacrifices. Or the organization would decide to appoint a leader of the knowledge program who was docile and didn’t rock the boat, so that the death became a long drawn-out affair.
Why, I asked myself, did managements act this way? Why didn’t they recognize that knowledge was the very lifeblood of these organizations? Why didn’t they examine the metrics of success? Why did they take such thoughtless decisions, almost by accident, and kill something of central importance to their organization’s future?
It’s not just knowledge management!
One clue came from the recognition that the phenomenon wasn’t limited to knowledge management.
I noticed the same phenomenon in lean manufacturing, which was invented at Toyota in the 1950s and introduced into the USA in the 1980s. A collaborative review of the phenomenon was conducted and reported in 1990 in the landmark book, The Machine That Changed The World, by James Womack, Daniel Jones, and Daniel Roos. In the study, the top-rated plant—globally— in terms of quality and productivity wasn't a Japanese plant. It was a Ford plant in Hermosillo, Mexico. So you would think that Ford would be so proud and grateful that it would celebrate and replicate the success elsewhere. Just the opposite happened. The Hermosillo plant was doing things “differently” from the rest of Ford and so it was “brought back into line”. In effect, the innovation was killed.
Intrepid managers didn’t give up. The Hermosillo experience was emulated in Ford in the 1990s at the Romeo engine plant in Michigan. But Ford eventually forced the successful start-up plant manager to resign and replaced him with a succession of more conservative appointments.
So even when an oasis of excellence and innovation is established within an organization being run on traditional management lines, the experience doesn’t take root and replicate throughout the organization because the setting isn’t congenial. The fundamental assumptions, attitudes and values are at odds with those of traditional management.
What are the values and attitudes that kill knowledge management?
What are these fundamental assumptions, attitudes and values of traditional management, that tend to kill all creative and innovative activities in a firm? They are fairly well-known. They are taught in business schools. They are present in management textbooks. They are heard as a regular drum-beat in that Vatican of management: Harvard Business Review.
The first assumption is that the standard practices of traditional management—hierarchy, command-and-control, tightly planned work, competition through economies of scale and cost reduction, impersonal communications—are a success. Indeed, managerial discourse in these firms proceeds as though these practices reflect timeless truths of the universe, so obvious that there is scarcely any need to articulate them, let alone re-examine them. There is an inability to admit that these managerial practices arose as a response to a specific set of social and economic conditions. Now that those conditions have changed, the validity of the principles is a serious issue.
The second plank is an unwillingness to take seriously any evidence to the contrary. Lang Davison, a co-author of The Power of Pull (2010) was telling me recently about the workshops that were run by the Deloitte’s Center for the Edge with their startling new findings, such as that the rate of return on assets of US companies is one quarter of what it was in 1965. The executives were unwilling to take the studies seriously. “They are living a delusion,” Lang said, “it’s all the more powerful as it’s a collective delusion, as reflected by the capital markets. We even heard executives say, in response to our findings about declining ROA, that it couldn’t be that bad if the equity markets still value corporate institutions so highly.”
The third assumption of traditional management is that the marketplace can be predicted and controlled and manipulated. Fifty years ago, this was a reasonable assumption. Big companies were oligopolies and controlled the marketplace. There was high demand for their products and services. After the Depression and the war, people were happy to have any refrigerator or television. Customers had little access to reliable information. And with only three television channels, big companies could control the airwaves. New entrants into the marketplace were not a serious threat. Global competition was still in the future.
Traditional management was a good fit for this setting. But it is a very poor fit with the world of 2010, where global competition and the shift of power from sellers to buyers have transformed the situation. Big companies are no longer in control of the marketplace. Providing goods and services are no longer enough. To assure their future, they have to establish relationships with customers and win their delight, not merely their satisfaction. This is a radical change in the challenge faced by firms today. Instead of a simple linear manipulation, firms are now involved in complex interactions.
The fourth plank of traditional management is to view employees as “human resources” i.e. things that can be controlled and manipulated and exploited. So long as the firm was merely providing goods and services to the marketplace, it could give commands to employees as to what to do and control them to make sure that they did what they were told. Once the challenge became one of having interactions with customers and creating a steady flow of innovations and new value to customers so that they would be delighted, the firm depended on its employees to generate those innovations and interactions. Smart firms discovered that the energy and enthusiasm and insights of its employees—now often highly educated—couldn’t be bought or directed or commanded and controlled. Instead, employees had to be inspired to contribute—a radically different and more difficult challenge. Again it was a shift from a simple linear manipulation to a complex interaction.
The fifth plank of traditional management is to view the firm as an entity exploiting a static stock of knowledge, through “scalable efficiency”. Traditional management hasn’t grasped that the game has changed. Today’s customers demand not merely average products based on static knowledge stocks. Instead they want rather something new that will interest, excite and even delight them. Whereas in the 20th Century customers had few choices and little access to information, now thanks to global competition, they have many choices. Also, thanks to the Internet, they have instant access to accurate information about what the choices really are. If customers are not delighted, they will go elsewhere. Today what is needed is “scalable innovation”, which depends on innovation and flows of new knowledge—the life-blood of real knowledge management.
The sixth plank is economies of scale. Becoming bigger enables the firm to achieve economies of scale. But in the process, traditional management encounters the experience curve and the phenomenon of declining returns. The more experience the firm has, the longer it takes for the next performance increment of improvement. This is discouraging and tends to result in managerial “flailing”, as managers desperately try to make further gains in a setting that doesn’t permit it.
What makes it difficult to change traditional management is the interlocking and self-reinforcing nature of these assumptions, attitudes and values. Once the goal of the firm is established as producing goods and services or making money for the shareholders in a predictable economic environment, scalable bureaucracy and the efficient management of existing knowledge stocks are seen as appropriate responses. The firm develops proprietary knowledge. It aggressively protects that knowledge to make sure no one else gets access to it, and it extracts the value from that knowledge as efficiently as possible and for as long as it can. The rationale of the firm is to minimize transaction costs in deploying these stocks of knowledge efficiently. That way of thinking and acting created huge and seemingly successful companies in the 20th Century.
But it is a failing proposition in the world today. The life expectancy of Fortune 500 companies has fallen from around 50 years half a century ago to less than 15 years. If trends continue, Deloitte’s Center for the Edge predicts that it will fall to 5 years.
Why KM programs tend to get killed
So the root cause of KM programs being killed is that KM is incompatible with the underlying philosophy of traditional management, which no longer fits the world of today. In 1950, it was not unreasonable for large companies to think that the world is predictable and linear and can be controlled and manipulated. They could manipulate customers. They could manipulate employees. They could protect and exploit existing stocks of knowledge and in the process make a killing.
In 2010, this approach is an increasingly bad fit with the economic context. The result is increasingly desperate and flailing efforts to maintain control, to cut costs, to downsize and outsource, even as those very efforts become more and more counter-productive.
So we should not be surprised that great KM programs repeatedly become victims of this managerial flailing. In a world in which the game consists of exploiting static knowledge stocks and achieving scalable efficiency, knowledge management programs are perceived as “costs” that can be cut with negligible loss. So it is natural that in the midst of a cost-cutting drive, or an outsourcing or a downsizing, killing the KM program can be seen as an obvious quick win. It is a low hanging fruit that enables the firm to meet its quarterly revenue targets, even as it hamstrings the firm’s ability to thrive for the future.
It hardly matters that the KM program has—for a time—the support of the senior level of the organization. With a steady influx of new managers, all trained at business schools, weaned on standard management textbooks, avid followers of HBR, and armed with sharp cost-cutting knives, it is only a matter of time before they get the chance to bring the firm back into line with the assumptions of traditional management and gut the KM program.
What’s the alternative?
What’s exciting is that some firms are proceeding in a radically different way of organizing and managing. They are proceeding on a different of interlocking assumptions, which begin from the goal of delighting clients and providing a steady stream of new value to customers. Once this becomes the goal of the entire firm (not just the goal of the marketing or the R&D department), then bureaucracy and command-and-control cease to be a viable organizational option.
Instead the firm will naturally gravitate toward some variation of self-organizing teams as the default model for organizing work. That’s because it is only through mobilizing the full energy and ingenuity of the workforce that the firm is likely to have any chance of success at generating the continuous innovation needed to delight clients.
Once the firm adopts self-organizing teams aimed at delighting clients, downsizing and outsourcing are seen in their true light as counterproductive to everything the firm is trying to accomplish. Instead, doing work in an iterative fashion and providing value in each iteration are the norm. Radical transparency between managers and workers becomes a necessary principle for achieving the goal. Happily, when firms get into this mode, the risk of needing to downsize or outsource its core business is reduced: continuous self-improvement is a normal and natural way in which self-organizing teams evolve toward high-performance. Systematically accessing new knowledge flows--aka knowledge management--becomes central to the firm's future.
This is a radically different way of organizing and managing. Whereas traditional management is a downward spiral with negative economic, moral, and social consequences radical management is a virtuous circle with happy consequences for firm productivity, job satisfaction, and client delight.
What does this all mean for KM?
So what’s a knowledge manager in an established organization to do? How do you protect your program against inevitable death threat posed by traditional management?
The first step is to make sure that your ship is seaworthy. Check to make sure that your KM program is well managed, with clear goals, vibrant communities of practice, effective use of IT and social media (though without excessive reliance on IT), and valid metrics of the KM program’s contributions. Without those elements in place, your KM program will be a sitting target for a cost-cutting traditional manager.
The second step is to make sure that your KM program is focused on supporting innovation and learning, and drawing on flows of new knowledge, including knowledge from outside the firm, not merely re-circulating the internal dogmas of yesterday. In this way, your KM program can be a genuine contributor to the firm’s real future.
The third step is to check: what are the overall goals of your organization? If your firm is already committed to radical management, you are in good shape. But if the firm is built around traditional management--producing goods and services, and making money for the shareholders, through “scalable efficiency”, then your KM program is at risk, no matter how well run it may be, and how matter how much you can demonstrate what it is contributing to the firm today. With the attitudes and practices of traditional management in place, it is only a matter of time before your KM program will become another victim.
The choices here are to brace your program—and your own career—for the inevitable death blow, or persuade the organization to embrace radical management.
Neither choice is easy. But that’s what is at stake.
To learn more about radical management, go here. Collect an amazing array of bonus tools for leadership management and storytelling here. Help spread radical management by recognizing a leader in your life at: http://www.recognizealeader.com/
To learn more about radical management, go here.
Collect an amazing array of bonus tools for leadership management and storytelling here.
Help spread radical management by recognizing a leader in your life at: http://www.recognizealeader.com/