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GRENFELL, SAD METAPHOR FOR MODERN ENGLAND

The fire that spectacularly consumed all the high-rise homes in Grenfell Tower, West London, and many of its occupants is, sadly, a metaphor for the state of the nation in England. In the wake of another tower block fire in 2009 – six lives were lost at Lakanal House in south London – the main lessons that were england flagidentified then were obviously unaddressed. As an acknowledged problem, the bottom line is that it was a repeated mistake and thus avoidable.

With the tragedy also symptomatic of wider safety issues, the person who called for the original Lakanai Public Enquiry rammed the extent of the dysfunction home. In uncompromising language, Jenny Jones, London Assembly Planning and Housing Committee chairwoman at the time, railed: “I said in 2009 we couldn’t allow more people to die in a tower block fire. The system of fire safety checks was not working properly and inadequate building regulations relating to the outside panels were partly responsible for the rapid spread of the fire.” Ms Jones added that those doubts continued to be expressed in the years after, in spite of the recommendations from the Public Enquiry and Coroner’s Inquest. “It is staggering that fire safety professionals were warning in March this year that the use of flammable cladding was a tragedy waiting to happen. In fact, some had been warning about the use of such materials back in 2000, well in advance of the Lakanal House fire.”

Attending the biggest preventable incident in recent memory, the new Public Enquiry and other investigations will no doubt raise the issues of money, or more familiarly, lack of it, as well as plain old negligence. Few will admit it but, whatever the outcome, it’s clear that decision makers at many levels are not very good at learning from experience, whether in the private sector or the public sector. Learning from experience is a defined skill, its absence in the workplace echoed by the catalogue of unlearned lessons that keep on littering the workplace.

But just how bad are our decision-makers? At the individual employer level, it’s been notoriously difficult to measure except through imprecise indicators such as speed of delivery, the effort involved and eventual yield/turnover/profit. But there is now a modern technology-related way of estimating the prevalence of acknowledged mistakes that could become the substance for proper experiential learning.

Short of listing them – they’ve filled many a book, mine included – I quote a simple Google search for the words must learn the lessons and then should never happen again, both public acknowledgements of mistakes. I prefaced them with the geographical location, the UK, and the numbers that came up were jaw dropping. The first was 40 million-plus, the second 39 million-plus. Yes, references to lessons that needed to be addressed – i.e. those requiring the particular skill of experiential learning – numbered at least 39 million.

I appreciate that many are separate references to the same event and that Google searches don’t make these figures rigorous or academically sound but if the net figure doesn’t suggest that something is wrong with the way we make our decisions, I refer to another, more authoritative, observation, where the examples were big enough and political enough to be mentioned in the corridors of power. Confirming that our lack of experiential learning is not new, a columnist from The Times newspaper in London did some research in Hansard, the official record of all legislative utterances in Westminster 15 years ago. Into his computer he typed the words “no stone unturned” which, he decoded, was “an inflated way to claim energetic action” for something gone wrong. The number was 4,933 over the 14-year period to 2002. “Is it really possible that someone in the House of Lords, the Commons or elsewhere in the political machine has declared their intention to leave no stone unturned, on average, once every single day for the past 14 years?”, he declared. Incidentally, “no stone unturned UK” in Google turned up 506,000 references.

Occupational fitness is a defensive subject for any national grouping but for the UK, the evidence gets firmer when it comes straight from the horse’s mouth. A rare self-assessment of decision makers in top British companies turning over more than £200 million a year found that an astonishing one in four of their determinations was wrong. Their admission to the consulting, technology and outsourcing company Capgemini was that the rate in financial services was even higher – one in three. With an average 20 ‘business critical’ decisions taken by each manager every year, the financial impact of which was computed to be worth an average £3.4 million, this equated to a wrong determination every eight weeks by each of every one of an average 33 decision-makers in every organisation. This unusual survey was undertaken in 2004, since when – on the basis that the nation’s productivity figures have languished – the evidence of any improvement is thin.

If readers are still unconvinced of the country’s decision-making infirmity, I suggest the following underlying, unacknowledged and systemic explanation; that both the nation’s specific and collective memories are short, selective and/or defensive. And even if any of these WEREN’T the case, commerce and industry are light on the skill known as Experiential Learning (EL), which is the ability to transpose prior practice, whether successful or unsuccessful, into better practice. Sadly, it’s a subject not formally taught in our business education, even in our business schools, the traditional approach being to let individuals learn for themselves spontaneously.

Not that, even if it WAS taught formally, we could have a tutored chance at being better experiential learners because of two connected and sweeping decisions in education and the workplace. Both have consciously and dramatically purged the ‘experience’ component of any proposed experiential learning across society.

The first concerns the awareness of long-term experience. All types of occupation-related history, including business, economic, management, even corporate history, are virtually non-existent in the education system, which, simply, removes enduring awareness from future employees’ consciousness. The second removes the mindfulness of short-term experience from the employers’ workplace in the form of the flexible labour market, whose short-term tenures in the UK now averages between four and five years. At this rate employers’ OWN unique knowledge, experience and wisdom continually goes ‘walkabout’, leaving replacements to rely almost exclusively on the non-specific evidence from their replacement employers. And while the experts think this is a good thing for employers to have, it comes at the expense of the employers’ own knowledge, experience and wisdom, without which tried-and-tested mistakes get repeated, wheels get re-invented and other lessons ignored (as with Grenfell), with replacements typically disassociating themselves from their predecessors’ experiences (“Not in my time”, “Not my responsibility” and “We know better”).

The coal-face effect of these two measures is a widespread memory deficit, what’s called corporate amnesia. Without it, it’s why decision makers can’t learn from experience, why there’s so little organic progress, and why – so, so tragically – so many people lost their lives in west London in June. Incidentally, at the time of writing, Grenfell Tower is among another 200 tower block examples of experiential NON-learning to date. With other blocks still to be checked, the bill for replacement cladding is already estimated to top £600 million – another heavy cost for experiential non-learning and the nation’s productivity that’s bound to be exceeded by a heavy margin ….!

The wider solution to the workplace disruption and corporate amnesia is not rocket science – to counterbalance, provide replacement employees with both the appropriate evidence base and the skills to properly APPLY the experience to new circumstances and environments. Even innovative knowledge – i.e. completely new initiatives – require experience and experiential learning to evolve.

However the “lessons” of Grenfell turn out, I bet a pound to a penny that the words ‘experiential learning’ or its antonym ‘experiential NON-learning’ will NOT appear in any of the reports into what happened. Nor will it be suggested that the flexible labour market and its unaddressed bedfellow, corporate amnesia, might be a factor in the disaster. Or that proper EL should be a more prominent subject in the workplace.

When will commerce and industry realise that our ability to make good and better decisions is not as good as we think it is? For the world’s oldest industrial nation – meaning that we have more experience than anyone else to inherit and with which to work – such flawed performance should not be shrugged off as normal and/or acceptable.

Postscript: Devolved Scotland is little better at experiential learning, at least in this area of activity. At the time of writing Napier University’s Bainfield Halls of Residence and 44 other Scottish schools were found to be using the same kind of cladding that was used in England. Scottish regulations were changed in 2005 after a similar fatal Scottish tower block fire in 1999.  dot

MIGRANTS A LEG-UP TO BETTER PRODUCTIVITY? Not in the UK, so what to do ….?

How relevant is national culture in the pursuit of economic productivity? And what effect does the worldwide influx of foreign nationals into many countries have on their hosts’ wider output?

Notoriously difficult both to define and manage, culture is MIGRANTSan amorphous quality constructed of shared patterns of behaviours and interactions, cognitive constructs, and emotional understandings that are learned through a process of socialisation. Commerce and industry is one identifiable area where its effects can be quantified through one simple number – output at the individual, corporate and national level.

In the case of countries like the US, a high immigrant country, and Poland, a high emigrant country, the traditional perception is that their migrant workers are particularly diligent. Employers love them because their output and reliability is high and their wages can often be competitively low. In the UK, where immigrant labour has also been particularly high over recent times – and especially from Eastern European countries – the attitude is much the same. Compared with native labour, they’re especially valued for their estimable work ethic, which David Frost, a former Director General of the British Chambers of Commerce, assorted industrialists, even some MPs, daringly say the UK doesn’t have.

Privately, mainly because it’s probably too politically incorrect to say too loudly in the public arena, the expectancy has been that Eastern European immigrants to Britain would, by their example, help to improve the nation’s poor productivity. It appears that this prospect is ill fated.        

New academic research has found that many migrants to the UK start losing their stronger work ethic after just two years. With economists equating work attendance with work ethic – one of the most valued attributes for employers – 113,804 workers from Poland and seven other eastern European countries that joined the EU in 2004 were initially more than three times less likely to be absent from work than native UK workers. This study into the question – titled Understanding the perception of the ‘migrant work ethic’ and published in the Journal Work, Employment and Society – used data from the Office for National Statics UK Labour Force Survey from 2005 to 2012.

The Bath University study found that after the two-year period of higher performance, these foreign workers were taking as many sick days as their UK counterparts, suggesting that this component of British culture – and perhaps others too – is doggedly contagious.

Given that culture is notoriously difficult to change, what’s to do to get British workers and their migrant colleagues to be more productive? Something that would override the cultural phenomenon of high absenteeism, even surmount it by a large margin …..?

One solution is to improve the quality of a NON-CULTURAL factor that affects both groups. It’s the consummate skill of decision-making, which has become inherently more ‘hit and miss’ in today’s business world because of the self-imposed workplace revolution of short-tenure employment, which has disconnected employers from their own hard-won and expensively acquired knowledge and experience. The flexible labour market came into effect around 35 years ago to help employers better cope with the fast-changing marketplace but the resultant high level of employee churn has dramatically reduced individuals’ awareness of the employers’ own unique evidence base that replacement employees would otherwise need to make good and better decisions.

Ever since then and across the board – i.e. every employer and every employee, including and especially major decision-makers – there’s been much workplace stopping-and-starting, plentiful experiential NON-learning, trifling organic progress and oh-so-slow productivity growth, as the record confirms.

The problem of continual comings and going of employees hasn’t stopped there. It’s seen off most corporate loyalty in the workforce and sworn off many organisational USPs, the distinctive selling points that makes institutions special, helping to dilute overall organisational cultures in an unmanageable way that serves to make them more homogenous. And the ‘experts’ (themselves products of the flexible labour market, bless them!) admit they don’t know how to explain our productivity distress.

Truly, employers are, to use awkward medical imagery, suffering a corporate form of Alzheimer’s – without being aware of it …

To offset the intimate knowledge deficit, known as corporate amnesia, employers need to provide their replacement employees with their more comprehensive evidence base, which should include much of their culture-indicative and distinctive tacit knowledge and experience that will have otherwise walked out of their front doors. And to make this improved resource work more efficiently – i.e. allow replacement employees (and those more permanent) to APPLY rather than REPEAT past practice – employers have to add the untaught skill of Experiential Learning (EL) to their in-house training. As it implies, this variety of learning takes place from experience, but in this model erudition expressly INCLUDES the employers’ OWN knowledge and experience, which flexible working has absented.

This blog addresses both.

Postscript: Improved productivity is the no-brainer answer to many of the UK’s economic woes, confirmed at just one level by the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. Being systemic, good and better decision-making is the single most effective way to improve profitable output, competitiveness and – coincidentally in the UK’s case – also the most effective pathway to ensure that Brexit, when it eventually happens, works. dot

How to close the gap with the richer few. Addressing the main side issue of the UK’s GENERAL ELECTION 2017

However one boils down the motivation for the UK’s upcoming General Election, thegen election 2017.jpeg rhetoric is as familiar as ever; the richer few will be better served than the poorer many. The priority of Brexit aside, it’s a UK chorus as old as the hills that never seems to be understood or adequately addressed by the politicians of all persuasions. Or business.

The issue is simple: in terms of remuneration, the worse off can’t keep up with the better off, mirrored unambiguously in the evident relative wealth distribution figures in the population. Politically charged, it happens to coincide with an uncomfortable and relevant issue that is only now being acknowledged – that the nation’s productivity is not competitive enough, meaning that the output of British workers is too low. What seems to be overlooked is that if productivity were better, the disparity would diminish or, more plainly, employees would become more valuable and their remuneration would rise accordingly.

But this is where economic logic seems to trip over itself. Traditionally, the blame for low UK productivity is aimed at the workers who, confirmed by research, actually work longer hours than employees in many other countries. Unsuitable education is also reproached along with the linked lack of relevant skills but what if much of their effort was misdirected and the problem was NOT primarily at the coalface, rather with the decision makers whose determinations were less than effective?

It’s a conclusion that gets little traction, no doubt because leaders would have to admit that, at the time they presided over lower productivity yields, their well-paid performances were unworthy of their remit. But consider this. Their decisions ARE automatically less than effective, as are the inevitable efforts of their subordinates, because of the unintended – and unaddressed – consequence of a policy that has upturned the character of the whole workplace, including the individuals at manager and directorial tiers.

At the individual employer level, the flexible labour market’s stop-start effect, now in place for more than 35 years, has been continuously removing the institutional knowledge base of every employer. The result is systemic – constant workplace disruption, a depleted store of organisational evidence that would otherwise allow good and better decisions to be made by replacements, the end of organic continuity (which is the main element of most progress) and, inevitably, lower productivity. They all contribute to what is called experiential NON-learning, which is where employers, representing the richer few – a.k.a. their main decision-makers – could help the poorer many. 

Experiential non-learning’s antidote, Experiential Learning (EL), is a formalised skill like any other that is widely untaught and clearly essential in a working environment that encompasses short tenure. For this, EL has to be accompanied by an attendant and suitable Knowledge Management (KM) programme that more expertly captures and shares the detail of exiting experience before it walks out of the front door.

Flexible working has its advantage in an ever-changing business environment but its evident downside effects need to be offset before it can fully contribute to productivity’s restoration.

p.s. in the post-Brexit world, productivity will need to be improved anyway if there’s no shelter from the EU’s tariff breaks, which used to help sell nearly 50% of our exports. Higher productivity and remuneration would also help to assuage the lingering class war that bedevils our society. dot

Open Letter to UK Chancellor Osborne: “Here’s why your latest Budget forecast is pants” 

Rt. Hon. George Osborne MP,
Chancellor of the Exchequer,
HM Treasury.
1 Horse Guards Road,
London SW1A 2HQ.

March 20, 2016.

Dear Mr Osborne,

Open Letter: “Here’s why your latest Budget forecast is pants

Forgive the urban slang, Sir, but words these days have to be loud to get your attention. We all know that you’re trying your best to get the UK on its economic feet but your optimism is misplaced.

In your speech to Parliament, you mention the magic words productivity and productivity growth 11 times. Yes, they’re important – you accept it’s the key to your planned bottom line – but you’ve deliberately camouflaged the real position by burying our actual performance in its wider international context. It’s a yardstick, you say, that’s been “decelerating” in a vast number of countries, that it’s also a “concern” elsewhere and that it’s “too low” across the West, suggesting that everyone is suffering.

Yes, everyone IS suffering, but I must point out that our productivity and productivity growth is so low as to be competitively rubbish, which is what pants means.

Can I remind you that just six months ago (September 2015), the Office for National Statistics (ONS) was reporting that our productivity growth had hit a 25-year low – despite Government contributing to a highest-ever workforce and interventions in housing apprenticeships, skills, universities, transport and finance. Output per hour of UK workers fell 20 percentage points below the average of other leading industrialised nations, and the latest data you give on the subject is that there’s been no improvement. I can’t remember an equivalent collapse in 40 years.

To give a hard number indication of how important you now think is this factor of production, there ARE rough estimates of the cost of lost productivity in the UK – it’s around 7.5% of GDP (Proudfoot, 2005). At today’s level, that’s around £155 billion – equivalent to more than TWICE the Office for Budget Responsibility’s £69.4 billion deficit forecast for 2015/16. Whatever the reason for why we’re so inefficient – I’ll move on to that shortly – the question arises: Is this not a big enough number for this shortfall to be addressed directly?

May I dutifully point out that the UK’s low productivity scores has been an issue for decades. And that Government has been trying to fix it, albeit half-heartedly, for almost as long, throwing around Government-style solutions costing arms and legs in spades. And giving us just pockets of real competitive advantage.

So WHY? How is it that other industrialised countries outperform us so comprehensively on this critical aspect of wealth creation?

A clue to this comes from the repertoire of the late management guru Peter Drucker, whose counsel was that “It is only managers – not nature or laws of economics or Government – that makes resources productive (Managing in Turbulent Times, 1980), meaning that, at the end of the day, output has less to do with infrastructure and monetary inputs than what happens at the coalface of industry and commerce. If employees can’t get from “A” to “B” without going via “Z”, however un-potholed is the provided road, then said employees are simply less productive, ensuring that the money that employers throw at them is not particularly gainful and, from your lofty lookout, you don’t get as much tax income.

Whilst infrastructure-like things are very important, the real problem is management pure and simple. From the figures, it’s clear that management doesn’t do management very well and when that happens, neither can employees. What this means is that while you can continue to do Government-type things until you’re blue in the face, until management raises its game, much of your effort will fall on infertile ground.

Back to WHY? You’ve actually mentioned one of the reasons, describing education as the “single most important thing we can do to boost the long-term productivity of our economy” because – also in your words – the “nation’s productivity is no more and no less than the combined talents and efforts of the people of these islands”. Education is one of those things that you’ve been banging on for years, but – as the productivity numbers confirm – we’ve continually fallen short, suggesting that there’s something in the education system we’re not being taught.

May I respectfully point it out?

It’s because we’re particularly poor experiential learners, as your and previous Governments’ persistent efforts to reverse this endemic problem clearly demonstrates. Compared with others, we don’t learn lessons well. It’s not part of our DNA to look back, assess constructively and apply. Alongside our workplace pandemic of repeated mistakes and attempted cover-ups, “We must learn the lessons” is probably one of the loudest workplace noises we make. We’re more knee-jerk, preferring to employ what another management guru, Henry Mintzberg, describes as Business School stratagems that teach packaged versions of business problems rather than understanding real-world experiences. Bottom line, our business education doesn’t teach us real Experiential Learning (EL), making us very good experiential NON-learners.

For EL to take place, an awareness of ‘experience’ is self-evidently a pre-requisite. Unfashionable ‘history’ is another word for it, yet generically both are widely and demonstrably absent in both business education and the organisations that employ us.

For example, the teaching of economic history is declining and except for the mention of the industrial revolution in some classrooms, business history is non-existent. There’s another, even more forceful, fact, widely unacknowledged and actually systemic to the problem that helps to reinforce the Mintzberg observation that real-world experiences are not adequately acknowledged in decision-making. The flexible labour market’s distinguishing feature of short employer tenure – including managers, the average in the UK is around four to five years and falling – means that much employer-specific knowledge and experience gets dispersed, a description for the condition being corporate amnesia. Alongside huge jobs disruption, this dearth of available employer-specific knowledge and experience in the workplace – ultimately the responsibility of institutions themselves to deliver – provides little ability for rolling generations of new blood to learn from that actual experience. Any learning that does take place is from others’ experience that, while sometimes useful and even essential, is Mintzberg-like typically unconnected to the employing organisations’ ‘real-world’, requires adaptation to a new unfamiliar environment and, anyway, will suffer similar dispersal and disconnection when the new blood moves on. Persistent discontinuity + rolling corporate amnesia = programmed underperformance …..    

And even if that knowledge and experience were available to be properly inherited and joined up, the skill of how best to learn from it is not provided.

What’s happened is that the flexible labour market, which has its positive points, is short-changing the evidential base that employees would otherwise use to make their decisions.

On the basis of your Budget speech, it seems that you’re depending on productivity improvement to reach your budgetary goal. On current numbers, Chancellor, we’ll have to improve productivity by a factor of many, many times to get us where you need us, something we’ve never achieved before. Perhaps you’re thinking that what goes down so fast can turn up just as quickly but productivity is, and has always been in modern times, our millstone. Even our more recent historical best will be a challenge.

I’d like to think that you have the time to cheerlead such a change in workplace practice but an improvement such as you need looks to be a destination too far for your short-term horizon. Nonetheless, industry and commerce could still do it for themselves.

Getting EL right involves employers properly capturing their short-, medium- and long-term knowledge and experience before it escapes through their revolving doors. At the same time business education will need to teach the absent discipline of experiential learning to have any chance of trimming that annual £155 billion of lost productivity. Only then will we be able to better compete with those nations whose instinctive nature for learning lessons is better than ours.

Collegially,

Arnold Kransdorff.

Postscript: Many professions – among them architecture, art, music, the military, medicine, politics, science, the clergy and so on – contain an element of their generic history in their education. Does the lack of history in business education and the workplace indicate that business, at least in its management role, is not a profession? If so, isn’t it time that a society wholly dependent on mercantile endeavour does a radical re-think? dot

An Open Letter to Britain’s Business Secretary: Our enduring productivity shortfall – Are we just inherently poor employees?

Sajid Javid, MP.,
Secretary of State for Business, Innovation and Skills,
1 Victoria Street,London, SW1H 0ET.
September 2015. 
 
Dear Mr Javid,
 
Our enduring productivity shortfall – Are we just inherently poor employees?
 
I’m trying to imagine how it must feel to be in charge of a failed policy that has every chance of continuing to founder.
 
Your colleague, George Osborne, the Chancellor, has described our evident problem as the “challenge of our time” and the key to making Britain the “richest of all major economies” to surpass even the US in 15 years. Those were the words he handed down in his pre-election speech on July 9, 2014 and which follow the efforts of both your – and previous – governments for more than 30 years.
 
Yet 14 months later (September 18, 2015), the Office for National Statistics (ONS) reported that productivity growth – the key to which Mr Osborne was referring – had retreated to a 25-year low. Despite Government contributing to a highest-ever workforce and interventions in housing, apprenticeships, skills, universities, transport and finance, output per hour from UK workers in 2014 fell 20 percentage points – yes 20 percentage points – below the average of other leading industrialised nations.
 
Are we inherently poor employees? No, just untutored experiential learners, meaning that, unlike many of our competitors, we don’t learn very well from our own and others’ experiences.
 
May I respectfully point out what your experts have MISSED. If you remember back in the 1980s, it was thought that high levels of labour market regulation equated with poor economic performance. Widespread deregulation followed, providing businesses with an easier way to hire and fire. The fact that many of our competitors also have flexible labour markets and better productivity growth scores only serves to confirm that they are better experiential learners.
 
In our case we can produce turnover (à la our rising GDP) but its cost is extraordinarily high because of our inherent inefficiencies, which helps to explain, of course, our lower wage economy and correspondingly lower standard of living ….
 
Employers taking advantage of your flexible labour market do little to address the unique and hard-won knowledge and experience that walks out of their doors on a rolling basis – in our case every four to five years on average. Imagine ….. EVERY employer having to experience this level of disruptive output for almost EVERY one of their employees, affecting EVERY job and EVERY department ….? Bottom line, it stops in its tracks the way most progress happens – organically, i.e. from the building of one experience on another.
 
Without their knowledge and experience, employers have little ability to benefit from their own tried-and-tested practice. The result is that they become experiential NON-learners, as demonstrated by the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace – and characterised by the whistle blowing, cover-ups, gagging, the different types of public enquiries, post-project reviews, tribunals, commissions and the lists of ‘not-fit-for-purpose’ activities.
 
If employees didn’t have to reinvent their employers’ raison d’etre so often, our productivity would automatically be that much higher, which would go a long way to realising Mr Osborne’s ambitious aspiration for UK employees to be on a par with our US counterparts.
 
Experiential learning is one of those business skills that we, as a nation, manifestly lack, and this deficit has now become especially damaging in our very flexible labour market. What’s needed is for employers to ensure that their employees share their unique knowledge and experience before they go walkabout, then provide their successors with the special corporate skills to learn from that experience. The former’s capture is an unnecessary oversight by host employers who have submissively neglected to realise that they have proprietary part-ownership of their own experience because they’ve been paying for it all the while, the latter being the defined formal discipline that takes the traditional one-size-fits-all approach to decision-making to its new required level to address the issue of short tenure. Simply stated, it’s the way to cut out many of our repeated mistakes, re-invented wheels and other poor decisions.
 
I am not suggesting that the Chancellor’s fiscal measures are not useful but your Government could make more of an impact on productivity growth by helping to offset the downside effect of the flexible labour market that you’ve been actively encouraging for all the time that productivity growth has been lagging our major competitors.
 
If you’re still unconvinced, your predecessor, Vince Cable, DID acknowledge that the flexible labour market was “contributing to low productivity” (Resolution Foundation, May 13, 2014). So, while the explanation for productivity growth’s weakening has got everything to do with skills, it has virtually nothing to do with the inherent decision-making abilities of employees, who are simply being short-changed by what their employers DON’T provide.
 
If you want to improve productivity growth, may I suggest that someone take additional heed of the counsel of the late Peter Drucker, the acknowledged founder of modern management, who believed “It is only managers – not nature or laws of economics or government – that make resources productive” (Managing in Turbulent Times, 1980).
 
Collegially,
Arnold Kransdorff.
See also https://biggernumbers.wordpress.com/macro-matters/ dot

THE ELEPHANT IN THE ROOM

 January 2014: Under the surface of Britain’s latest indicator of recovery – the Office for National Statistic’s announcement of a 1.9% rise in the economy in 2013 – is buried a statistic that that has dogged the country for more than the five years of the latest recession. It is productivity, the ability to produce goods and services at a competitive rate.

Once again the figures showed a decline in output per hours worked, an outcome that has, according to reports, confounded our officials. The worry is that this dysfunction will ultimately make the recovery less sustainable, allowing any advantage acquired to dissipate.  

The fact that productivity’s poor performance goes beyond the latest crisis signposts a more endemic problem. Which raises the question: what is stopping Britain from becoming more competitive?

Here it is. It is the inability to learn from our own experiences.

Beyond the usual educational and management suspects, there is an issue that few of these officials acknowledge. In fact it is actively encourage. It is the flexible labor market, that modern workplace phenomenon that has given us short jobs tenure. Forty years ago, an individual would have one, perhaps two, employers in their working lifetime. Today, the average number is around eight. In the US, for example, the median level of tenure of ALL the Fortune 500 companies is just three years and eight months. That’s across the board – all grades, including managers.

How this affects productivity is simple. Against the flexible labor market’s clear benefits, there is an iceberg-like limitation. It provides a discontinuous and incomplete institutional knowledge base, otherwise called corporate amnesia. This constrains much of the ability to learn from one’s own experience. Given that most progress is organic  – i.e. organization-specific and dependent on the building of one experience on another – this increases the rate of repeated mistakes, re-invented wheels and other unlearned lessons. Expensive! VERY expensive!

Without an intimate awareness of one’s employers’ own knowledge and experience, any experiential learning is restricted to the knowledge and experience of replacement employees. Their contribution to the decision-making process is the business equivalent of a seedbed of otherwise healthy plants without any suitable top-dressing.

Whilst not railing the clear benefits of flexible working, the battle cry of “We’ve got to learn the lessons …” is now so common as to make the solution urgent. This blog explains how good Knowledge Management can help to make an employer’s tried-and-tested knowledge and experience less discontinuous for transiting employees, allowing for better experiential learning and decision-making.  dot

“Dear Mr Osborne ….” – An Open Letter About Productivity

Rt. Hon. George Osborne MP,
Chancellor of the Exchequer,
HM Treasury.
1 Horse Guards Road,
London SW1A 2HQ.
March 22, 2013.

Dear Mr Osborne,

Open Letter – What your 2013 Budget doesn’t grasp

I listened to your 2013 budget speech but not once did I hear you mention the single word that would have made all your efforts to kick-start growth more credible.

That word was productivity. As you well know our productivity is wretched. By 2010 the productivity gap with the US had soared by nine percentage points compared with 2006, the largest gap since 1994 (Office for National Statistic, 2011). For the two previous years the proportion of national income created by each worker per hour leapt in France, Germany and the US while it remained stagnant in the UK. US productivity per hour worked was 23 percentage points higher than the UK while Germany and France were ahead by 18 and 16 percentage points respectively. In October 2012, our outgoing Governor of the Bank of England, Sir Mervyn King, reported that productivity had dropped by 4% over the previous five years, with no-one – his words – really understanding why (http://www.bankofengland.co.uk/publications/Documents/speeches/2012/speech613.pdf).

Chancellor, the private sector may well have picked up more than a million jobs under your stewardship, much of it from the public sector, but this means very little if that employment’s output is less than competitive.

The importance of productivity – real productivity, not output disguised by a reduced sterling value and things like less red tape – has not been adequately addressed for years. It’s about producing products and services cheaper, quicker and better, in other words getting from A to B without going via Z. In addition to Government’s red tape-like efforts, it means better decision making at the sharp end of commerce and industry.

Did you know that the annual cost of wasted productivity is around £120 billion – yes £120 billion (Proudfoot Consulting, 2005)? That was in a year when the economy was in its bull mode. Is not this a big enough figure for you to do something – or get someone else to do something?

This elephantine sum includes all the repeated mistakes, re-invented wheels and other unlearned lessons that litter the public and private sectors. Do you recognise this business landscape? The fact that productivity’s other matrix, productivity growth – a measure of inbuilt headway and another good indicator of policy and decision-making skills – has been declining since the 1950s (Groningen Growth and Development Centre and the Conference Board, Total Economy Database, 2004) surely confirms that we’re pretty poor experiential leaners. And given this conclusion covers a period when business education’s availability has never been greater, our ability to teach how to make good and better decisions is similarly suspect.

Mervyn King said no one understood why our productivity had dropped recently. May I point out a contributing factor – and what you could do to help?

You may not be aware that the actively encouraged flexible labour market has had an enormous unintended consequence. The high level of employee turnover has meant that employing institutions’ own unique knowledge and experience is constantly walking out of the front door. There is good academic research that points out that when individuals leave, they take with them up to 90% of their employers’ distinctive knowledge and experience (D. Bonner, American Society for Training & Development, 2000), leaving only their paper trail. What actually disappears is the vital tacit knowledge component of their tenure that is typically unrecorded and, usually, just as important as the remaining explicit data and information. The result? Our institutions can’t learn very well from their own special experiences.

I am not going to suggest that the flexible market be discouraged – it has some very valuable short-term benefits for both employers and employees; rather, commerce and industry need to be encouraged to use their past knowledge and experience to allow their walkabout employees to better learn the lessons for which they’ve already expensively paid.

Experiential Learning (EL) is now a recognised and dedicated discipline that business education and commerce/industry have been slow to take up. As its name suggests, it’s a way of applying the evidence of tried-and-tested precedent (whether successful or not) to improve decision-making instead of having to re-invent things every generation. It falls under the wider discipline of knowledge management that involves the efficient capture of said knowledge and experience before it walks out of the front door. Then walkabout employees need to know how best to apply this valuable intellectual capital to their employers’ new circumstances and conditions in the cause of better decision making, which is where the opportunity arises for our business educators.

If decision-making improves, costs can come down, prices can be reduced, competitiveness will get better, sales will rise, ipse facto GROWTH. It’s not rocket science and it doesn’t require huge capital expenditure around which commerce and industry is balking. What it does do is capitalise on the knowledge and experience that we’ve already paid for at great expense. The oldest industrial economy in the world should be able to utilise its tried-and-tested experience to much better advantage.

Most people would see this as a way of using “history” as a management tool. True enough. There are plenty of words of wisdom that more eloquent people have uttered to support the concept – among them Winston Churchill’s “The furthest backward you can look, the furthest forward you can see” and George Santayana’s “Those who cannot remember the past are condemned to repeat it”. My own preference is US author Russell Hoban in his 1973 book The Lion of Boaz-Jachin and Jachin-Boaz: “If the past cannot teach the present and the father cannot teach the son, then history need not have bothered to go on, and the world has wasted a great deal of time.” Truly, history – I call it organisational memory (OM) – can provide experience cheaply. It gives institutions a way of using the knowledge and experience of prior employees – without putting them back on the payroll. Discarding it makes no sense.

If you need further endorsement of the pathway to growth, look at what our next Governor of the Bank of England, Mark Carney, said in Davos about “self-sustaining productivity” (http://www.dailymail.co.uk/news/article-2269099/Growth-important-inflation-says-new-Bank-boss-insists-maxed-ideas.html) and the President of the European Commission José Manuel Barroso’s appeal for greater competitiveness across his 27-country constituency (http://ec.europa.eu/news/pdf/sg-2013-00286-01-04-en-tra-00.pdf). After that, look at the March 13, 2013 issue of Civil Service World (http://www.civilserviceworld.com/every-department-should-have-a-historical-adviser-argues-lord-butler-of-brockwell/) where the former Cabinet Secretary Lord Butler suggests that Government departments appoint historical advisers to improve their decision-making.

Then, follow https://biggernumbers.wordpress.com/ for the extent of the problem – and the solution.

Collegially,

Arnold Kransdorff.
ak@corporate-amnesia.com
www.pencorp.co.uk dot
 
 

Posted March 22, 2013 by Knowledge Management

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