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COVID-19: THE REALLY BIG LESSON THAT’S ESCAPING DECISION MAKERS, BORIS INCLUDED
It’s so obvious it’s embarrassing, yet so predictable
By Arnold Kransdorff
It’s timing, timing, timing, the curse of ‘too little, too late’, poorer decision-making and the mountain of early deaths and debt ….
Educators teach us that decisions need to be evidence based. It’s drummed into every business school student and has survived into the Covid-era where, in varying degrees, politicians and the medical advice fraternity have practiced this seemingly sensible advice. But this instruction is for circumstances where there is time for reflection and consideration. The pandemic, however, has meant that the environment is changing, literally, on an hourly basis, which means that the gathered evidence, usually weeks old, is ALWAYS behind the actual event, ensuring that decisions, including well-meaning decisions, are never grounded on the prevailing situation.
So, strictly adhered to, determinations to counter the event, will always be late in their application which, invariably, guarantees a postponed solution, as Covid is showing. Importantly, it negates one of the other components of good decision making – common sense, arguably as important in such swift-moving circumstance. In the UK’s case, remember the late reactions by the travel industry and the various lockdowns where evidence was being awaited before action was taken? Two years on, the same attitude prevails, this time with a never-higher infection rate that, once again, was thought to threaten the National Health Service. In the new-variant Omicron circumstances, it has taken two weeks to come to a decision during which case numbers have escalated beyond 120,000 a day.
So, what is the existent lesson from which the decision makers fail to learn? It’s that, that in a pandemic, determinations need to be pre-emptive, effectively made ahead of the evidence which, by definition, simply means quicker. But how can this be done when the data and information, as a matter of course, is late in arriving?
The management speak of using hindsight
If you recognise the individuals who actually make proactive decisions, they’re the people with the most experience, specifically those who have an acute awareness of events after they have occurred. In stripped down management speak, they have what’s called hindsight, out of which, with acquired understanding of the significance and nature of these events, acquire insight and the ability to make anticipatory determinations. It’s the skill that’s called foresight, the quality we ascribe to wisdom.
The way they do this with imperfect current evidence is to employ the next best thing – the data and information that’s already occurred, a.k.a. the personal exploit, organisational memory (OM) or its less fashionably portrayal as history, variously from their own practise and from their employers’ and others’ record. In the UK’s case, this could have included the numerous epidemics and potential pandemics such as HIV/AIDS, Dengue, Cholera, Ebola, Yellow Fever, Swine Flu, Mers, even the Plague, all of which, incidentally, chanced to happen in the working lifetime of current employees; they would have provided the substance of actual events and past practice. The current contagion might have been different and potentially more serious, but they were still highly contagious and would still need immediate action. What the UK did was, when it did consider its options more widely, was to choose the wrong disease to heed. Unlike some Asian countries like South Korea and Singapore, the UK focussed on pandemic flu, not pandemic coronaviruses. And while the politicians actually held a government-sponsored dummy run to anticipate a pandemic, the follow-up biological security strategy in 2016 was conspicuously unheeded. Ian Boyd, chief scientific adviser to the UK government between 2012 and 2019, observed: “We learnt what would help, but did not necessarily implement those lessons”.
All this was complicated by the on-going and extremely high staff turnover of civil servants, who should have been able to keep the decision makers – themselves short-tenure incumbents – informed, making them all, including chief decision maker Boris Johnson, unaware of the available evidence. One politician, Lord Freud, the Minister for Welfare (2010-2016), summed up the situation: “I sat there for six and a half years, looking at the third, fourth, fifth generation of a person doing a particular area: there is no corporate knowledge retained. That’s just a massive vulnerability”. He was, in effect, living the reality of a system without any institutional memory and suffering from so-called corporate amnesia.
The other component of this type of decision making – common sense – comes into its own by virtue of the pandemic’s urgency. It needs to deliberately accommodate a worst-case scenario to avoid the evident risk of mis-reported evidence.
In truth, the UK’s wider attitude to capturing and using institutional memory is instructive. There is no long-term business history taught in the UK’s educational system, including business schools apart from others’ short-of-detail case studies. Nor is there much effort to capture and use any corporate-specific short- or medium-term history to avert the effects of the massive knowledge loss from high staff turnover. The upshot is that most determinations, both in Government and industry, are made in isolation to the available evidence, leaving decision makers with the industry equivalent of what the medics describe as dementia. This was alluded to in 2013 when Lord Butler, a former Cabinet Secretary, suggested that every Government department appoint historical advisers, a lead balloon.
Wouldn’t it be better if decision makers themselves didn’t have to drag their feet as an endemic part of their skill?
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A discussion Paper
WHAT OUR SHORT-TERM EMPLOYEES TAKE AWAY – YOUR COMPETITIVE EDGE
An everyday story of our old-fashioned workplace – and knowledge transfer
By Arnold Kransdorff, aka Mr Corporate Amnesia
Employers and senior managers, picture the situation of many of your departing employees. If you’re a UK employer, the individuals – and this includes almost all ranks in the corporate hierarchy – have been with you less than five years on average and that’s before the casualties from Covid-19. The US position is even shorter. During their short time with you, you’ve likely benefitted from their diverse experience but against this you’ll sustain a period of discontinuity and an induction period when their replacements’ productivity will be low. You’re also probably going to pay for additional training to update their skills and likely endure several repeated mistakes per individual while tolerating their reinvention of a corporate wheel or two due to their unfamiliarity of your prior practice.
As the swing doors revolve behind them, consider what else they’re taking with them – the singular way they’ve learned to do the things that’s relevant to your business and your industry. Less to do with their technical skills, it comprises the unspoken, mostly subtle, obscure and intangible issues that reside under the broad heading of your cultural values, all of which dictate their unconscious and spontaneous reactions. Among these unique reflexes come from mindsets such as your belief system, which can include your corporate insights, perceptions, customs, rituals, prejudices, distinctive language, the special way of doing specific things and your company politics. They’re what’s known as tacit or cognitive knowledge, otherwise described as the of ‘how’ of know-how, different to explicit knowledge’s the ‘what’ of know-how covering the more formal type of operational know-how that can be easily codified. In truth, their combination represents the most important of all the corporate assets, so their regular and incremental loss will be impactful.
The source of your competitive advantage
Conceptually, explicit and tacit knowledge are recognisably exclusive but their interaction provides for two opportunities for added value that flexible working’s short tenure turns loose. In the first place their awareness facilitates a smoother rollout of output for employees, a passageway that, in transportation language, embodies the grease that allows the corporate wheel to run more efficiently and what academics describe as the source of competitive advantage[1]. They’re Important because every employing organisation is different and the understanding of their variances dictates employee behaviour and ultimately their decision making. Several recent Harvard Business Review studies have reported that about half of externally hired leaders fail – and not for lack of ability. They crashed because they did not mesh with company culture or the people on their teams[2]. Elsewhere, a study of 240 organizations in 2004 was conducted by TalentKeepers, which found that the greatest impact of employee turnover was lost knowledge, which had negatively affected a staggering 78% of the organisations [3].
The second add-on value refers to the interaction of the tacit with explicit knowledge, which provides the evidence and opportunity – through reflection – to reposition decision-making to accommodate both the mistakes/lessons and the employers’ new circumstances. It’s how conventional decision-making works, the academics describing the process that turns old knowledge into new knowledge. It’s the incremental way that underpins almost all progress.
But hang on. Reflection, and especially accurate reflection sufficient for better decision-making, requires an accurate memory recall – and modern short tenure employment has ensured that many employees have walked out of the front door. Without the intimate awareness of their actual experience, effective deliberation – and of course good decision making – is a non-starter across the departmental hierarchy. It is surely disconcerting to realise that in today’s flexible labour economy, the mindfulness of individual employers’ experiences doesn’t extend beyond its longest-serving employee – and then sparsely. Is this not a precursor to employers progressively losing much of their raison d’être – and then becoming almost exclusively dependent on others’ dissimilar experiences? Thenceforth, where does viva la difference, the backbone of choice and competition, stand? In fact, short-tenure employment across the corporate community has been ongoing for more than 40 years – and our competitiveness/productivity has been in crisis ever since? A real-time association?
Dealing with the dispersal of corporate know-how is the most unmanaged of the important assets in the corporate armoury, mainly because of the difficulties in recognising much of it and the difficulties employers in recording it. In reality, the distinctiveness of both the explicit and tacit elements are opportunely buried in its actual corporate-specific experience. So, what to do?
The way forward
Replace what high staff turnover displaces, NOT for the purpose of repeating past experiences, but for enabling employees, and especially replacement employees, to learn from those prior experiences, however they turned out.
Where such recollections can be most effectively retrieved in a short tenure environment is in the application called oral debriefing, which focuses on the skilful capture of short- and medium-term organisational memory (OM) delivered in either transcript, audio or video format to replacement employees, even to in-situ colleagues. Done well, they can provide the detailed familiarity not available in traditional tutelage and/or standard induction processes. Oral history is already an acknowledged tool for serious scholarship; it was first championed by the Pulitzer Prize winning author/historian Studs Turkel and Professor Allen Nivens, who started Colombia University’s Oral History Collection in 1948 that other universities have copied.
But, for this to happen requires a positive cultural change in attitudes to knowledge sharing in the modern short-tenure workplace among employees and their employers/managers.
Employees, for one, generally feel proprietorial about their knowledge. It’s been especially self-evident ever since the flexible labour market took hold in the 1980s – and arguably justifiable in our competitive job marketplace. It’s given the workforce much more leverage and opportunity in their employment – but at the expense of their employers. While gaining wider experience, employers sacrifice their own knowledge and the advantage of jobs continuity. It’s not insupportable for both to have robust constituent bodies.
Two things need to happen – employees have to be persuaded to share their knowledge and employers/managers will need to acknowledge that knowledge sharing goes to the heart of how to better survive in a flexible labour economy. Without it, the intimate parts of the employers’ prime intellectual capital just spin off uselessly, benefitting neither, especially if employers are disadvantaged.
The big question: Who owns your knowledge?
There is a strong – and obvious – argument to support a collaborative culture change. Just settle the question: who owns the knowledge and experience that employees acquire in their employers’ service? Up to now, employers have not generally challenged employees’ presumption that it belongs to them, a likely hangover from the days when a job-for-life was commonplace and employees’ corporate knowledge would invariably be accessible. Today, it’s both relevant and decisive to ensuring efficient continuity in today’s merry-go-round workplace, in which case knowledge title can be addressed with the simple argument that by paying for it, employers also have proprietorship. In other words, the knowledge and experience acquired during employees tenure is JOINTLY owned, a reality that can be reflected in conditions of employment by allowing the employer the right to capture and share it.
The truth is that not everyone is going to cooperate with knowledge sharing, among them dismissals and those individuals who are made redundant. But the number of employees who leave of their own accord, including retirees and individuals who don’t mind sharing their knowledge – usually the more important decision-makers anyway – is high enough in today’s flexible labour market to make a difference.
Ordinarily, knowledge capture can be timed ahead of departures and delivered to replacements immediately after induction/onboarding. Or it can be done at regular intervals, say once a year at a quiet time, after important events or, in the case of long projects, during the project cycle. And even if it becomes necessary to offer some sort of disbursement to encourage full cooperation, it is good value to smooth jobs and workplace disruption, provide the lost evidence to allow proper reflection, improve decision making and prevent new hires from having to reinvent the corporate wheel
How to do it?
Having addressed the WHY of knowledge sharing comes the HOW to do it.
There are several options against the endemic background that everyone suffers from short, selective and defensive memory. The first is that individuals, either on a regular basis or before they depart, pen or record their experiences. As a general rule, individuals, even senior decision makers, are notoriously poor communicators when it comes to autobiography and especially with difficult-to-appreciate and identify tacit knowledge. Experience relates that the most effective way of documenting this type of testimony/legacy is to outsource the exercise with a specialist interviewer/facilitator, who has the ability to “peel onion skins” when the related evidence is imprecise. When employers/managers find this too personal or private for an outsider, a third option is to train up an internal individual to do the job, whose prime qualifications would be a critical awareness of management process and an ability not to be intimidated by authority. For this, http://mrcorporateamnesia.com/ [4] provides a step-by-step TOOLKIT for employers to do the knowledge transfer themselves. It explains the issues around knowledge ownership, knowledge sharing and how best to capture and learn from short- medium- and long-term organisational memory. The recognised tools used have been customised to accommodate today’s short-tenure employment.
The state of the modern workplace is acknowledged to be dire. Its nomadic character has brought with it rootlessness, disloyalty and insecurity. Short tenure employment now demands a different approach to getting things done. Corporate-specific knowledge transfer across the generations is one constructive approach, with consideration given to wider legacy handover across the departmental spectrum.
[1] https://eprints.bbk.ac.uk/id/eprint/22775/
[2] https://hbr.org/2014/01/for-senior-leaders-fit-matters-more-than-skill#:~:text=Outside%20hires%20take%20twice%20as,a%20leader%20promoted%20from%20within.&text=And%20ultimately%2C%20of%20the%2040,within%20the%20first%2018%20months
[3] https://www.thecompetencygroup.com/blog/the-effect-of-corporate-knowledge-loss/
[4] http://mrcorporateamnesia.com/
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Fair warning, business. You’re CONSCIOUSLY disremembering yourself out of organic progress ….
“TO MOVE FORWARD, YOU MUST LOOK TO THE PAST.” This aphorism is a variation of the more famous quote by the Spanish-born philosopher, 
George Santayana’s “Those who cannot remember the past are condemned to repeat it.”
It’s a precept that gets validation from a bevy of other philosophers and educationalists and yet, how agreeable is business? Do we, in the modern capitalist West, subscribe to history as a business tool?
It seems not; it’s widely unsung and even disparaged.
+ Economic history has taken a back seat in business education, its presence more often a feature of NON-business teaching.
+ Business history is also non-existent as a teaching medium, with even Harvard Business School withdrawing it as a compulsory subject in its first-year curricula. In the UK the subject is confined to a handful of loyal academics, with many of its leading lights having decamped overseas in frustration.
+ Corporate history is additionally more unfashionable than ever, typically misrepresented as the stuff of old lang syne and public relations once or twice every 100 years.
+ In the new walkabout workplace of flexible working, employers have not adequately compensated for the rolling loss of their own unique knowledge and experience, preferring to futilely concentrate on trying to reduce their high staff turnovers.
+ And relevant to this dearth of long- and short-term knowledge, the teaching of decision-making has remained largely unchanged from its one-size-fits-all approach that was designed for the old-fashioned workplace, where employees rarely moved. In the current flexible workplace, the skill needed requires the more constructive reflection of a more complete evidence base. It’s the untaught formal skill known as Experiential Learning (EL).
We are even turning down the advice of late business and education luminaries like Sir Alistair Pilkington, Sir Peter Parker, Michael Porter, Peter Drucker. The list goes on in the UK …. Sir George Blunden, Sir Richard Greenbury, Lord Alexander, Sir Arthur Knight and Alex Fletcher, MP. In the US they include Peter Senge and Professors Alfred Chandler, Tom McCraw, David Kolb and Chris Argyris. And in Japan, there’s Professors Ikujiro Nonaka, Horotaka Tekeuchi and even, on advice when he was Crown Prince, Emperor Akihito. Among the list of even older educational and business megastars there’s Alfred Binet, the creator of the first intelligence test, and Thomas C. Barry, former President and Chief Executive Officer of New York-based Rockefeller & Co. and, later, President of Marlboro. Among others.
All advocate(d) the awareness of history in its various formats – in business’s case economic, business, management and corporate – as an essential influence in the decision-making skill-set of employees. In one case the individual, Sir Alistair Pilkington, personally funded a department in a British university, the London School of Economics, to champion the discipline.
History, it seems, has acquired an unfashionable disposition that threatens to remove the hard-won evidential base of our achievements – in effect our experience, more often than not now disrespectfully deemed to be ‘the past’ and ’irrelevant’. It’s a nom de guerre that, in its institutional form, is slowly being rebranded as Organisational Memory (OM) in order to be less superannuated for modern employers.
In reality, its absence weakens organic progress, which is one of the prime elements of ALL advancement. Even innovative progress – i.e. new initiatives that leapfrog organic progress – requires incremental awareness and learning to firstly take place and then to survive and grow. Being non-specific, the only history-related product that is used, case studies, does little to contextualise or connect a disjointed workforce.
Since the 1980s, when business history flourished alongside a healthy number of adjunct professional bodies, what’s happened is that the critical awareness of long-term business history has retreated. This happened to coincide with the start of the biggest-ever loss to individual employers of their own knowledge and experience as a result of the rolling departures of short-tenure employees. In the UK the average employee tenure in companies is now an average four-to-five years, no thanks to the very flexible – and actively encouraged – labour market.
The advent of flexible working was the single biggest change in workplace practice at the time, and arguably ever. In fairness it achieved one of its primary goals – it increased overall employment. But it also brought an unexpected and non-compensating retort; it knocked crucial productivity – the output of individual workers – into the long grass.
Whilst allowing employers to more quickly adapt to changing environments and circumstances, the hope was that the diversity of new and more experienced blood would compensate for the foisted institutional disruption; instead, short-tenure employees – including top decision-makers – have ensured that every job is always in flux. Alongside huge reemployment costs, there is no continuity, little or no corporate inheritance, a loyalty deficit, a corporate culture that is constantly being diluted, an employee base that has to deal with on-going unfamiliar market environments and corporate circumstances and the widespread breakdown of the recognised organic way that most progress is achieved – i.e. one experience on another.
The combination of little business awareness of the long-term and the organisation-specific short-term gifts the employer with the uncomfortable reality of a form of workplace ‘blindness’ similar to Alzheimers ….. ironic for a country with a heritage of business experience greater than any other and a never-higher availability of business education.
The picture at the societal, non-business level is somewhat better but its teaching is hardly expert and its application evident mainly at top-drawer institutions. For example, 20% of head teachers at leading independent schools have studied history at undergraduate level, one of whom, Mark Bailey, High Master of St. Paul’s and professor of later medieval history at the University of East Anglia, believes that the skills acquired from studying the past provide an excellent foundation for navigating the present and preparing for the future. Elsewhere, more than 15% of all current MPs and even 10% of the current cabinet are trained social historians with one Tony Blair once admitting that he wished he had studied the subject at Oxford instead of law. Professor Bailey recently wrote an article in London’s The Times under the headline ‘History teaches you how to run the country’ (August 11, 2017), a view suggestive of how and why independent education appears to be the better qualified at preparing individuals for responsible jobs. Yet – oddly and neglectfully – not one modern British politician or industrialist champions the subject in business education.
Another suggestion is that business educators and employers don’t want to learn from their peers’ past experience. Sadly unimaginative, wasteful, unprofessional ….?
The detractors of this notion might well point out that history’s awareness doesn’t reflect well on many of the decisions of our current politicians or industrialists but the argument could also be made that outcomes could be infinitely worse. This author’s suggestion is that history on its own is only half the job; the actual outcome is wholly dependent on the widely untaught skill of much better constructive reflection, what’s called Experiential Learning (EL).
Whatever the actual explanation for business history’s wider neglect, the reality in today’s short-tenure workplace is that the rolling transplantation of new employees, even those in similar sectors, is never seamless. The inheritance of organisational memory – ipso facto history, otherwise the record of actual practice – is the ideal (and only) way to smooth both generational illiteracy and individual workplace disruption.
To combat the loss of long-term knowledge and experience, the subjects around business history need to be resurrected and/or introduced into business education, just as other professions do – art history for the training of artists, architectural history for architects, music history for musicians, military history for soldiers, et al. To address short-term forfeiture, employers themselves have to selectively capture their own unique equivalent knowledge and experience before it walks out of the front door, optionally via video, audio or transcript to be then shared with the rolling generations of replacements. To realise full added value, however, they have to then top up their conventional training with the untaught skill of Experiential Learning to ensure more constructive reflection on a more comprehensive evidence base.
In a society where history in the business world is deemed more entertainment than education, experiential learning is the optimum way to improve the quality of decision-making, one main indicator would be fewer repeated mistakes and other unlearned lessons that now litter the workplace. In the post jobs-for-life era, using the business equivalent of the motorists’ rear view mirror would also make it easier for employers – and the nation – to improve stubbornly low productivity.
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TESCO – a classic case of ‘nothing lasts forever’ – but can it recover?
These two scenarios must be on the lips of many, including Tesco’s, where its directors’ attention is no doubt focussed on renewal.
But with the latest bombshell – that the company had knowingly been delaying supplier payments – even further questions arise: do they really know why they fell from grace and what’s underlying this manifest behaviour undeserving of a former market leader in its sector which, seven years ago, was ranked the 10th largest company in the FTSE Index. Now 34th, did it not learn anything on the way up?
If so, why did it not retain or learn from any of that valuable acquired know-how, its hard-won knowledge or from its unique institution-specific wisdom? More importantly now, now that they’re down, how much will it learn to get back on its feet?
I have already tendered my theory on this Linkedin group that Tesco has become a poor experiential learner – i.e. its ability to learn from its own experience has faded (scroll down to earlier post). The latest evidence further confirms this.
In the past Tesco didn’t put its suppliers under such pressure. In the period in question, it did, as Dave Lewis, the company’s Chief Executive, has now admitted (“…. chasing commercial income clouded our purpose.”). Notwithstanding it was unethical and likely illegal behaviour, the fact that it was done consciously and deliberately indicates oversight, amnesia and/or disregard for previous tried-and-tested practice, all primary components of the process of experiential NON-learning.
Using a medical analogy of the process, the original £263 million-plus accounting hole in Tesco’s accounts and the associated mistreatment of suppliers can be described as the ‘symptom’, the company being reluctant to admit the extent of its trading downturn. And as ‘treatment’, what Tesco allowed to happened was to permit a bit of serving corporate wisdom to go AWOL – AKA experiential NON-learning.
Because conditions and circumstances are always changing, the ability to experientially learn is an inherent requirement for all companies wanting to grow, even to mark time. Just examine the annual list of top companies and the way its rankings change. What goes up, inexorably comes down! So, what’s the business-related ‘cure’?
In Tesco’s case it could displace the responsible parties and introduce seminars on business ethics but a better understanding of what’s happening in the modern workplace would help to address the underlying – and puzzlingly still-unacknowledged – problem.
As discussed frequently on this blog, one of the main reasons why modern industry and commerce don’t (or can’t) learn from its experiences is that they have few people in situ who remember ‘how it was done’. This is because of the very flexible labour market, where employees – including managers – have an average four-to-five years tenure in their eight-or-so different employers in their working lifetimes. Whilst flexible working has its certain advantages, it’s a development that’s largely destroyed jobs continuity, widely absented unique company-specific experience and made decision-making almost exclusively dependent on replacements’ unfamiliar experiences. Such mobility has additionally imposed a corporate environment where new employees typically don’t see themselves responsible for their predecessors’ mistakes or even how they did things, heralding conditions whereby hard-won and expensively-acquired lessons are ignored. What has also happened is that the acknowledged way most progress happens, i.e. organically through the building of one experience on another, has largely disappeared.
In Tesco’s case, there’s no reporting of staff turnover, at least in its annual report and accounts, but jobs churn in the supermarket sector is traditionally higher among junior and middle ranking staff than elsewhere. This is doubtless also the case at senior levels although further up at board level – where responsibility ultimately lies – some appointments have, in recent years, arisen through internal ranks. However difficult it is for this level of senior management to accept, this could signal that the disregard of prior experience is not so much the problem; rather it is the failure to experiential learn.
Using another medical analogy, short tenure has given us – including Tesco – the business equivalent of Alzheimers, where employers, literally, lose their memory. To solve the problem, organisations need to efficiently capture their valuable knowledge and experience before it walks out of the front door and then know best how to apply it to the ever-changing circumstances of today and tomorrow’s workplace. The former helps to recover lost continuity and the latter, which requires more inclusive studied reflection, upgrades conventional decision-making processes to accommodate the unacknowledged downside of walkabout employees, explained as follows …..
In the pre-flexible labour market era, the way determinations were made was mainly through a one-size-fits-all set of taught rules. In today’s short-tenure workplace this remains the case but without the input of much important employer-specific knowledge and experience. Companies are basically short-changing themselves by allowing their decisions to be made using mainly others’ experiences, a workplace characteristic that helps to explain all those repeated mistakes, reinvented wheels and other unlearned lessons.
For Tesco, the collegial message is that it has to connect its workforce beyond traditional acclimatisation with an eye to enabling its rolling generations to APPLY its prior experience – whether successful or unsuccessful – to good and better decision-making. It might want to investigate whether its EL practices are fit enough for the flexible labour market, in particular human resources (HR), onboarding/induction, knowledge management (KM) and decision-making processes. 
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TESCO: The discarded knowledge behind the company’s ignominious fall from grace ….
Big problem arises suddenly. An out-of-the-blue £263 million accounting hole precipitates a shed full of introspection. The profits forecast crashes along with the share price and the company’s credit rating is downgraded to reflect “Tesco’s significant management and governance deficiencies”.
The company’s former chief executive had already resigned after presiding over three profit warnings in eight months but the reality suddenly hits home and the problem becomes sector wide as all the big players admit that several upstart grocers are doing their job better. It emerges that the company’s auditors had already flagged up an accounting problem – likely THE accounting problem. Somewhat late in the day an enquiry is launched and the Serious Fraud Office launches a criminal investigation. Eight key staff are suspended, including the UK’s boss, and the company’s chairman voluntarily walks the plank. To make things worse, there was a compensation payment announced of £43m after an earlier blunder by Tesco’s banking arm that left 175,000 customers out of pocket. So why?
Certainly, fixing the books by this massive amount is a suspiciously clear attempt to cover up something big. What? Did prior success encourage a culture of complacency? Or produce an all-powerful management that a weaker board couldn’t challenge? The evidence is not fully offered yet but let me take a shot at explaining another, more structural, cause that would help explain some or many of the possible reasons – that Tesco has fallen victim to a deficit of its own knowledge via the very flexible labor market.
Stay with me. Tesco has changed its staff many times over the past decades, including its top managers. Up to recently new blood has sync-ed well with each generation of old blood, suggesting that knowledge sharing of the company’s unique know-how and experience has been effective. This may well have stopped or its quality has progressively degraded.
Without a detailed awareness of the company’s special know-how, the rolling generations of latest decision makers may have become prone to either repeating the status quo or imposing scenarios based on the unfamiliar experiences of their previous employers. This explanation has a direct impact on the NON-use of its own ‘wisdom’ as well as another, related and more harmful, effect on the ability – or rather the inability – to learn from it. Effectively, Tesco has lost – or is losing – its tested USP. It has become an experiential NON-learner.
The difference between a learner and an experiential learner needs to be explained. Both depend on remembered and/or obtainable data, information and knowledge, which can then be applied to new circumstances and environments. To be an experiential learner in an institutional setting is contingent on being aware of the institutions’ experience. My point is that flexible working irretrievably disengages institutional experience from the evidential mix with which to make good and better decisions. And while business education is well versed in teaching the former, they widely overlook the latter, whose format requires a different approach. Non-learning invites a more competitive environment.
Short of DIRECTLY addressing knowledge loss at the UK’s average rate of staff turnover (around 20% a year, including managers) means that an organizations’ bank of remembered know-how and experience can be reduced to homeopathic levels in just a short space of time. Fortunately, not everyone leaves simultaneously and atypical practices like job overlapping and mentoring helps. But given that academics estimate that when employees leave, they take with them up to 90% of their employers’ unique knowledge – most of it tacit and nothing of which typically gets into data banks – the compounded attrition of this distinctive component of intellectual capital is still truly massive.
In Tesco’s case, group employee turnover is not fully disclosed, suffice to say that the supermarket sector average is among the highest in the country. Much of this is related to traditional shop floor churn but it would be pertinent to also know the annual level of staff turnover in the key management departments that make its crucial decisions. If high – as it is elsewhere in commerce and industry – short tenures impose abnormal workplace disruption, itself no friend of productivity. Then, because Tesco’s special and hard-won knowledge and experience is constantly going AWOL, the company will have disposed of huge volumes of its expensively-acquired intellectual capital that could be useful for on-going decision-making. The phenomenon is otherwise known as corporate amnesia, which is an even greater encumbrance than constant workplace disruption. And because the awareness of prior practice is largely absent, the ability to organically progress – i.e. build one experience on another, which is acknowledged to be the way most headway happens – gets lost.
The predisposition to repeat the past is a scenario that justifies itself in the underlying belief that the earlier outcome was successful, so why shouldn’t it work again; unfortunately this discounts always-changing circumstances and environments, as is now happening in the grocery sector. The other aspect of unfamiliarity with the past forestalls experiential learning, which involves adapting tested practice to changing circumstances and the environment. This offers up the prospect of repeated mistakes, re-invented wheels and other unlearned lessons, of which the wider workplace is full. Tesco’s too?
It’s an inefficient model with which most employers grapple and Tesco is just the latest big example that’s got itself caught short. The big question is whether Tesco’s newest management can identify and then ensure that the past’s successful components can be built upon. If not, they’ll have to reinvent it.
Which is not a professional way to travel. To use a motoring analogy, it’s like repeatedly changing the drivers of a Formula One racing car whose roadworthy mechanisms are frequently disconnected and then reconnected with reputable but unfamiliar and unproven components. And then removing the car’s rear view mirrors.
It’s tempting to conclude that the flexible labor market is just too difficult and too expensive to change (it’s actually already very costly to maintain in terms of rehiring costs, re-training, etc), so this rooted management deficiency has to continue. It needn’t – if knowledge sharing is better entrenched. Employers need to radically upgrade their Knowledge Management (KM) processes to include all the valuable stuff that keeps on going walkabout and business education needs to much better teach the formal skill of Experiential Learning (EL). It’s a discipline that also engages HR, training (both management and shop floor) and IT.
Once employed, it’s a way of providing relevant experience cheaply to a constantly changing workforce. And because it’s documented, it extends the one-generation advantage of overlapping and mentoring, so earlier successes and failures – I call them sire experiences – don’t have to be re-invented or paid for ever again. Apropos similar contexts, wouldn’t it be useful for new Tesco decision-makers to be able to accurately refer to – and learn from – the tacit thinking and undocumented experiences of management and staff when the company launched its ‘Every little helps’ slogan in 1992 or how the Clubcard scheme helped it overtake Sainsbury’s as the UK’s largest food retailer in 1995? Or even, at some future dates, the non-explicit circumstances behind the current crisis, which must have started in 2013?
Coincidentally David Lewis, Tesco’s new CEO, has already said as much: “We need to go back and find out what it was, in its DNA, that made the Tesco brand successful in the first place.” Too late for a first-had account, second-hand or probably even a tenth-hand account, unless, of course, your KM system covers all that hindsight. Otherwise, you’ll just have to guess ….
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What’s the ultimate measure of executives’ remuneration? If it’s productivity, read this damning indictment of top management pay in the UK.
The whole question of how top managers’ pay is ‘calculated’ is complex to the point of being inexplicable. I’m aware of how its done – firstly as a bargaining exercise that embraces prior experience, the recompense achieved in previous jobs, consideration of organisation size, what the competition pays and, of course, availability. Thereafter, increases become dependent on various benchmarks, among them sales performance, share price and inflation. Given their current levels of massive reward, it is tempting to conclude that actual top management compensation becomes a moving focus of all these inputs to suit individuals and their organisations. But there’s one yardstick – arguably the most important of all – that looks to be disregarded, seemingly deliberately.
It’s productivity, the factor of production that provides the measure of investment efficiency, surely one of the bigger responsibilities of management. It defines the ability of top decision-makers to turn sales into best profit or its equivalent in many NGO and Government service sectors. Because it is so rarely mentioned at the institutional level, it is unclear whether the productivity measure is ever actually assessed and/or considered.
Yet top management pay has never been higher at a time when productivity’s comparison with the UK’s major competitors has never been lower. And, even more perverse, the differential in remuneration with their subordinates’ – i.e. ordinary workers who are accomplices in the productivity stakes – has never been wider. To add insult to injury, the pay increase of the subordinates they purport to manage is only marginally above inflation.
The definition of ‘top bosses’ include senior managers in both the public and the private sectors ultimately responsible for ALL of the country’s output of 30 million workers. In recent years public sector pay has often followed the record emoluments of the private sector although many lesser ranking managers in both quarters are more often categorised separately in lower pay grades.
It’s not too difficult to put flesh on the bones of this wider issue.
At the top of the tree – for example bosses in the FTSE 100 companies – it is colourfully reported by the High Pay Centre, an independent non-party think tank, that by the end of the first Tuesday in 2016 (i.e. by January 5) bosses had made more money than the average UK worker will be earning in the entire year. In effect, they were pocketing the equivalent of more than £1,200 an hour, with incentive awards increasing by nearly 50% of average annual salary (Manifest MMK pay survey). For the same period workers’ pay increased almost 2% after near-zero inflation-boosting take-home pay by the biggest margin since the financial crash in 2008 (Ashe).
This was at a time when UK productivity for ALL the British employees they managed was at abysmal levels. Towards the end of last year the Office for National statistics (ONS) was reporting that output per employee was at a 25-year low at – wait for it – 20 percentage points below the average of other leading industrialised nations. Productivity has been comparatively low for decades.
The huge differential between the compensation of the boss and the bossed is – again wait for it – 183 times, up from 160 times in 2010.
The other factor that doesn’t appear to have been factored into management pay in the publically-quoted sector is share price. Year-on-year, the FTSE 100 index over the latest period was down more than 5%.
Interestingly, both bosses and workers typically blame each other for low productivity, both implying the absence of specific skills. Ironically there’s one skill that both parties lack, a proficiency that organisations and business education are complicit in shunning and characterised by the never-ending list of repeated mistakes, re-invented wheels and other unlearned lessons that litter commerce and industry (e.g. a Google search in January 2016 for “must learn the lessons” UK found 59,700 results).
Recognise what it is? It’s Experiential Learning (EL), the ability tied to Knowledge Management (KM), Human Resources (HR) and business education that facilitates organisation-specific lessons to be successfully applied to changing environments and circumstances.
What’s actually happening is that the very flexible labour market is recognized ONLY for its advantage as an instrument of quick change in a moving marketplace. With job turnover averaging around 20% annually – and that includes top decision-makers – it hides an iceberg-like shortcoming by disrupting continuity and bringing with it what’s called corporate amnesia, which, in turn, disengages organic progress and prevents seamless experiential learning. Result? Lots of unlearned lessons, with productivity going to hell …..
For just a hint of what’s going on, the average time in post of a Chief Executive in the National Health Service was just 700 days in 2013 (Kings Fund). In the private sector, 24% of FT100 companies changed their Chief Financial Officer in 2014 (KPMG). And if we follow the model forecast by the US Department of Labor’s Bureau of Statistics that tomorrow’s employees will have 10-14 jobs by the age of 38 – that’s in just half their working life – today’s productivity hell is going to look quite attractive.
In point of fact, jobs change and experiential NON-learning is not exclusive to the UK. But given the higher productivity of the UK’s main competitors, this aspect of production doesn’t appear to be as burdensome. The point here is that there’s no opportunistic value in doing little or nothing about better learning to apply both successes and mistakes to always-changing circumstances and environments.
In the meantime some collegial and obvious questions arise: Why aren’t managers doing more to improve productivity? Are business schools doing their job? And, more pointedly, are top managers in the UK worth their salt? Discuss.
With so many top managers in Davos at the moment, I suspect the underground chat might also take on an international aspect.
A postscript: There are already signs that the differential pay levels are attracting added political attention. Jeremy Corbyn, the new leader of the opposition in the UK, has stated that the business model seems to unfairly reward only one section of the workforce. A future Labour government could, he said, ban companies from paying dividends to shareholders unless they pay their workers the living wage.
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ONBOARDING HAS A TIME-PERFECT OPPORTUNITY TO DO MORE THAN INDUCTION: A PEEK INTO THE FUTURE?
Most employers see onboarding as corporate orientation or as more sophisticated induction, a way of familiarizing and making fresh employees more comfortable in their new environment.
The ‘experts’ in the discipline explain it as a way of accelerating employee performance, setting objectives, instilling a new organizational culture and encouraging a dedication to their new paymaster. The techniques they advocate include classroom training, e-learning and the use of so-called mobile learning incorporating interactive content with new technology devices – all formalizing and updating the old techniques of induction when jobs change was relatively rare.
This seemingly unusual observation about the linkage between corporate orientation and workplace churn is relevant for several unacknowledged reasons, the main one being that modern jobs change is NOT relatively rare any more. It’s endemic, meaning that employers’ corporate memories are now limited to the duration of their employees’ jobs tenure which, in many developed countries, averages just four to five years (lower in the US), figures that include top-flight decision makers (latest sources PayScale, Quarsh). And this is important why?
Such high worker turnover makes onboarding never more important. Its elevated responsibility requires a more active and effective role, yet its routines don’t – or can’t – use the organisations’ knowledge and experience that exists outside the oldest resident employee, whose corporate recall is typically piecemeal, generalized and incomplete. Consequently, without any suitable wider historical input, the ability of current onboarding processes to familiarize new bloods is short weight.
It is here where onboarding could up its game. Because of its formalized role to induct new appointees, it provides the most time-perfect point of the employment cycle to fill this intelligence gap, not only for familiarization but also for improving corporate decision-making, the single most important factor of ANY business stimulus.
With the help of other corporate disciplines such as Knowledge Management (KM), Human Resources, Experiential Learning (EL), business education and Information Technology (IT) – and the nod from higher management – there are two separate and effective mediums that would complement the traditional process more efficiently.
For the long-term historical requirement, there is no better product than the traditional corporate history done in an accurate and readable format. It’s an unfashionable document in today’s times, usually produced as a celebratory medium for an important anniversary and written deferentially. But done professionally as a genuine historical document, it can provide most of the objectives achieved by traditional induction processes. The best time for its presentation is immediately after an appointment is made, which is usually when its content becomes most receptive. Ideally it should be updated every five years or so, which is near enough the current average length of today’s individual jobs tenure.
For the more recent tenure-term evidence, where the quality of decision-making can be dramatically impacted, the advocated product is oral debriefing that can onpass the knowledge and experience of ‘emigrants’ – exiting employees – to ‘immigrants’, their incoming replacements. The idea is not exactly new. It has its origins in the traditional exit interview, which is ordinarily not an interview at all, rather the output of a formulaic, 20-questions means of trying to uncover reason why employees leave. But done differently in oral, non-questionnaire format, the oral debrief can be used to extract the issues and decisions unique to the exiting individuals job, all the evidence that would otherwise walk out of the front door. Done well, it can be especially useful for making determinations. With the employers’ main decision-makers being the most common candidates, such debriefings can be conducted either during tenure (usually annually or after important projects or events) or near the end of their incumbency.
Where it differs from the traditionally branded exit interview is in its intended composition, with an emphasis on the special and more practical non-technical component of how the outgoing individual did things. Normally unwritten, unspoken and unshared, it’s known as tacit knowledge, which is mainly implicit, esoteric and context-, co-worker- and organisation-specific. Precisely, it’s the special way things are done that’s buried in tried-and-tested experience – whether successful or otherwise – and which would allow the next generation to APPLY (rather than repeat) that intelligence more efficiently. The debrief needs to be authoritative and accurate and in the words of the exiting employee rather than in reported speech. Unfortunately, few people have the documenting skills to do the job first hand, so it is more often necessary to have the job done via a skilled interviewer who can tease the experiences out of the individual. In many respects, the questioner is the more important factor of the exercise for, when left to his or her own devices, the subject’s contribution is typically bland and lacking in both incisiveness and rigor.
Whether delivered in-house or by specialized onboarding companies, its potential as a medium for providing experience-based evidence for the next generation of employees at both the individual and departmental levels is unparalleled. As a separate function, it represents the biggest-ever opportunity for this small cog in the huge business wheel and – done with purpose – it can also be one of the most important.
The process doesn’t stop there. The employer then has to equip the replacement employees with the ability (alongside their own experience and education) to take account of this past practice to new environments and circumstances. The difference to past custom is the additional – furthermore permanent – evidential base and the scholastic ability to do more efficiently what is called Experiential Learning (EL), a discipline that is generally NOT taught in our business schools or in-house training. It’s a subject that individuals are supposed to learn informally for themselves through experience, a feature that always distinguishes the best decision-makers. But without an employers’ experience, the ability to learn is restricted to little more than intuition, untested judgment, political expediency, subjective thinking, unnecessary experimentation and delay, an approach to decision-making that becomes very hit-and-miss. And expensive.
This ‘resettlement’ of such corporate intelligence across generational appointees is a serious attempt to improve the quality of decision making, the standard of which has arguably worsened when judged against the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace, all evidenced by the incidence of whistle blowing, cover-ups, gagging, the different types of inquiries, post-project reviews, tribunals, commissions and the self-proclaimed ‘not fit for purpose’ activities. And this at a time when the availability of traditional business education has never been higher.
Arguably a black hole in business education, El is closely associated with organic learning, the acknowledged way that most progress is achieved – i.e. through the building of one experience on another. The flexible labour market’s enforced dispersal of employers’ knowledge and experience – which has introduced to most workforces the iceberg-like phenomenon of corporate amnesia – has upset this model, necessitating a completely new approach to effective decision-making.
The theory and practice of how best to experientially learn is already known, acknowledged models of which include methodologies devised by its main proponent, Ohio’s Case Western Reserve University’s Professor David Kolb. However, to fully capitalize on its reflective approach in today’s transitory workplace requires institutions to fill the knowledge/experience gap left by short tenure.
To do this requires an important culture change at the corporate level, at least among those employees whose departures are self-initiated and/or amicable, which typically are the more numerous. They have to agree to share their acquired knowledge and experience, until now seen by them as proprietorially theirs, in spite of the fact that the attained intellectual capital has been paid for by their employer, created in their employers’ own environment and with their employers’ resources. As indicated, the employer then has to capture this intelligence in a communicable format (via audio, video and/or script with skillful debriefing) that can be passed down and across the organization. Only then can the learning part of EL start.
Whilst flexible working was thought to provide a working environment with transferable experience among walkabout employees enough to make individuals more skilled, the truth is that it has also disconnected employers from their own hard-won and expensively-acquired knowledge and experience ….. an outcome that has more than offset the intended advantage? Is this not one of those unintended consequences of Adam Smith’s invisible hand? And one, bizarrely, that business education and business itself has carelessly allowed to escape their attention for more than 30 years, coincidentally ever since the actively-pursued flexible labour market took hold in the 1980s ….
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EMPLOYEE ALERT. Your boss is short-changing you with the important business intelligence you’re given to make his decisions ….
Here is a draft memorandum you can give to your boss to explain how properly done KM can improve your decision-making – and HIS performance. It’s all about why and how best to share and capture business knowledge, and then incorporate the discipline’s neglected derivative known as Experiential Learning (EL).
Pointedly, it gives chapter and verse to business’s biggest unaddressed deficit – its own hard-won and expensively-acquired knowledge base, most of which walks out of the front door as a consequence of one of the single biggest changes in workplace practice since WW2. What the active flexible labour market leaves behind is characterised by the visible part of the proverbial iceberg, a small measure of its potential content leaving industry and commerce to re-invent itself every generational change. Business misinterprets this employee churn as useful ‘renewal’ and thus providential in a fast-changing environment whereas it actually disengages organic learning by laying waste much of the organisations’ acquired wisdom. It’s another form of the old-style brain drain but on an industrial scale.
Before you rewrite the memorandum to suit your own employer, do three bits of research. Find out from HR your own company’s annual employee turnover (if possible, break it down into management churn and non-management churn), estimate the number of key decision-makers across this spectrum and recall the detail of several examples of repeated mistakes, other unlearned lessons and poor decision making.
MEMORANDUM
MAKING THE CASE FOR BETTER KNOWLEDGE MANAGEMENT (KM)
BACKGROUND: Our current KM system revolves around our IT system, where our data bank stores most of our documentation, both what we generate in-house and acquire externally. While this allows us employees to access such data and information quickly, the evidence is that its usage is LOW across the organisation. If anything, only the most recent records are typically accessed.
The amount of USEFUL content is also low, consisting of mainly data, information and explicit knowledge such as internal and external correspondence and the professional or vocational skills that are recorded in the abundant manuals and textbooks and offered up in training courses. What’s missing is the important tacit knowledge, the special and more practical non-technical component of how we do things that is normally unwritten, unspoken and unshared. It’s the type of knowledge that is mainly implicit, esoteric and context-, co-worker- and organisation-specific to us alone. Precisely, it’s the stuff that oils the special way we do things that’s buried in our tried-and-tested experience – whether successful or otherwise – and which would allow us workers to APPLY this intelligence more efficiently.
The reason why this isn’t normally available is that much of it walks out of the front door when staff leave. Our employee turnover is high, including our main decision-makers. When they move on they take with them what is arguably the more important component of our intellectual capital, effectively our hard-won and expensively paid-for WISDOM.
In the distant past – I’m referring to the pre-1980’s here – long tenure enabled knowledge sharing, however disorganized; most employees had one or two employers, or if they were really unlucky, three in their working lifetimes, ensuring a a measure of continuity. Now the average is around eight – and this includes senior employees. The fact that neither long tenure or knowledge sharing is evident in today’s workplace has changed the dynamic of good decision-making, namely that the single most important component of the art – employer-specific experience – has largely disappeared. The corporate body – us – and backup business education have not adequately addressed this meaningful deficiency.
PROPOSAL: That we upgrade our KM processes. I have put together the following arguments for your consideration.
(1) The single biggest reason why we should invest in better KM is the flexible labour market, which has dramatically changed the employer/employee relationship. In the past, the traditional association between the two was intimately linked through long tenure and shared memory. With today’s high rate of jobs change, the corporate body has, quite deliberately and entirely unwittingly, altered this relationship. No longer are individuals an aggregate part of the institution. Individuals ARE the institution for only as long as employees remain in situ. Then, when the face changes, the institution changes, or more accurately tries to change, bereft of its continuity and at the mercy of new brooms. Ordered evolution has become a shapeless revolution with little regard for the one corporate asset that represents the organizations’ life form – its institution-specific knowledge and experience. It presages a mercurial workplace, with such things as corporate culture, ethos, values, and tried-and-tested usage struggling to maintain an even keel, all philosophically justified by the mistaken belief that the changed ideals are inevitable and thus unavoidable. Having chosen to operate in isolation to its own expensively acquired experience, the corporate “wealth machine” – us – has largely disempowered itself through weighty knowledge loss. In short, short tenure has allowed corporate command to be displaced. All of commerce/industry is similarly affected.
(2) We used to call it the brain drain, when highly trained people emigrated. Now, knowledge loss is happening on an industrial scale without anyone having to leave the country – and it’s been going on since the 1980’s when flexible working started out in The effect of this is that our own bank of remembered know-how and the experiences of the company for which we work is at homeopathic levels. Fortunately, not everyone who leaves, leaves at the same time and job overlapping, mentoring and apprenticeships help to partly smooth the disruptive journey, providing short-term connectivity. But the compounded attrition of this distinctive component of our intellectual capital is still truly massive. Without home-grown knowledge and experience, the constant dilution – and corresponding implementation of others’ homogenised decision-making – means that our unique ESP is relentlessly being offset, and not always in ways that maintain or increase our competitiveness.
(3) High-volume employee turnover raises another important issue that underlines the wider effectiveness of the current corporate structure. Flexible working was supposed to enable employers to quickly adapt to an ever-changing market environment and give replacement employees wider experience. Industrialised countries have benefited differently but while overall productivity has improved in the UK, this matrix still significantly lags our major competitors. Wider experience is undoubtedly useful in many cases but the absence of one’s own corporate knowledge disengages the opportunity to learn from one’s own experiences and is still a major contributing factor to productivity shortfall. In truth it affects ALL high job turnover countries/companies but some are better at one distinguishing factor – the ability to better learn from one’s own experience. It’s otherwise known as the ability to experientially learn. We’re not very good at it.
(4) This single factor affects the accepted way that most progress occurs in organisations – organically, i.e. the building of one experience on another. It is also a factor in how one of the other types of progress transpires; innovative learning, which leapfrogs organic progress, similarly requires a component of incremental awareness.
(5) Productivity, or more specifically our lack of it, has recently been flagged up by the Governor of the Bank of England as an important element in our continuing recovery. The BOE’s contribution is to recommend Government-initiated fiscal approaches such as infrastructure/educational improvements and cuts in red tape but, on their own, they’re insufficient. Coalface decision-making is also vitally important, arguably the very element that, at the end of the day, that should complement – not substitute for – the top-down effort. In truth, experiential NON-learning is pandemic, all contributing to an inbuilt shortfall in competitiveness that reflects directly on our profitability and – not unimportantly – on our employees’ living standards. Just consider the number of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace, evidenced by the incidence of whistle blowing, cover-ups, gagging, the different types of inquiries, post-project reviews, tribunals, commissions and the self-proclaimed ‘not fit for purpose’ activities. Add in all the concealed, denied and/or unacknowledged mistakes and the collective cost of so-called ‘wasted productivity’ is estimated by Proudfoot Consulting to be 7.5% of GDP (2005 figures). Apply this to our own turnover! (fill in yourself a list of the company’s recent poor decisions to further illustrate the problem). See other sections of this blog for further information.
(6) There is another wider education-related issue. The focus of traditional teaching is that decision making is a one-size-fits-all approach. In circumstances where lengthy job tenure allowed employer continuity, this might have been suitable but it is incompatible in an environment that imposes high levels of jobs churn and an associated lack of organization-specific knowledge and experience. On the basis that ALL institutions are different, a different approach to decision-making is required, one that replaces attendant disengagement and the employer-specific knowledge gap. Such an approach encompasses a more inclusive approach to KM and EL, the latter being a formal discipline that traditional business education and training still explicitly neglects. Its raison d’etre is to apply tried-and-tested experience, whether that experience is successful or unsuccessful. For this to happen, individuals need to have access to their employers’ experience and the ability by way of rational reflection to apply that experience to their different environment and circumstances. This quality is not something that is indigenous to most employees.
(7) To better experientially learn from our tried-and-tested practice, the knowledge deficit is key. It’s the commodity WE employees create that is the company’s prime intellectual asset. As the corporate body has paid for it and also supplied the environment in which it is fashioned and applied, the rational argument is that the company should have a measure of ownership alongside the employees who have created it. If we, as individual personnel and teams, take it away, you as the employer – and our successors – will NOT be able to benefit. This raises the important issue of knowledge sharing, a subject about which many of us modern employees are proprietorially possessive, even when we move on. To redress this uncooperative attitude, it would be prudent for the company to include the obligation of knowledge sharing and capture in all employment contracts with staff. After all, the knowledge acquired has been corporately paid for and created within our environment.
(8) The flexible labour market ensures that us employees WILL move on, whatever our rankings, the most usual reason being wage improvement and opportunity. In our case, average annual turnover is (fill in)%, broken down to management (fill in)% and non-management (fill in)% churn. At the national level, the average rate is (also) high – around 20% every year in the UK and many other industrialized countries, higher in the US – and it’s a turnover that you, representing the employer, have found difficult (and expensive) to reduce except at the margin.
(9) When us workers do leave, the academic estimate is that we take with us up to 90% of our employers’ special knowledge and experience. Most of it is tacit knowledge, which is different to the data and information that we normally leave behind in the company’s data bank. Best described as the how of “know-how” of getting things done in our own special environment, it’s the type of knowledge that defines the corporate body and which enables us as employees to perform more effectively. As already indicated, much of it is ordinarily unwritten, unspoken and unshared. When things are shared verbally, there is also always the problem of short, selective and defensive memory recall, especially of the detail. Imagine when YOU Would not you have benefitted from an enduring detailed knowledge of your predecessor’s experience? And will not your successor benefit from an intimate knowledge of your experiences? However important are your distinctive understandings of the company and its environment, there is also relevant and equally important intelligence of how things are done and experienced elsewhere in the departmental hierarchy.
(10) As things stand, the way we operate is, no thanks to employee churn, almost entirely dependent on the knowledge and experience of replacement employees. This means that new bloods are only using the experience of their prior employers with which to make their and, therefore, our decisions. This is not necessarily all bad but however smart are these replacement employees, their experiences still have to be adapted to our dissimilar environment. As such, they will be working with only half of the possible evidence. We tend to believe that the imported experiences of replacements will fully substitute. They don’t. My argument is that our decision-making would automatically improve if we also had access to our OWN hard-won and expensively acquired knowledge and experience.
SUMMARY: The flexible labour market has allowed industry and commerce to accommodate change in a way that more comfortably reflects the fast-changing marketplace. Whilst not deriding the need for continuing ‘change’ – change is inevitable in order to adapt – the reality is that the pace of it is not controllable any more. Like history, KM can provide experience cheaply – if one is aware of it. In the current workplace environment of high staff turnover, much company knowledge and experience – the corporate equivalent of our ‘history’ – is typically being dispersed, removing its obvious benefits for which we’ve already paid. My proposal is that our KM system is upgraded to more fully accommodate our short-term, medium-term and long-term memory, not to enable repetition but to support learning and organic improvement. At the very least the more important decision-makers should be given the opportunity to apply the past to always-changing circumstances and events.
Given short tenure realities, this means that the company’s important experiences and the knowledge that this generates should be captured in easy-to-digest formats. There are three separate mediums/processes for KM to be more effective.
(i) Short- and medium-term memory can be captured with skillful oral debriefing at regular intervals during tenure, before exit or immediately after key corporate events. For this, the issue arises of WHAT’S important to share and capture? In general terms this can be answered by the question WHO’s important. This can be deduced by the total of main decision-makers in our company although there would also be a number of key others.
(ii) For longer-term institutional memory, this can be applied through a comprehensive and readable corporate history – a “How We Got To Now” document – that is arguably also the best way to induct new entrants. Once this is done, it should be updated every five years, which is near enough the current average length of individual tenure in the UK.
(iii) Thereafter, the company should include FORMAL Experiential Learning in its training programmes, which would enable all employees (whether old or new) to become better experiential learners. As noted, formalized EL is not a discipline that is generally taught in our business schools or in in-house training; it’s a subject that individuals are supposed to learn informally themselves through experience. Without access to their employers’ unique experience and a methodology to learn in this way, this becomes very hit-and-miss.
Once all this is done, we will have several more tools to add to swift document retrieval. This will include quicker induction and the ability of rolling generations of employees to better learn from prior practice so that the expensive pandemic of repeated mistakes, re-invented wheels and other unlearned lessons can be reduced. It would be key to improving productivity.
I submit that this would benefit the in-situ employee base in the current generation, the FUTURE employee base – and YOU (and then whomever replaces you when you move on).
Signed …………………………….. Date ………….
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HOW TO SHOOT ONESELF IN THE FOOT. READ HOW THIS HUGE EXAMPLE OF EXPERIENTIAL NON-LEARNING IN SOUTH AFRICA IS THREATENING THE COUNTRY’S ENTIRE ECONOMY ….
The headlines around the country’s monopoly electricity generator say it all: Eskom warns of total national electricity blackout, Eskom suspends executives amid power crisis, Chairman quits amid ongoing power cuts, South Africa power cuts worsen amid longest streak in two months, Rolling blackouts whole weekend, Find your load shedding schedule here, Looming power blackouts threaten South Africa’s economy, South Africa ‘living on the edge’, Leadership crisis short-circuits Eskom, Eskom, a dry run for South Africa itself and What now for junk-rated “dinosaur” Escom?…..
There is no country in the world today in which the supply of electricity does not play a key role in its development. To keep the lights on requires a certain level of professional expertise. When this disappears and/or incumbent replacements don’t or can’t learn from tried-and-tested experience, the absence of light – or more accurately endless power outages – can easily threaten a country’s industrial, business and social edifice.
This is exactly what’s happening in SA at two separate levels, at the national political level and at Escom itself. Both flag up a recognisable deficiency in what’s called experiential learning (EL), an offshoot of the discipline known as Knowledge Management (KM) which, in simple terms, covers the process of capturing, distributing and effectively using knowledge assets such as data, documents, policies, procedures and the expertise and experience of individual institute-specific workers.
While this deficit might seem like an inconsequential explanation for both an organisation or its country host in their parlous current states, the possible consequences of a fundamental knowledge shortfall is not too different from the apocryphal explanation of Napoleon Bonaparte’s defeat at the Battle of Borodino in 1812; that for want of suitable winter horseshoes, the war was lost. For winter horseshoes read essential knowledge. In organisations in the West, high staff turnover has a similar effect but the impact in SA is much higher because of its broader knowledge deficit.
Escom’s predicament is centred on its human resources. It HAS TO – that is to say purposefully – discard many of its qualified professionals in favour of unqualified and inexperienced replacements who, critically, have no detailed institute-specific awareness of their employer or their jobs. This includes the company’s senior decision-makers who, in private recognition of their insufficiency, often hire very expensive ‘consultants’ (frequently former employees) to help them make or rubber-stamp their decisions. In spite of them, Escom’s problems have festered.
The compulsion to restructure the workforce is dictated by legislation that requires employers to hire staff according to an ethnic framework reflecting the country’s national and regional demography. In SA, this means that Blacks, Indians and mixed-race “Coloureds” have to supersede Whites in the workforce of State-Owned Enterprises (SOE’s). Alongside other diktats to ‘incentivise’ similar changes elsewhere in the workforce, implementation began almost immediately after Black majority rule in 1994 but in Escom’s case, the transition was slackened off because its required skills were considered important and the likely effect of big employee churn would be more impactful. In the event, and as the record shows, the 20-year slowdown of dismissals and re-hirings has not provided any perceivable advantage.
And for Escom, the outlook will get no better if reports are true that SA’s Department of Labour is insisting on further cuts in the number of skilled White employees by 3,389, among them 1,081 engineers and 2,179 tradespeople (City Press and Rapport Newspapers, March 8, 2015). On top of this the prospects will look even worse when the announcement is made of another drip-effect – the further delay and the additional cost of the two desperation-measure power stations that Eskom has planned. The expectation is that the delays to 2020 and 2021 respectively will add between R100 billion to R150 billion to the already enhanced budget of R223 billion (Moneyweb Today, March 4, 2015). Escom’s ballooning long-term debt is around 18% of total government indebtedness with its debt-servicing costs now more than R9 billion a year, double the amount of five years ago. Alongside a downgrade of the company’s debt to junk status, worried creditors are questioning the ability of Escom – which ultimately means the SA government – to pay. In the words of one consultant: “There is so much wrong with Escom, in the terminology of venture capital, it is running out of runway. If we don’t turn the situation around, South Africa will fall over its fiscal cliff.” (http://www.dailymaverick.co.za/article/2015-03-23-analysis-the-crisis-at-eskom-a-dry-run-for-south-africa-itself/#.VUzHI9NVikp)
The inevitable big questions are whether SA can weather another six to seven years of rolling power cuts and if – just as important – it can afford another huge black hole in its rainbow balance sheet?
Whether re-staffing delays are extended or not, the imposed churn has a serious spin-off that impacts on productivity, specifically that the employing institution loses much of its organisational memory (OM). And without its OM, it is extremely difficult for it to learn from its own unique experiences, which is how most organisational progress occurs – organically, i.e. from the building of one experience on another. In Escom’s case – and not only at Escom – it is this direct KM-related deficiency that has been unaddressed in huge measure across SA. Even during the employment of important decision-makers, there is virtually no documented knowledge sharing, so little employer-specific knowledge/experience is available for any experiential learning to take place. In effect new employees, even if they come from related industries, start from an unfamiliar organisational base, necessitating an unnecessarily long and unproductive induction period.
The other explanation for Escom – and SA’s – difficulty is education-related leading to similar knowledge shortfalls. The country’s business education system does not include SA business – or wider – business history, a subject that is key to familiarising new entrants with the mechanics of how they they’ll earn their livings for the rest of their working lives. Neither is long-term corporate history used to familiarise employees with the specific inheritance of employers. The unspoken political justification for this is that prior experience – i.e. that which happened pre-1994 – is inapt or unsuitable, a philosophy that denies the unavoidable influences of the past however it transpired.
Behind this impolitic idea lurks another unacknowledged oversight. The focus of traditional teaching is that decision-making is a one-size-fits-all approach. In circumstances where long job tenure allows employer continuity, this might be suitable but it is incompatible in an environment that imposes high levels of jobs churn and an associated lack of organisation-specific knowledge and experience. On the basis that ALL organisations are different, a different approach to decision-making is required, one that replaces enforced disengagement and the employer-specific knowledge gap. That approach is Experiential Learning (EL), a formal discipline that traditional business education and training still explicitly neglects. Its raison d’etre is to apply tried-and-tested experience, whether that experience is successful or unsuccessful. For this to happen, individuals need to have access to their employers’ experience and the ability, by way of rational reflection, to apply that experience to making good and better decisions.
Far be in for me to make someone else’s political determinations but the business decision screaming out for attention in SA is not so much of the squandering of valuable experience and more of what’s called meritocracy, a philosophy which holds that employment, and especially jobs that involve important decision-making, should be vested in individuals according to their genuine ability. The cheerless record of many of SA’s changed institutions and organisations speak for themselves.
For experiential learning’s own lesson, it’s no good replacing any type of experience with bad practice. All that happens is that the learning curve becomes ever steeper. In South Africa’s case, dogma has to somehow be fine-tuned to accommodate the more sensible business imperative but the overriding exigency is clear; jettison, or improve, poor productivity or, however unpalatable, repossess the discarded skills if at all possible. For governmental policy makers, the message is that productive jobs always give politics more life.
Then, to support essential learning at the corporate level, it would be prudent to employ fitting KM practices to incorporate selective, but wide, mentoring, internships and a programme of regular and skilled oral debriefing of main decision-makers. Importantly, this needs to be complemented with dedicated in-house training to familiarise decision-makers with how to apply that knowledge and experience to new environments and circumstances. Ipso facto the discipline known as experiential learning.
In Escom’s case, attention to these aspects of KM would help to smooth out jobs discontinuity and associated corporate amnesia whilst the awareness of wider local, corporate and international business history would help give a measure of continuity to a workforce that has to reinvent itself every generation. For just one example how its own history might have helped would have been the awareness that its current problems are closely related to similar problems in the late 1970s and early 1980s (http://www.gsb.uct.ac.za/files/BusinessDay_newspaper_article.pdf). Unfortunately, even previous generations of Escom decision-makers did nothing to solve those problems, confirming their ability to experiential learn was just as deficient as the current generation of decision makers. The awareness of other previous problems and solutions – management crises, cash-flow issues, maintenance backlogs, etc. – would be equally useful.
Escom’s example of experiential non-learning is not unusual in many other developing countries. Most of Africa has employed similar dogma-related decisions that have stalled development over even longer periods, neighbouring Zimbabwe being the most visible model of such management dysfunction. For SA, the local risk is seemingly unavoidable dissatisfaction over jobs creation, the most recent example being the nation’s xenophobic uprisings. Even Sowetans, normally the more supportive of SA’s citizens, are getting upset with the plan to lately install pre-paid electricity meters. Ironically, these iconic residents are thought to owe Escom around R8 billion in unpaid bills, more than is owed by defaulting municipalities. Then there is the sacking of 1,000 workers at the as-yet unbuilt Medupi power station and the spinoff walkout of 17,000 other workers who refuse to return until the discharged workers are reinstated. All against the plan to raise electricity tariffs by more than 25% above already-heightened prices over the remainder of the financial year and, showing how much SA’s coffers are emptying, the planned sale of its stake in the wireless operator Vodaphone to stump up R10 billion.
The country’s inability to learn from experience has cost it dearly so far. There is also the prospect that continued experiential non-learning will cost it even more. Will these outlays include the outcome that some of the headlines about Escom are suggesting? SA’s choice is clear – be business savvy or risk letting its political chickens come home to roost.
Discuss …..
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Management alert. A striking statistic that hides a clue how British productivity CAN be improved
British-owned companies are less profitable than foreign-owned companies in the UK. This finding comes out of recent figures from the Office for National Statistics (September 14, 2014) showing that just 1% of registered businesses in the UK in 2012 were foreign-owned. Quite low, I thought, but the real jaw-dropper was that they contributed 29% of the non-financial economy. With much of the more profitable financial sector also foreign-owned – it accounts for another one third of the British economy – this figure would disproportionately be even higher. In both sectors, many were takeovers of existing British companies that, especially in the non-financial sector, were often unprofitable but – here’s the more noteworthy point – they ALL continued to employ British workers, whose record of productivity in their previous employment – and going back decades – was never much to write home about.
The obvious question is how come so many relatively unproductive workers could be transformed? And what exactly does foreign-ownership bring to the party?
The apparent disparity could, I thought, be down to the fact that foreign-owned businesses were more likely to be large in terms of employment, so they would probably add more value to the UK business economy than smaller businesses. But no, even micro businesses employing fewer than 10 people were disproportionally more profitable; whilst, overall, smaller businesses were least likely to be foreign-owned, their numbers totalled 0.5% of registered companies and contributed 5% of gross value added (GVA).
What does all this mean? The unavoidable suggestion is that the average contribution of home-owned business – represented in the research by GVA, effectively the measure of income generated by individual businesses minus the costs of goods and services, which comes out slightly lower than actual GDP – IS undeniably lower. Said differently, though, foreign-owned companies must be better managed, a conclusion that obviously casts aspersions on the quality of home-grown management in their own environment and the effectiveness of local business education.
It’s not a detail that is entirely unacknowledged, the Department for Business, Innovation and Skills formally admitting that the UK does have “significantly poorer management skills” (report, July 2012). But where this foreign-ownership disclosure does introduce something new is that it provides evidence that British workers are not resolutely less productive. In other words, they CAN outwork many of their competitors.
No, I’m not going to suggest that all of UK LTD. gets itself taken over by foreigners! What I AM saying is that the presence of a non-British influence in the workplace has somehow transformed the abilities and output of British workers – and this needs to be isolated and, possibly, applied. It won’t be simple given that the different styles will include those of the US, France, Germany, Holland, Switzerland, Spain, Japan, Canada, Jersey and Luxembourg, which makes the job of extracting their singular influences one for social scientists and/or the experts who have overlooked where others have succeeded in our own environment. In the meantime, the workplace does hold some quite obvious, yet unacknowledged, clues to one known inherent failing of British management that is already confirmed by comparisons of international productivity. The weakness has had, and continues to have, a huge impact on this Achilles heel of low productivity and, thus, profitability.
That foible of British companies, and therefore their managers, is that so many are experiential NON-learners – i.e. they don’t learn very well from experience, both from their own and others’, but especially from the former. That weakness, which could show up foreign-owned companies as better learners, may well be one of the pointers that emerge from any research into the phenomenon, an aspect that would highlight a known gap in both the workplace and business education.
For separate evidence of the scale of British NON-learning, the list of illustrations is endless, among it the catalogue of mistakes that get repeated, the wheels that are unnecessarily re-invented and other unlearned lessons that litter commerce and industry, all ad nauseum. Add to this the iceberg-like incidence of whistleblowing, cover ups, gagging, the different types of public inquiries, post-project reviews, tribunals, commissions and the catalogue of self-proclaimed ‘not fit for purpose’ activities, etc., all of which contribute to the estimated cost of wasted productivity at 7.5% of GDP (Proudfoot Consulting. 2005). Adjusted for inflation, this same percentage would total £113 billion for the 2012/2013 year, more than the total revenue expenditure of the National Health Service.
These examples and figures ultimately confirm that British managers do have difficulties with this aspect of learning, which is a competency that negates the accepted way most progress occurs in organisations – organically, i.e. from the building of one experience on another.
If, then, experiential NON-learning is part of the problem, experiential learning (EL) is clearly the solution. It is a dedicated subject that requires a completely different approach to decision-making – and specifically how to teach it – in order to cope with the changed way the workplace operates: in short by bursts of activity with different faces. What I’m talking about is the flexible labour market, where everyone – including managers – changes employers on average every five years in many industrialised countries, lower in the US. Traditional decision-making is taught as a generic, one-size-fits-all subject to individuals whose experiences within organisations was long-term and shared. The fact that NEITHER is evident today should alert employers and business educations that something important is missing.
Short tenure and jobs disruption have been responsible for constantly disconnecting individual employers from their unique knowledge and experience. Without this important component of one’s own employers’ intellectual capital, the ability of new bloods – even remaining employees – to fully experientially learn can’t happen. All that transpires is that employers become wholly dependent on the unfamiliar knowledge and experience of replacement staff. Without access to institutions’ own knowledge and experience, generations of managers and their subordinates have only half the evidence with which to work. Such short measure, the results of what’s called corporate amnesia, is no friend of good decision-making and better productivity – however competent are replacements.
The flexible labour market has had one other systemic effect that is equally unnoticed and damaging. Because of short tenure, managers have largely relegated their role for productivity improvement to the government, which – in defence of competitive underperformance – has stepped up its fiscal enhancements with policies such as tax breaks, improving infrastructure and providing better education/training. A strategy that has had only marginal effect, with productivity still lagging the UK’s major competitors, its ‘sticking plaster’ effect has been a poignant reminder of the wisdom of the late management guru, Peter Drucker, who counselled that “It is only managers – not nature or laws economics or government – that make resources productive.” (Managing in Turbulent Times, 1980).
To compensate for the upturned workplace, it is necessary to do something more about the organisation-specific knowledge loss that slips away via flexible working. Simply stated, employers have to capture their special knowledge and experience and business education has to teach a more directed kind of decision-making that specifically includes that unique evidence. For an acknowledged methodology, there is Professor David Kolb’s reflective model of EL updated to accommodate flexible working’s disruptive influence.
Bottom line, this would help to bring back the workplaces’ misplaced continuity and return decision-making to its rightful vendor. Tangentially it would also re-focus the art of decision-making towards being company-specific, allow employers to maximise their human capital even after employees have left the company, connect youth with experience and, apropos the dialogue in one of English novelist J.L. Carr’s texts, connect with: “You have not had 30 years’ experience. You have had one year’s experience 30 times.”
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“The left hand doesn’t know what the right hand is doing.” How business and business education can join to overcome this common management affliction
To KM-ers, the benefits of our discipline are blatantly obvious but it’s no secret that the progress it has made since it was first launched out of a small academic conference in Boston in 1993 hardly equals its importance in today’s flexible labor market.
At the simplistic level, KM’s raison d’être is the continuing corporate use of corporate knowledge in its various forms, and particularly the corporate knowledge that is unique to a host employer. To be helpful, it has to be captured – and then applied – to enable more than one person to benefit for exactly the reason that today’s workforce has become so discontinuous across the corporate hierarchy. There’s another reason why KM has become important; the increasingly fragmented business disciplines that have arisen out of today’s more complicated workplace have resulted in uncoordinated management decision making, best described by the idiom that “the left hand doesn’t know what the right hand is doing”. So, in addition to solving the problem of allowing relevant knowledge and experience to be passed DOWN the organizational generations, properly constructed KM can ensure that the same knowledge and experience can be effectively passed ACROSS the organization.
To date, most of the work into KM has concentrated on capturing, storing and disseminating data and information through Information Technology (IT)- based systems, usually through an intranet to enable ready access to host organizations’ documented base of facts and other data and information. This is the explicit part of corporate knowledge, the WHAT of know-how but only half of the actual experience base. What’s visibly missing from the knowledge mix – and what practitioners and institutions have yet to effectively incorporate into KM – is the lubricating component known as tacit knowledge, the distinctive organization-specific HOW of know-how that typically walks out of the institutions’ front door at times of staff exoduses, which today occurs at the annual rate of 20% and upwards in many establishments, higher in the US. Together, these two types of knowledge provide the complete tried-and-tested evidential base that would allow unseasoned and transiting employees to better apply their decision-making skills to changing conditions and circumstances. It’s the discipline known as Experiential Learning (EL), the decisive link in the KM chain that allows organisations to empower so-called organic learning, which is acknowledged to be the most effective form of progress (from the building of one experience on another). Requiring the skill of studied reflection, it’s also a still-to-be actioned methodology that falls squarely into the role of business education.
Bottom line: it provides a more rigorous and enduring ‘lessons learned’ approach to decision making.
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p.s. Without proper KM, corporate access to prior institute-specific knowledge and experience ordinarily has an extremely limited corporate audience and, after a short time of staff churn, NO corporate audience. Whatever IS available becomes entirely dependent on the inherent short, selective and defensive Organizational Memory (OM) of the few individuals who don’t walk out of the front door. Even with good recall, such individuals are hardly adequate repositories of much more than a smidgeon of OM.
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“Australians are amnesiacs” – but what about its business sector? And are other countries equally challenged?
A third Aussie academic’s suggestion that Australia suffers from “amnesia” raises the tied question whether this forgetting culture at the political/social level is also evident in commerce and industry. Do they, too, have short memories and, if so, SO WHAT?
That the argument is persuasive comes from Brendon O’Connor, Associate Professor in American Politics, US Studies Centre, at the University of Sydney, who supports his assertion with two other prominent Australian authors, Peter Carey in his “Amnesia” and Robert Manne in “The culture of Forgetting”. “The notion that we are a nation of amnesiacs when it comes to the past is compelling,“ writes O’Connor (Brisbane Times, November 5, 2014).
If right, the equivalent in the business world – corporate amnesia – is providing an unacknowledged migraine headache that commerce and industry, even government, have indirectly been actively encouraging since the 1980s, when more permanent employment was replaced by the so-called flexible labour market.
This single change in workplace practice has shifted the reality of where an organizations’ ‘experience’ resides, previously with the individual institution. The persistent exodus of employees has, literally, denuded the organization of much of its prime asset, its distinctive knowledge and experience. In its place, the belief is that the imported experience from replacements will wholly substitute. It doesn’t, no thanks to the rolling leave-taking of the tried-and-tested workings that make the organisation special in the first place. Today’s description of it is the organisations’ DNA, honed by its distinctive environment and circumstances.
Don’t leave me just yet. The ability to quickly adapt a workforce to a changing marketplace was initially an attractive policy for employers (it still is) but the unintended consequence of short tenure imposed abnormal workplace disruption and – more importantly – the continual loss of its important institution-specific knowledge and experience. Yes, strategies like job overlapping and mentoring help for at least one generation but given academic estimates that exiting employees, when they hit those revolving doors, take with them up to 90% of their employers’ unique know-how – most of it tacit and nothing of which typically gets into data banks – the typical year-on-year knowledge loss for individual organizations is big, especially when it involves important decision-makers; for the three decades this has been going on, the compounded total is truly massive, as has been the camouflaged negative impact on productivity growth. What’s also happened is that institutions’ individuality has progressively diluted to a weary uniformity, where all have been exposed to the same knee-jerk management solutions. Stand up the supermarkets, DIY stores, fashion outlets, even the High Street and more.
Two more impacts are evident. Without the special ‘lubricants’ that flexible working has industriously dispersed, institutions lose the organic way that most progress occurs – i.e. the building of one experience on another, ably assisted by the inherent loss of corporate momentum every time the guard changes. And without the awareness of tested past practice, there arrives the hidden cost of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. For the individual organisation, the incapacity to experientially learn is a modern phenomenon that business education and its prime market and facilitator, commerce and industry, have negligently overlooked.
Specifically, both have ignored the critical importance of institute-specific knowledge and experience to the learning process, business for allowing an important part of their main intellectual asset to walk out of their front door on a regular basis, and business education for not teaching the formal discipline of experiential learning.
The difference between traditional ‘learning’ and ‘experiential learning’ is tangible. Technically, learners are able to efficiently apply their education and their own prior experiences to new environments and circumstances. While both depend on remembered and/or obtainable data, information and knowledge, experiential learning is contingent on also being aware of the object employers’ unique knowledge and actual experience which, of course, has gone walkabout. This probably explains why business education doesn’t teach how best to learn from this enlarged evidential base but then nobody – either business, themselves or others – has suggested that it should, surely an outcome that highlights how disengaged is one with the other. In today’s changed workplace, it’s not enough to be a learner. It’s now necessary to be an experiential learner.
Truthfully, the irony of amnesia, no less corporate amnesia, being unrecognised in a sophisticated and educated society is an especially curious expression of current human nature.
For how to assess the weight of corporate amnesia and its invisible consequences, the giveaway pointer is the rate of employee turnover. For Australia, there is much contradictory evidence for the actual rate, with the Kelly Global Workforce Index in 2013 finding that Australians are the world’s leading job movers while Hay Group reported, also in 2013, that Australia has the joint-lowest proportion of workers intending to stay in their current roles for over five years. Yet another, The Australian Human Resources Institute’s survey in September, 2013, is more cheerful; medium-sized businesses were losing staff at the highest rate (17 per cent), smaller companies at the annual rate of 11% and larger companies at 10% a year, which happens to compare favourable with many other industrialised countries.
Whichever is correct – and however beneficial is the original intended flexibility factor – Australia’s main focus on its job churn problem is to try and reduce turnover rates rather than encourage knowledge sharing between the generations of movers. Which, at even low rates, would seem to be the more logical.
As with employees in other countries, the question of knowledge ownership and sharing are among the main obstacles to a more comprehensive and useful Knowledge Management (KM) programme. Based on historical precedent, employees typically argue that they have sole proprietary rights. It provides an important definition of their ability, the basis of their negotiations around remuneration and their status, so why should they share? Against the reality that it also defines the way business is currently run, employers are now realising that the high-churn workplace has provided the justification – and requirement – to shift this exclusive attitude. Their argument could be that given the employer has paid for the knowledge and also provided the environment in which that knowledge is created, this exiting bit of institution-specific intellectual capital should have joint ownership with the employee. Sharing would, they could also argue, hike business output, which would ultimately be beneficial to both parties if everyone did it. Coincidentally it would be a discourse of equal importance and effectiveness to the one that triggered the flexible labour market three decades ago.
An issue best addressed at the beginning of an employees’ tenure, agreement could provide the beginnings of a more comprehensive and powerful KM programme of capture-and-learn to close the important corporate knowledge gap. However unrecognized, the implications for continuing NON-sharing are, arguably, less than sustainable, especially with better-learning competitors always in the slipstream. With experiential NON-learning contributing heavily, the cost of wasted productivity, for example in the US and several European countries, is between 5.9% and 9.7% of GDP (source: Proudfoot Consulting in 2005). It’s also worth remembering that better KM, exactly like history, can provide experience cheaply – after which it doesn’t have to be re-invented or even paid for ever again. Just applied, which is happening anyway – but without the full deck of cards ….
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p.s. When it comes to being amnesiac, Australia, I argue, is much the same as many other nations. The questions of short tenure, knowledge loss and experiential NON-learning are certainly evident elsewhere, even dictated by political dogma. Where the difference lies elsewhere is in the different levels of awareness or the simple disregard of the problem and, particularly, the solutions. This could be explained by the reluctance of executives to see anything negative in flexible working or the fact that the same executives are themselves part of the flexible labor market and, therefore, less concerned than they might be otherwise. As an aside, their leaving their own footprints behind them in some permanent format would be just as useful for their successors.
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When your hiring option is a graduate or someone more experienced, which? How our flexible workplace has complicated the choice and rubbished the ensuing transition ….
There is an article given space in the Daily Telegraph mentioning the Chief Executive of a graduate recruitment company (October 15, 2014) declaring that SMEs are being shortsighted by not hiring more graduates. The argument is that fast-growing SMEs need to start planning ahead in order to have the talented employees they need later on and that they will then have the chance to mould them into their own DNA to become “culture carriers for the founders.”
This is an outwardly compelling objective but did anyone else see the perpetuating flaw in the reasoning for all employers, including SMEs?
The outspoken head hunter, no doubt motivated by self-interest, should know that very few graduates – and I mean very few – stay with their first, second or third employer for very long, or even return to any of their previous paymasters. They – the employees – are energetic participants in the very flexible labor market, which employers have been championing for years so they can more quickly adapt to changing market circumstances. In tandem, and quite unexpectedly, their employees have also taken it up with gusto, reasoning that the best way to improve their salaries and experience is to hop, hop and hop again. In their working lifetimes, the number of hops that a typical employee will make – and this includes my quoted headhunter’s graduates – averages around eight, more in the US. So the stated advice is little more than pure fantasy.
In reality, the flexible labor market has killed off the prospect that the employee tenure of almost everyone will be protracted. However hard it is to admit, most companies – and this includes SMEs – are then just being opportunistic for the simple reasons that graduates’ prospects are purportedly better than non-graduates, that their cost is lower than someone more senior and that there is the outside chance that they’ll stay. What all employers have done is effectively shot themselves in the foot; they have traded employee flexibility for conveyer belt workplace disruption, institute-specific corporate amnesia and the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that have squeezed much of the life out of their productivity growth. So, in the case of new graduates – as it is for most employees – the argument around tenure longevity is universally bogus, as are the difficulties around the eight or so inefficient transitions as currently effected.
To compound the headhunter’s fantasy, the stated suggestion is that graduate hire is better than the engagement of more experienced individuals. Whilst neither group of employees should be automatically discounted by employers, both options are, in truth, ill-grounded because seniors are themselves also actively engaged in ‘hopping’ and, whatever their acquaintance with prior practice – in effect someone else’s practice – their experiences still have to be adapted to their new employers’ exclusive circumstances, environment, culture and DNA.
It can be rightly pointed out that graduates may be quicker learners than non-graduates or even more experienced individuals. But without being aware of prior practice and/or acquired knowledge, their ‘learning’ is restricted to the contemporary, which excludes an important swathe of potential erudition that would derive from connectivity and give a frame of reference. Without a frame of reference, learning is just reflex.
Unnoticed, the short tenure reality of the workplace has changed everything, making hiring choices more challenging and transitions less than smooth. Both graduates and the more experienced are handicapped by their unfamiliarity with their employers’ distinctive knowledge and experience, as it is with even new non-degree appointees.
However unkind it may be to suggest, it can be argued that the benefit of graduate hiring in a low tenure workplace is marginal at best, negative at worst and conceivably little more than a altruistic gesture on behalf of the employer, who is ultimately dependent on other employers doing the same thing.
I am cognisant of the invidious position that graduates find themselves but the 35-year-old flexible labor market does have an insidious downside. I’m believing that it is one of the examples of economist Adam Smith’s “invisible hand” – an unintended consequence that employers and academics either ignored, didn’t see or forgot to better address.
Actually, the choice between graduates or more senior appointees – or even non-graduates – need not be subjective at all if employers properly engage Knowledge Management (KM) and the formalized discipline known as Experiential Learning (EL). To cater for short tenure, the former should enable knowledge capture before it walks out of the front door and the latter – still untaught in any structured way – allows short-lived employees to better apply their new employers’ tested practice to new environments and circumstances. That way, genuine meritocracy could be applied to the selection using the quality of which candidate was going to be the better experiential learner.
It is this attribute that does not generally find its way into assessments of interviewees’ abilities, yet the aptitude to learn from experience has always been important and is now a critical skill in today’s high-churn workplace. Alongside the KM solution there is another unaddressed issue – the question of business education’s role in better preparing undergraduates for their job in industry and commerce. Should business education do more to familiarise their flock?
As indicated above, it is employers – through, for example, the appointments serviced by my quoted headhunter – that are providing this late familiarity. Business education argues that their role is academic, not hands-on. It is true that many business academics have no real business dirt under their fingernails and try to compensate for this by sometimes inviting real-time industry figures to describe their work. But business educations’ reluctance to get more involved at the practical end of business is still both uninspired and shortsighted.
Together with the constituency they serve – commerce and industry – they are actually well positioned to provide such familiarity. My suggestion is that companies and other institutions should be encouraged to produce their corporate histories in readable and instructive format. In addition to being able to provide in-house induction and instruction, selected accounts could then be given to undergraduates (and others) as recommended reading material. This would provide new entrants with the necessary coalface insights to reduce their workplace unfamiliarity and give them – and their employers – a head start in their jobs. Of course they, the corporate histories that is, would have to be produced professionally ……
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SHORT-TERMISM encourages our productivity shortfall – read this unnoticed and compelling explanation ….
It’s no big news that, in the West, we mainly look to the short term? Is there a linkage with this, the poor forecasting record of our economists and business analysts, and the difficulties we have in maintaining productivity growth?
Short termism is strongly reflected in many of our business-related strategy decisions, usually explained away as a reaction to the fast-moving marketplace, the fact that speed is considered a virtue, as are the beliefs that ‘time is money’ and there is an advantage in being ‘first to market’. In the East, the approach is more reflective, less emotional, largely holistic and longer term, stratagems that get the approving attention of the West but little traction.
Alongside this there is a coincidental weakness in the performance of economists and business analysts, who are at the heart of most of our tactical decision-making. Governments take serious note of them, banks too, and businesses and private investors follow. At one end of their game, the most glaring example is how so many missed the signals that led to the biggest downturn for almost a century. At the other end, many stock market analysts are bullish one day, only to be floored the next (the supermarket sector to name the latest one), and visa versa. Accepting that the job is a demanding one, it seems that the quality of their judgment is less than rigorous, in spite of their specialist education.
Then there is the palpable decline, clearly seen in OECD countries, in the productivity growth of businesses, which is defined as the increase in output not attributable to growth inputs such as labor, capital, and natural resources but driven by technological advances and/or improvements in efficiency. This has become increasingly difficult to achieve over the past 30-odd years, also, coincidentally, at the time of never-wider business education.
What, then, is the link between short termism, unreliable projecting and squeezed productivity growth? There is a fourth coincidental observation, which, I argue, helps to explain the connection and which reinforces the negative outcomes of all three. It surfaces in business education and the decision to disregard two co-relatedrrelated disciplines which can broadly fall into the unfashionable speciality called HISTORY in its various forms and the most effective way to learn from it, a formalized discipline called Experiential Learning (EL). In the business world, both are as rare as hen’s teeth.
History is an acknowledged medium for learning. Unfashionable though it is, schools use it poorly and museums feature it more imaginatively. It is a subject that gets dedicated generic attention in a number of professions, among them architecture, art, science, politics, the military, etc., but not, strangely, business, where economic history has been in decline as a dedicated subject for years. Except for a short time at Harvard Business School, its cousin, business history, is virtually unknown as a curricular subject, as is its younger sibling corporate history, which is a vehicle typically used by businesses only as a celebratory way of marking an important anniversary. For whatever reason their resistance by almost all sections of commerce and industry is rigid.
My point is that history is a massive resource of relevant knowledge and experience. To limit its awareness to only the experiences of a contemporary nature – i.e. that that can be tangibly remembered personally by individual employees – is to deprive decision makers of a huge and valuable evidential resource. Without it, economists and business analysts – not to forget coalface decision makers in commerce and industry – can ensure little true context, perspective and, I argue, objectivity, all of which affects their fitness as observers, interpreters and decision makers.
In truth, history provides experience cheaply, a quality that ought to enhance the entrepreneurial credentials of business people. Its awareness is championed by devotees from Abraham Lincoln (“We cannot escape history”) to Winston Churchill (The further backward you can look, the further forward you can see”) and Mikhail Gorbachev (“History decides the future”). Admittedly most are politicians and although there are business people among its backers, their numbers are few and their profile low, with most of them preferring to echo the mantras of “History is irrelevant” and “One must only look forward, not backwards”. The great contradiction of this attitude is that businesses ostensibly value experience, even attaching great pecuniary cost to those who have it.
In the politicians’ case, they are usually referring to history in its long-term format, which is useful for strategic applications and longer-view decisions. But history as a medium doesn’t stop there. Its absence in its long-term format is now compounded by its in-company dearth in its medium and short–term forms. Here I’m referring to the more contemporary history to which I’ve already mentioned and which is ostensibly ‘remembered’ by employees of their own experiences on behalf of their current paymasters. It is within this defined classification that history’s huge potential application has also not been recognized.
Its awareness as an intellectual asset has become critically important to commerce and industry because of one of the biggest changes in the way we do business through the flexible labor market. It has, over the last 30-odd years, given us short job tenures across the corporate hierarchy averaging around four/five years, lower in the US. A transitory workforce has meant that employers’ unique knowledge and experience has been constantly exiting their premises, leaving organizations to continually work without an intimate awareness of the special way they deal with their own business. The result? Conveyer belt workplace disruption, institute-specific corporate amnesia and the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. It is not un-coincidental that the increase in this phenomenon overlaps with the onset of flexible working in the 1980s – and in spite of the wider availability of business education.
Rather than history proper, I prefer to call this history Organizational Memory (OM). Unlike long-term history, this more contemporary form of an institutions’ intellectual capital has a more practical application for day-to-day management. It is at the heart of organic learning, the building of one experience on another that is acknowledged as being the most efficient form of progress. The preferred capture medium for it is oral debriefing in written or visual/video format, conducted after important corporate events and/or at regular intervals during or at the conclusion of the tenure of important decision-makers. The significance of capturing this type of history is three-fold, firstly to help overcome the endemic short, selective and defensive memories of employees, which is a characteristic of all individuals, secondly to ensure that the knowledge and experience can more precisely be made available across the organization and lastly, also for successive generations, This form of OM can usually be separated into two distinct periods – short-term OM relating to important corporate events that can recur and medium-term OM covering the period up to employee exit, which is typically around five-years.
In truth, if it is not captured, its use in decision making is NIL, zero, zip, nix or as dead in the cage as one John Clees’s parrot.
Once detained, the acquired evidence base then needs to be applied through the other discipline called Experiential Learning, also widely unaddressed in business education. Typically left to individuals’ own resources, it specifically connects the skill of reflection to decision making in different circumstances and environments.
All this might seem onerous but I would argue that history’s more rigorous application is a long overdue addition to conventionally flawed business education and is now a vital supplement to compensate for the loss of the organizations’ unique knowledge and experience. Not insignificantly, at least in the UK, there is now a public admission that the flexible labor market may be “too flexible” and that it is, indeed, contributing to low productivity (Vince Cable, MP, Business Secretary, Resolution Foundation, May 13, 2014).
Wrapping up, the widespread absence of history in the long-term leaves individuals and their employers with only short- and medium-term OM with which to make their decisions. It is this shortfall of older chronicled evidence that begets short-termism and its side effects. The reality is that even this historical witness deficit can be short changed. There is the already-mentioned imperfect recall of the experiences of both older and new employees. On top of this the experiences of the latter have an additional handicap. Whilst not always unusable, their experiences are corporately unfamiliar and always have to be adapted to their new employer. If adaptation is necessary, as it always is, surely better to include one’s employers’ own experiences in the decision-making mix?
Without history/OM/EL – disciplines that fall neatly into the burgeoning discipline of Knowledge Management (KM) – the effective experience base with which to make good and better decisions is incomplete. To duck it – some call it revisionism or the reinterpretation of orthodox views on evidence, motivations, and decision-making processes – is to give up a golden opportunity that is already tailored-made to home grown circumstances. I conclude that against the deafening chorus of “We must learn the lessons” that echoes around the workplace as generations of workers replace each other, ‘history’ in its various guises needs to be more fully integrated as a management tool. Only then can the organizations’ legacy be more than a funeral.
It’s not rocket science. History, whether successful or unsuccessful, is the largest reservoir of tested knowledge and experience. When parable celebrity Rip Van Winkle awoke after 20 years, his musket was rusty, his dog was nowhere to be found, he recognised no one and only one person acknowledged his family name. His wife had passed away and his close friends had either died in the American War of Independence or moved away. Everything was unfamiliar. Unaware that George Washington had become the first President of the United States, he gets into trouble when he proclaims himself a loyal subject of King George.
In the world of real-time decision-making in business, he would be left wanting of intervening knowledge and experience – a.k.a. history – and consequently less able to cope with the present and the future. In the actual fairy tale he resumes his old life of idleness and, in the process, inspires his new neighbours to do likewise.
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IF IT AIN’T BROKE, DON’T FIX IT. But what if it IS broke – and DOES need fixing? With a business proposal, you win the argument – but nothing happens. Why?
Recognize this scenario? I’m interested in why this happens. I’m supposing that you’ve covered ALL the required bases and the proposal is a genuine no-brainer. But zilch transpires.
Underlying this, I’d like to better understand why some decision-makers are more defensive than others. Some organizations, for example, will only react in defensive mode – i.e. when their backs are against the wall. Others are more proactive.
In his book ‘Risky Savvy’, Gerd Gigerenzer writes that defensive decision-making is an indicator of weak leadership and a negative “error culture”. In the UK, for example, our caution – and related unwillingness to change, which often overrides change for the better – is legendary. In the US, proactive is more instinctive, suggesting that – with both countries having similar education availability – the explanation is cultural. This reason gets some support at the geopolitical level with several topical events. The fight against jihadism, for example, has been ongoing for decades, yet every time it erupts, leaders start from scratch to build some new ad hoc coalition to fight it. Elsewhere, the frightening Ebola virus in Africa has been a recurring problem, also for decades, but efforts to fight it have never got very far. In his Op-Ed column in the New York Times (September 16, 2014), David Brooks describes these high-profile examples, both of which now present precarious outcomes, as governance failure, expressive of a cultural shift away from what he comprehends as Organization Man, the non-institutional fashionable idea that sees big hierarchical organizations as dinosaurs. Other examples abound, from climate change to unhealthy food production, even to the UK’s certain constitutional crisis following the late address of the Scottish independence issue. Whilst my particularly focus is principally non-governmental/political, there is a conveyer belt of instances of apparent inert decision making in the business world, prompting the deafening chorus of “We must learn the lessons ….”.
In their explanation of why this is happening, the named commentators are right in their own way but there is a more elemental reason without which most decision-making becomes less than rigorous. It comes down to a generalized INABILITTY to learn from experience, an untaught skill in the way we’re educated. Alongside the widespread disposition to forget to remember, we’ve mostly become experiential NON-learners, where successive generations are unnecessarily repeating mistakes and reinventing the wheel because – no thanks to the highly flexible labor market – they lack the institution-specific evidence and the ability to better apply erstwhile lessons. As the evidence shows, it’s visible in much of our decision-making, whether in business or elsewhere. We just don’t reflect on employer precedent to complement the evidential base, leading to excessive caution and ‘hang fire’ decision-making.
The experiential NON-learning conclusion derives from anecdotal evidence of widespread mistakes of a recurring nature across commerce and industry supported by my own empirical research showing a coincidental decline in OECD productivity growth during the near exact period the flexible labor market started out in the 1980s. Paradoxically, this has occurred at a time when the availability of business education has never been higher. Flexible working was a deliberate workplace stratagem to accommodate the fast-moving marketplace of the time that has given us reduced employer tenures alongside widespread workplace discontinuity and institute-specific corporate amnesia, leaving employers having to depend almost entirely on the detached experiences of others’ in their decision-making. The unintended consequence of all this is that, without the accessibility of one’s own employers’ unique knowledge and experience, there is little opportunity for transiting employees to facilitate organic learning (from the building of one experience on another), which is acknowledged to be the most effective form of making progress.
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The pioneering “Big History” idea that Bill Gates is pushing for High School students overlooks an equally innovative idea for business education that can spin off through KM, EL and decision making
As part of his philanthropy, Bill Gates is championing a new approach to teaching history to US High School students, based on the work of Australian professor David Christian (New York Times, September 5, 2014). Its distinct style aside, Gates is clearly acknowledging the importance of the genre in general education.
If his new-style teaching approach is beneficial for the universal scholar, would not business history – and maybe Professor Christian’s distinctive approach to teaching it – be equally beneficial to an undergraduate and post-graduate business audience, even to High School pupils in different formats? After all, most students, whatever their education, and particularly business school scholars, will end up in the business world in some way. Also, many other professions – politics, art, the military, science, architecture, etc – include their generic history in their own education but – strangely – not the tutelage of doing business. Is not business a profession, or has its importance not yet been fully recognized as one of the mainstays of society? If not – and even if it has – I’m surprised that Mr Gates the businessman has missed this obvious application to an occupation to which he owes his success.
There is an even more practical ‘coal face’ application for history in today’s modern workplace, where the flexible labor market ensures a large and continuous turnover of staff (see p.s. below). This has meant that an endlessly transiting employee base is largely unaware of their new employers’ unique knowledge, experience and way of doing things. As such organizational memory (OM) – alias history in its corporate format (otherwise the younger sibling of business history) – becomes the only pathway to replace absent familiarity and specifically the establishments’ own exiting know-how. Without institute-specific corporate history, there is little or no ability to learn from one’s own unique knowledge and experience, a reality that unseats organic learning acknowledged to be the most effective form of making progress (from the building of one experience on another). Properly managed OM (again ‘corporate history’), whether in its traditional narrative form for long-term organizational memory or oral debriefings for medium- and short-term memory – falls neatly into the emergent discipline of Knowledge Management (KM) and immediately becomes the raw material for the new and attendant formal discipline called Experientially Learning (EL), another of business educations’ curricular oversights.
The common perception of history is that its storyline is exclusively long term. It’s not. There is also an unacknowledged – and unaddressed – practical application at the local institution and contemporary level. Management consultants try to utilize it but their evidence base is typically and inevitably imperfect.
And that, Mr Gates, is how history at the micro level can be better used to good effect, in particular provide hard-won experience cheaply, after which it doesn’t have to be re-invented or even paid for ever again. I’m sure you recognize the added value of lessons NOT forgotten so that they can be applied by successive generations, even in the innovative industry in which you do so well.
p.s. FYI Microsoft’s average staff tenure is just four years, six months above the average of all Fortune 500 companies (Payscale, July, 2013). Four years might equate with the perceived pace of industrial change but the equivalent staff tenure does no favours for the maintenance of institutional performance, even survival; just examine a 10-year-old list of the world’s 2,000 biggest companies …..
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“CAN’T LEARN”. The shocking state of (un)enlightenment in modern business life. Read about this surprising and sobering state of our half-knowledge .…
There’s an inconvenient perception that prevails with business education and their main customer, industry and commerce. It’s a shared ‘know-it-all’, a ‘we-know-best’ belief. Consider this. Both business education and businesses themselves are disregarding a huge – and I mean huge – area of seminal expertise that would ordinarily serve employers well. The pair have not successfully adapted to a changed workplace environment.
This imposed ‘black-hole’ of know-how begins with the wholesale discard of long-service expertise, as shown by the penchant of employers to consider dead meat most post 50-year-olds in the belief that youth and ‘experience-poor’ trumps ‘experience-rich’. It is a conviction that gets observable support by the notion that the higher salaries of retained ‘oldies’ are more expensive than the cost of lower-waged novices, the belief that elders are less adept at learning and the unrecognised irony that new bloods will have to re-learn the hard-won and expensively-acquired past that will, of course, have departed. All this is entangled with other popular misconceptions that ‘history’, because it applies to another era, is irrelevant while reference to the past will just encourage repetition when change, paradoxically, becomes necessary, as it always does.
This is further compounded by the even larger abandonment of the SAME institute-specific experience in favor of current employees’ past practice, as effected by the main downside consequence of the actively-pursued flexible labour market, where short tenure has effectively purged the employers’ unique knowledge/experience base from the cognizance of transiting personnel, including senior hierarchy. This time the discard is NON-age related, the belief being that other employers’ experience, as imported, will compensate. Taking both asset classes together, that’s ALL the institutions’ long-term organisational memory (OM) and almost all of its medium- and short-term OM. If I was a doctor, I’d be thinking Alzheimer’s ….
Amazingly, these interconnected misconceptions – that effecively say that disrupted continuity does not mean starting from near scratch – have been around for more than 30 years, ever since the flexible labour market took hold, so the amount of retained organizational-specific knowledge, experience and institutional wisdom within institutions has reduced to homeopathic proportions. As a result – and given that most progress in the business world is acknowledged to be organic (from the building of one experience on another) – the key players in the game of business have disengaged from mainstream decision-making the best of learning opportunities, specifically the most important of evidential resources. Ironically, it (the organisations’ own experience) has already been paid for – expensively. Underlying this, the constant replacement of personnel over such short periods has blended organisations’ individuality with others and consequently watered down their unique selling points (USPs).
What businesses DO do is try and reduce their staff turnover, indicating that the issue of departing experience does feature in the boardroom, however modest their effect. Actually, all the evidence shows that staff turnover is more dependent on economic conditions. For example, recent figures show that voluntary churn in the UK has decreased, offset by higher redundancy-related turnover (source: 2013 CIPD Resourcing and talent planning survey). Overall, staff replacement of upwards of 20% a year is commonplace, higher in the US, a number that includes senior staff grades.
For businesses, the omission’s restoration falls neatly into the jurisdiction of knowledge management (KM), specifically being able to capture their important and hard-won know-how and experience ahead of its departure and in particular its tacit knowledge. For business education, the job is to teach the transiting generations of employees how to better apply the tried-and-tested past to new conditions and circumstances, a formalised, precise and widely untaught discipline known as experiential learning (EL) that should embrace more structured reflection on previous practice. As it exists, what miniscule amounts of EL that IS taught only focuses on the immediate experiences of in-situ employees who are soon to walk through their employers’ revolving doors; by default, therefore, the prior experiences of former employees are unseen and therefore unconsidered.
Through this deficit, the net effect of such ‘half-knowledge’ is that individual workers lack the necessary institution-specific support to make good and better decisions. As such, performance below their inherent competency is an issue that directly affects competitiveness and goes some way to explaining why productivity growth has become progressively more difficult to achieve in recent decades. And if more evidence is required, managers in the UK actually ADMIT that 25% of all their decisions are wrong; in financial services it’s even higher (source: Capgemini). In the US, around 85% of its leaders are found to show an inconsistent ability to manage innovation and change (source: Harvard study covering a 25-year period). You could also tally up the pandemic of repeated mistakes, re-invented wheels and other unlearned successes that your own employer finds necessary to make. And all this when the availability of business education has never been higher ….
Dare I label this long-time exclusion? Arrogance, ignorance, oversight, defensiveness or is there something else I’ve missed?
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Whistle blowing – the thick end of poor management. And why things WON’T improve ….
Remember the days of trades union militancy when individuals who broke ranks with labor protestors were called scabs? Well, the management equivalent – whistle blowers – are rearing their heads in increasing numbers in the UK’s public sector. Frustrated with being part of poor services and inefficient operations, well-intentioned employees are finding that their only recourse is to ‘spill the beans’.
So much so that the House of Commons Public Accounts Committee, which concerns itself with the efficiency and effectiveness of government departments, has raised concerns about their treatment in public service. Management is accused of bullying and harassment to cover up wrongdoing (Commons report, September 1, 2014).
Whistle-blowing is the latest symptom of poor management alongside the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the modern workplace – and mostly due to just one unacknowledged shortcoming in institutional proficiency. It’s the inability of organisations to learn from their own hard-won and expensively-acquired experience imposed by the actively-encouraged flexible labor market. Alongside the acknowledged way of progress being mainly organic – i.e. through the building of one experience on another – short tenure has ended workplace continuity, hosted the phenomenon of corporate amnesia and imposed on organisations’ self-styled experiential NON-learning.
And given this EXACT reason, the prospect of whatever is done to better deal with whistle-blowing will largely be futile. Simply stated, all the people involved with attempted or actual cover-ups will, according to either normal short-tenure comportment or dismissal, move on and the new faces will not see themselves as either responsible for past behavior or obliged to take heed of any corrective actions. Or they’ll simply forget to remember, as they’ve done with all those other enquiries, post-project reviews, inquests, case studies and their resultant recommendations that already fill the organisations’ archives. Back to square one for the umpteenth time …..
There’s a postscript to all this called gagging, when managers PAY potential whistle-blowers to keep their mouths shut. Over five years to 2010, this cost taxpayers £14m in payouts to around 5,000 axed civil servants (Freedom of Information survey, Daily Telegraph, April 3, 2013). The sums involved could be more than £400,000 for senior employees.
p.p.s. It’s a syndrome that also infects the private sector, usually addressed privately where possible. Unless ….
Read how, in this blog, better knowledge management (KM) and properly taught experiential learning (EL) can help.
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Academics STILL think the way they’re teaching business is best. Read what they’ve been missing for more than 30 years
The conventional wisdom is that the one-size-fits-all education is the best way to teach the future generation about the business of business. Unnoticed, they – and their main constituency, commerce and industry – have overlooked the dynamic of how businesses best learn and progress. It’s through the building of one experience on another, known as organic or active learning – the modern designation is experiential learning (EL) – which requires that employees have an intimate awareness of their employers’ unique knowledge and experience with which to fashion their decisions.
Unfortunately, they’ve failed to do anything about accommodating the single biggest change in workplace practice since WW2 – the flexible labor market. Whereas, before the days of flexible working, employers had a near full measure of worker continuity (employees would work for one, perhaps two, and if they were really unlucky three paymasters in their working lifetime), the subsequent short worker tenure introduced widespread workplace disruption and, more importantly, the phenomenon of corporate amnesia. Today, the number of employers averages eight, even higher in the US. Widely supported and encouraged, flexible working has imposed constant discontinuity and largely removed from the workplace the awareness of a new employers’ unique knowledge and experience. Instead of being able to apply their employers’ knowledge and experience to new circumstances and environments, walkabout employees throughout the corporate hierarchy have been dependent almost entirely on their own prior practice. In effect, more germane has been replaced by less fitting, a pattern that unavoidably imposes on institutions the faculty of experiential NON-learning alongside a continuing dilution of their unique selling point (USP). It should be emphasized that, however relevant an individuals’ prior experience might be, it still has to be adapted to new circumstances and new environments, the point being that the ability to learn from one’s new employers’ experience is, simply stated, forfeited.
Having lost a central plank of their learning opportunity, both organizations and business academics have not yet conceded that learning processes need to change – from an all-purpose approach to more of an institution-specific approach. For organizations, there has to be better knowledge management of their long-term, medium-term and short-term memory. And for business education, they have to teach the formal discipline of proper experiential learning a la acknowledged doyen Professor David Kolb and others. Only then can commerce and industry take best advantage of flexible working, conventional business education AND experiential learning.
Through experiential NON-learning, it is likely that flexible working has been responsible for much of the shortfall in productivity growth since the 1980s when, not un-coincidentally, short employee tenure started in earnest. This raises several awkward questions: Why is business education and business still in denial about the huge asset that keeps walking out of industry and commerce’s front door? When it comes to the corporate body, what’s happened to the acknowledged universal principle of progress being the result of learning from experience, and particularly from one’s own experience. And why the continuing unresolved debate about the benefits of organizational remembering verses organizational forgetting? Reinventing the wheel is just tedious, unnecessary and unproductive, as the deafening resolve “We’ve got to learn the lessons …” confirms.
While Rome burns, I get the apprehensive feeling that business education and business are both still waiting for each other to fire the gun …..
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SOFTLY SOFTLY KM IS STILL FALLING SHORT
From my two-year association with related Linkedin groups and Facebook, I detect a slightly healthier outlook for Knowledge Management but virtually no acknowledgement by commerce and industry – or even business education – that there is another important dimension to profiting from knowledge capture: the skill of experiential learning (EL).
It is no good institutions just capturing their own hard-won and expensively-acquired knowledge and experience. Decision makers must know HOW to apply it to changing circumstances and environments. Experiential learning – a la David Kolb’s inspiring work, and others – is a formalized discipline that business education does NOT teach, they choosing that their students depend on individuals’ memory alone to inspire better decision making. It is an informally undisciplined approach that needs updating.
There is ample evidence to support the more demanding approach to KM. There is, firstly, the acknowledged low level of individuals’ memory retention, illustrated by typical short, selective and defensive recall abilities. Pertinent to our high staff turnover rates, there are academic estimates that up to 90% of organizations’ knowledge, including the more important tacit element, is embedded and synthesized in their employers’ heads (not in corporate data banks, as thought) and, finally, that in cases of employee poaching, which accounts for a large proportion of workplace turnover, the performance of high flyers typically falls sharply in new corporate environments and stays well below old achievement levels thereafter. I assume lower hierarchy individuals would be similarly affected.
In truth KM and particularly EL requires a more inclusive approach, especially in today’s flexible labor market where institute-specific knowledge and experience exits the corporate consciousness every four or so years, even quicker in the US. In addition to its efforts to capture its transiting knowledge and experience, organizations need to be reassured that its walkabout employees are ABLE to properly learn from its own prior experiences. As things stand, all organizations can depend on is that their new employees can, perhaps, recall their knowledge and experience with OTHER employers. Without the ability to experientially learn properly, their capacity to apply both their own prior experience and their new employer’s experience (that’s IF it’s made available), is severely compromised.
All this is commerce and industry’s big black hole, amply confirmed by the pandemic of repeated mistakes, re-invented and other unlearned lessons that litter commerce and industry. KM is like history. Accurately recalled and PROPERLY applied, it provides experience very cheaply.
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Commerce and industry are their own worst enemy when it comes to experiential learning. How business education and Knowledge Management could help ….
It’s widely acknowledged that learning from experience – i.e. turning old knowledge into new knowledge to cope with changing environments and circumstances – is the shortest way to make progress. Put another way, it emulates the conventional wisdom that the best way to make headway is organically – i.e. from the building of one experience on another. Even innovation, which leapfrogs convention, requires historical perspective.
It is actually the case that the science of experiential learning – I would ague that it’s also an art – has already been ‘invented’, thanks to one Professor David Kolb’s distinctive reflective approach. Its most advanced usage has been around for more than 30 years yet, in spite of its acknowledged veracity by academia itself, the formalized discipline is a virtual stranger in business curricula and particularly in the way decision-making is taught and used.
The fact that its oversight coincides with the single biggest change in the way we’ve been doing business for at least the same period makes the neglect puzzling in the extreme. The flexible labor market, seen as one of the most beneficial aspects of the modern business landscape, hides an iceberg-like weakness. Alongside constant jobs disruption, short employee tenure means a lot of organization-specific knowledge and experience is always walking out of the front door, including the institutions’ important tacit knowledge.By having to mostly depend on the knowledge and experience of replacement employees, the organic principle of how most progress is achieved is overturned, replaced by what is known as corporate amnesia. Without an intimate awareness by new employees of their employers’ unique way of doing things and its hard-won and expensively-acquired knowledge and experience, the subsequent institutional learning curve is necessarily steeper and longer than it might otherwise be, providing the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. The business-relevant point is that in today’s walkabout workplace, traditional decision-making techniques need a new focus to include the evidential base of one’s own employer’s practice. Standard Induction processes, too, are little more than useless. To allow effective experiential learning to take place, new blood must know what old blood experienced, not to REPEAT what they did, but to know how to APPLY what they did to ever-changing circumstances and new environments.
Without the ability to apply, which is where Professor Kolb’s reflective process comes in to good knowledge management and proper experiential learning, the ability to learn is replaced by little more than intuition, untested judgment, political expediency, subjective thinking, unnecessary experimentation and delay. Recognize it?
The solution is obviously a collaborative one. Business education, which has always been slow to anticipate and implement new approaches to its standard educational formula, is obviously the constituent to TEACH the discipline of experiential learning. But without the evidential base, which has to originate from business itself, there is no raw material with which to work. As such, business needs to acknowledge the problem and be more demanding of the solution by business education, the body supposedly there to serve it. And Knowledge Management, whose role it is to manage its employers’ knowledge, has to be more proactive and innovative.
One’s corporate ‘history’ may appear to be old hat and seemingly irrelevant but, with good KM and inspiring EL in place, it does provide experience cheaply as well as many of the bridges to get from ‘A’ to ‘B’ without going via ‘Z’.
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SHOCK HORROR, A STATISTIC TO MAKE EMPLOYERS WORRY …
I’ve just been passed an interesting – and shocking – bit of research that should put the wind up many of the US’s major companies.
Payscale, the Seattle-based salary data company, has published the employee turnover rates of all the Fortune 500 companies. The head-shaking statistic is the median level of tenure, averaging – wait for it – just 3 years and eight months. That’s across the board – all grades, including managers. Payscale describes this as indicative of industry being “hot and the economy is improving”.
Underlying this encouraging viewpoint is the more sobering observation that if it takes up to a year for new placements to be inducted properly and their end-of-tenure period is similarly short-changing, individuals’ productivity is both short-lived and low. More serious, however, is what short tenure does to institutions’ ‘memory’. Continual discontinuity at this rate – even at much longer frequencies – (the flexible labor market has been active now for 40 years) quickly reduces the retention level of institute-specific memory to homeopathic strengths. Without the organizational ability to recollect one’s own unique, hard-won, tried-and-tested and expensively paid-for experiences, there is a corresponding inability to learn from oneself. Hence the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. The reality for an experiential NON-learner is that productivity goes south and south again, just as the OECD statistics are confirming.
Payscale’s observation is that the first movers are the “top performers” and “the solution is to evaluate what causes employees to leave and improve these areas …”. With the flexible labor market irretrievably continuous, the remedy is actually more far-reaching. For employers, their valuable knowledge has to be captured. For the rolling generations of decision-makers, their employer’s prior practice has to be applied alongside their own previous experience. And for educators, the skill has to be taught.
For just a soupçon of Payscale’s data, the Massachusetts Mutual Life Insurance Company has the highest turnover rate of all the Fortune 500 companies. With a 38-year median age of employees, average tenure is a little over nine months. Fewer than 10 firms on the list had employees with tenure of 10 years or more.
It is instructive that some of the companies with low-loyalty employees are today’s high flyers. For example Amazon and Google, with employees of median ages 32 and 29 respectively, now have tenure rates of just 12 months. Their median pay is not low ($93,200 and $107,000 respectively), indicating that Payscale’s suggested inquiries of employees would be useful but does this level of discontinuity presage difficulties to come? Will they – and others – be among the successful companies that go sour?
On the basis that others of us follow the US, it would be useful if Payscale did similar studies of the FT 250 alongside Europe and Asia’s top companies. With the evidence showing that churn is not just a young employee phenomenon (executive turnover is also high), modern short tenure is not all it’s cracked up to be – at least for employers who, if you remember, were among the original champions of the flexible labor market. The good news is they don’t have to U-turn – but they do have to do experiential learning properly.
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Why do so many successful companies go sour? NEW perspective …
It’s seen as one of business life’s inevitable laws. But surely experience counts? The more one has of it, the better organizations should be at coping.
There are some excellent examples like Italy’s Beretta, which goes back to 1526, Holland’s Grolsch (1615), Finland’s Fiskars (1649), Sweden’s Sveriges Riksbank (1668) and England’s Lloyd’s of London (1688), Twinings (1706) and Sotheby’s (1744). But consider some of the more modern winners-cum-disappointments like ICI, Eastman Kodak, Norton Motorcycle, Honeywell, Digital Equipment, Wang Laboratories, Alcoa, ITT, Atlantic Richfield and the many other one-time top players. All were once great, now fallen or struggling, raising the spectre of what will happen to today’s winners like Apple, Microsoft, Marks & Spencer, Wal-Mart, Sony, Blockbuster, Motorola, Toys “R” Us and Yahoo, and the many others on the Fortune 500 list.
Once again, why? On the way up, all accumulated valuable experience, that much-acknowledged benchmark of professionalism and high pay for the institution’s decision makers. Yet – as history’s record threatens – the prospect of the organization taking the low road (or no road) threatens large.
Alongside the traditional explanations of poor leadership and education, many authors have penned their ideas why good companies fail but there is an unnoticed dynamic in the modern marketplace that is threatening to accelerate the uncertain sustainability of all business enterprises. It is even encouraged, providing an unintended consequence that is knocking the stuffing out of productivity – and endurance.
It’s the flexible labor market, the mother and father of short-tenure employment. Without counteractive action, this 40-year-old phenomenon has allowed organizations’ unique, hard-won and expensively-acquired experience (the tacit kind, not just the explicit content of employers’ databanks) to regularly depart to others’ environs. The amount of organization-specific knowledge departees take with them can be huge. In its place the imported experience of replacement employees – largely seen as an enhancementof the corporate experience – has disallowed employers from benefitting from their own practice. Using one’s own experience is almost always the most effective way of making progressbut widespread corporate amnesia, now the norm, has resulted in successive generations of experiential NON-learning associated with the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. Alongside the organizational inability to organically and sequentially learn from itself comes the difficulty of not being able to sensibly adapt to changing circumstances.
Bizarrely, the formal discipline of experiential learning – arguably one of the most important of organizational skills – doesn’t get a high priority in business education or in commerce and industry. In the former, the skill of decision-making is typically taught as a one-size-fits-all subject where the skill of applying knowledge to new and different circumstances has become more dress rehearsal than first night. That commerce and industry lets their valuable evidential base disappear through its swing doors is reckless, short-sighted, wastefully un-commercial and disarming for rolling generations of hamstrung decision-makers. To give new-blood determinations a better outcome, their prior experience needs to be married to their new employers’ tried-and-tested practice.
And that’s why institutions leave themselves behind.
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Manchester United, is this a classic case of hero to zero in the making? How would YOU turn it around?
Here’s an example of an organization that has a fascinating management problem to address. Not long ago it was riding high. Almost overnight it can’t get its act together. The only big difference to then and now is that its leader – much acclaimed, including by his predecessor – has changed.
Not unlike the many businesses we know that achieved big success and then fell from grace.
How accurate is this parallel? What’s the problem? Is there anything that business – and particularly Experiential Learning – can teach? And just as important, is there anything that business can learn?
Is this not a good example of a case for experiential learning?
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Hitting yet another six for cricket – a top-drawer sports example with an motivating KM and EL model for business ….
Kevin Pietersen, the world-class cricketer who has come to the end of his international career, has offered to pass on his wisdom to his successors (http://www.standard.co.uk/pasportsfeeds/pietersen-happy-to-pass-on-wisdom-9233512.html). It is a gesture that holds an important lesson for commerce and industry.
The 33-year-old all-time record run scorer for England is showing the business world how best to do knowledge management (KM) and experiential learning (EL). He’s SHARING. It’s the basic requirement of both disciplines, without which better decision-making has, usually, only others’ non organization-specific experience to work with. And in today’s very flexible labor market, it happens to be the only way to prevent one’s own employer’s knowledge and experience from walking out of the front door.
Sticking with sports, imagine what could have been if Manchester United’s former manager Sir Alex Ferguson had done what Kevin Pietersen is offering. Instead of having only his own know-how with which to work, David Moyes, his successor, would also have Sir Alex’s valuable Old Trafford experience to make his decisions. Escalate this to all of industry and commerce’s top operatives and managers, whose corporate tenures average around five years in many developed countries, less in the US …..
In our new world of high jobs churn, what we’ve got to address is the self-made workplace where one’s own employer’s knowledge and experience is being sacrificed on the alter of corporate amnesia. To be more explicit, the acknowledged way of most progress is organic – the building of one recalled experience on another ….. not stop-start’s constant re-invention of the corporate wheel.
Post script: As it happens, it’s been announced that Sir Alex Ferguson is to teach his coaching blueprint to senior executives at Harvard Business School. My point is that Manchester United is also a deserving recipient, the argument being that the club provided Sir Alex with the exact tools he needed, namely the environment and handsome remuneration over 27 years. As such, it is eminently arguable that his wisdom is jointly owned. It’s a view that few proprietorial high flyers might agree with but employers would do well to do KM and experiential learning properly before their swing doors take their employees off to new pastures. Shared wisdom would, I insist, help to improve decision making – both at home and away. And if yet another no-brainer argument is needed, once captured, it’s free, gratis, costless and on the house to apply again and again and again.
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The UK’s latest KM deficit – this time at the heart of the Metropolitan Police. Where, then, is their opportunity for genuine experiential learning?
Last weekend The Times of London quoted an anonymous source as saying the lack of corporate memory at management board level in Scotland Yard, the Met’s metonym for the body responsible for policing most of London, was “quite frightening.” The disclosure came days after the serving Metropolitan Police Commissioner, Sir Bernard Hogan-Howe, was unable to answer detailed questions put by the Home Affairs Select Committee about mass shredding of intelligence from Operation Othona, a covert inquiry into police corruption around an infamous 20-year-old murder.
While the published story was more to do with the side-lining by Sir Bernard of former Assistant Commissioner for Central Operations Chris Allinson, a retiring senior 30-year veteran policeman, to a described “non-job” as Assistant Commissioner for the Olympic legacy body that oversees the longer-term benefits of the 2012 Olympic Games in London, the disclosure of such corporate amnesia at the heart of London’s police must raise questions around the body’s ability to learn from its own experience.
In the event, the admission focussed on stated Met-specific knowledge illiteracy at the top of the managerial iceberg. My suggestion is that the problem is more pervasive.
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UPDATE – STILL not good at doing its job. Here’s one untried thing the British civil service could do to make itself FIT FOR PURPOSE …..
In May 2006, the British Home Secretary, John Reid – now Lord Reid – infamously introduced the phrase “Not fit for purpose” into the political lexicon. It was not long afterwards every single Government department had inherited the description. Since then, little apparent change; in just the last five months, the characterization was still being conferred on much of the Government’s work, among it ….
Business rates
The Charity Commission
The national minimum wage
The floods quango
England’s health watchdog
Atos, which carries out the Government’s “fitness for work” program
The UK’s part-time childcare system
The Justice System in England and Wales
The new “safest ever” passport
The Government’s Money Advice Service (MAS)
The Parliament-created Independent Parliamentary Standards Authority (IPSA)
The government’s proposed lobbying register
‘Why’ is not an unfair question given that Government attempts to improve its performance have been tried at least 300 times over the past four or so decades. While the latest effort (through the 2008-created education body Professional Skills for Government) would likely pass muster with business education elsewhere, there is still a very wide and particularly deep hole in the curricula offering when it comes to teaching how employees could make better decisions on behalf of their employers.
It’s a dual-dependent approach with an equally evident oversight in industry and commerce – and the public sector is no less culpable. The gap is proper Experiential Learning (EL), to wit the subject that recognises the universal principle that MOST progress is achieved organically – i.e. from the building of one experience on another. Presently it is discretely addressed through external evidential resources such as the flagship practice of universal case studies, which expects decision-makers to be able to make their determinations on the basis of others’ example. The in-house, more relevant organization-specific knowledge and experience, which is unique to an employer, is studiously overlooked, as is the formalised way of how best to learn from experience.
With no help from employers, commerce and industry, which actively participates in the modern and very flexible labor market, typically makes little or no attempt to capture their important non-explicit knowledge and experience before it walks out of the front door – with the very real consequence that all new blood has little or no employer inheritance with which to learn from experience. Other practices such as mentoring are rare, largely confined to apprentices and new senior employees and constrained by the endemic short, selective and defensive memory recall of appointed longer servers – and applicable, anyway, across just one short-tenured generational change.
What seems to have happened in the workplace shuffle of modern short jobs tenure is that both industry/commerce and the education system have overlooked the importance of the ‘no-show’ of the key TACIT element of the evidential mix necessary for good decision making – i.e. the employers’ own, detailed, hard-won and expensively acquired ‘how of know-how’. Apropos the dialogue in one of English novelist J. L. Carr’s texts: “You have not had thirty years’ experience. You have had one year’s experience 30 times.” Recognise what’s happening?
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NOT FIT FOR PURPOSE: the blind side of why UK Government departments don’t – or can’t – learn from themselves ….
While this statement also applies to the less-transparent private sector – and other equally afflicted economies – the evidence for the public sector is overwhelming. The chorus of “We must learn the lessons ….” has been deafening for decades. In 2008, the House of Commons Public Administration Select Committee pointed out that no department was “fit for purpose”, a blunt indictment of Professional Skills for Government (PSG), the body created four years earlier to “professionalize the business of government.” As was pointed out, this blueprint had already been tried around 300 times. For example, the much earlier – 40 years earlier – Fulton Report had generated virtually identical ideas and plans. Wearily, the House of Commons Public Administration Select Committee’s report queried: “The great mystery remains: if so many of Fulton’s recommendations were (eventually) implemented, why are the same criticisms still valid?” And five years later, still true, confirmed by the fact that, in just a two-week period since the start of 2014, Britain’s tax system, The Charity Commission, the Healthcare Inspectorate Wales, Finance Wales and the Environment Agency have all been described as “Not fit for purpose.”
So why? The unseen reason is that British leaders/managers/decision-makers are not trained – and not suitably furnished by their employers – to be good experiential learners (EL). EL’s underpinning is the acknowledged way MOST progress is achieved – i.e. organically, the building of one experience on another. It just happens that the very flexible labor market’s short jobs tenure disrupts essential continuity and without any attempt by employers to capture and apply their unique, hard-won and expensively paid for knowledge and experience, the reality is widespread corporate amnesia and institute-specific NON-learning.
Consider this: since the 1980s, when flexible working started in earnest, employers have gone through around eight generations of employees (probably slightly lower in the public sector but enhanced by more lateral movement) during which time virtually nothing of their own special way of doing things was retained or applied. And even when expensive Inquiries, including even more costly Public Inquiries, were held – all of which issued bountiful ‘recommendations’ – there have been few individuals in situ who would have felt themselves culpable for their predecessors’ practice or obliged to carry out timeworn advice. In the case of the public sector, departmental turnover has recently been high enough (in some cases greater than the private sector) to warrant press scrutiny.
Without an institute-specific evidential base, the environment exists whereby any experiential learning is exclusively dependent on the knowledge and experience of replacement employees. Not necessarily a bad thing, but on its own, the knowledge mix with which to make institution-specific decisions is less than rigorous, promising the evident increased rate of repeated mistakes, re-invented wheels and other unlearned lessons. All this contributes to wasted productivity. And for an indication of what this can cost, the number that Proudfoot Consulting puts on this delinquent figure is between 5.9% and 9.7% of GDP in a range of OECD countries in 2005. At today’s exchange rate, the UK figure for this one-year’s misapplication was £120 billion.
The opportunity value is clear. Within the orbit of better Knowledge Management (KM), the way to cope with staff discontinuity and related knowledge loss – what I call corporate amnesia – is full-on Experiential Learning, the missing link in our schooling and business affairs.
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Is a veteran more useful than a new employee?
On the basis of the actual numbers in organizations, the answer would appear to be one big fat NO, the typical attitude being that so long as there is someONE around who remembers the old days, continuity is assured. For the experience they bring – or could bring – it appears that one’s own employers’ hindsight is not considered valuable any more.
Without being an automatic apologist for generational change – and I’m not only referring to the really old-timers or their short-term younger replacements – the habitual replacement of one’s own experience via the flexible labor market holds an unrecognized sting in the business tail. Given the long-held recognition that most institutional advancement is organic – i.e. organization-specific and dependent on the building of one experience on another – the pervasive staff disruption that is now commonplace among employers is removing the very ability to experientially learn. If the tried-and-tested past, whether that past be successful or unsuccessful, is not respected or cannot be applied, where is the ability to avoid the repetition of expensive mistakes, the reinvention of tried-and-tested wheels and the capacity to learn hard-won lessons? They’re pandemic in commerce and industry.
The uncomfortable reality is that, today, the veteran is an employee with less than five years experience with their employer, and even less in the US, in spite of efforts to reduce the churn. Excluding the bloodletting of the recent recession, the truth is that the average company or institution has a corporate memory that would otherwise only stretch back to around 2009; before that, any intimate knowledge of what happened with their employer in whichever department is legend and/or rumour. An explanation why productivity is so difficult to achieve and so many successful companies fail?
With all that staff turnover, and without much contextually-inherited knowledge, there is little continuity on which to build. All the hard-won and expensively acquired knowledge and experience gets recycled elsewhere in the business biosphere, leaving individual organizations with only the collective experience of imported employees to apply to their different circumstances. Not that outside experience is not useful but deprived of the intimate knowledge of one’s own paymaster, the outcome is a business environment that has to be furthermore “bespoked”, a circumstance that inevitably steepens the corporate learning curve, lessens institutional differences – i.e. individual USPs – and shrinks competitiveness.
There is no intention of belittling the contribution of new blood. Only that on its own, its contribution is the business equivalent of a seedbed of otherwise healthy plants without any suitable top-dressing.
“Ask old Mr Rogers, he’ll remember what we did when we last launched a new product” is a discourse, however comforting, that is seriously disingenuous. No one individual can proxy all past events any more than new arrivals can substitute for them. For the flexible labor market to be truly gainful, discontinuity must be made less disjointed.
As such, the opportunity value for the fledgling discipline of PROPER Knowledge Management (KM) is enormous, until now encumbered by a puzzling chain of unaddressed issues, among them
…. an audience of indifferent executives predisposed to the short jobs tenure in which they themselves participate. “Why should we worry. We’re moving on?”
…. an employee base that hasn’t been persuaded that their experience is not their exclusive possession. It’s actually JOINTLY owned with the remunerating employer, so sharing should be a natural expectation.
…. a small tribe of enthusiastic KM operatives struggling with the problems of knowledge collection.
…. and business academics indisposed to teaching the formal discipline of experiential learning.
It’s all undeserving of a supposedly enlightened business community that needs to redefine the basis of how they evaluate worth, usually assigned to actual experience. This does NOT only mean the experience of transiting replacements. It also means one’s own tried-and-tested practice, until now neglectfully allowed to walk out of the front door on a regular basis.
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Who owns the business knowledge that employees acquire in their jobs?
The conventional perception is that title belongs to the employee. It is the core of their “power”, the underlying source of their negotiating tactics and the basis of their status. It provides an important definition of their ability, gives value to their experience and defines the way business is run. This is reflected in their general proprietorial attitude to sharing, especially their important knowledge.
As such, the business-specific knowledge they acquire walks out of the front door as they – and the organizations that employ them – take advantage of the modern flexible labor market.
Read how this pervasive (mis)understanding about knowledge ownership is one of the bigger delusions that organizations have had foisted on themselves – and particularly how, by NOT arguing that because they have paid for it, they have JOINT ownership, employers overlook the unaddressed, even unacknowledged, opportunity offered by expert Knowledge Management (KM). Through better experiential learning, the opportunity value gets massively enhanced by being able to offset flexible working’s discontinuity, which sees much of the developed world’s staff tenure, including that of managers, averaging little more than four years, and even less in the US.
That which has been lost then has to be reinvented and/or relearned in order to be re-applied to changed circumstances, a not insubstantial cost that leadens decision making, productivity and competitiveness. By using KM imaginatively, otherwise lost knowledge can provide experience very cheaply.
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For an employer, which is the more useful? One’s own experiences or someone else’s experience?
These questions are relevant in today’s business environment because we’re sacrificing the former for the latter. As a replacement or substitution, it’s NOT a fair exchange by any measure.
The mass exodus of institution-specific knowledge and experience from the very flexible labor market means that organizations are becoming increasingly dependent on the imported knowledge and experience of other employers, which – undeniably – are simply less relevant.
While others’ knowledge and experience are always going to be valuable, they’re NOT familial or have any inheritance or intimate context. In practice they have to be adapted to their new hosts, just as one’s own institution’s knowledge and experience – that’s if it hasn’t disappeared – needs to be applied to new circumstances. Without one’s own knowledge and experience, the resultant decisions are inevitably less rigorous than they might otherwise be. Properly built Knowledge Management (KM) combined with Experiential Learning (EL) is the key to filling in this huge gap that could help to reduce the level of repeated mistakes, re-invented wheels and other unlearned lessons that deaden productivity, competitiveness and profitability. In truth, the existing ways of capturing and applying one’s own knowledge and experience are still unrefined and less than effective as a conduit for good decision making.
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Hands up all those who think knowledge belongs to individuals alone ….
It’s the conventional wisdom, the core of individuals’ “power”, the underlying source of their negotiating tactics and the basis of their status. It provides an important definition of their ability, gives value to their ‘experience’ and defines the way business is run.
Yet this understanding is arguably one of the bigger delusions that organizations have had foisted on themselves.
It is eminently arguable that knowledge – and its related intellectual asset, wisdom – has JOINT ownership with the hiring party because of the employers’ remuneration to the employee and its provided environment. As such, it is NOT exclusively owned.
On this basis, a huge opportunity exists for the lumbering discipline of KM and its associated activity of experiential learning and decision making. What it does is formally provide the pretext that knowledge sharing with the employees’ paymaster is a reasonable expectation. As per KM’s offered purpose, it would thus become more acceptable for knowledge to be transmitted across organizations and, in our very flexible labor market, down the generations.
Given that the concept of non-sharing is so well embedded in business, the question arises how to encourage a more collaborative environment – i.e. how can employers be persuaded to treat purchased knowledge more proprietorially and how to ensure their employees consider their traded knowledge and wisdom less territorially; in other words, provide the misplaced environment to make KM work better?
I think the former is probably easier than the latter although if employers can’t (why wouldn’t they?) agree that they have at least a measure of ownership, the whole concept of KM will continue its hesitant advance. One of my own suggestions (follow the postings on this blog) my suggestions is for employers to take the initiative and include collaborative commitments to share knowledge in all new contracts of employment. Possibly with additional inducements, knowledge sharing could then become commitments at regular intervals during employees’ employ (for example at important events) and/or at exit.
Handled imaginatively and non-threateningly (we have found that individuals are generally flattered to be asked to cooperate), KM immediately becomes a more recognizable and acknowledged discipline. Of course this is not always possible (when individuals are dismissed, for example) but the number of times this is possible makes the exercise very valuable indeed.
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GAGGING, COVERUPS AND WHISTLE BLOWING – THE INCONVENIENT TRUTH ABOUT POOR DECISION MAKING
The current disclosures around the uncomfortable subject of gagging orders raise some equally uncomfortable truths about the quality of the UK’s decision-making abilities.
The private sector notwithstanding, around 5,000 axed employees have been muzzled with payouts of about £14 million that ensure that workers keep their mouths shut (Freedom of Information survey, Daily Telegraph, April 3, 2013). No information about the seniority of the individuals is known but there is no doubt that the payoffs are suggestive of the importance of individuals’ jobs, their work and the events to which their gagging arrangements refer. Each gagging, otherwise seen as a vehicle for cover-ups, represents poor decisions that were evidently too expensive or too embarrassing for their higher managers to collegially or publicly admit. Rather than generate any remedial concern about decision-making, it is instructive that the only discussion around the subject has been confined to whether whistleblowing should be admissible.
This aside, the use of gagging orders and so-called non-disclosure agreements (NDAs) has been widespread across Whitehall and town halls, prompting two departmental bosses, Health Secretary Jeremy Hunt and Communities Secretary Eric Pickles, to appeal for the end of such practices. Within days of the latest revelations, however, more than 1,000 family doctors – technically self-employed and not Civil servants but now responsible for decision making around most of the publicly-funded NHS budget – were issued with orders banning them from talking about the work of the new organisations running local health services without permission.
The recent Freedom of Information survey found that 256 councils in Britain had signed compromise agreements with former staff between 2005 and 2010. The number of confidentially agreements issued by councils soared from 179 in 2005 to 1,027 in 2010. In central Government, the Department for Business, Innovation and Skills signed agreements with 83 officials over the past two years. The Treasury signed agreements with 64 individuals, although only a “small number” involved confidentiality agreements. Elsewhere, the Department for Transport signed 40 agreements in the past three years, all of which contain confidentiality clauses. The Department for Energy and Climate Change signed 12 agreements containing confidentiality clauses and the Ministry of Justice signed 15, while the Foreign Office spent £5.5 million on compensation agreements.
In truth, the quality of decision making across Government and the civil service is poor in the extreme. There is not a single Government department whose activities have not earned the sobriquet of being “not fit for purpose,” the idiom used by John Reid, MP, the British Home Secretary, to describe his Immigration and Nationality Directorate in 2006.
That poor decision-making is not a new phenomenon can be evidenced by events that that go back many more years. Why, then, is gagging so visible at this time? Indeed, why is decision-making so poor anyway?
The harsh recession is probably the main reason, managements’ focus being their insecurity about their own livelihoods. But there are several other underlying and less obvious causes that flag up the quality of our decision-making education, the latter of which takes no account of a changed workplace environment that has been on-going for more than 30 years.
For one, the traditional journey to decision-making in the UK does not usually include much specialised tuition, the classic route being the following ill-proving reasoning: if you’re the best cook in the kitchen, you’re the best choice to be head chef, thinking that negates many of the skills necessary for management. The other explanation is less obvious and – perversely – actively encouraged.
It is the unintended consequence of the flexible labour market that many institutions – politicians, the organisations that represent business, business educators, management consultants and businessmen themselves – have yet to acknowledge and address. The stratagem has its benefits in the short term – it provides employers with a flexibility to quickly accommodate changing circumstances. But along with flexible working has come short jobs tenure.
And with short jobs tenure comes institutional-specific corporate amnesia as transiting employees walked out of the front door on average every four years (The Death of Wisdom, Business Expert Press, New York, 2012). 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, arguably, more important than the remaining explicit data and information. Compound the effect since the early 1980s and the retained level of an organisation’ own unique knowledge and experience is homeopathic.
The result? An inability to learn from one’s own special experiences, only others’, which is always less relevant and needing to be accommodated anyway. The effect? The pandemic of repeated mistakes, reinvented wheels and other unlearned lessons that litter the workplace. The cost? Hugely damaging to productivity, the centrefold of competitiveness and that elusive goal, growth. One management consultancy (Proudfoot Consulting, 2005) estimates the cost of wasted productivity in 2005 – a bull year – at £120 billion – YES £120 BILLION, nearly £20 billion more than the entire National Health Service budget in 2012 – a figure that must, surely, corroborate the observation that existing decision-making and its instruction is either less than effective or misdirected.
This second observation holds an instructive indicator where existing instruction approaches are necessarily flawed. With some few exceptions, traditional decision-making is taught as a one-size-fits-all discipline. In the current workplace where one’s own tried-and-tested knowledge and experience is now so rootless, this ignores the reality that most progress is organic and incremental, a topography that the flexible labour market’s discontinuity inconveniently upends. It is hard to conclude that existing decision-making instruction is – to be reminded of Mr Reid’s idiom – fit for purpose.
In this case, the teaching of decision-making, surely, is best actioned through institute-specific experiential learning, 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 through reflection the evidence of tried-and-tested precedent, whether that experience be successful or not. Importantly, precedent needs to include the experience – tacit as well as explicit – of prior employees and not just that of in-situ personnel. It falls under the wider discipline of Knowledge Management that requires an intimate awareness of an employer’s actual experience coupled with the aptitude to efficiently apply it to changing conditions and environments.
Without the former, the latter can’t take place. Without the latter, old knowledge can’t be effectively transformed into new knowledge, a skill that would help avoid all those unlearned lessons that contribute to Proudfoot’s estimate of the elephantine cost of our wasted productivity – as well as those nagging gagging orders.
The example of the technological triumph in Los Alamos, where the atomic bomb was born, illustrates the model exactly. In the wake of the US Government’s decision to stop testing nuclear weapons, officials were concerned that the skills it developed would atrophy, so, in the event that it had to one day resume testing, it undertook a massive programme called the Knowledge Preservation Project (Los Angeles Times, August 28, 1995) to ensure that the expensively-acquired expertise it had accumulated over the years was not lost forever as archives progressively degenerated and scientists retired. As part of the programme, retired weaponeers were brought back to the laboratory for video taped interviews intended to salvage knowledge about nuclear bombs that could not be gleaned from blueprints and archived documentation. Researchers recorded more than 2,000 videotapes. The rationale of John D. Immele, director of nuclear weapons technology at Los Alamos, at the time was: “We don’t want to press the erase button on our memory and go back to where we were 50 years ago.”
What Los Alamos was doing was the first phase of proper experiential learning to enable rebuilding the past without having to re-invent it. And even if they weren’t aware of it at the time, what they were also doing was providing the evidence with which they could also build a better bomb (if that’s at all possible) in a much shorter timeframe and less expensively.
The lesson for lesser beings, albeit from another’s experience, is precisely the effect of not having rear view mirrors on a motor car. Without them, one has to continually crane one’s head to make good navigational decisions. At best, drivers give themselves a stiff neck; at worse, a fatal accident.
Some think this is just like hiring a historian to point out the intricate nuances of what actually happened so that managers can be made more aware of what to do next (http://www.civilserviceworld.com/every-department-should-have-a-historical-adviser-argues-lord-butler-of-brockwell/). They’re right but consider this. Employers would have to hire an army of historians to have any effect on the number of poor decisions being made. Anyway, to be effective they would also need to acquire the evidential base of their localised subject – and not just through the organisation’s limiting archives. It is managers who should be doing the job of historians. Better to just skill-up managers with the help of proper experiential learning processes….
Postscript: In the league table of wasted productivity, there are several other of the UK’s industrial competitors that have higher percentage costs in terms of GDP. But its inability to learn from experience appears to be many times more visible, perhaps due to better transparency. However complacent this might make us feel, our productivity is still wretched. Much better experiential learning would achieve Mark Carney, our next Governor of the Bank of England’s counsel that the pathway to growth is “self-sustaining” productivity (http://www.dailymail.co.uk/news/article-2269099/Growth-important-inflation-says-new-Bank-boss-insists-maxed-ideas.html). That’s output that produces things cheaper, quicker and better – without artifices like cheapening exports via currency devaluation. Simply stated, it comes through better decision-making at the coal face.
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How to kick more goals in business – a masterclass straight from the horse’s mouth
Near the end of 2012, there was an instructive seminar given to Harvard Business School students by one of the world’s most successful football managers, Sir Alex Ferguson. Harvard was hoping he’d let slip how he’s managed to win almost every trophy in the game during his 26-year tenure with Manchester United. For those who want to do better the business of business, he did.
Given that he’s turned Manchester United into an annual £300 million-plus turnstile, his thoughts were both important and edifying, with lessons relevant to every department in the dough-making – or as we say in Britain the dosh-making – process.
The excuse for festive language aside, the main difference with ordinary business and commerce is that Sir Alex’s 11 principal employees are all millionaires and probably more difficult to manage than us mere mortals. The other variance is his own tenure. He has brought to the Old Trafford soccer pitch an uninterrupted and long tenancy, unusual in other football clubs as well as the rest of commerce and industry. This distinctive landscape has meant that the club’s head decision-maker has not had to constantly acquaint himself with new environments and circumstances, a not unimportant advantage for his employer.
On top of strategy, he gave colorful advice about leadership, delegation, induction, the importance of caring and criticising his players, how to deal with competitors, public relations (especially the press) and the importance of doing due diligence.
But, interestingly and significantly, he left his stellar advice to the last, not only for his successor but for the organization who writes his monthly stipend. “When you’re in the twilight of your career, share everything you’ve learned with the next generation.” While his long tenure clearly prompted the scheduling of the need to share his knowledge, the lesson for the rest of commerce and industry must be to do this more often, no thanks to the flexible labor market, where employees – including top decision makers – have as many as eight different paymasters in their working lifetimes. For non-Manchester United employers, this has meant constant disruption, widespread corporate amnesia, repeated mistakes, reinvented wheels and the other unlearned lessons that transitory employees make in every department.
And this, quite coincidentally, has been going on for the last 40 years, not with all the explicit knowledge we’ve efficiently collected in our massive data banks but with the more important tacit knowledge, a component of wisdom that business education has forgotten to teach how to acquire.
What Sir Alex was saying has everything to do with the vital discipline of experiential learning and its derivative influence in areas such as KM, decision making, HR and IT that industry and business education have overlooked for eons – and without which their ability to progress organically has been seriously disrupted. It’s an unintended consequence of a well-meaning strategy to give employers a better reaction time to changing circumstances but, philosophically stated, if the elder can’t teach the younger, then progress falters and when the memory fades, converses. All that hard-won and expensively paid for tried-and-tested practice thenceforth has become a waste of time. Just look at the southward direction of the OECD’s productivity growth in an era when business education has never been more available. What we’re doing is giving ourselves the business equivalent of Alzheimers.
Sir Alex avoided most of the downside effects of flexible working by also being a very skilled experiential learner. Is it not time for Industry, commerce and business education to copycat him?
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Check out this SECOND valuable lesson from the world of football giving some inspirational business advice relevant to KM, HR, IT and business education
Around Xmas time of 2012 I highlighted some choice advice from the world’s most famous football manager, Manchester United’s Sir Alex Ferguson, who told Harvard Business School about the importance of sharing knowledge.
Now, another high profile football personality is proffering related advice about the self-same attribute – experience – that, once again, underlines how industry and commerce are overlooking the single most effective educational tool for maintaining and improving corporate growth.
The tool is experiential learning, the formalized discipline that, in today’s short-tenure workplace, would enable successive generations of employees NOT to have to continually reinvent the wheel for their employer. The man this time is Steven Gerrard, the celebrated captain of Liverpool Football Club, which – like Manchester United – is also much decorated.
Gerrard, aged 32, articulates his fear that a culture of ageism – now prevalent at Liverpool – is infiltrating English football, with experienced players being discarded because of a growing obsession with investing solely in youth. He argues that players like Manchester United’s Paul Scholes, 38, Ryan Giggs, 39, and Chelsea’s Frank Lampard, 34, showed the value of older players.
With Gerrard’s operative word being “solely,” what he and Ferguson are voicing is that the acquired knowledge and wisdom that age brings to experience should not be overlooked. In Ferguson’s case, this would be the managerial knowledge specific to Manchester United and in Gerrard’s case, the football equivalent of the special shop floor knowledge and environment/circumstances that enables his individual skill. For the wider business world, this would be the totality of the employers’ knowledge that disappears through the short tenure labor market and which gives rise to endemic corporate amnesia, widespread experiential NON-learning and declining levels of efficiencies, productivity growth and ROI. It’s an outcome that helps to confirm the academically documented evidence of individuals’ poor knowledge transferability between employers and business education’s neglect in teaching how best to experientially learn.
Sticking to sport, Ferguson has been Manchester United’s manager for 26 years. Liverpool is on to its fourth manager in nine years. Rather than just blame poor recruitment choices, is there anyone else out there prepared to acknowledge that workplace discontinuity, institutional knowledge loss and the absence of proficient experiential learning will negatively influence Liverpool’s scoreboard?
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What chance a THIRD example of sport giving valuable advice to business in as many weeks? Now cricket goes in to bat for experience, calling a no-ball on the fixation on youth
The first and second goals were football’s. Manchester United manager Sir Alex Ferguson’s dressing room advice for Harvard Business School included the need to share his Manchester United knowledge with his eventual successor. Then Liverpool Football Club’s captain Steven Gerrard’s back-of-the-net header was his observation that a culture of ageism was infiltrating English football, with experienced players being discarded because of a growing obsession with investing solely in youth
Now cricket’s Dirk Nannes, the Dutch Australian fast bowler, has delivered similar edifying advice by urging Australia’s national selectors not to cite age as a valid reason for axing key players. Like Steven Gerrard, his appeal is for them to value experience and he has urged the abandonment of selection policies that resulted in NSW and Australian opener Simon Katich being dropped because he was considered too old. Katich was dumped from the Australian Test team in June 2011 at 35 years of age, despite being the side’s most prolific run scorer the previous summer. More recently, NSW wicketkeeper Brad Haddin, 35, was overlooked for the current summer’s Test campaigns in favour of the younger Matthew Wade. According to Nannes, the biggest problem in a cricket team is trying to put an old head on young shoulders.
This is exactly the difficulty in the business world, with a marathon twist. We’ve been neglecting this issue for 40 years. That is, we’ve strategized and been sprint running what we’ve called the flexible labor market to make commerce and industry more responsive to fast-moving change – but without taking football and cricket’s advice.
The result is palpable. In the wise words of Nannes, we’ve not been able to put an old head on young shoulders. No thanks to short jobs tenure, wisdom has been postponed, or even bypassed by discontinuity’s disruptive influence and the Alzheimer-like effects of institution-specific corporate amnesia. To mix a few more sporting metaphors …. the race that is business now means that every sprinter drops the baton …. the high jumper has become the long jumper.
The lessons for business – and specifically for KM, HR, IT and decision making – are clear. To connect experience with youth, commerce and industry must allow the latter to inherit the knowledge and experience of the former. Then – and this is where business education has to change – the rolling generations of employees must know how to apply that self-same knowledge and experience in the cause of better decision making for their new employers. That’s proper experiential learning, the key to achieving that elusive objective in today’s growth-less market place.
Oldies are not dead meat. They are the raw material for providing expensive and hard-won experience cheaply.
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You’re the team manager of some very fast runners. What do you do when every athlete keeps on dropping the baton in the relay race?
You DON’T change the runners. But construct the same scenario in a business where the runners are your employees and the prevailing workplace turnover is such that everyone – including your senior managers – is replaced every five years. Then realise that your business has been doing this for the past three decades and more, allowing your workforce to be completely replaced around eight times. So what, I hear you asking?
Alongside a continuous stream of new blood and new ideas, we’re rich in everyone else’s experience and a member of that ‘advantaged’ band of institutions which has access to the much-prized flexible labor market, enabling us to duck and dive whenever necessary.
Ah but, I respond, underlying all this, there’s no workplace continuity, so induction is a never-ending process, cutting individuals’ effective output by around 25%. Your corporate ‘memory’ only goes back to 2007, so many procedures have to be re-invented and there’s no real opportunity to learn from erstwhile hard-won and expensively paid-for experiences in any department. Mistakes are constantly being repeated and you’re always fire fighting. Productivity is low, your productivity growth ever lower and your ROI is on the floor.
It wasn’t supposed to be this way. Everyone who is anyone is always saying that such flexibility is good for industry and commerce.
Sorry guys, when an organization loses its memory, it reverts. It can’t progress smoothly because most evolution – and yes, even an employers’ – occurs organically. With the way we’ve constructed the workplace, there’s no joined-up inheritance and corporate amnesia has imposed on us the business equivalent of Alzheimers. As such, growth is, literally, halting, an unintended consequence of the well-meaning strategy of flexible working of somebody in the 1970s.
Oh, and by the way, your very fancy digital data banks don’t cut it. It only provides a hint of the corporate evidence needed to overcome your more valuable knowledge loss. That part of your expensively acquired intellectual capital has walked out of the front door.
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Decision-makers are ducking the productivity challenge – Too hard? Not visible enough? Why?
Everyone is looking for growth. It’s the new religion that seems to be eluding all and sundry. Did you know that there’s a huge opportunity going begging equal to between 6% and nearly 10% of GDP? And it’s unaddressed.
In 2005 – a boom year before the current recession – the size of the potential intervention in the US was nearly $890 billion, in Germany more than €200 billion, in the UK more than £120 billion, in France more than €90 billion and in Spain almost €65 billion. These selective figures out of the OECD come from the Stock Exchange listed consulting firm, Proudfoot, being the estimate of what these countries throw away annually in wasted productivity. With year-on-year productivity growth across the OECD showing a decline before and after this period, today’s equivalent figures must be much, much higher, and also manifest elsewhere in the world.
With this subject an issue for in-house productivity contributors such as HR, KM, IT and business education, there is an interesting muddle about productivity, Most companies think it has got something to do with output. It has, but so long as competitors are equally unproductive, the insufficiency doesn’t show up too much. Is this the reason it is ignored and hence unaddressed?
In truth, the conventional definition short-changes the actual meaning. My own pet description is the ability to get from A to B without going via Z, which takes it out of the volume game and squarely into at least three other, arguably more accurate, areas of insight. They are the already mentioned productivity growth, its cost when it is wasted and, additionally, the ancillary Return on Investment (ROI), a key marker of productivity’s effectiveness. All three give productivity a more genuine veneer – and have been showing southward numbers for years.
The opportunity value has huge resonance with the late management guru Peter Drucker’s 1991 productivity challenge that, as the statistics show, no one has since taken up seriously. By way of a reminder, he said: “The urgency of the productivity challenge is great. The country that does this first will dominate the twenty-first century economically.” With his observation that businesses and other types of organization are largely wasteful in their production, the logic is simple. Better productivity will allow lower prices = higher sales = growth. It’s not rocket science.
The unrelenting volume of productivity shortfall indicates that much of the underperformance comes from experiential NON-learning, a phenomenon characterized by repeated mistakes, reinvented wheels and other unlearned lessons prompted by the short-tenure workplace, constant workplace disruption and their consequent corporate amnesia.
While the mentioned metrics flag up the hidden measure of productivity shortfall, they also highlight the potential opportunity for improvement that has been historically overlooked. Instead of just adjusting currency values, there is more that business and business education can do.
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A sorry tale of a missed opportunity to survive the current recession. Read the plot of a planned stage play featuring the dead hand of a deaf Finance Director …
The scene for The Death of Wisdom: It’s the winter of 2012 in the UK. The economic news is not good. If the country falls into a triple-dip recession, it will likely lose its AAA-rating. Interest rates would rise and the Bank of England would be adding even more time to its warning of years of economic hardship. What to do?
The acknowledged solution is that industry and commerce has to create “growth.”
Enter backstage (pointedly not stage left or stage right), a gorgeous 30-year-old ambitious, mid-career employee, who, having spent five years in the playwright’s invented business, is moving on to her fourth employer. She is typical of most employees, expecting to work for another four or five organizations in her working lifetime.
Ms Short-Tenure is giving some eleventh-hour advice to the Xmas brainstorming meeting of senior departmental managers: “Why don’t we lower our prices, even more than we’ve already done. This will encourage people to buy more. We sell more. Ipso facto GROWTH. It’s not rocket science, but then all those very learned economists, advisers and other decision-makers who got us into this mess also weren’t rocket scientists.”
“Ah”, says the Finance Director, feigning the wisdom of established practice: “We have to cover our costs.”
“But,” replies Ms Short-Tenure, “what if we could reduce our costs?”
“We’ve already done all we can,” says FD. “Otherwise we’ll go bust …….”.
Ms Short-Tenure knows that her upcoming departure will mean that she’ll take with her all her employer’s unique knowledge and experience. She appreciates she’s become more employable but, with a vestige of loyalty to the organization that’s given her a good standard of living, she’s also aware that once she’s gone, her employer will have to depend entirely on her replacement, who will take about a year to become productive and will, in turn, walk out with the same amount of the company’s special knowledge and experience. Through her multiple successors, her current employer will have to reinvent the wheel many, many times in every department, exactly like the company’s many previous generations.
She adds, authoritatively: “Do you know that our productivity is way below our competitors? Are you aware how many times we’ve repeated our mistakes? Do we really have to constantly duplicate what we already know? If the company didn’t literally allow its hard-won and expensively acquired lessons to walk out of the front door, we could learn to cut our costs. And instantly become more competitive. Do you know that the cost of the UK’s wasted productivity in 2005 was 7.5% of GDP, equal to £100 billion?
Seeing the eyes of every manager glaze over, she ups her argument: “If we DON’T allow our unique intellectual capital to leave us and then use it properly, we could cut out much of our waste and not have to firefight our mistakes. Wouldn’t we then be able to cut our prices?”
FD smiles patronizingly. He’s not interested. Nor is anyone else around the table. Sometime soon they are all planning to resign and move on. The lights dim and the curtain drops. The program notes explain that the Second Act covers how the company is taken over, makes the same mistakes and eventually goes into receivership.
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Check out this impressive way of learning business lessons from one’s own domestic experiences.
In the world of knowledge management, decision making and business education, experiential learning reveals itself in several ways; what we learn from other institutions, known as benchmarking, what we learn from the tried-and-tested practice of our own employer and what we learn from our own – and others’ – private lives.
I’ve just read a book that illustrates how effective the last mentioned pathway can be. The author, Neville Joffe, used a strenuous holiday climbing Mount Kilimanjaro to pen the story – and the event-specific lessons he extracted from it, among them the need to manage expectations and – echoing the book’s title – the requirement to persevere. “Never say Never” ends each chapter – and the book – with these business and life learning lessons that disillusion many. He runs a company that specialises in tackling business illiteracy, so he knows something about making sense. See (which url do you want to use?)
I point out this ingenuous and unsophisticated business medium because experiential learning generally is an indistinct discipline, informally applied and poorly executed by commerce, industry and business schools. For the evidence, just recall the pandemic of repeated mistakes, reinvented wheels and other unlearned lessons that litter the workplace. In business education it is undeservedly overlooked in favour of conventional teaching, which is characteristically fashioned around the standard of instruction received. Learning on the other hand is instruction acquired out of an abstracted process of critical reflection, reasoned deduction, and applied action, the evidential base for which is actual experience.
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Never mind the recession! There’s another crisis waiting on our doorstep. So why can’t we see it?
Take any organization and replace up to 15% of its employees, including its top managers, every 12 months. Assuming it’s not the same people who pass through the swing doors every year – the statistics actually support this – the institution will replace itself completely in the seventh year. When individuals leave they take with them up to 90% of their employers’ knowledge and experience, leaving the organization with a minimal knowledge base of its own making and, from their replacements, the remembered experiences of other employers.
These endless workplace interruptions are not far off reality in many industrialized countries, providing an overlooked business scenario with hugely serious implications, not least the inability of employers to learn from their own tried-and-tested experiences. It’s the way most institutions progress but, instead, the residual business environment is hiding an uncomfortable reality that threatens the prospect of any sustainability.
Behind the scenes, the OECD’s per capita productivity growth – the indicator of how efficient we are – has steadily declined to the point where it is now barely above zero (Groningen/Conference Board). Alongside this, a recent survey of 20,000 American companies shows a similar southward profile for their Return on Investment (ROI) to a figure just above 1% (Compustat/Deloittes), numbers which are low enough – one would think – to fuel concern. The latest estimate of the cost of wasted productivity is between 5.9% and 9.7% of GDP in a selection of industrialized countries (Proudfoot Consulting), a number high enough to also spark deep unease. The coincidental factor for both is that they apply to periods that equate to the advent and consolidation of the flexible labor market and the continual disappearance of organizational-specific knowledge and experience. The fact that the US houses the most productive companies in the OECD indicates how underwhelming the equivalent figures elsewhere must be.
The problem to similar to a relay race where every sprinter drops the baton.
Like the credit crunch, is this another of our massive blind spots? What is clear is that for 40 years we’ve been encouraging an unintended consequence of the short tenure workplace, a period in which we’ve completely replaced our company workforces around eight (yes eight) times. One of the perceived benefits of flexible working was to profit from the practice of others. Instead, the evidence suggests that we’ve created a lot of experiential NON-learners.
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Huge number of unlearned lessons highlights an unaddressed area of productivity shortfall that is ripe for improvement
I’ve just done a Google.com search to update my long-held recognition of one of our biggest areas of unrelenting business weakness. Typing in the words “no stone unturned”, which is a reassuring way of someone claiming energetic action for something gone wrong, I received a breath-taking number of hits – more than 3 million. Anecdotal evidence for widespread corporate dysfunction, yes, but just to cross check, I then typed in the words “poor decision making”. Up came the equally eye-watering figure of 2.56 million. Similar staggering numbers came up for “bad decisions” – 5.3 million hits – while the more clearly identifiable sub-set category of “repeated mistakes” threw up 81,000 hits and “must learn the lessons” (another way of saying “no stone unturned”) signalled 237,000 hits.
The numbers for these watchwords without the quotation marks, which provides a less weighty indicator of corporate deficiency but nevertheless is still closely correlated, is also very sobering. No stone unturned = 3.5 million hits, poor decision making = almost 76 million hits, bad decisions = 106 million hits, repeated mistakes = over 18 million hits and must learn the lessons = over 88 million hits. All these, of course, are just the visible signs of much of our business-related dysfunction, which raises the question how many more unpublicised bungles – and therefore unseen by Google – are there?
The long list of the latest acknowledged defaulters covered references to Europe’s bankers who, according to London’s Financial Times, have forgotten the lessons of the Depression and a Canadian medical doctor whose observation that the vitamin C lessons that prevented scurvy could help overcome same vitamin-deficient disorders such as rheumatoid arthritis, heart attack, cancer, pneumonia, and even stretch marks in birthing mothers. Printed out, they would consume quite a few forests – but they also carry an important message for employers and business educators.
It is that commerce and industry are not very good at learning from their – and others’ – hard-won and expensively-acquired experience. And much of it for one surprisingly explanation that seems to have bypassed almost everybody? It is the modern workplace practice of short jobs tenure that allows an employers’ special knowledge to keep walking out of the front door, never to be used by its paymaster patron. Corporate amnesia is rampant, as is experiential NON-learning.
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Beware the competitor who is a better learner. There is a huge area of non-learning open to improvement
How often do market leaders become laggards? And why? These questions, and others, links the short-tenure labor market with the inability to continuously learn from one’s own employer’s special knowledge and experiences.
Every time employees walks out of the front door, they take with them up to 90% of their employer’s special knowledge and experience to be replaced by the experiences of corporately unseasoned replacements, whose imported know-how is not always relevant, remembered accurately, is truthful, or even transferrable. With this happening every four or five years in many developed countries, a phenomenon that has been going on for the last 30-odd years, most employers have only discontinuity and very short memories on which to depend. With only one generation’s short-term memory to work with – the contemporary one – is it any wonder that the corporate beneficiaries of short tenure have a legacy of short-termism? Then there is the related trillion-pound” question for industry and commerce: …is lots of second-hand experience really better without much accrued organizational-specific wisdom?
Corporate learning is confined to two areas of endeavor – from others and from one’s employer. Others is taken care of with the discipline known as bench marking and external recruiting, while learning from one’s own employer’s experience is the area of opportunity open for huge improvement, quantified by the pandemic of repeated mistakes, re-invented wheels and other unlearned successes that little the modern workplace.
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Mayday alert! We’ve acquired the business equivalent of Alzheimers. Read about the invisible hand that’s stopping industry and commerce from learning from its own experiences
Relevant to KM, HR, IT, management development and business education, there is an unintended consequence of the flexible labor market, a workplace development that is proving to be among the most corrosive of components to good decision-making.
Every time employees walk out of the front door, they take with them up to 90% of their employer’s special knowledge and experience, leaving their former employer virtually empty handed – not of their explicit knowledge, which fills their data banks, but of the more useful tacit knowledge, the absent component of good decision-making. Since the 1980s, most organizations have replaced entirely their workforces around seven or eight times in many developed countries, leaving employers with the organizational memory of only their unseasoned current incumbents. The result is a heavily compromised institutional knowledge base continually grounded in others’ experience and – ominously – the distinctive inability to use one’s own experience to progress organically. Hence the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace, the cost of which is enormous.
I challenge the underlying premise of the original designers of flexible working – and their devotees – that wider experience on its own is necessarily beneficial. It flags up Thomas Malthus and David Ricardo’s law of diminishing returns, suggesting that lots of second-hand experience doesn’t work well without the awareness of the acquired wisdom from organizational-specific practice. To survive, organizations need to remain unique in their development, not become watered-down amalgams of everyone else. Surprisingly, the downside effects of short jobs tenure are still widely unacknowledged.
Organizations can continue to take advantage of the flexible labor market and still hold on to their special knowledge and experience. It’s a way of recovering lost continuity, allowing rolling generations of employees to learn more effectively from their employers’ tried-and-tested experience and improve their decision-making skills.
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Check out this awesome example of an unintended consequence that is needlessly costing commerce and industry an unimaginable amount of money
The truly bizarre thing is that it is still largely unacknowledged after 40 years, widely unaddressed, even by business academia, and – even now – actively encouraged. The 18th century economist Adam Smith, famous for identifying the “invisible hand” that promotes an end that was no part of the intention, would be nodding his wise head.
In the early 1980s someone smart thought that the workplace was too unresponsive to the rapidly changing environment. The future was considered unsuitable for a workforce that changed employers once, or maybe twice, in a working lifetime, the supposition being that we needed a flexible labor market that would allow employers to duck and dive as required to accommodate the technology-led, dynamic and new industrial revolution.
It did, but nobody thought to address the downside consequences or how to deal with the iceberg-like outcome – short jobs tenure and the continual loss of the organizations’ unique, hard-won and expensively acquired knowledge and experience.
The research data says that today, the average length of time an employee, including managers, stays with an employer is around five years in many developed countries. When they leave, they take with them up to 90% of their employers’ own knowledge and experience, leaving their paymaster, literally, empty handed, not of their explicit knowledge, which fills their data banks, but of the more useful tacit knowledge. Without said knowledge and experience, employers are unavoidably experiential non-learners. The cost of our repeated mistakes, re-invented wheels and other unlearned lessons is enormous.
Employers can continue to take advantage of the flexible labor market and still hold on to their special knowledge and experience. It’s a way of recovering lost continuity, allowing rolling generations of employees to learn more effectively from tried-and-tested experience and thus improve their decision-making. It is relevant to HR, KM, IT and business education.
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What’s the most disregarded management problem in the industrialised world? There’s a clue ….
It’s costing employers the equal of between 6% and nearly 10% of their countries’ GDP.
It’s the expense of lost productivity, a large part of which comes from the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that now litter the marketplace. The avoided part of managers’ oversight is in the repetitive – and thus unnecessary – nature of organizational inefficiencies and, most puzzlingly, the failure to recognize the main reason for the corporate inability to learn from their own knowledge and experiences.
For more than 30 years, employers have been consciously and energetically pursuing the workplace practice of discarding said knowledge and experience.
Generally seen as a desirable aspect of the modern workplace, the flexible labor market is the culpable party. What companies and other organizations haven’t fully appreciated is its enduring domino effect – the departure of up to 90% of individuals’ institutional-specific knowledge every time they walk out of the front door, continuous workplace disruption, widespread corporate amnesia, the noted capacity for experiential non-learning, productivity shortfalls, poorer competitiveness, ROI downturns and the prospect of disempowering the wealth-creating machine. It’s a very real toxic chain – and widely unaddressed by both employers and business/management education. It’s an alert for HR, KM, IT, management education and strategic thinkers, and especially for those businesses concerned with their productivity and competitiveness.
It’s not even questionable any more; the perceived benefits of the flexible labor market are wearing thin – and for all the wrong reasons.
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Hands up all those employers that would want to use the knowledge and experiences of their previous employees – without having to put anyone back on the payroll?
In reality it’s a no-brainer, an enticement for nil-cost gain if there ever was one. For one, it would further maximize your investment in human capital that has already been paid for at great expense. For two, it would provide the organization with an evidential base for allowing the rolling generations of employees to benefit from your unique knowledge and experience and help you to stop in its tracks the contagion of repeated mistakes, re-invented wheels and other unlearned lessons that now litters the workplace.
Since the early 1980s, the so-called flexible labor market has given individual companies and other organizations as many as eight – yes eight – complete – yes complete – staff changes, including their top decision makers in many developed countries. Research suggests that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads. Simply stated, this means that, for employers, most of their special knowledge and related wisdom keeps on disappearing, never thereafter available for use by themselves.
Instead, industry and commerce have had to depend entirely on the experiences of corporately unseasoned replacements, whose imported know-how is not always relevant, remembered accurately, is truthful, or even transferrable. The outcome has been an endemic corporate amnesia, the backwash of which is the innate ability not to be able to learn from one’s own tried-and-tested experiences.
Conventional induction and efforts to improve employee retention are marginal aids, which means that the decision-making journey most employers travel today is a very expensive detour.
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A serious question for employers …. If it were possible, would you want to use the knowledge and experience of your previous employees – without having to put anyone back on the payroll?
In reality, it’s a no-brainer, an enticement for nil-cost gain that doesn’t require an answer. But rhetoric aside, it’s also one of those apparent propositions that seem too good to be true. Not so.
Since the 1980s, most organizations have replaced their entire workforce around eight – yes eight – times. And given that when individuals walk out of the front door, they take with them up to 90% – yes 90% – of their employers’ own special knowledge and experience, it means that few organizations are able to benefit from their expensively funded and hard-won hindsight. While exiting employees can theoretically passage their ‘memory’, however remembered, to a new employer, the source organisation “is typically left in oblivion”.
For how to capture and apply said knowledge that ends up being scattered “every which way but in the direction of the organization that created it”, there is a new approach to managing organizational memory (OM) and experiential learning (EL) that specifically accommodates the short-tenure workplace.
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How to increase your HR department’s standing ….
Take full control of the induction process.
Since the early 1980s, the flexible labor market has given most companies and other organizations as many as eight complete staff changes, including top decision makers.
For all that time industry and commerce have had to depend entirely on the experiences of corporately unfledged appointees, whose imported know-how is not always relevant, remembered accurately, truthful, or even transferrable. The statistics say that the average tenure across most of industry and commerce in many developed countries is just five years, effectively 25% shorter if one takes into account the initial acclimatization phase and the employee’s end-period of employment. And when an individuals walks out of the front door, they take with them up to 90% of their employer’s institutional-specific knowledge.
All institution-specific knowledge and experience has a value, at its minimum equal to the salaries of the people who created it and potentially much more. Once it leaves, it becomes the intellectual property of someone else. It needn’t be that way.
To extract maximum productivity from a transient workforce, much depends on the quality of an organization’s induction processes. With conventional induction and efforts to improve employee retention marginal solutions, there is now a way yo lengthen and improve the productivity phase of transient employees by at least 25%. Put another way, the knowledge and experience of past employees can be put to use – without having to put them back on the payroll.
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Is Experiential Learning part of Knowledge Management? If so, KM has a powerful application to add to its portfolio
I’m not talking about the type of experiential learning that complements classroom instruction with hands-on activities. Or the Outward Bounds-type courses or the on-the-job co-operative research and development programs that universities have with private industry. Or even the educational opportunities that are offered to students to enroll at foreign universities to address spreading globalization. It is the experiential learning that allows employees to benefit from their own and each others’ knowledge and experience that, in today’s flexible labor market, walks out of the front door on average every flour to five years in many developed countries.
This type of experiential learning is largely overlooked by both commerce/industry and business education. For the former, little or no effort is made to capture their knowledge and experience except for the explicit-type content recorded in institutional data banks. The more valuable institution-specific tacit knowledge is allowed to disappear. For business educators, there is an equivalent oversight in teaching the rolling generations of employees, especially managers, how best to learn from experience, specifically from the current employer’s own experience.
This is fundamentally different from the standard teaching model, which focusses on giving instruction in a one-size-fits-all approach. Learning, on the other hand, is instruction acquired out of an abstracted process of critical reflection, reasoned deduction, and applied action.
Because of short jobs tenure, modern business tutelage needs to shift more towards an institution-specific competence based on actual knowledge and experience. It’s called experientially learning. To coordinate this, KM looks to be the perfect vehicle.
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New approach that allows employers to use the knowledge and experience of their employees AFTER they’ve walked out of the front door
It’s an approach that will further maximize the human capital that has already been paid for at great expense.
Since the early 1980s, the so-called flexible labor market has given individual companies and other organizations as many as eight complete staff changes, including their top decision makers in many developed countries. Research suggests that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads. Simply stated, this means that, for employers, most of their special knowledge and related wisdom disappears, never thereafter available for use by themselves.
Instead, industry and commerce have had to depend entirely on the experiences of corporately unseasoned replacements, whose imported know-how has not always been relevant, remembered accurately, is truthful, or even transferrable. The outcome has been an endemic corporate amnesia, the backwash of which is the innate ability not to be able to learn from one’s own tried-and-tested experiences – and the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the business experience.
With the flexible labor market now irreversible, conventional induction and efforts to improve employee retention are marginal aids, which means that the decision-making journey most employers travel is a very expensive detour. There is now e a way to get back on track.
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Why do so few decision makers utilize their employer’s IT data banks?
Academic research clearly indicates that decision makers only use their employer’s archives sparingly, often also complaining that source material is inadequate.
The reasons are unclear. Possibly there are time constraints under which managers find themselves. Egotism is another possible reason, a characteristic widely deemed necessary for executives that encourages them to feel that their instinct or education know better. Elsewhere, prior data, information and experience are not seen as anything more than dry ‘history’. More likely, though, is that the data banks hold only explicit knowledge while the very flexible labor market has dispatched the institution’s more useful tacit component of the knowledge parcel, leaving decision-makers without the example of tried-and-tested precedent.
Whatever the actual reason, decision makers probably don’t know how to properly apply their employer’s tried and tested experiences, whether they (the experiences, that is) be successful or unsuccessful, remembered or forgotten.
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Do you want to modernize/upgrade your document management system to enable real knowledge management?
If you’ve spent a lot of money on a digital solution to just manage your corporate documentation, you’re short-changing yourself. Big time.
Using your digital machinery more imaginatively would allow you to apply the knowledge and experience of your past employees without having to put them back on the payroll. As such, you would further optimise your investment in human capital and let you learn from the experiences that you’ve allowed to walk out of the front door. Imagine having the opportunity to break with all those repeated mistakes, re-invented wheels and other unlearned lessons that reduce your productivity and competitiveness.
Did you know that the average job tenure of today’s employees, including top decision makers, is around 4-5 years in many developed countries? Did you also know that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads? Simply stated, once your employees walk out of the front door, most of your special, hard-won and expensive-obtained knowledge, experience and related wisdom will forever be unavailable to you.
Your digital archive undoubtedly contains most of your past explicit data, information and knowledge. It just needs to be topped up with the exiting tacit knowledge. Between them, you’ll have the necessary evidence in hand to give successive generations of employees the opportunity to become better decision-makers. It’s called experiential learning.
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A new approach to making experiential learning work for organizations whose per capita productivity is in need of serious attention
Ever since the 1950s, per capita productivity growth has been declining to the point where the annual average increase is around 0.8% among OECD countries. And that’s before the latest recession struck. When productivity growth declines, the ability to compete weakens. When it falls into the red, it means that businesses are getting less than added value from their investments.
There is a clearly identifiable quarter of corporate dysfunction in the late Peter Drucker’s declared crisis of productivity, his belief being that businesses and other types of organization are largely wasteful in their production. Part of this is the high incidence of repeated mistakes, re-invented wheels and the other unlearned lessons that litter the workplace, a product of the high level of employee churn and associated corporate amnesia where organizations can’t learn from their tried-and tested experiences.
The trick is to better manage one’s organizational memory and introduce proper experiential learning to cut out the continual and unnecessary re-learning that short jobs tenure has imposed on industry and commerce.
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Information overload is not the only reason for poor managerial performance. There is a huge area of corporate oversight that is ripe for better decision-making
That managers are over burdened by the data, information and ‘knowledge’ that pours out of organizational data banks might be accurate were it not for research that says that decision makers only use their employer’s archives sparingly, often also complaining that source material is inadequate.
Whatever the reason, the fact is that managers don’t look particularly efficient when other research published in a 2005 edition of Harvard Business Review found that 55% of leaders are associated with below-average corporate performance. Just 15% of the individuals studied over 25 years – a period of growing business education – showed a consistent ability to manage innovation and organizational change. An even more instructive 2004 study from the consulting company Capgemini found that senior managers in large British companies admitted that one in four of their decisions was wrong, with the rate in the financial services sector being nearly one in three.
Whilst these ‘snapshots’ should not detract from the fact that the majority of decisions that managers make are right, the reality is that many decision makers are not doing productivity and competitiveness many favours.
Information overload notwithstanding, there is a huge gap in the way managers make and are taught to make their decisions. No thanks to the very flexible labor market, their determinations are typically grounded within other employers, the experiences of which are not always relevant, remembered accurately, truthful, or even transferrable. On top of this, the data, information and knowledge usually provided by their new employers excludes the one crucial component on which most good decision-making depends – tacit or cognitive knowledge.
According to academic research, up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads – and allowed to walk out of the front door, never to be utilised by its patron. In the pursuit of better decision-making, it is both this institution-specific content and an area of instruction called experiential learning that organizations and business schools studiously neglect.
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Every company looking to hire has to induct their new appointees. There is a new approach to getting corporately unseasoned replacements up to speed quickly and more efficiently than conventional techniques
Since the 1970s, the flexible labor market has given most companies and other organizations as many as 10 complete staff changes, including top decision makers.
For all that time industry and commerce have had to depend entirely on the experiences of corporately unfledged appointees, whose imported know-how is not always relevant, remembered accurately, truthful, or even transferrable. The statistics say that the average tenure across most of industry and commerce is now just five years, effectively 25% shorter if one takes into account the initial acclimatization phase and the employee’s end period of employment. Elsewhere, academics have estimated that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads.
To extract maximum productivity from one’s transient workforce, much depends on the quality of an organization’s induction processes. With the flexible labor market now irreversible, conventional induction and efforts to improve employee retention are marginal solutions. That’s very expensive. There is now a way to get back on track.
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As an employer, what’s the best thing you can do for your new appointees, especially your high rankers?
Provide them with a detailed oral debriefing of several of their predecessors.
There is a corporate oversight in dealing with the effects of short-tenure employment in that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads. When they leave – as they’re doing on average every four to five years – they take it all with them, leaving only what’s in the corporate archive.
Organizations typically have a voluminous paper record that often provides only bare facts. Managers’ choices and actions may be remembered but not the reasons and the intended significance of their deeds, or the views and perceptions of those who participate in the decision-making processes. Memory is also frequently inaccurate, such as the evidence that tends to sway decisions. In no two organizations are they exactly the same, nor in any two parts of the same organization. In particular, individuals forget both the density and duration of the activity underlying the surface facts. An effective oral debriefing program can address the problem of this before time dilutes or erases them.
For employers to expect decisions to be made without reference to this crucially important aspect of the decision-making process is hamstringing management.
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How to improve decision-making in our era of short-tenure managers
The average length of time many managers – even top managers – stay with their employer in many industry sectors is now around five years, their period of maximum productivity around 25% less if one takes into account their induction and end stage of employment. Academics have also estimated that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads.
When they leave, they take with them all their knowledge, experience and acquired wisdom that organizations have already paid for at great expense. The result? Institutions can’t learn very well from their own tried-and-tested know-how.
There is now a way to improve transient managers’ decision-making. It’s through a completely new approach to decision-making that has been adapted to the modern workplace.
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A fresh way of dealing with a corporate problem that is crushing corporate productivity
There is an unacknowledged, iceberg-like and delinquent edge to the enthusiastically pursued flexible labor market. It is a workplace development that is proving to be among the most corrosive of components to good decision-making.
The elevated level of employee churn has introduced conveyer-belt workplace discontinuity and associated corporate amnesia. These are modern phenomena that have prevented institutions from learning from their own hard-won and expensively paid-for experiences. The result is a never-ending recital of repeated mistakes, re-invented wheels and other unlearned lessons, the cost of which is substantial.
By reducing the level of poor decision-making in a clearly identifiable quarter of corporate dysfunction, employers will be able to help address the late Peter Drucker’s declared crisis of productivity, his belief being that businesses and other types of organization are largely wasteful in their production.
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How experiential learning can solve the problem of pervasive corporate amnesia and low productivity
The flexible labor market has given us high employee turnover. Consequent short jobs tenure has removed all of an employer’s medium- and long-term memory, even much of the short-term memory. This has introduced to industry and commerce the phenomenon of corporate amnesia. In turn, this ‘memory loss’ prevents the organization from learning from its own experiences, which helps to explain the pandemic of repeated mistakes, the reinvented wheels and the other unlearned lessons that litter the workplace. The cost is enormous.
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Without noticing it, is Western society’s wealth machine disempowering itself? Early warning sign or eccentric notion?
The actively encouraged flexible labor market is giving employees, including top decision makers, as many as eight different employers in their working lifetimes in many developed economies. At this level, the average job tenure is just five years. With academic research indicating that up to 90% of the knowledge in any organization is embedded and synthesized in peoples’ heads, where does this leave the employer?
With the relationship between knowledge and power intimately linked, the corporate body has, quite deliberately and entirely unwittingly, allowed its command to be displaced.
No longer are individuals an aggregate part of an established institution. Individuals are the institution for as long as they remain in situ. Then, when the face changes, the institution changes, or more accurately, tries to change, bereft of its continuity and at the mercy of new brooms, whose imported know-how is not always relevant, remembered accurately, truthful, or even transferrable. Ordered evolution has become a shapeless revolution with little regard for the one corporate asset that represents the organization’s life form – its institution-specific knowledge and experience. These departures presage a mercurial world, with such things as corporate culture, ethos, values, and tried-and-tested usage struggling to maintain an even keel.
Having chosen to operate in isolation to its own institution-specific, hard-won and expensively acquired experience, have those who engineered the stratagem of short job tenure, inadvertently pulled the rug from beneath themselves?
In the past 40 years, the flexible labor market has removed all of the employers’ medium- and long-term memory, even much of their short-term memory, introducing industry and commerce to the unacknowledged phenomenon of corporate amnesia. In turn, this ‘memory loss’ has prevented organizations from learning from their own experiences, helping to explain the pandemic of repeated mistakes, the reinvented wheels and the other unlearned lessons that litter the workplace. The unintended cost is enormous.
Given the unlikely abandonment of the flexible labor market, the answer is the better management of institutional-specific organizational memory and the proper use of experiential learning to provide employers with the ability to improve decision-making, productivity and competitiveness.
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Are employers doing enough to help themselves out of the current economic crisis? No, and the opportubity for doing so is fast disappearing
Businesses are overlooking what could be called rookie economic advice that the resumption of growth has to come through a relentless focus on improving competitiveness, a factor of production that is being obstructed by the widespread loss of corporate knowledge that is walking out of the front door.
Whatever governments do to ameliorate fiscal positions, competitiveness has to ultimately come from the sharp end of business – companies themselves. One of the prerequisites for competitiveness is productivity. Productivity means doing things better, cheaper and/or faster. The more marked these features, the greater will be demand. Ipso facto growth, the desperate new religion on the forecourt of industry and commerce.
Whilst some companies are maintaining staff levels to avoid losing skills, the pursuit of such productivity generally has taken a back seat, with most companies more interested in strategies that further austerity through capital cutbacks and labor retraction in addition to the customary high levels of staff wastage. This allows even more organization-specific knowledge to disperse, further inhibiting the ability to learn from its own experiences. Instead of enabling the prospect of better productivity, this is enhancing the predisposition to expensively repeat mistakes, re-invent the wheel and shed tried-and-tested lessons, all to productivity’s detriment.
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Why business education has to change to accommodate the short-tenure character of the modern workplace. Check out the opportunity for knowledge management and experiential learning
Conventional business instruction was designed at a time when individuals could expect to have one, perhaps two, and if they were really unlucky, three employers in their working lifetimes. Today, employees – including managers – can expect to have an average eight different employers in many developed countries, giving tenure periods of around five/six years.
For employers, there is only a comparatively short period to integrate their transient employees to make them fully productive. More importantly, this has imposed a fundamentally different dynamic on the assimilation process. Traditionally, the individual would have many more colleagues to personally consult when it came to integrate their practice with the corporate experience in order to make appropriate decisions for their new paymaster. Today, the number of potential colleagues has shrunk – or even disappeared – along with the huge volume of the organizations’ unique knowledge and experience. Thus far, both industry/commerce and business education have done little to address the instructional implications of the consequent corporate amnesia, in spite of the fact that the flexible labor market’s short tenure character has been in train for more than 30 years.
To end the departure of the organizations’ unique knowledge and experience, employers plainly need to have suitable capture mechanisms in place. Attention KM. But, thereafter, the important role for business education is in teaching the short-lived generations of employees how best to learn from experience. The discipline for this is the more proactive branch of education called experiential learning, which is different from the one-size-fits-all instruction that current business education traditionally provides. Unlike teaching, which is instruction received, learning is instruction acquired out of an abstracted process of critical reflection, reasoned deduction, and applied action, the formalized skill that business education widely ignores.
Modern business instruction has long needed to shift more towards applying an institution-specific competence based on the application of actual knowledge and experience.
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Much of business education concentrates on correcting failure. Useful, but is this emphasis correct?
No. Business education is doing only half its job.
Typically, corporate success is not considered an area where additional learning resources should be directed. But, as the record clearly shows, success is not a commodity that can be guaranteed continuously. It can easily be reversed for the simply reason that circumstances are always changing. Success, too, is the organization’s most profitable area of endeavour, so to keep depending on repeated success is both insular and short-sighted. When circumstances change, success can easily turn into failure and the need to fire fight escalates. It then becomes endemic, with overall success eventually dependent on a defensive culture.
Instead, educators – and the institutions they are supposed to serve – should skew their learning labours to both failure and success. That way, the former can become delayed success while the later can become continuing success.
The appropriate discipline for this is the more proactive branch of education known as experiential learning, self-evidently the practice of learning from actual experience. It is an approach to business education that is still widely overlooked, requiring a keen awareness of the institution’s evidential base of actual experience in order to work, not now available in today’s highly flexible labor market where individuals take with them up to 90% of their employer’s institutional-specific knowledge when they walk out of the front door. And that’s happening every four to five years in today’s workplace.
The correlating learning process is different to traditional teaching, which is instruction received. In contrast, learning is instruction acquired out of an abstracted process of critical reflection, reasoned deduction and applied action. It is in these two elements that experiential learning takes place and where business education has a role.
There is a way how organizations can best retain their corporate knowledge and experience and then how experiential learning can applied using David Kolb’s acknowledged reflective methodology.
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Africa’s disastrous post-colonial development is among the most expensive examples of management dysfunction
The management dysfunction aspect relates to how every other developed and developing country has emerged from their feudal pasts – by basing their advancement on the employment of individual property rights in the agricultural sector. By ignoring this essential lesson, even neglecting to insist on recipient countries adopting less medieval attitudes toward land in return for their financial help, not only has money been wasted unnecessarily – around seven post-WWII Marshall Plans over the past half century, with little perceptible benefit – but one of the world’s most long-running tragedies has been allowed to persist.
The policy to which today’s Africa aspires is commonly known as leasehold. The policy to which the developing and developed world has adopted is freehold, which allows individuals ownership of the land. Were they to experiential learn, small-scale subsistence farming could be transformed into more commercial operations capable of feeding urban populations. Whilst acknowledging that the move away from the traditional mind set that land is communal would be a sea change way of thinking, this would be no more exceptional than dozens of other, equally different cultures. The one successful modern non-African example quoted is Peru in the early 1990s but comparable proposals drafted for Tanzania and South Africa have been resisted, in spite of being backed by the World Bank, revealing how political dogma can supplant the wisdom that can emanate from precedent.
The ability to experientially learn as one of the biggest areas of oversight by management and business education, even in developed countries. Its main focus is on the non-doctrinaire reasons for institutional-specific knowledge loss, the 30-year-old flexible labor market, which has introduced to the workplace the phenomenon of short jobs tenure. This has led to continual workplace disruption, corporate amnesia, the inability to experientially learn and the consequent repeated mistakes, re-invented wheels and other unlearned lessons, the cost of which is enormous.
The new workplace requires commerce/industry and business education to change its conventional processes.
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How to transform the economies of African countries – the ignored experiential learning opportunity. Why?
The developed world has spent more than 50 years and around seven post-WWII Marshall Plans trying to transport African countries out of their colonial pasts. Why, when other under-developed countries have succeeded developing themselves, has the African continent barely moved?
They – along with the international ‘aid industry’ that is tasked with fostering the transformation – have proved to be particularly poor experiential learners. The non-learning aspect relates to how every other developed and developing countries have emerged from their feudal pasts by basing their advancement on the employment of individual property rights in the agricultural sector. By ignoring this essential lesson, even neglecting to insist on recipient countries adopting less medieval attitudes toward land in return for their financial help, money been wasted unnecessarily and one of the world’s most long-running tragedies has been allowed to persist.
The policy to which today’s Africa aspires is commonly known as leasehold. The policy to which the developing and developed world has adopted is freehold, which allows individuals ownership of the land. Were they to experientially learn, small-scale subsistence farming could be transformed into more commercial operations capable of feeding urban populations.
Whilst acknowledging that the move away from the traditional mind set that land is communal would be a sea change way of thinking, this would be no more exceptional than dozens of other, equally different cultures. The one successful modern non-African example quoted is Peru in the early 1990s but comparable proposals drafted for Tanzania and South Africa have been resisted, in spite of being backed by the World Bank, revealing how political dogma can supplant the wisdom that can emanate from precedent.
The the ability to experientially learn is one of the biggest areas of oversight by both management and business education, even in developed countries. Its main focus is on the non-doctrinaire reason for institutional-specific knowledge loss, the 30-year-old flexible labor market, which has introduced to the workplace the phenomenon of short jobs tenure. This, in turn, has led to continual workplace disruption, corporate amnesia, the inability to experientially learn and the consequent repeated mistakes, re-invented wheels and other unlearned lessons that litter industry and commerce, the cost of which is enormous.
The new workplace requires commerce/industry and business education to change its conventional processes.
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