Saturday, October 20, 2007

Turning Knowledge Into Action

Execute. Implement. Stop talking and do something. Actions speak louder than words. If you have a learning organization, it needs to be a doing organization too. No matter how you put it, the evidence is rolling in: The distinction between so called “old economy” and “new economy” companies are overblown. Regardless of industry, knowing what to do isn’t enough. Those companies and business units that dominate their competitors win by turning knowledge into action.
Just recently, we met with the founders of Reactivity, a company that consults to Internet start-ups and is incubating several of its own start-ups. Unlike most Internet start-ups, Reactivity has been profitable since it was founded over two years ago. When Mitch Kapor (the founder and first CEO of Lotus, and designer of Lotus 1-2-3) learned about the company, he not only invested a great deal of his own money, he convinced the young founders to make him Chairman. John Lilly, one of Reactivity’s co-founders, told us "Good ideas are easy to find. By now, nearly everyone knows what it takes to succeed. The problem is doing it; that is the hard part." John Lilly’s words are nearly identical to what we have heard from hundreds of executives in more traditional industries, like automobiles, pharmaceuticals, energy, publishing, textiles, and financial services. Executives in these industries know which business practices and business models will enhance performance. The difference between winners and losers is what they do, not what they know.
Lots of Knowledge
It isn’t surprising that so many managers know so much. Companies do a lot more than just draw on past experience. Most companies, and increasingly even small and young companies, hire management consultants armed with the latest managerial tools, they use inside and outside experts to keep training their people, they have the Internet, Intranets, and Extranets, and their thirst for information about what they ought to do supports the publication of over 1700 management books a year.
Yet, so often, all this knowledge doesn’t help much. Managers at companies we speak to, consult for, and study keep pulling us aside, and whispering that, even though they have all this knowledge, their company isn’t turning it into action. The problem isn’t just inaction. It is usually worse than that. More often, people know what to do, but their companies keep doing things that clash with, or undermine, proven practices that would enhance performance.
Our frustration and curiosity about why so many companies are filled with smart and hard working people, but still didn’t act on their knowledge, inspired us to complete a four-year research project. We call this the “knowing-doing” problem--the challenge of turning knowledge about how to enhance organizational performance into actions consistent with that knowledge. For example, audiences often nod knowingly when we talk about “the smart talk trap.” We explain how, in many companies, knowing-doing gaps are created when talk is treated as an acceptable substitute for action. When something needs to be done in such places, people act as if talking about it, making decisions relevant to it, and planning are the same as doing something to actually address the problem. There are numerous meetings where, at the end, the decision is to have even more meetings! In such firms, there is often little follow-up to ensure that anything is actually happening.
Smart Companies
We don’t reject informal talk, formal presentations, quantitative analysis, mission statements, and strategic planning. These often inspire and guide intelligent action. It’s just that they are not substitutes for action. Fortunately, not all organizations are plagued by this problem. Smart companies use several practices to make sure that talk isn’t the only thing that happens:
1. They have career systems that bring people into senior leadership positions who have an intimate knowledge of the organization’s work processes because they have performed them themselves and have grown up with, or been promoted from within, the organization. Jim Goodnight, CEO of SAS Institute (a billion dollar software firm) still spends about half his time leading software development projects. George Zimmer, the CEO of the hugely successful retailer, Men’s Wearhouse, still spends at least a day week in stores.
2. They value simplicity and do not reward unnecessary complexity. These are places where calling something “common sense” is a compliment rather than an insult, and where the language used is simple, clear, and direct. A key part of Steve Job’s turnaround at Apple Computer was eliminating the dozens of product platforms that Apple was selling when he took over in July of 1997. Within a year, Apple had only four platforms, two laptop computers and two desktop computers.
3. They use language that is action oriented and, even more important, followed up to ensure that decisions are implemented and that talk results in action and not just more talk. At IDEO Product Development, people get ahead by producing prototypes for new products, not just talking about great ideas for new products. An engineer who just talks, but never produces any prototypes, will be teased and, and if that doesn’t lead him or her to develop prototpyes, then shunned, by coworkers.
The smart-talk trap is just one of the five major causes of knowing-doing gaps. These gaps are fueled by too much reliance on history and precedent, fear, dysfunctional internal competition, and measuring and rewarding the wrong things. Special attention is required to avoid and reverse these problems, and get managers to help their companies gain an action advantage over competitors, which is all that counts in the end in both old economy and new economy companies.

1 comment:

Gary Cokins said...

I agree with your "knowing-doing" gap description. As further evidence Dr. David Norton, the co-author of The Balanced Scorecard book series with Professor Robert S. Kaplan has been mentioning at his seminars two observations. (1) Many organizations formulate good strategies, but their problem is failure to execute them. (2) The key is not just the strategy map and its KPIs identified for monitoring in the scorecards and dashboards, but rather identifying projects and initiatives that accomplish the strategic objectives in the strategy map. These are all components of the increasingly popular over-arching term, "Performance Management." Your blog supports this thinking.