Issue 10 (emailed version), Thursday 12 October, 2000
Made in New Zealand - twice winners of the America's Cup


Why do so much education and training, management consulting, and business research and so many books and articles produce so little change in what managers and organizations actually do?

Pfeffer and Sutton, The Knowing-Doing Gap:
how smart companies turn knowledge into action.
Harvard Business School Press, 2000

Welcome to issue ten of EDGE FIRST, an email magazine dedicated to making you a better leader, by providing:
- provocative thinking about what it means to be a leader
- the tools, techniques and best-practices that drive leadership improvement

In this issue
WarmUp® – Is management dead? Is God?

Ten minute MasterClass® – The knowing-doing gap
Listomania – with a bullet!
Sixtysecond Snapshots®
1 - how to build a dream (new-economy) team
2 - the 'Law of Crappy People'

To access Portable Document Format (.pdf) files you'll need Adobe's® free Acrobat® Reader.
WarmUp®
In both this eZine and its companion (Award) we make occasional use of the columnar material (Fortune magazine) of Thomas Stewart (author of Intellectual Capital: The New Wealth of Organizations). Especially on knowledge management. Clear and thoughtful, provocatively packaged.

Now, our Tom also appears regularly at eCompany, writing a 'Barely Managing' column, the first of which – Management Renaissance, October 10, 2000 – is subtitled "Only suckers and really anal people thought much about management until the recent dotcom shakeout. Now the lost art is returning to the fore."

In some company, asking 'Is management dead?' has an effect similar to asking 'Is God dead' at a Sunday School seminar. An awkward silence is likely to ensue. And that's what happened, according to Stewart, when GE's chief learning officer Steve Kerr asked the question (about management, not God) in front of “a gathering of some of the most eminent management minds in the field, including Warren Bennis, Charles Handy, Tom Peters, Harold Leavitt, and Peter Drucker. Kerr's remark struck this heady, heavyweight crowd like a fart in a church.”

Kerr's no dummy, Stewart says. He's CLO at General Electric, which means he runs the greatest management training ground on the planet, including what is arguably the world's best business school, GE's management development institute at Crotonville in Ossining, NY. He's also a former professor of business at the University of Southern California, which means he can use words like stochastic and heuristic and still think he's speaking English.

So why is that such a tough question? And what's it got to do with leadership? First question first: Stewart says, in effect (I'm summarising, as always) take a look at recent history. Lately it's seemed as if anyone with half a brain would have been silly to worry about management. Why 'manage' when “you can make a couple of zillion dollars by making copies of your business plan into paper airplanes and flipping them onto every lawn on Sand Hill Road?” (Sand Hill Road, by the way, is the semi-mythical residence of Silicon Valley's venture capitalists – the conceptual equivalent of Wall Street and The City - Ed).

“Why bother,” Stewart asks, “to build management processes that work and will last when Microsoft or Cisco Systems will buy you out and provide you with their processes?”

The answer, of course, is that the cold bath of last April's NASDAQ correction has told us all what Gary Hamel and his guru kin (and the whole 'quality' movement) have long argued; that scale and operational excellence and infrastructure are important. And, also of course, that management is not dead. “It never will be,” says Stewart. “Sure, a few people were able to grab the money and run, and who can blame them? Now it's time to get to work.”

The relevance to leadership? It's a point that Stewart doesn't make – and that we dwell on at greater length in the 'knowing-gap-doing' stuff below. Our Tom's vignette illustrates yet another reason why it's worth separating, in your mind and in your practice, management from leadership. In extremis, out on the fringes of the new economy, management is, at least for a time, optional. Leadership - anywhere - is not.
Ten minute MasterClass® - The knowing-doing gap
In our lead quote, Pfeffer and Sutton ask why all that education, training, consulting, and research have so little effect on what organizations actually do. An allied question is – on the assumption that you can't read them all – how do you decide which of the thousands of books published every year on leadership and management are worth reading?

We don't know the answer, but don't have any reservations recommending The Knowing-Doing Gap. It'd be going over the top to say 'if you only read one … make it this one,' but it is well worth your time. Here's why:

One reason there's so much stuff – so many books, articles, consultants and academics – is that the ideas (unoriginal, unremarkable, similar to last year's) don't turn into action. We buy the books, even though we know what they're going to say, because we're still not executing.

Each year, more than $60b is spent on training in and by organizations. Much of it based on principles that are fundamentally timeless. Much of it endlessly repeated. In 1996, $43b was spent in the US on management consultants. Yet many organisations carry on doing things pretty much as they always have.

You get the picture (Pfeffer and Sutton do labor it a bit). Too much telling, not enough doing. Why is one of the great mysteries, and a key question for all leaders, wherever they sit in whatever sort of organization. These two set out to find some answers.

First, though, they confront Knowledge Management (KM). If everyone (we exaggerate for effect, right) is into KM, they ask, how come there's this gap? To quote Thomas Stewart “The new economy is about the growing value of knowledge as an input and output, making it the most important ingredient of what people buy and sell.”

Trouble is, they say, many consultants, organizations and writers take the view that knowledge is tangible (a patent, say) – something to be acquired, measured and distributed. And there's two things wrong with that:

(1) It draws a problematic distinction between knowledge as a tangible good, and how that 'good' is applied in the workplace.
- Often, this is because the people (managers, consultants, information technologists) who build the systems for collecting, storing and retrieving knowledge have no idea about how people actually use it in their jobs.
- What's really important is tacit knowledge – the stuff passed on by stories, gossip and observation – which is difficult to codify but essential for doing the work.
- Yet most KM systems emphasise technology, and it's a common (but precisely wrong) wisdom that KM “starts with technology.”

(2) It separates knowledge – the tangible good – from the organization's purpose and values, and worse, overemphasises the former at the expense of the latter. What's this mean? Consider the famous Toyota Production System: everyone knows what it looks like, hardly anyone has managed to copy it successfully. Why? Because the tangibles – kanban cards, andon cords, quality circles – are only part of the story. What you can't see – the Toyota philosophy and culture; the soul of the system – is what really makes it work.

KM out of the way, Pfeffer and Sutton lay down a first principle: If you Know by Doing, there is no gap between what you know and what you do.

“Learning by reading, learning by going to training programs, and learning from university-based degree programs will get you and your organization only so far,” they say. Sure, theoretical knowledge is essential, but it's not sufficient.

This is the key insight of the book, and deceptively simple. You might think simplistic. But it's the reason why the Toyota system works. It's the difference between the few very successful and the many not so successful organizations. It's exemplified by firms like Kingston Technology, number 2 in Fortune's 100 best places to work in America, who say “If you do it, then you will know.” It's exemplified by Honda's “actual part, actual situation” approach to quality. It's the key enabler in Solectron's superb customer satisfaction management systems – where the people who solve quality and performance problems are close enough to the production lines to see every action.

One learns to be a leader by serving as a leader.

We're not going to summarise the whole book. But we'd like to run a few highlights past you:
- These guys have got a thing about what they call smart talk. One of the barriers to turning knowledge into action, they say, is the tendency to treat talking about something as equivalent to actually doing something about it. Leaders often forget, they say, that a decision, by itself, changes nothing. An even more extreme form of substituting talk for action occurs when managers act as if talk, writing, and analysis are the main tasks they ever need to do, and seem to spend much of their time preparing, delivering and listening to flashy and well-rehearsed presentations that are designed to impress one another.
- Mission statements are a common means that organizations use to substitute talk for action. The mistake is to believe that having one is the same as implementing one.
- People also frequently confuse 'having a plan' and 'doing planning' with actually implementing the plan and learning something. There's often, they say, little connection between how much effort an organization devotes to planning and how well it performs.
- In a variation on the 'conflict between best practice and innovation' theme we've been pursuing elsewhere, Pfeffer and Sutton point to a tendency to behave as if the present were a perfect imitation of the past as a common problem.
- Another common inhibitor to turning knowledge into action is fear. Fear creates knowing-doing gaps because acting on one's knowledge requires that a person believe he or she will not be punished for doing so. How to follow WE Deming's exhortation and 'drive out fear'? Praise, pay, and promote the deliverers of bad news; punish inaction rather than unsuccessful action; encourage leaders to talk about their failures; give people second (and third) chances; banish those who humiliate others; celebrate mistakes; and don't punish innovation.
- Measurement processes powerfully affect behaviour [we can hear the WE Demmers muttering in the background!). Many organisations measure the wrong things, and one of the common outcomes is an exaggerated knowing-doing gap. The balanced scorecard gets a very bad press here – if you use a BS in your place, you need to read these pages.

Enough, OK? You get the picture. If you've got a knowing-doing gap in your organization (and we'll take bets that you have), then reading and absorbing what this book has to say might just be what distinguishes you from all the wannabes. How compelling is that!?
Listomania – with a bullet!
Alert readers will have noticed we like bulleted lists. We're suckers for them, not least because it's an efficient way of organising information in an on-line eZine. When the Donaghy Leadership Behavior Report ("A non-profit website dedicated to answering the question: What Do Effective Leaders Do?") popped out of a web search recently, we just had to cut and paste their list:
  • All leaders and followers are born, but no one is born a leader or a follower ... effective leader and follower behaviors are not that much different, so effective followers are generally good prospects for becoming effective leaders.
  • The younger generation has shown much less interest in attaining leadership positions and exercising effective leadership behavior than previous generations. If this continues, we are headed for real trouble.
  • Many educational institutions have deemphasized the basic social and interpersonal skills courses that are so important in developing effective leader and follower behaviors. This is a step in the wrong direction.
  • We are witnessing many more examples of failed leadership than at any time in the past. This is due not only to a lack of motivation and education, but also a declining interest in leadership research and on-the-job leadership behavior training.
  • It is almost impossible to distinguish leaders from nonleaders. Hunting for THE leader or even a group of leaders (what Edwin Hollander calls the "leader-centric" approach) is a waste of time.
  • Trying to understand leadership by looking for leadership traits or trying to look inside the heads of presumed leaders (using traditional self-report techniques) is also a waste of time.
  • There is no single comprehensive list of leadership behaviors, no best measure to identify leaders or those best qualified to become leaders, and no single path to becoming a good leader.
  • People with subordinates are not leaders. People with subordinates are managers. Effective leaders turn subordinates into effective followers and eventually into effective leaders.
  • Being in a high level position does not make one an effective leader. People can achieve top positions by being charismatic, friendly, well connected, wealthy, or in many other ways unrelated to exercising effective leadership behavior.
  • Leadership behaviors are not mysterious, unique, or difficult. Everyone has exhibited leadership behavior at one time or another. Sometimes these leadership behaviors have been successful and sometimes not.
  • The best way to study and understand leadership is to identify those behaviors which occur during interactions between effective leaders and followers. This collaborative approach has been called the "leader/follower relationship model."
  • The leader/follower relationship model requires that we place more emphasis on follower behavior, follower influence, and follower perceptions of leaders ( relying more heavily on superior's, peer's, and follower's observations).
  • Effective leaders are flexible. They realize that the same leadership behavior may be successful with one follower in one situation and unsuccessful with another follower in another situation.
For more about the DLBR, a product of the Communication Research Laboratory, Department of Communication and Mass Media, University of Wyoming, Laramie, WY 82071, contact William C. (Bill) Donaghy, Ph.D., Director. Cruzer@uwyo.edu.
Sixtysecond Snapshots®
Brutally short summaries of material too valuable to junk

All from a long (9,500 word) feature by David Sheff in the August issue of Wired. The article – Crank It Up – is about Netscapee (and AOL escapee) and new economy wunderkind Marc Andreessen. The subtitle “Marc Andreessen and his dream team at Loudcloud are building the Web's next power play: custom-designed, infinitely scalable sites that blast off a virtual assembly line” says it all. Well, not quite all. Here's some 'leadership' stuff too good to junk:

SSS 1 – how to build a dream (new-economy) team. For more than two years, even as he held the post of America Online's CTO following Netscape's acquisition by AOL, Andreessen scoured the digital landscape, searching for the perfect business – and the perfect team. The man he wanted as CEO was his close friend Ben Horowitz, a popular Netscape and AOL manager – thoughtful, methodical, and even-tempered (especially compared with the mercurial and occasionally morose Andreessen). “Horowitz was the manager everyone at Netscape wanted to work for,” says Scott Dunlap, Loudcloud's head of product management. “The great VPs of Netscape all came out of Ben Horowitz. Ben helped people build careers and pulled together teams better than anyone else.”

Andreessen says he never considered anyone else for Loudcloud CEO, not even himself. "Whatever value I can contribute to the company, they're getting it now," he says. "I would hate the job and I wouldn't be particularly good at it. I can contribute more if I don't have to be consistent. I am free to drive everyone crazy with new ideas and impatience. I'm happy to push people right to the edge. I don't mind pissing people off."

Horowitz, by contrast, tries not to, which is one of the reasons Andreessen wanted to work with him. They decided early what kind of company culture they wanted, talked about trust and respect, and how to motivate employees in a business where talent is scarce and hard to keep.

Modeling his management style after that of the man he claims as his hero, Andy Grove, Horowitz sets general goals for the company and encourages managers to set broad goals for their staffs. But whereas Grove is known for an almost ruthless analytic zeal (at Intel, one of his best-known maxims is "If you can't measure it, you can't manage it"), Horowitz is considered empathetic as well as effective, which may be why he is described by one employee as "the kind of person you would follow into a pit of fire."

SSS 2 – the law of crappy people. One of the lessons from Netscape that keeps Andreessen and Horowitz up at night: trying to get around the Law of Crappy People. “It scares the shit out of me,” says Andreessen. “The law applies to every company that gets big,” says Horowitz, “especially companies that get big fast, so we're a prime candidate.

“All you have to do is hire one person who isn't very good,” Horowitz continues, and the Law of Crappy People kicks – the worst employee at any level becomes the de facto standard for that level. “Your executives sit around the table. Some EVP wants to promote one of his or her directors to vice president. Or maybe they want to bring in someone new. Someone at the table says, 'That person isn't good enough,' to which the first person responds, 'Hey, you've got Joe Schmo, who is a bonehead. This guy is better than Joe.' So the guy who hired or promoted Joe Schmo shuts up.”

Andreessen says, “You will inevitably make a mistake. The minute you do, the quality degrades. A people hire B people, and B people hire C people. So the bad people breed like rabbits – they hire more people like themselves or worse. We saw it happen at Netscape when we ramped up early on.”

To avoid this, Horowitz and Andreessen are trying some unconventional tactics. Employee number nine was recruiter Jeanne Romano. She'd had no interest in an office job, but loved the idea of building a company from the DNA. “People in-house have more skin in the game,” she says. After three months, three of Loudcloud's 100 employees were recruiters; now there are seven. Similarly, though business schools teach their students that an HR department should be in place by the time a company has 150 employees, Loudcloud hired an HR person when there were only a dozen. Six months after it was founded, Loudcloud had nearly 200 employees. There will be 300 by this fall.
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