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Creating Competitive Advantage in a Fast Moving World, Part 2

Steve Spear, 1/5/2017

[This is the second of two entries on how to adapt in a fast changing competitive environment. The first is here].

Why Success Cannot be Bought

In terms of explaining these huge gaps in performance, the one thing we can dismiss is that the leaders have privileged access to materials, technology, or market access. The simple reason is that any materials and any gear on which they are transformed (same is true for information as a ‘material’ and IT systems as ‘gear’) is available to anyone else willing to make the same investment. ‘Stuff’ may be a necessary ante, but it cannot be a differentiator.

Why Success Cannot be Thought

There’s a conventional wisdom that if we equip people (typically the select or the elect) with enough data and sufficient analytical tools to process it, they can arrive at the good decisions about what to do and how to do it. But that runs into the basic nature of problems. They typically are not situations to which we have not previously paid attention. They are situations for which—when we did pay attention, we didn’t know enough to arrive at a meaningful and useful answer. The problem was not that we weren’t smart enough or didn’t think hard enough. The problem was that we didn’t know enough.

Discovering Our Way to Success

At least in certain parts of our life, when we don’t know enough, individually and societally, we have a default habit. We run experiments. We start with a problem, make some capture on what we think we already know, and then start making (controlled) changes in materials, methods, approaches, and so forth, to test the impact of changing inputs and operating conditions on outcomes.

This behavior, of running experiments, is not something limited to the esoteric world of laboratory sciences and engineering.

We all do this, be it in the kitchen, where we start with a recipe and change ingredients, measurements, and cooking conditions to improve taste and presentation. And this is exactly athletes do to master a skill: starting with a known approach and then do a controlled and tested alteration of stance, timing, preparation, and so forth to be more effective.

Workplaces: The Non-Learning Environment

The one place where this experimental approach towards deepening our skills and knowledge is too often missing, is on the job, where more often than not, people are confronted with broken systems that present them with inadequate information, instructions, materials, equipment, or skills. Not only are the best efforts compromised by the environment in which they are executed, the continue to be compromised because mechanisms don’t exist to identify conditions that are inadequate with an investment of time and resources to correct them.

I’m thinking of emergency rooms where patients are queued waiting for care, giving every appearance of a system overburdened or operating at its peak capacity. For the patients, it’s not an environment generative of gratitude. Instead it feels oppressive and dismissive.

But close, examination reveals that this ‘backlog’ is not an inevitable consequence of too much work flow going through a pipeline that is inherently too small. Rather, you find doctors trying to interact with a new electronic medical records systems that has none of the intuitive functionality and ease of use we take for granted with smart phones and apps, nurses are looking for medical records (which haven’t been entered in the new EHR), diagnostic equipment has no ‘natural home,’ so it cannot be found when needed, certain items are so oversupplied as to be spilling out of cabinets while other supplies are constantly stocking out.

Turning Everyone Into a Knowledge Worker

There are exceptions to this rule. Over a 13-year period, Alcoa dropped the chance of on the job injury from 2% to 0.07%, converting a routine experience into a rare one. In the case of Alcoa, this achievement wasn’t an either/or situation of trading safety for something else like cost or quality. It was safety and . . . safety and improved productivity, safety and improved timeliness, safety and improved customer satisfaction.1Alcoa earned these accomplishments by converting all work into knowledge work and all workers into knowledge workers. The starting point was recognizing that the single biggest adversary Alcoa faced was ignorance.

Why was someone at risk? They didn’t know not to be where they were when they were? Why did the process go out of control that it posed a risk? We didn’t know how to control it better? Why was a chemistry wrong in a batch? We didn’t know something critical.

And if ignorance was the real rival—even more so than Reynolds and Alcan—then the response had to be identify when ignorance was getting the upper hand and reverse the situation immediately.

It started with the ‘rule’ that if someone was hurt on the job, then the problem has to be called out immediately. Once called out, it had to be swarmed immediately, both to protect anyone else from encountering the same risks and also to start an immediate investigation as to why the risk occurred in the first place. It was well understood that delay was consequential, in that waiting an hour, a day, a week would mean that by the time the hazardous situations was investigated, it would have changed, revealing fewer clues as to why it has posed risk. This same logic applied to anything that had gone wrong.

If ignorance was everywhere, then everyone had to be engaged in its identification and mitigation. While it’s easy to say everyone, what did this look like in practice? When Alcoa took over an extrusion mill, the new site leader wanted to create his ‘quality and safety committee’ of hourly employees. And who did he pick? The five guys who had fired the most labor grievances against management. He ‘ask’ of them? Don’t change anything. Keep at identifying things we are doing wrong and calling them out. The thing is, when you call them out, we’ll do something different than the last guys. We won’t ignore you. We’ll do our best to make things better.

Easy to Say: Hard to do

Never admit wrong

It’s easy to say create a high velocity learning dynamic of calling and ands swarming problems with lessons learned quickly shared with colleagues. It’s much harder to do in practice. I remember with 20 people, all of whom had MBAs and dismissive of how challenging it is to lead a bona fide learning
organization. So, we went through the exercise of determining how comfortable they were in calling out problems they had experienced. Had they ever gone into a case discussion asking to explain how they had gotten to the wrong answer the night before. None. How many had seen a classmate start class by
asking to show how he or she had gotten to the wrong answer the night before? None. Why none? All of them had gotten their current jobs by doing well in business school. They had all gotten into business school by doing well in college and in their previous jobs, and they had all gotten into college by testing well and getting good grades. In short, for several decades they’d
learned to celebrate successes—As, 100s, gold stars—and had learned quickly that too much (if any attention) to slips, falls, and mistakes would be reputation breaking and deter getting the awards that only go to the ‘winners.’

Related to celebrating success and hiding/avoiding failure, consider the following scenario. You’ve decided to invite guests for dinner, and, feeling ambitious, you decide to serve chocolate soufflé for dessert. Never having baked a soufflé before, you decide to test five recipes to see which works best. When they come out of the oven, one is perfect in appearance, while the others are burnt, collapsed, and otherwise imperfect.

Which do you serve? When asked, everyone agrees the perfect one?

What do you do with the flawed ones? Nearly everyone gets rid of them, putting them in the trash, maybe covering them in ice cream and giving them to the kids. Almost no one insists that these are the ones they would study. Trying a different ratio of ingredients, a different way of whipping the egg whites, a different time or temperature in the oven to understand better what factors had what impact.

In effect, the knee jerk reaction is to stick with the recipe that is known to work (without a deep understanding as to why) and discard any opportunity for deeper understanding.

Getting it going

There are myriad other reasons why creating and sustaining an aggressive learning dynamic is difficult, why getting everyone to be a bona fide knowledge worker is hard. There are just so many socio-psychological sources of friction.

This is why getting this activated cannot be delegated. This is a responsibility
that those with authority for others cannot delegate or assign way. Without
leaders actually modeling, coaching, cultivating, and encouraging the non stop
identification and resolution of problems, people will resort to the typical fire
fighting and heroics (sometimes being rewarded for it). Without time, space,
and mechanisms to do so, lessons learned locally won’t be shared. And absent senior leaders setting the example, the junior ranks won’t know what to do.2

The High Velocity Edge, LLC

195 Tappan Street

Brookline, MA 02445


Remarks at NWDC May 5 2016

© S. Spear 2016

  1. For elaboration, see chapter 4, The High Velocity Edge. ↩︎
  2. For examples, please see The High Velocity Edge, chapter 9. ↩︎