Why Knowledge Management Didn't Save General Motors: Addressing Complex Issues By Convening Conversation
Starting about 2000 GM put together a vibrant KM program. At one point GM had 138 best practice teams and 33 centers of expertise working with identified subject matter experts. The KM program produced over 5000 best practices that impacted both quality and schedule and led to millions in cost avoidance. In 2008 KM was alive and well at GM. In the summer of 2009 GM filed for bankruptcy. Why didn't KM save General Motors? GM was brought down by a flawed strategy, but an organization's strategy is clearly a product of the knowledge that exists within its walls. The knowledge existed within GM to develop a more competitive strategy. But between 2000 and 2008 knowledge management did not help GM bring that organizational knowledge together in a way that could have saved it from bankruptcy.
Knowledge Management has the capability to address an organization's very difficult and complex issues, for example how to merge two cultures or how to refocus an organization from selling products to selling service. For these, and many other complex issues, no standard operating procedure exists and no history within the organization is available to draw on for guidance. The knowledge to solve complex problems does not reside in individuals nor even in the executive team – but the knowledge does exists in the collective. The knowledge management task is to bring together the collective knowledge of the organization to bear on complex issues.
To date, Knowledge Management has primarily been in the service of cost cutting or its twin, time saving. The GM example illustrates, that as KM professionals we have not garnered the collective knowledge to address the complex problems that our organizations are facing. That has certainly been true of my own work over the past 15 years. My work has primarily been about creating more effective knowledge sharing processes and communities. But in the last couple of years, more and more I find myself being asked to help convene organizations to address the complex issues they are facing. The realization about how my own work is changing has led me to think that the time is ripe to move KM to a new level and has encouraged me to write this post.
James March wrote a much acclaimed article in 1991 called "Exploitation and Exploration in Organizational Learning." In that article he says that the exploitation of existing knowledge (which is what knowledge management has been doing) must be balanced with the exploration for new knowledge. Both exploration and exploitation are essential for organizations, but they compete for scarce resources. Exploration is more costly because new ideas often don't work out. Exploitation of existing knowledge is cheaper because existing knowledge has already been tested, so there are fewer failures.
But the downside of exploitation is that it is a closed loop that can sub optimize organizational knowledge. An organization, exclusively relying on exploitation, will not move beyond the best practice that already exists within its walls. For this reason exploitation can produce a valued step change, but cannot produce the kind of discontinuous change that exploration can yield. KM has been focused on exploitation; we need to now balance the KM effort to help organizations explore new knowledge.
Johnsonville Foods an Example of Using Collective Knowledge to Address Complex Issues
Ralph Stayer, the CEO of Johnsonville Foods was faced with a difficult issue that was also an opportunity. Johnsonville Foods was a small, family owned sausage company of 1000 people, well known in Wisconsin for its quality. Stayer had received an offer from a food-processing company to buy large quantities of product on a regular basis.
Stayer saw this as a complex issue because Johnsonville Foods did not have the capacity to handle such a large job, so accepting it would mean everything would have to change, e.g. shipping, purchasing, equipment, production, packaging, new people, and training. To deal with this very complex issue Stayer called a meeting of the whole organization, giving them all of the information he had about the offer.
He asked employees to work in teams to answer three questions: What will it take to make it work? Is it possible to reduce the downside? Do we want to do it? Teams all across the organization struggled with the questions for almost two weeks, holding meeting after meeting to talk through the risks - which were considerable - and figuring out how they would have to operate differently if they were to increase production that much.
When Stayer brought the teams back together, each team laid out what would be needed and what the problems would likely be for the others. In the end there was almost unanimously agreement that they should take on the new business. Reflecting on the process later, Stayer said, "If you issue orders you're telling people, "Don't think; just do." But if you've got 1000 people, you've got 1000 minds. And if you issue orders from the top, you're using only 3 of them, or 2, or one. That's stupid."
Elements Needed to Address Complex Issues
There are three elements that are necessary if organizations are to use all their knowledge to address complex problems. All three elements are present in the story about Johnsonville Food.
• How to convene the organizational conversation in a way that allows new thinking to emerge
• How to frame the question for the conversation
• The types of issues that require leveraging the collective knowledge
• Making all the knowledge available so that those who have been convened are as well informed as possible
• The willingness of the leader to say, "I don't know."
3. Cognitive diversity
• Who needs to be invited to those conversations
• How to obtain cognitive diversity
How to convene
Convening is about designing a meeting in a way that allows new thinking to emerge. That requires reconsidering all elements of a meeting, e.g. the activities participants engage in, how the seating is configured, the nature of the invitation that participants receive, the length of the meeting, and so on. I have written about the task of the leader as "conversation architect" in other posts. Here I want to focus on the importance of small groups as the source of new ideas.
In a small group each participant can not only offer his or her own thinking, each can ask others to clarify their meaning, elaborate on what someone else has said, challenge an idea, and offer data to support his/her own position – in other words, a small group can have a conversation. In a large group participants are limited to declaring their position on an issue. Participants are all aware that "turn taking" is considered courteous and that to take up additional airtime by engaging others in the back and forth of conversation is sure to be viewed by others as discourteous.
Johnson and Johnson, researchers at the University of Minnesota, who study collaboration, say that the synthesis of diverse perspectives comes from being able to hold both one's own and another's' perspective in mind at the same time. Holding both perspectives implies more than having just heard another's perspective.
It means fully understanding the reasoning behind a perspective as well as the implications that would result from it. That necessarily means there has been enough back and forth between participants for each to gain that level of understanding.
The format for convening is a mix of three elements:
Framing the Conversation
Convening occurs around a question that frames the problem or issue in a way that has relevance to the convened group and that helps to move the group beyond obvious or known positions. One of the difficulties of framing a question is that questions often have an assumption embedded within them. For example, an organization may have a turnover rate of 15% among employees in their first two years of employment. The question, "How do we reduce the turnover rate of employees who have been with the organization less than 2 years?" assumes that a 15% rate of turnover is a problem. The framing of the question prevents participants from thinking about other possibilities such as viewing 15% as a useful weeding out of unsuitable employees, or as a way to bring new ideas into the company. A less biased question might be "What is the optimum rate of new employee turnover for our company and how do we achieve it?" Or even less biased might be, "What experience do we want new employees to have in their first two years, that prepares them and us to make a sound decision about their future with the company?" The task is to frame the question in a way that opens up the space to invite new perspectives on the topic.
Issues that Benefit from Convening
Here I am drawing on the work of Ron Heifitz, who has written a number of books on this issue, particularly "Leadership Without Easy Answers." Heifetz talks about two kinds of challenges organizations face, adaptive challenges and technical problems.
Adaptive challenges are complex and unpredictable; they have no known answers. People in the organization may even disagree on what the problem really is. To address adaptive challenges organizations must invent their way to a solution. Examples of adaptive challenges are, hospital systems faced with an interminable nursing shortage; the anticipated retirement of thousands of workers in the government sector; the relocation of 45% of an organization's employees to a new location." My mentor, Reg Revans use to say, in his rather outdated way, "These are problems about which reasonable men can disagree."
By contrast, technical problems are predictable and usually solvable by methods and tools that the organization has already developed to address them. If, for example, a well is to be dug in a new oil field, there are standard operating procedures; if a special issue of a journal is to be published, there are steps outlined that will put the issue out on schedule and within budget; if a new cell phone is to be developed, there are well defined phases of the development process. Technical problems do not require a fundamental change in methods or tools. More importantly, the people who solve technical problems can function within a known set of assumptions about how work gets done in the organization, as well as what kind of behaviors are needed to make that work happen.
Where convening brings great value is in addressing adaptive challenges. Heifitz says, "The power of a leader to address adaptive challenges does not lie in inventing solutions; rather it lies in using leadership authority to convene the conversations."
Johnsonville Foods faced an adaptive challenge and so did Ecopetrol a few years ago.
Ecopetrol a Second Example of Using Collective Knowledge to Address Complex Issues
Five years ago I got a call from Ecopetrol, the National Oil Company of Columbia. The conference organizers said, "We are having a meeting to develop a knowledge strategy. We have not had a knowledge strategy and we think we need one now as we get ready to be publicly traded on the stock market. Could you come to our three day meeting and make a presentation about what makes an effective knowledge management strategy?" "But," they said, "we only want you to talk for 15 minutes." Columbia is over 2000 miles from my home in Austin Texas, so my initial reaction was that 15 minutes seemed a very short time for such a long journey. But when I heard what they were trying to do I got very excited. They were convening the top 200 people from across all parts of the company to figure out what they needed to do about knowledge - a complex issue for which there is no "right" answer.
To obtain the diversity of thought they needed at the meeting, they invited representatives from fifteen MAKE winners to speak on the first day of the meeting. And, like my presentation, each of them spoke for only 15 minutes. After each presentation time was set aside for small group discussions – not Q&A - but pairs or trios talking together to make sense of what they had just heard.
The second day was devoted to a Knowledge Café (some times called the world cafe) where the Ecopetrol managers worked in small groups to incorporate what they had heard the first day. The Knowledge Café questions were, "What are the critical areas of knowledge that Ecopetrol needs to manage?" and "What KM processes should we focus on to manage that knowledge?"
Those of us who had made presentations the day before also participated in the knowledge café, moving from table to table along with all the managers. After six rounds of the knowledge café, with managers listening to and building on the ideas of other managers from different parts of Ecopetrol, the group began to coalesce around twelve knowledge areas and had also developed ideas about what KM processes would be most useful.
The third day was Open Space where participants selected which of the twelve topic groups they wanted to join, based on their own expertise and interest. The goal of each group was to set up action plans for that critical knowledge area. By the end of the third day the Open Space groups had a plan to implement each of the initiatives they had agreed upon during the Knowledge Café discussions the day before.
Ecopetrol had a knowledge management strategy after three days of convening and conversation – one that the 200 top managers were committed to.
2 - Transparency
I have noted the way the Ecopetrol meeting involved the elements of convening and cognitive diversity. The meeting also incorporated the third element needed to solve complex issues, transparency. There are two issues connected to transparency, 1) the willingness to say, "I don't know," and 2) providing all the knowledge available about the issue under discussion
The willingness to say, "I don't know."
The President of Ecopetrol, Javier Gutiérrez, attended all three days of the meeting. During that time he never made a speech about the outcome he wanted. Rather he listened to the presentations on the first day and on the second day he moved from table to table in the knowledge café with the other 199 managers to think together about how to build a knowledge strategy. What he said through his actions was, 'I don't know how to build a knowledge strategy, but I'm confident we can figure it out if we use our collective knowledge."
Over the last ten years, KM has been able to develop horizontal transparency in organizations through the implementation of communities. In many organizations it is now acceptable for a peer to say to others, "I don't know how to do this, can anyone help?" However, KM has not addressed the issue of vertical transparency in either direction, neither from frontline to senior leadership, nor from senior leadership to the frontline. Yet, as KM Professionals, we are fully aware that transparency is necessary for leveraging the knowledge of the organization.
Providing all the knowledge available on the issue
The second part of transparency is providing all the knowledge. And this President Gutierrez did as well. Ecopetrol was considering becoming a publicly traded company and everyone in the room understood the implications of that action for Knowledge Management. There can be no integration of collective knowledge without transparency. Unless everyone who is jointly attempting to make sense of an adaptive challenge has access to all the available data, there is no way to successfully address the problem.
Transparency is two sided, leadership must be willing to reveal what they know that may impact the issue, and likewise, frontline employees must be willing to reveal the difficulties they anticipate facing. One of the benefits of using proven formats for convening, such as Knowledge Cafés, Open Space, Storytelling Circles, and Appreciative Inquiry, to name a few, is that these formats are designed to establish an environment conductive to trust and disclosure. More typical meetings like retreats and townhalls tend to discourage disclosure, because if participants have ideas to offer they must say those ideas in front of a large group. But participants are often unsure about how their ideas will be accepted by a large group. Small groups provide the advantage of, 1) being able to test an idea with peers before offering it more broadly and, 2) having a sense of where others stand on an issue before offering a new perspective.
Ecopetrol successfully implemented the strategy they put together five years ago. The meeting I described was not a one time event. It is the way Ecopetrol continues to manage its knowledge using Communities, Technology Forums, Expert meetings, Knowledge Cafés, Conversation Circles, and Open Space to create new knowledge. In both 2010 and 2011 Ecopetrol was nominated for the MAKE award. I predict in 2012 they will be a MAKE award winner.
3 - Cognitive Diversity
I have spoken about convening and transparency, the third element is cognitive diversity.
How to obtain cognitive diversity
There was a great book published in 2007 by Scott Page called, "The Difference."Page reminds us that people can be diverse in many ways, race, gender, religion, etc. but Page's research shows that the kind of diversity that makes a difference in solving complex problems is a difference in the way people think, which he calls cognitive diversity. That includes the heuristics they use, their interpretations, problem solving strategies, and their prediction models. A physician thinks in a different way than an engineer and uses different strategies to tackle a problem.
A historian thinks in a different way than a mathematician – their training and experience provide them different approaches. When we convene the members of an organization to address a complex problem, we are not so much drawing on the knowledge they use in their job, as we are seeking the diversity in how they think about issues. Research that Page quotes in his book, shows that bringing diversity into the conversation increases the possibility that a group will generate new and more creative ideas.
A number of organizations have taken this idea of cognitive diversity very seriously. The Intelligence Cells in Iraq and Afghanistan, for example, are US joint knowledge production efforts to address a specific intelligence challenge. The makeup of a cell is multi-INT (i.e. SIGINT, HUMINT, IMINT). A cross section of disciplines (e.g. analysis, collection, legal, enterprise architecture, technology development) are also represented in each cell, as well as, government, industry, and academia. To address the very difficult intelligence issues about terrorists, requires more than spies, intercepted signals and picture taking drones, it requires a conversation among people who think in diverse ways.
Who needs to be invited
When I am asked by an organization to convene a meeting to address a complex issue, I bring the whole system into the meeting. That doesn't mean every employee, but it does mean representatives from every part of the organization as well as from every level. And often it also means involving outsiders, customers or suppliers who bring a different perspective on the issue we are addressing.
Teams, departments and divisions can face complex issues, as well as issues that impact the whole organization. For example, a Director, in a government organization I was working with, came to me with a problem. He said, "My office chiefs don't collaborate. They don't think about what is good for the whole organization, they are just each out for themselves." I had worked with many of his direct reports and I knew them to be well meaning people that did have the good of whole organization in mind. So I knew the answer lay somewhere other than the poor motivations of his direct reports.
I asked if I might observe several of his staff meetings, which he regularly held on Tuesday morning. What I saw happening was a very typical staff meeting - the Director started off with announcements, sometimes followed by a presentation from some part of the organization that wanted to get their ideas in front of the Office Chiefs. The largest part of the meeting involved the Director asking each Office Chief in turn for an update of what was happening in his or her area. There was very little conversation between Office Chiefs. Almost all of the talk was aimed at the Director – he talked to each in turn and each in turn responded to him.
The next time I met with the Director I asked him if there were any complex issues that he was dealing with but had not yet been able to find a solution for. He assured me there were a great many and named several. I suggested that he 1) devote one staff meeting a month to asking the group of Office Chiefs to help him address one of those issues, 2) that he think carefully about how to frame the question for them so as not to bias the answers they might come up with, 3) that he provide them with all the information he had on the issue, preferably ahead of time so they would be prepared, 4) that he have them work on the issues in small groups for an hour, and 5) that for the last hour he bring them together to have a large group discussion about their ideas.
Some times we held those small group conversations in a knowledge café format, sometimes in an interview format, sometimes we invited in someone who had a particular expertise. After about six months the group had begun to learn how each other thought. They had started talking with each other outside the meetings on other issues, and they had produced thinking on several issues that the Director could not have come up with by himself. The Director was pleased with what he saw as the Office Chiefs collaborating. For me the most significant move toward collaboration was on the part of the Director himself, he was willing to say, "I don't know," and to draw on the collective knowledge of his very diverse and very capable team to address some very complex issues.
It is possible to think about convening conversations as an event – something to do once in a while to change things up. But from my perspective convening conversations to address complex issues is a new way of thinking about knowledge. KM professionals experienced a shift in how they thought about knowledge around 2005 when they expanded their definition of knowledge from explicit knowledge in a repository, to the realization that much of the important knowledge was in people's heads and could not be captured. To make that shift a reality KM Professionals had to put new processes into play, like communities and peer assists that supported knowledge flow. As KM professionals we are again on the cusp of broadening how we think about knowledge. The shift is from limiting ourselves to drawing on the knowledge that organizational members possess, to also drawing on their sensemaking capability – their ability to bring heuristics, interpretation and perspectives to critical organizational challenges.