Knowledge Workers: Assets Not cost

Management’s duty is to preserve the assets of the institution in its care.

Knowledge workers own the means of production.  It is the knowledge between their ears.  And it is a totally portable and enormous capital asset.  Because knowledge workers own their means of production, they are mobile.  Manual workers need the job much more than the job needs them.  It may still not be true for all knowledge workers that the organization needs them more than they need the organization.  But for most of them it is a symbiotic relationship in which the two need each other in equal measure.

Management’s duty is to preserve the assets of the institution in its care.  What does this mean when the knowledge of the individual knowledge worker becomes an asset and, in more and more case, the main asset of an institution? What does this mean for personnel policy? What is needed to attract and to hold the highest-producing knowledge workers?  What is needed to increase their productivity and to convert their increased productivity into performance capacity for the organization?

ACTION POINT: Attract and hold the highest-producing knowledge workers by treating them and their knowledge as the organizations most valuable assets.

Practice of Abandonment

If we did not do this already, would we go into it now?

The question has to be asked-and asked seriously-“if we did not do this already, would we, knowing what we know, go into it now?” If the answer is no, the reaction must be “What do we do now?”

In three cases the right action is always outright abandonment.  Abandonment is the right action if a product, service, market, or process “still has a few years of life.”  It is these dying products, services, or process that always demand the greatest care and the greatest efforts.  They tie down the most productive and ablest people.  But equally, a product, service, market or process should be abandoned if the only argument for keeping it is  “It is fully written off.”  For management purposes there are not “cost-less assets.”  There are only “sunk costs.”  

The third case where abandonment is the right policy-and the most important one-is the one where, for the sake of maintaining the old or declining product, service, market, or process the new and growing product, service, or process is being stunted or neglected.

ACTION POINT: Ask the questions posed above and if the answer is no, make the tough choice to abandon a cherished business, process, service or market.

Abandonment

There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking

Effective executives know that they have to get many things done effectively.  Therefore, The concentrate.  And the first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive.  The first-class resources, especially those scarce resources of human strength, are immediately pulled out and put to work on the opportunities of tomorrow.  If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.

Without systematic and purposeful abandonment, an organization will be overtaken by events.  It will squander its best resources on things it should never have been doing or should no longer do.  As a result, it will lack the resources, especially capable people, needed to exploit the opportunities that arise.  Far too few businesses are willing to slough off yesterday, and as a result, far too few have resources available for tomorrow.

ACTION POINT: Stop squandering resources on obsolete businesses and free up your capable people to take advantage of new opportunities.

Getting Unstuck

The first logical problem in chain-link situations is to identify the bottlenecks...

Marco Tinnelli is the general manager of Lombardy machine company. When he took over the company after his Uncle's passing things were not good.  The quality of machines had declined, especially compared with the best competitors,  costs were too high and the sales personal were not technically sophisticated.

This was a good example of chain-link logic that was stuck.  Any payoff from better-quality machines was diluted because the sales force could not accurately represent their qualities and performance.   A better sales force, by itself, would have added little value without better machines.  And improvements in quality and sales would not save the firm unless costs were reduced.

Tinnelli's solution was to conduct three campaigns, one after another.  In the first campaign the company spent 12 months just on quality.  Everything the employees did for the next year would be focused on making the best machines in the industry.   Once they had good machines, they focused on the sales function.   The salespeople had been involved in the quality campaign, and now the engineers and manufacturing people worked with sales to build skills, selling tools, and communications links back to the factory.  

The first logical problem in chain-link situations is to identify the bottlenecks, Tinelli did that by --quality, sale's technical competence, and cost.  The second greatest, problem is that incremental change may not pay off and may even make things worse.   That is why systems get stuck.  Tinelli's solution was to take personal responsibility for the end result  and direct others attention to the three bottlenecks one after another.

ACTION POINT:  Identify the bottlenecks and focus attention on them.

Getting Stuck - Examples

It is of little use to supply advanced machinery to unskilled workers

The various problems at General Motors from 1980 to 2008 had strong chain-link features.  Increasing the quality of an automobile transmission does little good if the knobs fall off the dashboard and door panels continue to rattle.  Improving fit and finish, along with the drive train, may offer little overall improvement as long as the designers continue to produce pedestrian designs.

Improving the look of the automobiles may only increase costs unless the complex technology of design for manufacturability is masters and so on.

As another example, many of the thorny problems of economic development arise from chain linked issues:

• It is of little use to supply advanced machinery to unskilled workers, but it is also useless to educate people for jobs that do not exist. 
• Government bureaucracy can be a terrible burden, but improvement in its effectiveness can be won only if there is an efficient private sector.
• Without corruption, it would be impossible to get around the stifling bureaucracy, but bureaucracy is a necessary counter  to nepotism and a culture of corruption.
• Improving the roads puts a strain on poor port facilities, and better ports without good roads are of little value.  Improve both the roads and ports, and corrupt officials and unions will demand payments for letting shipments through.

ACTION POINT: Fixing two out of three links will not be good enough, real improvement require addressing all areas.