I’ve been reading The Social Life of Information by John Seely Brown and Paul Duguid. They have an interesting chapter on knowledge and learning, making the point that you can’t capture knowledge: it’s resident in the social network of your group. Sure, individuals have knowledge, but that knowledge is socially created. And you can’t give it away very easily:
Curiously, if knowledge will go out the door in the heads of people who have developed and worked with that knowledge, it seems reluctant to go out (or stay behind) in the heads of people who have not been so involved. The CEO of the innovative steel manufacturer Chaparral Steel told Leonard-Barton that for this reason the firm has no problem with competitors touring their plant. Chaparral, he said, is willing to show just about everything “and we will be giving away nothing because they can’t take it away with them.” Unlike information, knowledge, as we said, is hard to detach. pp. 122-123.
Chaparral (who I confess was one our clients when I worked in San Antonio, although I never worked with them directly) has a good point but don’t take it too far. Some innovations do indeed walk out the door. Take Xerox PARC’s inventions around the personal computer. Steve Jobs apparently came by and saw the Graphical User Interface (which PARC began back in the late sixties), he quickly left to apply it to the Lisa. That computer failed but the next one, the Macintosh, has kept 5-10% of the market for years. These types of technological innovations need protection.
But process? Come see my process. Write down everything that you see us doing. You’ll still have naught because you don’t have the team that I’ve assembled. You won’t have the courage to make the tough decisions regarding your hiring and firing. You won’t admit to making promotion mistakes. You aren’t me and can’t transform your business like I did mine. Unless there is some technological innovation in the process (we cut a hole in this pipe which no one else does), I will let you have it all. It won’t help you.
I think about this in the insurance business. Progressive Insurance is seventy-five years old, give or take, but has only captured the big market share since the advent of the public’s World Wide Web. Everyone can see how the use technology: it’s publically available on their website. The Auto Insurance Report from Risk Information, Inc. states:
In a study of the top insurers in Illinois (a state selected for its open regulatory rules and large size), InsurQuote and McKinsey found that for a sample risk, Nationwide generated one price, where the most sophisticated pricing company, Progressive was able to generate 131 different price points. Progressive’s result was based on a more expansive list of questions asked at the time of application and a more aggressive analysis of the relationships among rating characteristics. pp. 1, Vol.11(33)/503: May 31, 2004
Progressive does this by using sophisticated pricing models. Everyone else knows how they do it. The practice is well documented in the industry, if not the particular algorithms. The same issue cites the InsurQuote/McKinsey presentation as noting that Progressive used over 1 billion pricing cells, the most in the study of Illinois auto insurers. The other end of the spectrum was State Farm, who used about 1 million pricing cells. State Farm could get more accurate pricing by increasing the quality (and quantity) of its price points per risk, and thereby match Progressive on price. But it can’t do that without massive changes in its systems. The information of how to match Progressive is readily available, but the knowledge necessary to implement it may not exist within other companies.
This knowledge problem is more accute in companies that have poor structure. People do not readily share information, much less knowledge, where a unnatural hierarchy reigns. (See the Requisite Organization page for more on this.) Knowledge apparently is created most easily within groups (teams) within the same stratum, a natural team with a natural manager.
This creates the Community of Practice, a term used by Ettienne Wenger (see Communities of Practice: Learning, Meaning, and Identity) to describe the
relatively tight-knit groups of people who know each other and work together directly. They are usually face-to-face communities that continually negotiate with, communicate with, and coordinate with each other directly in the course of work. And this negotiation, communication, and coordination is highly implicit, part of work practice [and] work chat. — Social Life, pp. 142-3
These groups create knowledge through their constant interaction and working together. Brown and Duguid also report on a study of customer service reps that showed that the most efficient learning occurred while they were working, not in training classes, and that the best way for them to learn was to be next to an experienced worker. The experienced rep might not be able to train the others, might not be able to make his or her tacit knowledge explicit, but the trainees could “steal knowlege” from him or her as they worked side-by-side.
Since I currently work with BIG as a learning consultant, I have to take this to heart. The best way for these guys to learn to develop working enterprise applications in Java is to work with an experienced team of Java developers. But if no one in the company is a Java developer, what do you do? Bringing in experts from outside sounds great, but they cannot participate in the social life of the company, and therefore will not be available for the informal discussions of work that take place outside the company. This method has some but only limited value for learning. I suppose letting them muddle through works okay, but it does take a long time to get done. I’m working this out but I confess that I do not have any solutions.
Knowledge, it turns out, is a lot more social than we would like it to be. No matter how much we want people to use a knowledge management system, what works best seems to be the old-fashioned mixing people together. Burt, in his article [to appear in AJS soon] “”Structural Holes and Good Ideas”, (and probably in his book Structural Holes: The Social Structure of Competition ) says that creativity occurs within the structural holes in the organization. An article from the NY Times, “Where to Get a Good Idea: Steal It Outside Your Group” (Michale Erard, May 22, 2004, Saturday, pp B.9), talked about this:
Got a good idea? Now think for a moment where you got it. A sudden spark of inspiration? A memory? A dream?
Most likely, says Ronald S. Burt, a sociologist at the University of Chicago, it came from someone else who hadn’t realized how to use it.
“The usual image of creativity is that it’s some sort of genetic gift, some heroic act,” Mr. Burt said. “But creativity is an import-export game. It’s not a creation game.”
“People who live in the intersection of social worlds,” Mr. Burt writes, “are at higher risk of having good ideas.”
Burt develops these ideas in his many articles which are all worth looking at.
In the end, it is our social capacity, this affective, emotional life of humans, that drives knowledge and creativity in civilisation. Which is why peaceful societies produce so much more, even ones that create the peace at the edge of the sword. Conquering central “states” or empires (such as ancient Rome) produce a stable environment whereby people can create these intersections of social worlds. People who sit between worlds or groups succeed in creating new knowledge. Under violent circumstances, people are often too busy recreating knowledge that once existed to build something new.