Rolf Appel

Transcription

>> Larry Prusak: My own background is very similar to Ed Hoffmans in that I am a social scientist and I am also Brooklyn born and bread. Ed and I always share that. I’d like to talk to you today about the search for the Holy Grail. That probably surprises you. What it is, is another way of talking about collaboration within organizations, any organization. And this has been- - it is an interesting issue because if it could be summed up, if it could be decided by engineering or scientific or mathematical means, it would have been. We’ve had large organizations in the world since the mid to late 19th century, when large scale tasks had to be done by one organization. The railroads in the United States, cotton mills in England, steel and chemical manufacturing in Germany, and steel and weapons ordinates in Japan. So we’ve had these organizations now, large- scale, multi-tasks, complex organizations about 1860 to today and no one has figured it out. What does that tell you? Interesting issue. It can’t be solved and there is no sort of algorithms, there is no formula. I occasionally right articles for a magazine called, Management Science, but it is a stupid title, there is no science to management. None of this stuff is scientific, it is heuristic, it is cased-based commonsensical. Before I go on, let me you tell you, you’re welcome to ask questions so interrupt. There is nothing to interrupt, it is in my head, just speak up, be my guest. But organizations have to collaborate. Why are we talking about this subject, why is it so important? What do you think? Why are we talking about collaboration? Quick answers, what do you think is valuable? Maybe you don’t, which is possible. >>Audience: Better products Larry: Better products, you get better products if people collaborate. What else? Audience: You don’t have a choice. Larry: You don’t have a choice, why not? Audience: Project-based environments, you have to work with other people. Larry: Well, it really failed. Any other reasons? Audience: Synergies. Larry: Synergies, you get different types of knowledge, help each other. What Else? One and one makes three, exactly, better product. How about this, it is where all your money is spent. All your money is spent on knowledge and if you don’t use it, it is like throwing it away. In the United States last year, I just read this marvelous stuff, sometime I read economics because I am bit of a maxercist. It is really murderous stuff to read, but you get interesting insights. Last year in the United States, one trillion dollars was spent on intangible investments. One trillion dollars, that is the almost the exact amount that was spent on hard goods. So for every dollar sent off for an organization buying a chair, they spent it on patents, copyrights, training, intellectual, meetings like this. That is a lot of money. If you don’t collaborate, you are just throwing that money away, it is absolutely worthless. It is like having a factory that is not being used. Sir, speak up. Audience: What about other countries like China or Europe? Larry: Yeah, we’re about the same. If you look at Europe as a whole, it is a little less. Some countries it much more and it is just the countries you would imagine. The countries that don’t have natural resources, but do very well - - There is a wonderful study about the World Bank that compared Korea to Nigeria from 1960 to today. 1960, Korea and Nigeria had the exact same GDP per capita. Ever been to Nigeria, know anything about it, how would you characterize it? They have it all, god bless that land; oil, gas, minerals, they got it all. What does Korea have? Koreans (laughter). There is nothing there, nothing. So 1960, they are equal. Today, Korea’s GDP per capita is equal to a poorer European nation; Spain, Portugal, or Greece. Nigeria went downhill. So what do you think, why is that the case? Nigeria spent all the money on warfare, on armies, and weaponry. Korea spent it all on human capital development, intangible development, pays off. Israel, Singapore, Finland, they are all higher, but in large countries, Brazil should, Europe in general is about the same as the U.S. Japan is a little bit less, but that is the sad thing, that is huge amount. If you build a factory and you didn’t run the factory, if you built a plant and didn’t run it, you’d have to take it off as a deduction, it would be stupid. If you invest in knowledge and you don’t collaborate, it is the same thing, we just don’t have the same measures for it. Sir, speak up. Audience: Where is all this money coming from? Larry: You and me my man. I just did my taxes. These are budgets, this is private corporations, and government. What do you think- -this meeting is a perfect example. We did a gigantic account sheet of the United States, this meeting would go under intangible investments. How much does NASA spend on intangibles? It must be a pretty penny, it is everything that isn’t hard goods, training, development, science, lab work, you are not producing something tangible, it is an intangible. It is your money and mine, it is all the wealth that gets created, that is where it gets distributed, pretty interesting. All that money, all that time and effort, and we don’t know how to measure it, we don’t know what to do with it. It has only been the last twenty years that people really started thinking about it. I just read another interesting book by some well- known professors on organizational capital. What is the capital of an organization, I don’t mean the capital like Albany is the capital of New York. What is the capital structure of an organization? Audience: Intellect. Larry: I mean that is a big chunk of it. It is relationships, I was talking to Ed at the break, the relationships that you have, Don Cohen and I, known each other many years, wrote a book on social capital. Relationships are an enormously valuable form of capital, brand, reputation, knowing how to do something. These are all parts of organizations just as much money, as machines, as incredibly exotic and fascinating technologies that NASA and other groups have. If we did a real balance sheet of NASA or any organization, what we find is every bit of important as the physical manifestations would be relationships, know how, savvy, and solid knowledge. And I was looking through the little biographies of all the knowledge in this room, people with advanced degrees, working at NASA. It is remarkable amount of stuff so this is a huge amount. How much do firms pay for knowledge- - I am sorry, organizations, sorry I live in a more commercial world generally so I am used to saying firm. How much do you think organizations pay for knowledge? I worked for IBM for six, seven years. So IBM, the biggest expense they have is knowledge and it is not just R&D, it is not just knowledge in the labs. Let me tell me what I mean by that. I joined IBM when I was fifty years old, fifty-one years old. So let’s say you had someone thirty years old with the same education, that person has more energy than me, probably nicer, thinner, have hair, better prospect, but they paid me ten times what they pay that person. What did they buy? Experience. (Everyone together answers) Experience is a tricky word though, it is the biggest context of knowledge. There is a line in the Koran, I guess it is not too politically correct to quote the Koran, but it is a great line. It says, “The ox that goes to Mecca is still an ox.” You can have experiences and not learn anything from them. Some of you have alluded to that in the presentations I have seen. I have been married more than once so I can certainly tell you, you can have experiences and not learn anything from them. If you raise children, you learn this too. So experience is always the basis for knowledge, it doesn’t translate automatically into knowledge. So knowledge is a tricky thing to measure, individually, collectively, for countries. There is a lot of people working on this issue, how do you measure this, we’ll come back to this in a little bit. I just wanted to talk about why collaboration is important. It is the most expensive thing we have, it costs us the most. If we underutilize it, which we do because it is not measurable, you are wasting your money. What percent of the knowledge in a commercial organization do you think is actually used in any way? Take a commercial organization, it is probably just the same for government agencies, maybe even more true. Audience: Ten. Larry: Yeah, that is a good guess, about ten to fifteen, exactly right. Why isn’t the rest used? Audience: You don’t always need it Larry: You don’t always need, yeah sure. I know a lot about the geography of Brooklyn and it doesn’t come out much, no one asks me about it. Generally, and this gets to the heart of what we were talking about, what I’d like to talk to you about. When organizations don’t collaborate, when they don’t use the knowledge they have, you can look at this traditionally - - don’t get older, there is the best advice I can give you, you have to wear glasses and stuff. Traditionally, it was viewed as one or two problems; unable to share knowledge or unwilling to share knowledge. Those are the sort of two general categories. Now unwilling is something I don’t think we have to spend a lot of time with. That is less true in NASA, it is not even that true unless in some real- - there are organizations that are run like decathlons where everyone is running against everyone else and people are miserable and they kill each other. All the Wall Street Firms are like this, let me just tell you that. Audience: I’d like to interrupt you now. I take exception to one of those points there (Inaudible). I don’t think it is really the case. I think there are so many things that you need to know and there are subjects that you are interested in. And you don’t have to know everything to work on the subject you are interested in, but as you move along to subject to subject, it is nice to have that vast amount of knowledge to draw on. It’s not a matter, you’re right there are people who don’t want know or things that we don’t know, but there are a whole lot of things that is known that we just don’t know how to draw on. Larry: That is exactly what I mean by unable because either you don’t have the knowledge or don’t know who has it. Audience: Well, I take exception to unable. I think there are ways to understand what is there. Larry: There are and that is what we are going to be talking about, but as it stands today- - Well, what percentage of knowledge at NASA do you think is used? Audience: Probably ten. Larry: So were talking about 90 percent that might be useful not all the time and not every moment. Haven’t all of you had the experience, I wish I knew someone who knew this, who I could call on. Sir? Audience: Really quick, the shuttle program is a good example because of the schedules when issues come up, the folks who are normally limited to their experiences, you know, who do I know that knows about this? Who in the agency? Larry: Right, and would be the optimal answer? Audience: And return of flight was different where everybody was involved, the research center, the flight center, everybody was involved and the panel showed that there was expectations all kinds of places that were not being used before because weren’t looking. Larry: And you didn’t know where it was. One of the things, and this is really what you are talking about, I would add that there is a great phrase Alvin Toffler used called, “The diseconomies of complexity.” When you work at large, complex organization, which you do, that is geographically dispersed, that is cognitively dispersed, there is a diseconomy, it is the opposite of where you work one factory where you made widgets, one widget. That is economy of scale, the second widget is much less than the first and you can mathematically plot out how much the widget costs. Here you have “diseconomies of complexity” and many organizations have this, big ones, geographic. You could imagine what IBM or Citicorp, I do work with the World Bank, I was there yesterday, and the World Bank has that and so do you. The stuff you work with is complex, you’re geographical dispersed, you have political issues, and complexities, it is a complex business. So it is a diseconomy of scale. So people here aren’t generally unwilling. Don Cohen mentioned in his presentation something. When organizations have a mission, generally the people who work in them are pretty willing to share knowledge, general rule. It is not Wall Street, it is not a commercial firm, there is more a culture of equity. There is a culture of non-equity in commercial organizations that is getting stronger and really harms them, but it is not true here, it is not true in government agency, it is not true in any organization that has a mission beyond how much money can I get. If you work at a commercial, that it was what you do. People say, I am working for money, I am going to get as much as I can, and if I have to step on you get to get it, I might do that if I can use you, I might. That is different here, that is different than the World Banks, it is different in NGO’s, it is different in government agencies, for whatever reason. So unwilling to share isn’t a big issue, unable because of a lack of knowledge is a much bigger issue, much bigger issue, and that is what I want to talk about, what can people actually do? I mean it is fun talking about this, but unless we say what can be done, it becomes sort of nice rhetorical exercise. And organizations, this is the Holy Grail for them, you can show a great deal of monetary value in doing things like this. I mean you can show the accountant what it would take if people knew what they knew. There is a famous quote in knowledge management, it is still true. A guy from Hewlett Packard, CEO, said, “If we knew what we knew, we would be three times more profitable.” But that must be true here because if you knew what you knew, we would be three times more efficient. It is true anywhere, but knowing what you know is a tricky business isn’t it? Here is what makes it tricky. How do you measure knowledge? If I asked you, now this is an organization that is as knowledge intensive as any organization on this planet I will you that, it is something I can say pretty authoritative, where is the knowledge in NASA? Let’s say I am Martian, you find one up there. I don’t know if I will live long enough, but some of you may live long enough. You find a Martian, oh you work for NASA, pretty smart place, where is the knowledge in NASA, how would you answer that? It is in the people, but by the time you get to Mars, a lot of you are going to be retired, but NASA is still going to know how to come back from Mars so it has to be more than the current people, isn’t that true? Your knowledge is a good assumption, I mean when NASA started there were very few of you around today, who were when it started and you still know-- you know more so where else? Audience: (Starts of Inaudible). Knowledge is a political issue, there are people at NASA who know the politics. If there is an issue in terms of the technological disciplines, there are people in each of those who know the issue. If it is how to you get something through the budget or how do you get something through the contracting, there are people in contracts who know how to work it. And then are 80 percent of the people who you stay away from. So it is total context driven and the people who have been around long enough, the people who were successful, they know where the knowledge is in terms of the people. Sometimes the things we do is probably dangerous and we keep that quiet. Larry: Why do you keep it quiet? Audience: Well, if I know someone in contracting who will make my stuff go fast and I can rely on them, there is only a certain amount of capacity they can handle. Larry: That is right, if you tell John and John and Joe know, you get put to the back of the room if they get to that person first and they develop the relationship. Audience: There is a handful of people in Washington Headquarters who know how to get my money from where I need it to a senator. If that person or those people are below you, you got a big problem. Larry: So the knowledge in NASA is not only in people’s heads, it is in the relationships between people, the space between people, the context, which is absolutely true. Where else it? Audience: I think it is in the next generation also. Larry: How is it transmitted to them? Audience: I think it is transmitted to them through the outreach programs. Larry: So programs that siege future knowledge, where else? Audience: It is in our processes. Larry: Your processes and routines, absolutely right, the way you do things, and the documented routines, and the experiences is plucked together. The practices, the way you do something, that is where the knowledge is. Audience: At the same time, the processes is also where the vast majority of stuff that gets lost, gets lost. Larry: It gets lost in the sense that it doesn’t always get captured. NASA knows, capital K, how to do things because people know how to do it, they know who to go to and they know the routines and the processes. If I did a CAT Scan of NASA, that is where the knowledge would show up, people, the relationships if you could somehow draw lines to one another, the contexts, and the routines. It is not in the documentation. It could be, but very few people look things up in documentation when they want to know something. They pick up the phone. The problem with all this, and this is very useful, very interesting, is called the, “Satisficing.” A man named Herbert Simon wrote about this fifty years ago, he won the Noble Prize doing this, among other things, and he called it the “whale spleen problem,” which is before the internet. And he said, “If I stopped you on the street and said, here is a hundred dollars if you can tell me, I’ll give you two phone calls, does a whale have a spleen?” (Before the web) Well, you know what you do, right, who can I call, how do I make two calls to get to someone who would answer that phone and tell me if a whale has a spleen. Generally, we use the whale spleen problem in that we will go the people closest to us to get answers and as soon as we get an answer that is just good enough, we’ll stop because the added effort is harder, unless it is life or death, even then I have seen studies. But, you know, if you do Googling, and we all do this, there is a hell of a lot of important stuff that isn’t there and a lot of crap that is there. Although you’re right, you can find out the whale spleen I bet on that one, but there are a lot of very important things that are - - I mean it’s not manners though, it is just stuff. Some is very valuable, very useful. It hasn’t increased the knowledge productivity anywhere near as much as you think it would. Audience: Well, it is brand new. Larry: It is brand new. You’re right, when it becomes more commercial perhaps Audience: You got twenty years, and you got five years of it being nearly serviceable. Larry: Well, let me ask you another question. How much of what you know can you document? Let me ask you that, how much of what you know, pick a subject you know. Audience: Depends on the discipline. Larry: Well, let’s say someone gives you a lot of money and three months off, how much of what you know about a bounded subject, so not about live, something that is bounded, project management let’s say, something you know about. How much do you think you could document, even with a large amount of time and money? So you have incentives and you have freedom. Audience: A whole lot. Larry: You think so, you think so. How many of you think it is a big number that you could document? A couple of you. How many of you think not? Yeah, that is what I think. Audience: I think it depends on the subject. Larry: Yeah, again some of you really know a lot of about project management. You study it a lot and there is people in this room that really know this. Audience: I think project management would probably be the most challenging to try and capture, but the functions that support project management are probably where you should be concentrating on, the more systematic type of activities and knowledge that managers need to focus your effort on virtually understanding (inaudible) and how you organize it so you can recollect it. Larry: Right, so you can document it. Audience: Well, not document it. Make it where it is accessible- - I guess it is documented. Larry: But is that how you work? If you had a sticky issue, what do you do? You have been talking about problems, what do people do here? I have been listening to some of it. Audience: They talk about it. Larry: They talk about it. They don’t read about it, they talk about it. Why is that? Audience: It is easier and because of the relationship. You have the best invention and you have somebody else who has a bad one, but if they do a better job of the relationship aspect, it will go in that direction. Part of the discussion, in terms of contacting you’re knowledge folks, not only can they tell you how to work or getting the answer - - Getting the knowledge is one part of it, a small part, but it also then how do you use it, who is going to help you use it, how do you make a connection, how do you make sure you do it in a way that they don’t kill you when you (inaudible), I think that is the issue. I have been in rooms with senior executives, who authorize it go in that direction, behind the wall they say, make sure that doesn’t happen. You wonder how does that happen. Well, it is human nature. Things get worked in terms of projects reported or owned by the mission directorate or, everyone at NASA knows, it is going to get done at a center. And you are a moron if you are a center directorate and you don’t pay attention to that. Because if you have a center that doesn’t work with programs and projects, you have a center that is basically dead. So whatever gets articulated, there are reasons for it, but you know that the relationship and reputation is what drive things. So you document and you get good information that is useful, but it is the stuff in between that document that will determine success and failure. I have seen great people, who do all the right things with documents and they keep getting hammered because society doesn’t work by what we say it works. It works by relationships and all these other things. Larry: If I can just put that in somewhat different phraseology though, I completely agree. Knowledge is the space between the information, knowledge of how to do things. Knowledge is profoundly social and profoundly political, two true statements about knowledge. It is not Cartesian, information is, there is a lot of science, a lot of technology, a lot of engineering, that is Cartesian. It is out there, it’s true, most of us will believe that. That is why we do what we do, but that is information and that is data. Knowledge is a different subject based on information, based on experiences, but it is political and it is social and it is somewhat of a different subject. It is more valuable, you spend more money for it. If information was the ultimate source of value, a 12 year old kid with a laptop would know as much as you and me, but they don’t and they never will. That will never happen. Tom Friedman has this popular book called, The World is Flat, some of you may have read it. I recently wrote an article rebutting that, saying “The World is Round.” Technology does not level playing fields. If it did, a lot of the stuff you do is documented, there is a lot of documentation, but there is no other NASA. And if a country wanted to make another, it would cost a huge amount of money, time, and effort, as you well know. There is a difference between information and knowledge. Knowledge is a trickier thing and it is hard to measure. When firms or organizations try to measure knowledge, here is what they do generally, this is why it is tricky. Some measure the knowledge of individuals, called human capital accounting. So how many degrees do you have, how long have you worked at NASA, how many books have you published, how many projects did you work on. That is reasonable human capital accounting. Organizations do this, they go to Wall Street to raise money, they say here is the amount of people we have with three degrees, they do it for all – You get promoted, you get benefits, that is one way to do that. Another thing, some organization measure what groups know, what practices know, what divisions know. So it is a group measurement, some call it communities of practice. You heard Northrop talk about that yesterday, if I am not mistaken, communities of practice, practices, networks, groups, divisions, centers, you can measure it that way. Some measure the whole enterprise, our company, our organization knows this. That is the unit of analysis, the company. Some use documents. Our knowledge repository has eight million reports in it, therefore we have a lot of knowledge. Different units- - there is no agreed upon unit of analysis, which makes it very tricky to compare organizational knowledge and organizational character because people don’t agree what would be an accurate way to measure. The U.N., OCED, the EU, and the SEC are looking at this issue. There are a lot of people - -because what is the value of having one unit of analysis. Well, for capital markets it would be much easier to make investments if you knew what and organization knew. You’re going to invest money in a pharmaceutical firm if there was a standard unit of analysis you could invest. That is even true for government agencies, here is what we know, here is NASA, here is how much we’ve invested in knowledge, here is a way of proving it. Now we need more knowledge to do this, you would make a very effective case with your own budgets, but there is no agreed upon- - This is a brand new subject, ten to fifteen years old. So we’re still studying it, that is a real problem, there is no unit. Think about it, it is hard to measure this. Universities talk about publication, our faculty published this many books. That is one way to do it. Other places say here is what we accomplished. IBM, every year, leads the commercial world on technology patents, they are number one, that is their unit. We measure patents as a proxy for knowledge, it’s not bad, it makes sense. There are various ways of doing this, but it is not unified. So it is hard to compare countries, although there is a huge effort going on. How would you compare a country like Singapore, Israel, Finland, very high-tech knowledge type of cultures with other countries that have a lot of people and a lot of land, but they don’t produce patents. It is a different issue, very tricky thing, although it is the, as I said, it is the Holy Grail because if you can do this well, you have a unified unit of analysis than you would know what to do. You can start doing management techniques and tools to make it better. So having said that, what can you do? I hate to just talk about a subject, say this is really interesting than you go back and say that was interesting, but what the hell do we do about it. There are things you can do. Now you don’t run NASA, you don’t run the U.S. government, I don’t know what to do about a lot of this stuff myself. If I had control over an organization, but I will tell you some things that have worked in organizations that you can do, that you have the power to do within yourself. Let’s start with one Ed sort of referred to, obliquely, trust. There is no collaboration without trust. If you don’t trust someone, you might tell him the capital of France, you might tell them the GMP of Morocco, you might tell him Pie to the 25th function because that is not valuable, but would you tell him the name of someone in the budget department who knows how to do certain things. That is real knowledge and unless you really trusted someone, you’re not going to share that, no one does that. People don’t share knowledge without trust. Now trust comes - - This is a whole subject, I have about 30 books on this subject. Trust comes in two varieties. One variety all of us live by, it is one of the strongest factors in human physcology. It is a fancy name, it is called specific reciprocity, which simply means if I do a favor for you, what do you owe me? A Favor. How strong is that in people, in general? Audience: Pretty strong. Larry: Pretty strong, yeah it is really strong. Someone not just sends you a document, this just a minor favor, but really spends an hour of their time that is not on their agenda. You call someone, you say shit I am busy as hell, but I’ll spend an hour between nine and ten tonight talking, that is a real favor. When you ask them for a favor, they are going to feel pretty strongly that they owe it to you. It would be pretty rare for someone to say, you helped me, but I am not going to help you. Very few people would say that, very few, maybe some. Some might, but not many. That is called specific reciprocity, we all live by that. What about general reciprocity? Where you help someone without the expectation of a return, where you don’t owe them anything, but you’re doing it for the flag, for the country. You see it more in life and death, of course you see it more in the military. Although there are people in the military who would tell you otherwise, but in general in organizations that is fairly rare. Audience: Not at NASA. Larry: Not at NASA, that is true, that is good. So people would put aside their own work and help someone spend a lot of time. That is great. I think it is probably truer here, because there is a mission, than it would be at Citicorp or IBM or Northrop. Sometimes what firms do, and organizations do, however, to keep this going is have what we call enforceable social norms where if the social norm is cooperation, you enforce it. Let me give you an example because I completely agree in stories. I work part-time for a management consulting firm called Mackenzie, its part time, pays the rent. When I started there, there was a young woman who I was working with, her name is Lee Wise. She was middle to lower-middle management. And I was in her office and she said, I just got this request from the Gates foundation. They are interested in a proposal to help them do something. I said, what are you going to do about that? She said, well I found on our expertise system twelve people at Mackenzie who have written proposals like this and have expertise about helping foundations, great that is terrific. Now they all had documents in this system, but the documents weren’t that relevant to what she needed. They were old, they weren’t quite on issue, you got to really respond exactly what they want. So I said, what are you going to do, you can’t read all that stuff. He says, I am going to call each of these people up, twelve people. I need you to call me back between these hours, I have 24 hours. I said, Lee ten of those twelve people are senior to you. They’re all traveling around the world, some of them aren’t in the United States, some of that weren’t in the western or even in Europe, that is not going to work. She says, watch. She called twelve. I came in Monday, said what was the results. She said all twelve responded. I know this woman really well. I can hardly believe that, that is absolutely unique in management consulting, but it was true because Mackenzie enforces a social norm of cooperation. And what do I mean by that, if somebody didn’t respond to her, well okay, but the odds are they wouldn’t respond to someone else, maybe three months from now, who are junior to them. Eventually, and its quick, that knowledge gets around, this person is not responsive and no matter how good they are, in a year or two they said, maybe you should find a different place to work. That is an enforceable social norm and in that case it works. Don Cohen and I wrote a case, we did some research on executive recruiting firm called, Russell Reynolds. They told us about- - they had a chance to hire a tremendous recruit or head hunter. Guy had a list of contacts a mile long, he knew everyone, made a zillion dollars, but he only worked for himself. He’ll do it all, he won’t share leads, he won’t share information, and the head of that firm told us, I am not going to hire that person. Although, he would bring in millions of dollars in revenue, the example he sets, the signal he sets is wrong for this firm. That is an enforceable social norm. When you don’t have a mission, except to make money, you better do that. Even when you have it, it is not a bad idea. One of the strongest ways of enforcing these things, its not asking people to leave, its who gets promoted. There has been a great deal of research showing that is the signal that is stronger any organizational rhetoric or communication because one someone gets promoted, it is telling the rest of you this person does the right thing. And if they got promoted and they are an opportunist, if they’re self-serving, they’re a known son-of-a-bitch, that is a terrific signal to everyone, this is what we care about. When you promote other sorts of people there is nothing stronger. It is about as strong, I’ve read some studies about, as when children watch their parents. Tell your kids not to smoke and you smoke a lot. I’ve worked for seven management consulting firms. All but one of them said we really want our management consultants to keep abreast of the literature, to develop ideas, to be thought leaders, to really understand the issues. All they did, with one exception, was promote sales people. They never promoted people, who actually developed ideas. Now, I am not saying it is so bad to promote sales people, but as soon as that happens, everyone says, well they say this, but I am not going to spend that extra hour writing an article, I am going to go write another proposal. It is just rational, intended rationality. So those signals are hugely important as are the symbols of cooperation. There are symbols and there are signals. The architecture of building is a great symbol and signal of cooperation and collaboration. When you go into an office, hundred closed doors, no open space, no space for talking, no space for meeting, it is a big signal isn’t it. I’ve been doing some work on knowledge spaces and there is a big pharmaceutical firm, in fact Novartis, have you ever heard of that firm, big firm out in Basel. They have 22 ugly buildings in Basel, 19th century, industrial buildings. One by one they are taking down these buildings, leveling them, r e-building them on knowledge principles, which means there is some private space, much public space, and the symbol and signal, each floor, each work area has an Italian coffee station, this is great stuff, marble tables, wired back chairs, espresso, and biscotti and it is free. This is a Swiss firm mind you, these people love money. I mean this is Switzerland, we’re not talking about Mother Teresa’s missionary, these people love money. For them to do that is a tremendous signal saying, we want people to stop, have some coffee, and talk to other people. You know, were not going to monitor your talking about your kid’s soccer scores, were talking about a new molecules. It is a tremendous signal that knowledge is social and it needs to be flowed, it needs to be stirred around. I can give you many examples of this, counter examples, real examples. Don and I were thinking about writing a book about this. The Harvard Business School, which is not what I’m talking about. They got a lot of money about ten, fifteen years ago to put up a new building, Chad Hall. That building, and this is a school that teaches leadership and teamwork, that building had not one public space. It is all everyone on their own bottom. It is completely closed offices, no one thought of the signal they are giving to executives or people who want to executives, what about some common space where people could meet and talk to discuss issues. It’s all pecking order and private spaces, remarkable the signal that gives. Audience: I understand what you’re saying about enforceable norms. I think there is another level below the radar, the really difficult one, which is you know somebody who has the information you want, but they are such a pain in the ass, you don’t want to go to them (inaudible). I just dont want to deal with Carl, I am going around him. Larry: You’re absolutely right. This is a huge issue. You know, I have to tell you story about this. A very well know management consulting firm, this time I am not going to tell you their name. We did a social network analysis. This guy Rob Cross, I was at Virginia with him, did this for this firm. And it was their practice, the people who consulted to the leisure and hotel industry. And it turned out there are two people in the middle of the network who everyone had to go to. These were men in their fifties, who knew everyone in that industry. They had been there twenty years, they had wrote about it, but they were terrible people, and everyone wrote when I talk to this person I feel worse after I talk to them, but you couldn’t fire them, you would lose the practice. So we presented this, we had no names, but we could see – you ever see those social networking diagrams, they look like bowls of spaghetti. It is linkage to people and there are people right in the heart of it, right there, and there is always the outliers. These guys- - you couldn’t even see the lines it was so dense. So we asked the head of the practice, he was sitting there, what are you going to do about these guys? And he said - - and the guys were in the room and they knew it, they knew it, that’s who they were. They viewed that as a perk of being successful that they could just let it all loose. Famous entertainers are like that, the same thing, a lot of people when they rise up in life they view it as a perk to be a jerk. I am not making this up, this is true. Audience: The (inaudible) effect. (laughter) Larry: I am not going to talk - - You see what just happened at Harvard. I mean this is not exactly an unknown thing, you can find this in the bible probably. I haven’t read Hammurabi, but I bet it’s there too. So what did this guy do? It is a fascinating dilemma in real life, this is why this isn’t a science, what he did, and this is probably the best answer we can give, he found two people who wanted to learn what those people knew. They were sort of mid-managers with thick-skin and they would be the buffers for those people. So you go to them first, and they could take the abuse because they wanted to learn a lot. It was a jerry built answer, but it was an answer- - Exit and loyalty didn’t work. You weren’t going to get rid of them, you had to find something and sending them emails they just didn’t respond. You had to go to them because they liked socking it to you. I mean these are really managerial dilemmas around knowledge. I mean we’re fooling around, but it is a very serious issue. That is why I said, knowledge is social, it is profoundly social. The person who has the knowledge is- - There hard to separate, in fact it is impossible to separate the knowledge from the person who has it or the group that has it. You can separate information, if you ask me my address, I can write it on a piece of paper and there is my address, that’s information. But if you ask me what it is like to live in the town you live in, that is more knowledge, that’s inseparable from who I am. I might like certain things or dislike certain things. Audience: It seems like there are things beyond knowledge. Larry: Well, there are things beyond knowledge Audience: Like a superstar athlete, you can go and ask him how he - - L: He couldn’t tell you. We all – Its true for you to, it is called tacit knowledge. There is knowledge you can write down and tacitness. And tacitness means knowledge, that no matter what you say, it would be very difficult to describe. The classic book about this is by a great scientist named, Michael Polanyi, who wrote about how could you tell someone to ride a bicycle. They have to ride the bicycle, you can tell them, but really it is pretty important—How to swim, remember when you learned how to swim or you taught your kids how to swim, what NASA is like. You could tell me, Ed has told me before. I’ve known him for a while, but its real different listening to him, although he has deep knowledge, tacit and otherwise at NASA than actually working here even part-time. It’s been estimated that most valuable knowledge, especially athletics, physical things, painters, architects, scientists too. It is tacit, they can’t tell you what they do, they just know how to do it. If you go to foreign country, it is like that. If you travel around, similar things. I’m sorry this fellow had a question first. Audience: I was referring back to a study you did. The individual you did the study for didn’t realize (inaudible) or was he looking for a justification or excuse to go ahead and make the changes? Larry: I am glad you asked that. Very often when you discuss a problem in a larger group and you make the problem visible, it forces the function. He knew, of course he knew, but when you made it visible- - look at these people in the network, their positions are absolutely vital. Yet when we asked them, 80 percent said, I hate talking to this person and he was in the room. It was a room this size, about this many people, forced him to act. It is a valuable thing to learn, that is a tacit sort of thing. How do you get something like that? Audience: It’s just that this discussion reminded me of a point. I like baseball so I always - - Larry: I like it to. Audience: Ted Williams was a great hitter. When he retired, he became a coach. He couldn’t coach because he couldn’t understand why when he would tell the players when you see the stiches on the ball, you got to be born a certain way to see the stiches on the ball, you know you can’t teach that. My point was even when the person is a jerk, sometimes passing knowledge along takes skill. Larry: Not sometimes, it is always a skill. It can be taught to some extent. My father bought me that, I have a vision problem and my father bought me that book, The Art of Hitting by Ted Williams. I had it too. And I read it and it did me no good at all. And I could really read, believe me, I could read and I could memorize, but I couldn’t hit because it is tacit. I didn’t have the equipment, it’s not in me to do that well, although my father meant well. A lot of things, but there is an art to transferring knowledge directly and you guys study that. That is what a lot of stuff—that is what is going on in this room and that is what a lot of project management is about, use the language of engineering and science, it’s the “linga franklin” of NASA, but the truth is you learn by participating, you learn by doing and that is why these projects are so important and that is why so many of you know so many things because you do things. If this was just a course in aeronautics or a course in space engineering you might remember it and you can replicate the words but you wouldn’t know, with a capital K, how to do what you do. It is absolutely – this stuff is still not taught that way. It is taught here as best it can be and the fact that Dawn and Ed and I, a lot of these people are really interested in this, but this is advanced stuff. Many of the organizations, if you do training and developing, the pits. It has nothing to do with knowledge or anything what we’re talking about, it is just crap, its best avoided. This is very state-of-the-art stuff you are doing here. Audience: (Inaudible). I tried to learn the keyboard as a child, I read the books, took lessons, could read the music, I could play the notes. I could not make the music. Larry: That is a good example. Audience: My father never knew how to read music. He was an excellent drummer, play professionally. All he had to do was put a pair of speakers so he could hear the other music and he could play. Audience: There is certainly an issue, especially things like the arts and athletics where having a gift for it is a necessity and not having one is a barrier. I think with your example, one of example of way to transmit what seems like deeply tacit knowledge is say musicians master class. Now, it from talent to talent, but it is using a process that is a combination of examples, imitation, verbal hints that seem kind of oblique. You know, someone will say play it with more color, they don’t explain what it is. Person isn’t play it as it is, person says again, play it with more color. It is a complicated process of a shared experience that can communicate something very tacit. Larry: I saw one, Rostroprovich did the cello master class, that is exactly that, but that is what you’re doing here, that is what is happening today. It can be done with science and engineering as well as music and athletics, but you have to participate. Knowledge is experience and participation, it is very different than information. When I give these courses, if someone says to you, here is X amount of dollars- - Well let’s take something with more- - You graduate from college with a degree in chemistry, are you a chemist? Would a chemist call you a chemist? They’d call you a rookie. What does it take to be a chemist? Doing chemistry. Where other chemists would say you are chemist when you do chemistry and you know it tacitly. You could look up a situation and quickly say, that is clearly not enough hydrogen. It is true here, it is true in any organization. One is information retention and the other is knowledge. The knowledge is acquired by doing things, participating, experiencing, and acting. In some ways, knowledge management is the wrong words, although it helped bring it about. It really is knowing management, it is an active verb. We’re talking about something that is actively done, it is knowing rather than knowledge. Knowledge implies storage of information, which is fine, but knowledge - - it is really knowing. NASA knows how to do something, all of you know how to do certain things. Let’s go back a little bit, I just want to make one or two- - What can you actually do? One thing you can do is encourage trust by entrusting others. We’ve learned over the years, we’ve meaning social science researchers, that trust is contagious, that is reaches tipping points in critical periods. And enough people entrust others, the culture of trust is contagious, it will spread just as the culture of mistrust, both things are true, but it is contagious. It spreads like a virus and you can entrust others and have it spread. Let me give you a personal story about this. I ran a research institute for IBM and I had about thirty people working for me, many of them traveled a great deal, and they had to submit travel reports, you know, electronically, and I was supposed to look at all these and see you went to Boise, but business class, bad! You have to go coach! Monitor all their travel, where they stayed, what sort of flights they took. If I did that, three things would occur. It would take up half the time, IBM is paying me a great deal of money for something if I spend half my time doing that, it was something a clerk could do. Why do they need me to do that? Two, it would bore me to pieces and I just couldn’t stand doing it. Three, it was worthless. These people I had hired, I liked them and they liked me and I brought them into a room and I said, I am never going to look at your travel reports, I am going to approve them sight unseen. What happens when you say that? You are entrusting others. So the burden is on them to break the trust. I am saying I am not going to look at them and if I get in some trouble, if it got caught, if someone went to Boise business class or stayed at a Marriott rather than a 7/11 or wherever the hell they want the people to stay. It would come down to me and the person I reported to would slap my wrist, but do you think it was worth anything to those people? Would they do it? Would they cheat that way because it is asymmetric, it would be worth it. One business class trip, one nice hotel and it breaks the trust with me, it can’t be worth. It is a bad cost-benefit cost analysis and by me entrusting them, they then entrusted others. They viewed that as an example and the trust then became contagious and nothing evil ever happened. And IBM got a much better deal because they are paying me a lot of money to research and development. They weren’t paying me- - It just seemed absolutely ludicrous for me to spend - - I mean those are big reports. They make people report cabs, if you ate a Frankfurter rather than a hamburger, I mean it was crazy. Micromanager, an anal degree (laughter), it was just nuts. I am sure you all know what I am talking – Anyway, trust is contagious. So you can spread trust yourself, this is something that is bottom up. It is not top down, no trusts management anywhere. That is a general rule, people do not trust going up. They trust laterally, you want to encourage lateral trust, people at your level, level maybe one above you, one below you. Very rarely do people trust people at the top. This country has a problem with that, it is not something I can solve, but if you do-- surveys show that most people do not trust the people who run their organizations. They feel they got those jobs being certain types of characters and they don’t trust. That may be not true, god hope it is not true here, but generally it is true. But they trust their colleagues, they trust their peers, they trust you and you trust others and without trust no knowledge gets exchanged, no collaboration, not real knowledge, not real collaboration. You make fake, you know, what is the capital of France, Paris, boom. You don’t need trust for that. So trust can be done. Another thing you can do that is more- - I like what you were saying that is more system wide is let people know who knows what in an intuitive, clean way. Connectivity is a much better way to spend your money than collection. People generally, although it is good to have documents, I write, I read, we all want to do this, but generally connectivity is really important. So if you want to know who knows what, find some way and firms are doing this. This is something that can be done on having taxonomies that are intuitive, really clearly understandable so you can look up someone, oh that person knows this. Let them say what they know as well as you telling them. I worked for Ernest Young, another interesting firm, for a number of years. And the day I joined, they recruited me, once again they said, oh we really want you. I got a big skills questionnaire, eight pages, fill out the skills for our system. I didn’t have one skill on those eight pages. Can you program in C++, are you familiar with this system? I said, oh shit I don’t know this stuff and I wanted- - Why did you hire me, I mean I don’t have skill that is on this page. Some jerk devised that stuff. So let people, the ones that work better are where you can ask people what you know, but have them right their experiences, their publication, and let them say what they know, give them a paragraph, and then you can search by words. So even though you may have worked in Marshall or Goddard and you have done this and this, you have a deep interest in something else. I know these people, that is certainly true for most people that are quite intellectually curious, let them say that to, don’t just limited it to your own experiences and let them search. This is all doable, it is not rocket science and firms are doing this all the time. I see this, organizations are doing- - So it is really helpful rather than- - And it is great-- it won't substitute for what Ed’s talking about, people are still going to use their informal networks, nothing on this planet will ever eliminate that unless humans evolve, and that is not going to happen in our lifetime. If you get human beings that evolved differently, but as of today everyone would use their networks, but if you are junior, or middle, or an area where you don’t have networks, even Ed might not know someone in some areas, you can use a system. Are we out of time, should I ask? I just want one or two more quick points on what you can do, I thought that might be- - Rather than do that, let me sum up some of these points. This is really an important subject. How people collaborate, how you can help people collaborate it is the golden - - It is what everyone is looking for, it is optimizing your investments, you’re knowledge investments, it is optimizing what an organization like this knows. By not doing it, you are really wasting brain power, money, time, it is a real waste. We just don’t know a lot about this. It is not taught in the schools. You can get a Ph.D., there are very few MBA schools that even teach this, although it is the most important thing there is from my perspective. I can’t answer why that is the case, it is a great mystery to me, it is hugely important and you can do things. You can put in small systems, you can share your knowledge with others, proactively without specific reciprocity, you can trust people, and just as much as anything else, you can talk about knowledge. Voltaire once said, “People wouldn’t fall in love if they never heard the word.” I don’t know if that is true or not, but if you never talk about knowledge, if we only talk about information, systems, or data, that is all people are going to work with. If you talk about knowledge, say what do those people know, what does NASA know, what goes on in terms of knowledge in this organization. Tools and approaches and evaluations and measures will emerge if you talk about it. If we never measure it, if we never talk about it, nothing will ever happen. Not only are things only measured that are actually measureable, but if you never say something, you never talk about something, nothing will ever happen. So at that point, I am going to stop talking. Maybe you got one or two more questions if there is any- - You people have gone through a rigorous couple days. [Applause] Thank You