People And Structures

Almost overnight, it seems, the phrases intellectual capital and knowledge management have become part of manufacturing jargon. That's partly a grudging admission by top managements that the only enduring advantage -- since everything else can be copied -- is their people. It's also partly a near-panic reaction to their own limited resources in a lean-and-mean era where skill shortages abound. "The ability of an organization to generate new knowledge will be critical as we move into the next century," says Edward E. Lawler, director of the Center for Effective Organizations that is part of the Marshall School of Business at the University of Southern California, Los Angeles. "A company's key asset will not be its hardware, but the knowledge that's acquired in patents or that is accumulated in the heads of its people." That reemergence of people as a pivotal element to success in the next millennium has more than a touch of irony to it. As Lawler points out, it comes in the aftermath of a 20-year period during which "companies destroyed the traditional employment contract" of lifetime security through downsizing. Nevertheless, that renewed focus on people means companies will need to ask themselves two key people questions as they restructure into both virtual and boundaryless organizations. One, how can they structure themselves, asks Lawler, "to develop knowledge, procure knowledge, protect knowledge, manage people with knowledge, and organize on the Internet to access and spread knowledge?" Two, how will those structures and a company's internal processes impact its people? The options are many. Weyerhaeuser Co. has put in place an extensive system to capture the knowledge of its people. The family atmosphere at Manco Inc. sets it apart. At Alcoa Inc., workplace design has changed the way the company works and communicates. Autodesk Inc.'s approach: Get people to incorporate strategic priorities into their everyday thinking. All quite different tactics -- but with two things in common: They're designed to maximize the potential contributions of all the people in an organization, and they don't rely on one person for their success. As Lawler points out, appointing someone as chief knowledge officer "is not sufficient" by itself. No matter where you begin, "the reality is that eventually you will need to redesign everything from rewards to structure." And don't think too far ahead. Constant changes in information technology have made long-range planning irrelevant. "Companies will have to recycle and reinvent themselves over a cycle of 12 to 18 months," says N. Fredric Crandall, founding partner at the Center for Workforce Effectiveness, Northbrook, Ill. No. 12: Make priorities part of the routine "Let's face it," says CarolBartz,chairman, president, and CEO of Autodesk, San Rafael, Calif., "looking backward, you wouldn't even have contemplated making the Internet an integral part of a company's business strategy three years ago. So if you are looking out farther than three years [with your strategic plan], you are fooling yourself." Today, though, mainstreaming the Web into the fabric of its organization is front and center as one of Autodesk's initiatives. And Bartz excels in driving those initiatives into the organization -- with communication and delegation -- so that they become part of the everyday routine of people's work at Autodesk. "You have to get people to incorporate whatever your strategic priorities may be into part of their everyday thinking, or it's a wasted e-mail," says Bartz. "I provide a paragraph explaining why it is important, but I rely on my vice presidents to add bulk" to the priorities and determine what needs to be done to incorporate them into daily activities. For example, now that mainstreaming the Web is a priority at Autodesk, employees understand that any information-system plan, for example, must include an Internet plan. And engineers realize that any new product must take into consideration how it can be used on the Internet. "You have to get people to understand that management considers these things to be important," says Bartz, "so they will ask themselves, 'What can I do as an individual to throw my weight in that direction and to incorporate that priority into my thinking?' By making it a priority, it sends the message to our people . . . that is a question they need to ask," she says. "If you as the CEO ask those questions, your people will ask those questions." That approach won't shield a company from problems, however. Last month Autodesk laid off 350 workers, 10% of its workforce. But Bartz is keeping intact Autodesk Ventures, an employees group formed in June to incubate ideas that will leverage the Internet for Autodesk's customer base. "We are letting them operate differently from the rest of the company," she says, because the rules and regulations cripple a group like that "when they are told you are not doing it the way you are supposed to do it." Bartz understands that some of Autodesk's strategic priorities will change -- many will become part of the culture -- and some (being a market leader) will never change. "The most important thing is to pick them [the strategic priorities] and go," says Bartz. "It is less important that the priorities are perfect. It is more important that people understand them and embrace them." No 13: Design for communication The first thing you notice about the 13-month-old Alcoa Corporate Center across the Allegheny River from downtown Pittsburgh is how well it blends into the landscape, its wave shape appearing to be as natural as the river's flow. You don't even pause to think that the outside of the building has no name. (There's a small Alcoa sign above the ear-shaped reception desk inside.) Still, your eyes always seem to return to the central atrium and its escalators that transport the 400 people working inside around its six floors. People are always moving -- between floors or on the walkways on each floor -- sometimes stopping to talk. Then there's the equality of each workstation. Each is nine square feet with no ceilings or doors and is no farther than 45 feet from one of the floor-to-ceiling windows that are more than 11 feet tall. The outside walls on each floor are open for everyone to enjoy the view. Built at the insistence of Chairman Paul O'Neill, the building is -- but wasn't meant to be -- an architectural marvel. It is part of what he says is "an integrated set of logic" that's needed to build a great company. "It was designed to make the organization more effective. "I wanted to create a work environment that tells people that they are important and that we want you to collaborate," says O'Neill. "If you really want people to be able to contribute to the full-est extent, the old notion [a traditional office structure] just deters that. It reinforces the notion of who's important and who's not important." So now everyone from the lowest-paid employee at the center to O'Neill has the same size workstation (there are four different configurations). "I felt that we needed to change our workspace to reach our potential as a company," says O'Neill, who always has had a disdain for corporate pretentiousness. "I don't feel like I am any more important a human being now than when I made $6,000 a year. I didn't want my space to tell others they were less important. Different office sizes are just an invidious categorization." The open design, explains O'Neill, "says to the employees that everyone is important and that you don't get discriminated against because of the kind of work you do." Equally important -- because "you now see people every day that you used to see only once or twice a year," says O'Neill -- it has changed the way Alcoa communicates and works. "Before you had to make an appointment to see someone. Now you have an instant meeting with someone you just meet or you walk by and see that they are in their offices." The result: quicker decisions and fewer days before someone takes action. Increased communication also was behind his rationale for a main floor of glass conference rooms, a single cafeteria for everyone, and the kitchens and aluminum tables (like tall restaurant counter seats) that are on the other floors. "It tells people it is O.K. to congregate and talk to each other," says O'Neill. "You can't achieve great things in isolated spaces." No 14: Capture knowledge to capture success Ever hear this? "Jeff knows that." Or, "Go ask Kathy -- she's our expert in that area." But what happens when Jeff or Kathy leaves the organization or is away on business? Does everything come to a standstill? That's why Weyerhaeuser is working to capture that know-ledge internally and, in effect, create its own search engine for company information, says Edward P. Rogel, vice president for human resources and total quality. "We want to document our processes to replicate our best practices." The aim: become as good everywhere as it is anywhere. It's a multipronged effort. At a three-day conference each year, 20 to 30 teams of employees explain the best practices within their area. Teams in departments work to improve processes within their areas. But the bulk of Weyerhaeuser's knowledge-management activities center on placing information on the company intranet so it can be retained and available to everyone. A directory lists on-call company experts, a site explains in detail the best operational practices and processes that different groups use, and an online Center of Excellence acts as a virtual university. Also inside the Federal Way, Wash.-based company are networks of experts who look to create standards and processes in each business area, to teach and coach, and to identify skill needs and how to address them. What has Weyerhaeuser learned so far about knowledge management? "We've learned that this is not a nice-to-do thing, but that it is essential in order to improve our performance," says Rogel. "We've learned that it requires leadership and accountability, that the organizational culture is the key, and that you must drive it off business opportunities." And, he adds, "you don't ever give up. It is not something that happens overnight." No: 15: Managing with heart Sit in on a Manco team meeting or, better yet, attend one of its Duck Challenge Days where Avon, Ohio-based Manco honors partners (employees), suppliers, and customers who made an outstanding contribution to the company's success during the previous year. You'll see a lot of frivolity and humor. This year, for example, company executives -- one as Karnac the Magnificent, the other as Ed McMahon -- poked fun at top management. In other years, CEO Jack Kahl has swum across a duck pond in chilly weather or had his head shaved because the company had achieved its goals. But more importantly, you'll get a sense of the camaraderie and heartfelt warmth Manco partners have for each other and for top management. No forced applause, no one pretending to be happy for someone else. That unique culture has played a large role in the ability of Manco -- owned by Germany-based Henkel Group since 1998 -- to grab a 63% share of the duct tape market in the U.S. with its Duck Tape brand. Credit the leadership style of Kahl, who bought the company in 1971. Manco's goals are posted on bulletin boards throughout the company. Large wall-sized charts list daily sales, shipments and billings, current sales and marketing expenses, and the monthly profit or loss. All partners wear name tags with their first name in large print, their last name in small type. All employees can put up a slogan where they work. Anyone can stop production on the shop floor anytime, and signs above the shipping dock proclaim: "If you're not proud of it, don't ship it." It's also commonplace for people at Manco to get up at a meeting "and thank eight people for helping him or her make a successful presentation to a customer," says Kahl. "It is simply positive reinforcement of human beings -- not for profits, but for being good human beings." Manco reinforces that culture through stories by the Manco Duck. "Starting today, thank at least five people a day," suggested the Manco Duck in a recent issue of the company's bimonthly Duck Tales newsletter. "A handshake, a personal note, or a greeting card will do wonders to boost morale. People who feel appreciated become energized. They work harder, wanting to exceed their goals and prove that they can do even better next time." The Duck even gives tips to managers: "Hold meetings whenever rumors start . . . and give employees nothing but honest answers." It's all part of what Kahl calls "the big heartbeat in this company. We ring bells to praise people, and we pat them on the back. We recognize all the unsung heroes." And Kahl is one of them: This year, he rented an elegant theater in downtown Cleveland and brought in Broadway stars for an evening of entertainment for his employees. He took the cost -- "a couple of hundred thousand dollars" -- out of his own pocket, not the company's.