Kepner-Tregoe, Inc., a consulting organization, has been concentrating on helping people within organizations learn how to think more effectively. They call it "critical thinking." The Princeton, New Jersey-based firm has been doing so since 1958. One might assume that after working at this for nearly 40 years now, and given the apparent recognition of many people that "intellectual capital" is an extremely important asset for any company (see "Get $mart"), organizations would be taking full advantage of the thinking capabilities of people.
How many times have you heard (or even said): "We used to have our workers check their brains at the door. That's not the case around here anymore."? It seems that it still is the case at more places than people might realize-or would like to admit.
Kepner-Tregoe initiated a survey to assess the status of using brains not brawn. They queried 641 supervisors/managers and 773 hourly workers. Forty-eight percent of the supervisors were with companies with annual sales of $100-million or more; 89% were with companies with more than 100 employees. The make-up of the group: 34% first-line managers; 24% plant managers; 19% middle managers; 6% general managers; and 13% VPs/division managers. The largest percentage-41%-were with manufacturing companies.
The mix of the hourly workers was similar in terms of company size. One difference that should be noted is that although the single biggest job category is machine operator (22%), the major business area is service (40%), with manufacturing second (32%).
That's the who. As for the what that was discovered . . .
When asked "How much of your organization's thinking ability . . . is actually being used?", 63% of the managers and 62% of the hourly workers answered that they believe 50% or less is used.
Roadblocks
Another question asked about "the most significant barriers to effective thinking." Thirteen possibilities were listed as barriers. Both managers and hourly workers identified the same top three, with a difference between the rating of numbers one and two. According to the workers, the barriers are: organizational politics (41%), time pressure (34%) and lack of involvement in decision making (33%). The managers' rankings: time (48%), politics (39%) and lack of involvement (25%).
From the standpoint of workers, however, there seems to be a more fundamental problem: "In my organization or unit, hourly workers receive training to improve their thinking skills" is a statement presented to those surveyed. Fifty-two percent of the workers disagree; 44% agree; 4% aren't sure.
Managers seem to think there is sufficient training for workers: 58% agreed, with 40% disagreeing (2% aren't sure). As for whether they get enough training, 72% of the managers think they do.
Doug Wilson, a practice leader at Kepner-Tregoe, emphasizes that the whole issue is one of "effective critical thinking," not just thinking. "A lot of thinking goes on in organizations," he explains. "This is not about how many Ph.D.'s there are in an organization or IQ points or something like that. It is about the ability to analytically apply thinking processes." He cites four main areas that are the fundamentals:
- The ability to solve problems
- The ability to make decisions
- The ability to avoid future threats or to take advantage of future opportunities
- The ability to unravel complexity.
It's all very systematic.
Leading With One's Stomach
Which leads to another finding in the study-titled, incidentally, "Minds at Work: How Much Brainpower Are We Really Using?"-that Wilson points to: "In my organization or unit, decisions are made strictly by 'gut feel'" is the statement. Thirty-three percent of the workers agree; 26% of the managers agree. According to Wilson, this indicates that in too many companies, actions are more important than facts. They aren't using their minds, they are using their urges. Too often, the person who goes with his or her gut is the person who happens to be in charge.
It isn't that Wilson has anything against instinct, but he does say that the collection of relevant data can be helpful for those who are going to go with intuition, as well as for those who are more methodological in their approach. (Speaking of the power of the people in charge, there are two related statements: "In my organization or unit, when decisions are made, the boss's favorite alternatives get selected" and "In my organization or unit managers second guess subordinates and reverse their decisions." As for the boss getting to choose: 66% of the workers agree; 45% of the managers agree.
As for managers second-guessing, 55% of the workers agree; 40% of the managers agree. Seems fairly clear that even in this age of empowerment, managers matter.)
Habit-Making
Kepner-Tregoe, Wilson explains, offers training in developing critical thinking skills. The fundamental approach is conveyed in three days of classroom training. Then the organization helps assure that what has been taught gets implemented. The real issue, Wilson says, is not whether something gets learned: "Skill development is easy. The real challenge is to build habits." In other words, the critical thinking approach must permeate everything, whether it is conducting meetings or trying to figure out why a machine tool isn't working as expected.
Although the practice of critical thinking is generic, the training program is not one-size-fits-all. Wilson points out that during the three-day course there are some actual cases, so managers might be dealing with issues like not getting the information expected from a computer system or mergers and acquisitions. The plant floor people are likely to have a course that concentrates mainly on the problem-solving methodology.
"The issue that's first and foremost in this is leadership," Wilson insists. He references one of the firm's clients, Corning Corp. He explains that Corning management took the skills-building course. The question that the managers then asked was whether they should simply mandate the training for all of their employees. The Kepner-Tregoe response was that the first thing that management really needed to do was to make sure that they used the methodology. "If leaders of a company say that people should do something and they themselves don't model it, they'll have a hard time getting anyone to build a new habit." So Corning managers used what they'd learned and the people working for and with them recognized that the critical thinking skills were important, important enough for them to learn, too.
He points out: "If you want to make critical thinking a habit, you have to do it outside of a training course."
Learn it. Then use it.
Get $mart
On July 16, Ford Motor Company released its second quarter earnings, an all-time record. According to the company's press release: "Earnings for the second quarter of 1997 were $2.53 billion, or $2.06 per fully diluted share of common and Class B stock, up 33% from the $1.903 billion, or $1.56 a share, earned in the second quarter of 1996."
On July 17, Microsoft Corp. released its numbers for the previous quarter. According to its news release: "Revenues for the quarter ended June 30, 1997, were $3.18 billion, a 41% increase over the comparable quarter in fiscal 1996. For the quarter, net income was $1.06 billion, and earnings per share were $0.80, an increase of 86% compared to the $0.43 earned during the same quarter last year."
Although Karl Erik Sveiby didn't have access to these numbers when he wrote The New Organizational Wealth: Managing and Measuring Knowledge-Based Assets (Berrett-Koehler; San Francisco; $29.95), he uses the two companies to provide a point of comparison about what is really beginning to count nowadays.
Sveiby refers to these things that are increasingly important as "intangible assets," which are far more than the "good will" that accountants recognize. Ford has tangible assets like plenty of factories. Microsoft has intangible assets like millions of users of Windows, which lead other companies to write applications for Windows, which lead to more purchases of Windows. . .seemingly ad infinitum.
Historically, companies have concentrated on their tangible assets. But it is critically important to consider the intangible, as well.
Sveiby argues, in what is arguably an important book, that there are three types of intangible assets. There is the external structure. This consists of everything in the outside world (as in outside of the company), from customer and supplier relations to brand names. Another is the internal structure, from patents to processes: all of those things that make an organization what it is. And last but foremost, there is employee competence. This can make all of the difference.
Competence is one part knowledge, one part ability. It is knowing combined with doing. Competent employees create the external structures as well as the internal ones. Without them, a company doesn't make much of anything, physical or financial.
Sveiby doesn't maintain that it is better to produce software than sedans. He argues, in fact, that it's possible "to be both knowledge-focused and industrial, to have large tangible assets and still utilize the intangible assets." And he explains how. He points out that taking this approach can, indeed, make companies more profitable-and he warns that those companies that don't are not going to fair well in the days to come.
Another author who delves into this subject is Thomas A. Stewart, who has written Intellectual Capital: The New Wealth of Organizations (Doubleday/Currency; New York; $27.00). Stewart, who is with Fortune magazine, and who began looking into intellectual capital for articles he began writing on the subject in 1991, provides a workable definition:
"Intelligence becomes an asset when some useful order is created out of free-floating brainpower-that is, when it is given coherent form (a mailing list, a database, an agenda for a meeting, a description of a process); when it is captured in a way that allows it to be described, shared, and exploited; and when it can be deployed to do something that could not be done if it remained scattered around like so many coins in a gutter. Intellectual capital is packaged useful knowledge."
Note well that this is not an exercise in sitting around and thinking about things, the proverbial navel-gazing. Rather, it is about actionable ideas, or the means to generate them-things that can be used for the benefit of the organization.
Stewart writes, "Human capital grows in two ways: when the organization uses more of what people know, and when people know more stuff that is useful to the organization."
There are at least two implications here. One is that nowadays, when companies hit a rough patch, the immediate reaction tends to be eliminating members of the workforce: downsizing. Typically, Wall Street reacts favorably to such actions. But both Stewart and Sveiby point out that if intellectual capital is found in people, then eliminating people means that knowledge is going out the door, too. There is no way for the organization to use what it has gotten rid of.
Second, it is important that management provide direction with regard to what is important for people to know about. There needs to be a strategic goal in place so the knowledge accumulated and applied will benefit the company. Mana-gers need to be smart-and forward thinking.
There are personal implications to this knowledge-intensive period. Stewart titles a chapter "Your Career in the Information Age," which opens with the observation, "If there's unanimity about any aspect of the Information Age economy, it's that you have a better chance of getting a gold watch from a street vendor than you do from a corporation."
Stewart's suggestion? "Instead of security, seek resilience. Chart your contribution, not your position. Careers will be defined less by companies (`I work for IBM') and more by professions (`I design RISC chips'); they will be shaped less by hierarchies and more by markets."
It's all about what you know and what you do with what you know. Take every advantage of getting to know more about what's going on that's relevant to what you do.
These two books are a good place to start.-GSV
Contact Point
Should you care to reach Kepner-Tregoe, Inc.:
Kepner-Tregoe, Inc.
P.O. Box 704
Princeton, NJ 08542
Tel.: 609/921-2806
Fax: 609/497-0130
