"Corporate U's: High Value or Hot Air?"

Kristine Ellis

Training

September 2002, pp. 60-64

It is estimated that 2,000 companies now have their own corporate universities. This article discusses how a number of them are trying to run them in such a way that they clearly add value to the business. Several corporate universities are discussed in some depth, including General Motors University, Sprint's University of Excellence, Motorola University, Veritas University, and Bechtel University. There is also a case discussion of Hewlett-Packard, which purposely does not have anything they call a university.

The article also provides a list of do's and don'ts for adding value to a corporate university: (1) DO prune your offerings every year-Are the courses and services strategic at this point? Should they be automated or off-loaded because they take away from the university's strategic focus?; (2) DO have a close relationship with the CEO and top management-Ultimately, they are your primary stakeholders; (3) DO keep it "edgy"-Focus on pushing the envelope, and hire someone else to provide "me too" training; (4) DON'T get hung up on the numbers-Focus instead on what makes the company more successful; (5) DON'T get hung up in smile sheets-Employee learning expectations are important, but not the ultimate goal. Keep your eye on the business need driving the skill requirement; and (6) DON'T build in rigidity-Business changes overnight. Stay flexible so you can quickly adapt to your senior management's needs.

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"The High Cost of Lost Trust"

Tony Simons

Harvard Business Review

September 2002, pp. 18-19

The author of this article "hypothesized that when employees sense an inconsistency between what their bosses say and do, it triggers a cascade of effects, depressing employees' trust, commitment, and willingness to go the extra mile. These effects, we reasoned, would reduce customer satisfaction and increase employee turnover, harming profitability."

To measure this expected chain reaction, employees were surveyed at 76 Holiday Inn hotels. Using a number of statements, their managers' behavioral integrity (how closely their managers' words and actions were aligned) was assessed. Secondly, employees were asked about their commitment and the service environment at their hotels. Finally, the responses were correlated with the hotels' customer satisfaction surveys, personnel records, and financial records.

The results of this study were as follows: "Hotels where employees strongly believed their managers followed through on promises and demonstrated the values they preached were substantially more profitable than those whose managers scored average or lower. So strong was the link, in fact, that a one-eighth point improvement in a hotel's score on the five point scale could be expected to increase the hotel's profitability by 2.5% of revenues-in this study, that translates to a profit increase of more than $250,000 per hotel. No other single aspect of manager behavior that we measured had as large an impact on profits."

The article also identifies several reasons why maintaining behavioral integrity is hard: (a) Credibility is slow to build and quick to dissipate. It takes only a single lie for a manager to be branded a liar; (b) Managers must manage the expectations of different stakeholders, each with its preferred language and distinct interests. People may perceive a message intended for one group of stakeholders as hypocrisy compared to what was expressed to them; (c) Management policies shift, and the manager may have to convey different messages at different times; (d) Management fads come and go, and this fuels cynicism in employees; (e) Confused managers may behave inconsistently; and (f) Some managers have blind spots where they are unable to see an integrity problem within themselves.

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"When Two (or More) Heads are Better than One: The Promise and Pitfalls of Shared Leadership"

James O'Toole, Jay Galbraith, and Edward Lawler

California Management Review

Summer 2002, pp. 65-83

Leadership has usually been assumed to be a one-person undertaking. The authors argue, however, that the trend over the last half century has been away from concentration of power in one person and toward expanding the capacity for leadership at top levels of corporations. In the past, corporations were generally run by a President, with a Vice President available if the President became incapacitated. Since the end of World War II, corporations have tried numerous combinations of such roles as Chairman, CEO, COO, and CFO.

The article presents an interesting table which lists all the major corporations that have had co-leaders since the 1970's. Those labeled by the authors as "effective" were Schwab, Microsoft, Boeing, Intel, Hewlett-Packard, Goldman Sachs (1970s and 1980s), Disney (1980s), Berkshire Hathaway, ABB, Ford, Arco, Asda, TIAA_CREF, and Motorola. Those labeled as ineffective were: Citigroup, Apple, Morgan Stanley, Patagonia, Goldman Sachs (1990s), Disney (1990s), and Oracle.

The odds of success with co-leadership seem to go up when the leaders play different and complementary roles. Co-leaders should also be selected for their "chemistry" with each other. When working together, the individuals involved "should be clear about their roles and honest with themselves and each other about their respective contributions and needs for acknowledgement and power."

In surveying over 3,000 managers in a dozen global companies, the authors concluded that "many of the key tasks and responsibilities of leadership were institutionalized in the systems, practices, and cultures of the organization. Without the presence of a high-profile leader (or 'superiors' goading or exhorting them on), people at all levels of the organization (a) acted more like owners and entrepreneurs than employees or hired hands, (b) took initiative to solve problems and to act, in general, with a sense of urgency, (c) willingly accepted accountability for meeting commitments, and for living the values of the organization, and (d) created, maintained, and adhered to systems and procedures designed to measure and reward the above behaviors." The authors conclude that the reasons for success are often to be found in such key organizational variables as systems, structures, and policies - factors that are not included in research based on a solo leadership model.

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"Knowledge Management: Philosophy, Processes, and Pitfalls"

C. Soo, T. Devinney, D. Midgley, and A. Deering

California Management Review

Summer 2002, pp. 129-150

This article identifies four main components which embody a firm's knowledge management system: (1) a database subsystem that allows managers and employees to share the right information in a timely and efficient fashion; (2) an organizational language subsystem that allows individuals to understand the meaning of things; (3) a networking subsystem that allows individuals to retrieve and acquire information and knowledge from sources both internal and external to the firm; and (4) the transfer subsystem whereby systemic knowledge is either directly transferred between individuals or new knowledge is created by the unique combination of information with the individual's experience base.

Using mail survey from a study of 317 firms, a number of results were obtained: (a) The greater is formal and informal networking, the greater is information and knowledge acquisition; (b) The greater individual and organizational ability to absorb information and know-how, the more new information and know-how is acquired and the better is the basis for decision-making; (c) The more effective decision making that is applied to a larger stock of information and knowledge, the more new knowledge is created; (d) The greater is the level of new knowledge creation, the greater is the amount of innovation; and (e) The greater the amount of innovation, the greater the market and financial performance.

The article also identifies a set of lessons learned about potential "knowledge traps" which can victimize even the best firms: (1) Formal databases must be treated as strategic tools rather than mere storage facilities; (2) Managing formal database systems per se does not equate to knowledge management; (3) Informal networking is an important source of knowledge, but over-reliance on it can be detrimental; (4) To ensure that informal networking is less susceptible to randomness, it should be made more structured; (5) Senior management may not know the true state of their firm's knowledge systems; (6) Firms fail to recognize that certain individuals are either innately unable to absorb new knowledge or personal and organizational incentives make them unlikely to ever want to do so; (7) Unless carefully managed, knowledge can be a "dark power" which is not necessarily utilized for the benefit of the entire organization; and (8) Creativity in problem solving is the main driver of new knowledge creation and innovation, but it needs to be supported by appropriate mechanisms.

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From GP Deltapoint: Benchmarking

Mike Bresko, Managing Director, and
John McNeil, Principal Consultant

Benchmarking is one method used when defining opportunities - the first phase in the Journey to Operational Excellence.

A benchmark defines, for a given performance indicator, the best-in-class performance. Benchmarking is a process to carefully assess current performance and capabilities and to compare them to world-class performance. Benchmarking can help discern the strengths and weaknesses of critical processes, set priorities, establish performance targets, and plan actions. It is a critical element in defining opportunities and developing the case for change.

Benchmarking starts with self-study and assessment. What is critical to the operation? What has our past performance been? What should we benchmark? The purpose of benchmarking is to discover how to become the best for the processes critical to competitive success. Simply knowing the benchmark is useful, but understanding how that performance is achieved is far more valuable.

Successful benchmarking requires the following:

• Deciding what to benchmark - determine the processes critical to competitive success, what must be learned, and who should be actively involved in the benchmarking project.
• Planning the benchmarking project - identify performance indicators to benchmark against, develop study questions, and identify organizations to study.
• Understanding your own performance - gather performance data, problems, and opportunities.
• Studying others - identify benchmark candidates (look at competitors but don't limit yourself to the obvious, seek related processes that could provide valuable insights), decide how best to get your study questions answered, visit candidates.
• Learning from the data - analyze the data including the financial impact of the performance gap, summarize the findings.
• Using the findings - apply to setting and deploying goals for the organization.

Benchmarking is a powerful method during the journey to Operational Excellence. It provides direction and motivation essential to create the drive for change.

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