Turning Internal Benchmarking into High Payoff Training

Editor's note:

Most people who manage prefer to dive right in to our Drucker Perspective articles. This editor's note or preface is rather long, and may appear not to get quickly to the point.

We're sorry, but please hang in there with us to its termination. We believe our devoted readers will appreciate this Drucker-based historical background... and may result in altering ever so slightly the way you perceive the article's core content.

As Drucker reminded us: "When a change in perception takes place, the facts do not change. Their meaning does." In short, how we view the facts influences how we understand them and how we can meaningfully respond to them.

To Begin...

Peter F. Drucker frequently commented that among the "makers of the modern world," Frederick Winslow Taylor (1856- 1915) is rarely mentioned.

Taylor created the field of scientific management, that is, the systematic study of work and tasks. Using today's terminology, he believed quantum leaps could be achieved in worker output if work processes could be streamlined and/or reengineered.

And he was correct. Scientific management took the world by storm. It transformed societies and provided tremendous increases in the standard of living worldwide.

Before Taylor, no one studied work. It was assumed that "working harder" was the only way to increase worker output. Taylor demonstrated that by "working smarter" productivity of the workforce could be dramatically increased.

The result? Workers could produce more in less time, with less effort, and receive higher wages for their increased output. He made the poor working-class population more productive. And as a result increased their standard of living.

The Impact of Scientific Management on Training

Drucker often said: "Taylor's greatest impact all told was probably in training." Taylor-based training became the one truly effective engine of economic development the world over.

Taylor methodologically mapped out the right way to do given kinds of work. In many instances, he redesigned the tools required for maximum output.

Once this was done, he discovered he could compress years of so-called apprenticeship (or exposure to the experience of master practitioners) into days, weeks, or at most months of organized and systematic learning. He, in essence, put together in desired sequence the repetitive steps that had to be performed in many types of work to achieve maximum output.

By rendering explicit how a given work task should be executed, he made skill-based work capable of being taught, capable of being learned, capable of being practiced. And all this could be done quickly and successfully.

To reiterate: Before Taylor's immense contribution, it was erroneously assumed it would take years of apprenticeship learning to acquire a variety of craft skills. What formally took years could now be accomplished in weeks or months.

Most importantly, Taylor showed that by using a "black bag" of tools and techniques the productivity of work and workers could be dramatically improved.

The Military Converted a Peace Time Work Force onto a War Economy Work Force Using Taylor's Methodology

Indeed, Drucker reminded us, that the United States military in World War Two applied Taylor's Scientific Management to train, that is, convert, totally unskilled workers into first-rate welders, shipbuilders, electricians, carpenters, navigators, pilots and the like with unprecedented speed.

This, more than any other factor, said Drucker, explains why the United States was able to defeat both Germany and Japan. We understood the skills that were required. Taylor's methodology enabled ordinary people to acquire those goals quickly and easily.

"Further, the post-World War Two economic powers—first Japan, then South Korea, Taiwan, Hong Kong, Singapore—all owe their rise to Taylor's training. It enabled them to endow a still largely pre-industrial and therefore still low-wage work-force with world-class productivity in practically no time."

Today's Business Process Management and Six Sigma are similar in mission to Taylor's scientific management. They all involve the discipline of analyzing and organizing work processes for maximum productivity ... and to achieve desired measurable outcomes.

The goal today is to increase the productivity of knowledge workers.

Internal benchmarking is just one of many methodologies for accomplishing this objective. This article discusses how internal training organizations can find high pay off training projects by collaborating with Six Sigma/business process management groups. It is a positive sum (win/win) game for both.

Introduction

In the summer, 1999 issue of The Wharton Magazine, Laurence Prusak, former Executive director of the IBM Institute of Knowledge Management, told the following story about how British Petroleum identified and transferred best practices knowledge.

"Some years ago executives at British Petroleum—now BP Amoco, a $5 billion oil giant—noticed an unusual fact. While studying the company’s performance, they discovered significant disparities in the productivity of oil wells in different parts of the world.

"Intrigued by the discrepancy, John Browne, British Petroleum’s CEO, asked his associates to find out what was going on. The team that investigated the phenomenon soon found the answer."

It's the Differences that Make the Difference

"It turned out that tiny, seemingly insignificant innovations, that the workers practiced—for example, the method they used to remove barnacles from a ship’s hull—cumulatively made a huge difference in results and ultimately oil well productivity.

"Enthused by this discovery, British Petroleum set about trying to introduce these high-yield work techniques at all of the company’s oil wells.

"The initiative should have led to a massive, across-the- board increase in productivity, right? Wrong!

"British Petroleum learned, to its dismay, that productivity did not rise at all. The reason was simple."

As Expected: Resistance to Change

"The oil workers, who saw these changes as dictates imposed from above, resisted them. British Petroleum had to spend large sums educating/training the oil workers and persuading them of the need for change.

"This time, the effort paid off. The company slashed drilling costs by $47 million per oil well."

Like most stories, notes Prusak, "this one had a moral: Companies that capture knowledge about best internal practices and share it across the organization can sharpen their competitive edge."

Whether or not British Petroleum’s corporate training group was involved with this project is not known, but they should have co-ventured with the group that identified the best practices.

As Prusak indicated, the first attempt to transfer best practices to under-performing units failed. Once the best practices were converted into a systematic, well-organized learning program, productivity and profits soared.

Another Example

Still another illustration of increasing productivity and profits through internal benchmarking that leads to re-skilling is provided by Prusak and Thomas A. Davenport who co-authored Working Knowledge: How Organizations Manage What They Know.

"At Texas Instruments, sharing best practices became a strong focus after the concept was strongly endorsed by Jerry Junkins, then the firm’s CEO.

"Junkins noted: 'We cannot tolerate having world-class performance right next to mediocre performance simply because we don’t have a method to implement best practices.'

"In response to Junkins’ exhortation, the company developed a common set of terms and methods around best practices sharing called the TI Business Excellence Standard (TI-BEST).

"Early best practices sharing across the firm’s 13 semiconductor fabrication plants (known as 'fabs') had substantially reduced cycle time and performance variability, leading to capacity improvements equal to building a new fab."

The Message is Clear...

It's not the responsibility of internal training groups to systematically identify best internal practices that produce significant performance variations. That's the job of Six Sigma/BPM groups.

But it is the responsibility of the internal training organization to identify high-payoff training/continuing learning projects—and to construct meaningful learning programs that increase both individual and organizational productivity.

Neither e-learning nor any other "breakthroughs in the training process" are nearly as important for the future of the training function as the need for identifying high pay off training projects and developing customized learning programs (and continuing learning forums via social media) to successfully transfer these practices.

Training executives would be well-advised to link up with the appropriate groups in the organization that are involved with making work productive and the worker achieving.

Technology-assisted learning (games, social media, simulations, blended learning and the like) is quickly becoming standard in many internal training organizations. This competency is desperately needed by many Six Sigma/BPM groups.

Organized Improvement Involves Organized Learning Activities

Whether it is recognized or not, the organization and practice of continuous improvement management is derived largely from the early pioneering work of the Bell Telephone System.

Years ago the Peter F. Drucker wrote:

"Continuous improvement is considered a Japanese invention—the Japanese call it Kaizen. But in fact it was used almost (90) years ago, and in the United States.

"From the First World War until the early '80s, when it was dissolved, the Bell Telephone System applied 'continuous improvement' to every one of its activities and processes, whether it was installing a telephone in a home or manufacturing switch gear...

"For every one of these activities, Bell defined results, performance, quality, and cost.

"And for every one, it set an annual improvement goal. Bell managers weren't rewarded for reaching these goals, but those who did not reach them were out of the running and rarely given a second chance."

Measurement and Codification

Every year Bell compared the performance of an operation or a division with the performance of all others, with the best becoming the standard to be met by all the following year.

What was the basis of the comparisons? Bell pioneered the use of measurement as a way of spreading best practices. In other words, Bell used measurement to identify top-performing units and, then, studied the processes used to obtain superior results.

Now organizations of all kinds and sizes routinely benchmark themselves... and compare the performance (through measurement) of different divisions to ensure that the worst performers learn from the best.

Knowledge gained in one part of the company (or governmental agency) is increasingly being used to gain productivity improvements in another. But knowledge must be packaged, that is, codified. Davenport and Prusak define codification as follows:

"The aim of codification is to put into a form that makes [knowledge] accessible to those that that need it... codification converts knowledge into accessible and applicable formats... "

The Point?

As organizations drive change and performance improvement through measurement, the internal training organization must stand ready to determine and measure what really counts.

Training measurements, in many cases, can be related to specific process improvements and process outcomes.

For example, if one division within an organization has significantly lower costs associated with scrap, rework, field inspection and warranties...and it was discovered competent usage of statistical process control (SPC) is the reason for superior economics, then other divisions must be trained in SPC.

What's the objective of the SPC training? Scrap rates and rework rates of the under-performing divisions must be lowered to the level of the best performing division with respect to those measurements. Further, field inspection and warranty costs must also be correspondingly reduced or aligned with the best performing division.

Oral and written mastery of SPC is fine and dandy. But if the SPC program is to be considered a success by CFOs and CEOs it must result in a significant improvement in business-based measurements.

Many of the outcome/process improvement measurements internal training organizations need to judge, from a business perspective, as to whether or not given training/continuous learning programs are succeeding can be derived from internal benchmarking and other studies.

Using Social Media Technologies to Transfer Best Internal Practices

Today, training executives now have at their disposal many ways to transfer best internal practices. Live Instruction, web seminars, informal online discussion groups and more.

Sometimes there is a need for very formal instruction due to the nature of the subject. And other times organized (but informal) discussion groups led by a star employee or group will work wonders in transferring productivity boosting knowledge. (In a forthcoming article, we will discuss the difference between training, continuous learning and education.)

Meeting the Needs of Top Management

Much of senior-level executives’ discomfort with the training function reflects the lack of a clear economic framework for judging the linkages between training/continuous learning and profitability.

Therefore, training executives seeking high payoff training projects would be well-advised to convert the findings of Six Sigma/BPM groups into meaningful training and/or continuous learning programs.