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The Knowing-Doing Gap: How Smart Companies Turn Knowledge Into Action

 
11/30/1999
If so many managers know so much about the path to improved organizational performance, why is it so difficult to get there? Stanford professors Jeffrey Pfeffer and Robert I. Sutton, authors of The Knowing-Doing Gap (HBS Press), believe the answer lies not in the managers themselves but in embedded forces that undermine an organization's ability to turn knowledge into action. In this interview, Pfeffer and Sutton explain how such action inhibitors as hollow talk, debilitating fear, destructive internal competition, poorly designed and complex measurement systems and mindless reliance on precedent can stop effective action in its tracks.

In this excerpt from The Knowing-Doing Gap, Pfeffer and Sutton tell how Intuit uses an annual employee survey as an ongoing check on how the company is living up to the values managers know are related to the firm's ultimate financial success.

Intuit is a large firm that develops and sells financial planning software for both individuals and small businesses—the best-known titles are TurboTax, Quicken, and QuickBooks – implemented initially in both the Macintosh and PC environments and now on the Internet as well. The firm today has about $600 million in annual revenue and 3,000 employees. The company has a set of operating values that include the following:

  • Integrity without compromise
  • Do right by all our customers
  • It's the people
  • Seek the best
  • Continually improve processes
  • Speak, listen, respond
  • Teams work
  • Customers define quality
  • Think fast, move fast
  • We care and give back

In 1998, three-quarters of the employees responding to the firm's annual employee survey agreed with the statement "Intuit lives up to the corporate operating values."

The company has faced numerous challenges, including increasing product market competition, the development of Internet-based financial planning services, an attempt by Microsoft to buy the company that was stopped by antitrust concerns, and the demands of recruiting and retaining a talented workforce in the Silicon Valley. The company is publicly traded and offers stock options as a recruitment and retention strategy, and so is concerned about its stock price.

It would be easy to get diverted from doing what it knows it should. How has Intuit stayed focused? Mostly through its employee survey. Employees know the survey matters, so the response rate is quite high – 73 percent in 1998. And, the company uses the survey results to guide its behavior. Between 1995 and 1998, the proportion of people agreeing with the statement "We care and give back" doubled to 77 percent.

Of course, the survey by itself is of little value. Many companies have surveys and don't do anything with the results. Intuit people and the firm's cultural values are what make the surveys work. At the same time, generalized cultural values and intentions to be a certain way, without measures to assess how well the firm is doing, could easily become merely good intentions that do not drive action. The values, culture, and quality of the people provide the knowledge and intentions, and the surveys help turn that knowledge and values into action.

In 1995 employee morale was not where Intuit wanted it to be, so the company refocused on its people. Intuit moves around valuable employees, even at the cost of short-term efficiency, to reinforce its commitment to career development for its people. Moving people to different units also helps to reinforce the team culture by causing individuals to identify more with the company as a whole than with just small units. When an employee complained about not getting a raise, he received one a few days later after a thorough review by management. The company reemphasized its social activities and celebrations, and did not let financial challenges divert its focus from building morale and sprit.

Intuit uses both its formal employee survey and informal feedback to quickly identify gaps between its aspirations, embodied in its core operating principles, and what it is doing. Then, leaders move quickly to address these gaps. The measurement system at Intuit provides an ongoing check on how the company is living up to its values – values that reflect what managers know to be related to the firm's ultimate financial success. The measurement, nothing more than an employee survey, but one that is taken very seriously, affords a way of focusing managerial effort on those dimensions of the culture that most need attention at a given moment. At Intuit, the measurement system helps to reinforce and build the culture and to implement practices that leaders know are vital to the firm's success.

— Jeffrey Pfeffer and Robert I. Sutton
Excerpted from The Knowing-Doing Gap

In this excerpt from The Knowing-Doing Gap, Pfeffer and Sutton tell how Intuit uses an annual employee survey as an ongoing check on how the company is living up to the values managers know are related to the firm's ultimate financial success.

Intuit is a large firm that develops and sells financial planning software for both individuals and small businesses—the best-known titles are TurboTax, Quicken, and QuickBooks – implemented initially in both the Macintosh and PC environments and now on the Internet as well. The firm today has about $600 million in annual revenue and 3,000 employees. The company has a set of operating values that include the following:

  • Integrity without compromise
  • Do right by all our customers
  • It's the people
  • Seek the best
  • Continually improve processes
  • Speak, listen, respond
  • Teams work
  • Customers define quality
  • Think fast, move fast
  • We care and give back

In 1998, three-quarters of the employees responding to the firm's annual employee survey agreed with the statement "Intuit lives up to the corporate operating values."

The company has faced numerous challenges, including increasing product market competition, the development of Internet-based financial planning services, an attempt by Microsoft to buy the company that was stopped by antitrust concerns, and the demands of recruiting and retaining a talented workforce in the Silicon Valley. The company is publicly traded and offers stock options as a recruitment and retention strategy, and so is concerned about its stock price.

It would be easy to get diverted from doing what it knows it should. How has Intuit stayed focused? Mostly through its employee survey. Employees know the survey matters, so the response rate is quite high – 73 percent in 1998. And, the company uses the survey results to guide its behavior. Between 1995 and 1998, the proportion of people agreeing with the statement "We care and give back" doubled to 77 percent.

Of course, the survey by itself is of little value. Many companies have surveys and don't do anything with the results. Intuit people and the firm's cultural values are what make the surveys work. At the same time, generalized cultural values and intentions to be a certain way, without measures to assess how well the firm is doing, could easily become merely good intentions that do not drive action. The values, culture, and quality of the people provide the knowledge and intentions, and the surveys help turn that knowledge and values into action.

In 1995 employee morale was not where Intuit wanted it to be, so the company refocused on its people. Intuit moves around valuable employees, even at the cost of short-term efficiency, to reinforce its commitment to career development for its people. Moving people to different units also helps to reinforce the team culture by causing individuals to identify more with the company as a whole than with just small units. When an employee complained about not getting a raise, he received one a few days later after a thorough review by management. The company reemphasized its social activities and celebrations, and did not let financial challenges divert its focus from building morale and sprit.

Intuit uses both its formal employee survey and informal feedback to quickly identify gaps between its aspirations, embodied in its core operating principles, and what it is doing. Then, leaders move quickly to address these gaps. The measurement system at Intuit provides an ongoing check on how the company is living up to its values – values that reflect what managers know to be related to the firm's ultimate financial success. The measurement, nothing more than an employee survey, but one that is taken very seriously, affords a way of focusing managerial effort on those dimensions of the culture that most need attention at a given moment. At Intuit, the measurement system helps to reinforce and build the culture and to implement practices that leaders know are vital to the firm's success.

— Jeffrey Pfeffer and Robert I. Sutton
Excerpted from The Knowing-Doing Gap