Can an Organization’s “Deep Smarts” Be Preserved?

When employees leave, they take more than their coat and hat. How can companies better preserve the accumulated knowledge of individuals? Isn’t that what separates average companies from truly great ones?
by James Heskett

Summing Up

This month's column appears to have struck a chord with those who lament the continuing loss of implicit knowledge buried inside the heads of experienced leaders (termed "deep smarts" by Dorothy Leonard and Walter Swap in their book of the same name). Of particular concern is the phenomenon in large, publicly-listed business organizations.

What are the causes? As Simon Griffiths puts it, "While we continue to focus on the short term, we will lose the benefits of working for the long term. Wisdom is only gained through time and good teachers." Ray Wright suggests that "those companies that are in the hands of accountants will shrink from ... [preserving deep smarts] because they will not be able to quantify the benefits in business terms." C. J. Cullinane elaborates on this in commenting that "In a quest for a less costly and younger workforce, a lot of companies have eliminated the accumulated wisdom of older workers." Saira Somani-Mendelin points to another possible cause: The failure to preserve deep smarts "... goes much deeper than the bottom line. It may stem from insecurity and thus the unwillingness to share organizational knowledge." Joe Violette raises a more practical issue: "Knowledge coaching ... cannot be effectively accomplished on a one-on-one basis. Too few people will benefit ...."

Respondents provided possible responses to these dilemmas. Anshu Vats points out that "It can be done, but only by the firms that have employee longevity and a valued ... way of life." This may not mean retaining everyone, however, as Horacio Cavallero suggests in commenting that "I have always thought that it was very important to keep and shelter 'experienced professionals,' but not everyone. Organizations should keep those pros who keep up with constant learning and upgrading ...." Paul McDowall points out that "Any organization can immediately identify at least a handful of people whose departure would seem devastating ... [then] come up with some ideas on how to share and retain some of their knowledge. It's not rocket science."

Among more specific proposals, Sharon Richmond suggests an antidote to the Violette objection by suggesting that "Rather than relying only on private, one-to-one transmission of the information using an apprenticeship model, organizational leaders should insist on and practice greater transparency in management decision making." In a U.K. bank, David Physick relates that "we encouraged knowledge sharing through "lunch 'n' learn' sessions." Richard Smith writes, "One of the models found in our military services begins in structuring leadership positions of 'executive officer' ... principal assistants to designated leaders having command responsibilities ... growth positions to enhance individuals' abilities."

Francine McKenna poses a significant challenge in commenting that all of this "presumes two things about corporate life today: That enough corporate executives can be 'deep.' That it pays to be 'smart' in today's corporation." If the presumptions are not correct, as she implies, how do we deal with the deeper dilemmas this suggests? Do we have even a fighting chance to preserve "deep smarts"? What do you think?

Original Article

Successful organizations, according to Dorothy Leonard and Walter Swap in their new book, Deep Smarts: How to Cultivate and Transfer Enduring Business Wisdom, rely on people who possess knowledge that provides a distinctive competitive advantage. It is tacit (non-quantifiable, implicit, and often very subtle in nature) knowledge based on "first-hand life experiences" and "shaped by beliefs and social forces" based primarily on "know-how" and "know-who." It is "as close as we get to wisdom," and is dubbed "deep smarts" by the authors. Deep smarts are, in many ways, what enables managers to reach good judgements well before others—at the extreme, to practice "blink" (recalling my February column). The authors, based on their observation of deep smarts at work, prescribe ways in which they can be cultivated and transferred, and therefore preserved.

Conscious efforts can be made to develop deep smarts, according to the authors. They involve offering opportunities to obtain a great deal of experience through combinations of various jobs (requiring at least ten years for the accumulation of sufficient experience), simulations (speeding up the process a bit), and formal education. But most importantly of all, they involve the employment of "knowledge coaches" capable of creating opportunities for "coaches" to develop deep smarts through everyday observation and decision making. Such coaches are distinguished from mentors by the degree to which they structure and engage their charges in various learning experiences.

Deep smarts, it is maintained, can be transferred from one management "generation" to another. But it isn't easy. It requires that carefully-selected individuals possessing deep smarts devote significant amounts of time to the coaching of a self-selected protégé by creating a learning process that the authors term "guided experience" (including practice, observation, problem solving, and experimentation). Techniques to be employed range from presentations and lectures on the passive side to the provision of rules of thumb, storytelling with a moral, Socratic questioning, and learning by doing at the active learning end of the spectrum. It might involve following the coach through important activities or conducting post mortems of both the coach's and the protégé's behaviors and decisions. In an educational institution, one example of the use of knowledge coaches in the transfer of deep smarts is the employment of emeritus faculty members, disengaged from the performance evaluation and promotion process, to teach alongside junior faculty members while providing coaching in everything from classroom teaching techniques to the mores and culture of the organization.

The problem, of course, is that this process is both costly and time-consuming, particularly in organizations required to meet quarterly earnings targets. This raises the question of just how practical it is: Won't it always be relegated to the "nice to do" category of activities and responsibilities? How is knowledge coaching measured and rewarded? While everyone with requisite experience, according to the authors, is a candidate for knowledge coaching, can an organization afford to allocate sufficient time to the practice, including training? Conversely, are these questions merely symptomatic of a basic problem in management today; that is, the failure to preserve the deep smarts that separate the best from the average performers? What do you think?

    • David Keaveney
    • President and CEO, MotorSports Emporium, Inc.

    Companies must first break down the reasons why knowledgeable individuals leave. They need to recognize that not all employees have equal value to the organization. Only after digesting the facts should companies begin the fundamental building of a solid career ladder. Both company and executive must be willing to dedicate ample time to preserving "deep smarts" by applying techniques throughout the company to encourage mentoring as well as rewarding retention.

    • Sharon L. Richmond
    • President, Richmond & Associates

    One emerging management practice, if more widely adopted, would reduce the "costly and time consuming" difficulties around preserving deep smarts in organizations.

    Rather than relying only on private, one-to-one transmission of the information using an apprenticeship model, organizational leaders should insist on and practice greater transparency in management decision making. Management can then see and hear exactly what is considered as a decision is processed, and it becomes part of the everyday practice of running the business, not an "outside-my-real-job" added responsibility to coach and educate others.

    In our age of escalating complexity in business (and government, religious organizations, even the military), transparency is vastly under-practiced, with the many dire consequences we've seen of late. With expertise more widely distributed than ever, such overt sharing of information certainly helps each member improve their "deep smarts." Explicitly being transparent in decision processes yields other benefits as well—better decisions will result as all are more fully engaged.

    One current definition of transparency is offered on the Wikipedia site: "In sociology, politics, ethics, law, economics, business, management, etc., transparency is the opposite of privacy; an activity is transparent if all information about it is freely available."

    Practically speaking, this means leadership groups must improve their ability to speak clearly and openly about their thoughts, considerations, knowledge, and concerns (even their private internal judgments) with one another. In their book Power Up (Wiley, 1998), professors David Bradford (Stanford Graduate School of Business) and Allan Cohen (Babson College) describe an approach of "shared responsibility leadership" which is in part predicated on a leadership team's ability to use relatively more transparent processes. One major benefit? Exactly the kind of transmission of "deep smarts" that Jim Heskett describes.

    • John C. Yu
    • Managing Director, Taiwan, Shalom International Consulting

    It's difficult but not impossible to preserve an organization's deep smarts. However, the process will be dynamic and can be costly and time-consuming.

    The underlying issue is that "knowledge" is no longer fixed and unchanging in today's dynamic market environment. Anything from pure techniques (e.g., presentation skills, loading up applications for a computer, etc.) to more complicated expertise (e.g., leadership, strategy formulation, etc.) would change based on the current and foreseeable future market environments, such as technologies, unique characteristics of markets, employees, and so on.

    In a sense, the organization can be seen as an "organic learning creature" that consistently reshapes itself to meet the challenges of the environment.

    • Narendar Singh
    • Operations Manager, ICICI Lombard General Insurance Company

    Deep smarts can be developed through training and smart coaching. But unless an individual practically puts to use the benefits attained in training and coaching, it's not possible to have deep smarts in an organization. The experience and attitude of a person also counts, depending on how that person has come to be in a top position or in the "C" suite of an organization. Jack Welch started his career at GE in the plastics division which was not a popular part of the organization during those times.

    • Carol Morgan
    • Business Owner, Career Testing, Planning, and Management Services

    My experiences really resonated with the writing on deep smarts. As a retired high school career counselor turned business owner, nowhere is the crisis of preserving experience and wisdom greater than in the public education system. Even with this in mind, systems choose to avoid developing a "pass the torch" system. The system disrespects those lifetime educators who know why "the fence was built" and other educational trade secrets. The very young principals and superintendents entering the supervisory ranks with only three to five years of actual educational experience are totally clueless. I am watching carefully to see how they fare without the schoolhouse dinosaurs.

    I made the decision to utilize my own "deep smarts" by retiring and beginning my own educational business which I hope will do a better job of serving students than the institution that I gave my whole life to for twenty-eight years.

    • David Physick
    • Consultant Partner, Glowinkowski International

    Isn't this an adaptation of Peter Senge's work on learning organizations? No matter. I still think it is an essential thing to do. Tacit knowledge lies at the heart of much of Japanese lean manufacturing and, increasingly, lean service. When leading a business unit within one of the United Kingdom's leading banks, we encouraged knowledge sharing through "lunch 'n' learn sessions." The business unit earned an accolade as most motivated of its kind in Europe in 2000!

    • Anonymous

    I believe the loss of knowledge has always been a problem for American business and has mostly gone unrecognized. Sometimes when the founder of a business keeps a presence at the company after retirement it may minimize the loss of knowledge there. The ideals of mentoring and coaching can do a great deal to slow or eliminate the brain drain in American business. People do tend to make the same mistakes from one generation to the next.

    • Anonymous

    Ever since corporations changed from safe, trusting environments of stable, long-term employment to short-term, need-based places of employment, knowledge management systems have been rendered relatively useless. There is no incentive by employees today to give up or transfer their knowledge unless forced to do so. We also live in such fast-changing times with drastically different business models than the previous generation of workers had to deal with that some of the knowledge may not be relevant.

    I suspect that better knowledge management is done in smaller, private companies that don't have the pressures of quarterly earnings reports.

    • Paul McDowall
    • Special Advisor, Learning and Knowledge Management, Treasury Board of Canada Secretariat

    Any organization can immediately identify at least a handful of people whose departure would seem devastating. An organization that has identified them can easily come up with some ideas on how to share and retain some of their knowledge. It's not rocket science.

    I have worked in several organizations that have clearly suffered from the loss of these key experienced people, whether through retirement or downsizing or general attrition. The question should not be "Can deep smarts be retained?" nor even "Should deep smarts be retained?"

    The real question is "How does the organization manage itself?" The other questions are only ancillary to this fundamental issue.

    What we see around us is the legacy of a pre-knowledge-age management style predicated on the view that assets (land, labor, or capital) are what is really important. This naturally leads to the conclusion that people are not, and knowledge is not. As a consequence, learning is also not vital. It is just a necessary cost of showing a modicum of support for your people and is easily expendable in tough times. This old-style management thinking is too often associated with an MBA or financial officer view of the world.

    The answer is found in knowledge management. And don't believe vendors or consultants—it's not about technology. So I suggest we start with the right question. All the rest will follow in its proper place.

    • Ray Wright
    • Managing Director, Spacefleet Ltd.

    I think Dorothy Leonard and Walter Swap advocate a return to the medieval guild style of preserving and developing knowledge. If so, I support it, as would most Knowledge Management practitioners, I'm sure. However, I think that those companies that are in the hands of accountants will shrink from such an approach because they will not be able to quantify the benefits in business terms. Organizations that justify what they do other than in monetary terms will be happy to follow Leonard and Swap's lead if they are not already doing so.

    • Saira Somani-Mendelin
    • Applications Analyst, The Credit Valley Hospital, Mississauga, Ontario

    "Deep smarts" can only be preserved if senior management acknowledges, rewards, and encourages employees. It goes much deeper than the bottom line. It may stem from insecurity and thus the unwillingness to share organizational knowledge.

    Good employees—those who have the vision to take the organization to the next level—are often overlooked and undervalued, which leads to disloyalty, usually followed by a change in employers.

    • Harold Strawbridge
    • Senior Process Manager, Children's Hospital of Philadelphia

    I think organizational behavior, like individual behavior, is driven by a needs hierarchy similar to (maybe the same as) Abraham Maslow's. The organizational behavior I've witnessed is behavior typical of humans looking for a warm and safe place to sleep or a way to avoid pain. I suspect that preserving "deep smarts" or "surface smarts" (like business processes) is behavior exhibited by organizations that have needs at the top of the hierarchy: a "self-actualizing organization."

    If you don't see much effort to preserve "deep smarts," don't be surprised. How many companies deeply understand and benefit from knowledge management, process management, project portfolio management, and the balanced scorecard?

    It is not that preserving "deep smarts" falls into the "nice to do" category. It is about organizations spending a lot of their energy wrangling with needs like clubbing food and having a warm place to eat what they kill. Maslow suggested that only two percent of people are predominately self-actualizing. Could the rate be much higher for organizations?

    • Simon Griffiths

    You hit the nail on the head when you refer to "costly and time-consuming, particularly in organizations required to meet quarterly earnings targets." While we continue to focus on the short term, we will lose the benefits of working for the long term.

    Wisdom is only gained through time and good teachers. And it can only be captured inside people's heads, not in some system or other. Accept the fact that older people are important and have a role to play in organizations by teaching the younger ones.

    • Joe Violette
    • Project Manager (retired), Bechtel Corporation

    Knowledge coaching, or a term I'm more familiar with, knowledge sharing or knowledge management, cannot be effectively accomplished on a one-on-one basis. Too few people will benefit because it takes the time of the coach and the time of the person being coached. I've tried to share knowledge for project managers through the use of a project management Web site. That takes the cooperation and input of all of the functions and services organizations that support a project and a lapsed time of eighteen to twenty-four months. The procedures, instructions, manuals, and their individual Web sites must be linked to the project management Web site so that the latter is generally up to date. While this approach provides a wealth of information to those project managers who want to use it, it is not as effective as coaching. The question-and-answer piece is missing.

    I only know of one company, General Electric, that had some semblance of knowledge sharing and then it took the discipline of the CEO to make it work: "If you don't like what I'm trying to accomplish then maybe this isn't the company for you."

    • Mok Tuck Sung, MD
    • Fountstrategy International

    We have overlooked this issue of "deep smarts" far too long due to the pressure of meeting short-term earnings targets and the difficulty of measuring its effectiveness.

    Organizations are able to design a process to facilitate the idea as well as allocate funds for this initiative. But, until the people with "deep smarts" learn how to transfer their business wisdom effectively, the end result might be less than what is expected.

    • Anshu Vats
    • Industry Executive, EDS

    Isn't "deep smarts" more new-age management speak for hands-on experience that employees used to have in the olden days and still do in a lot of varied organizations?

    To me the issue really arises as a result of the separation of corporation and worker. This is very well documented by Anthony Sampson in his book, Company Man: The Rise and Fall of Corporate Life. In early times, company and workers were closely tied together, but over a period of time companies started using employees as divestible resources and employees started moving into entrepreneurial directions (as they say, watching out for themselves). This became really noticeable with the knowledge economy where the average employee tenure was no more than eighteen months.

    The issues associated with developing "deep smarts" are far more complex than whether corporations will have enough resources to focus on a "good to have" initiative, or whether the coaches and coachees can have incentives to do it.

    The issue is deeply rooted in the philosophy of why organizations exist. If an organization takes the modern view that corporations exist to create wealth for shareholders, it will not find it possible to combine tactical and short-term gain goals with long-term employee retention and hence the development of "deep smarts." On the other hand, companies that take the conservative view and put their employees on a par with their customers will and can find ways of retaining employees and thus the "deep smarts."

    There are many examples of such companies in our midst other than government agencies, such as GM, Harley, and so on. It can be done, but only by the firms that have employee longevity and a valued staff concept deeply engrained in their culture, philosophy, and way of life.

    • Anonymous

    Indeed, the knowledge of employees is the most important asset of any organization. The idea of knowledge coaching is a good one, but it is one that is not always properly implemented. With the myriad of management challenges facing companies and managers today, I am a strong supporter of coaching and knowledge or wisdom sharing. Storytelling is part of African culture. I see this as a great opportunity for business to leverage from wisdom sharing.

    However good the concept, the challenge lies in rewarding and measuring intangibles. That needs to be explored.

    • Martin McGuinness
    • Head of Quality Management, Babcock Naval Services

    It's not a question of "Can an organization's deep smarts be preserved?" It's more that they must be preserved. Failure to transfer knowledge from one generation to another will lead to a loss of way regarding where we have come from and what the objectives of the big game plan are.

    • Horacio Cavallero
    • Executive, Empresa Provincial de la Energía de Santa Fe

    I have always thought that it was very important to keep and shelter "experienced professionals," but not everyone. Organizations should keep those pros who keep up with constant learning and upgrading; by combining their experience and years of work in the companies, they can offer very interesting points of view. As a matter of fact, eastern countries preserve elders because of the experience they can share with newcomers. It's good to bring the young and old together. Create a complementary structure that is very simple but has great capacity for analyzing company policies, and set up a structure of permanent coaching. This group must include as many different skills as possible.

    • C. J. Cullinane

    In many ways I think the subject of passing on knowledge skirts the issue of why organizations "downsize" the most knowledgeable people, those over age 50.

    In a quest for a less costly and younger workforce, a lot of companies have eliminated the accumulated wisdom of older workers. When the effects of this knowledge drain hit the company, they look for a coaching or mentoring system. But before a coaching or mentoring system can work you have to have the coaches, and these coaches have to know they will not be fired once they train their replacements.

    • Richard Smith
    • Student, Ed.D. OL Program, Pepperdine University

    In learning organizations, retaining deep knowledge aligns well with mastery. Differentiating between a corporate knowledge coach or mentor may mean choosing between senior individuals' personal leadership styles. Acquisitions, mergers, and individual mobility make twenty-first-century succession planning a challenge most executives can devote little time to and will avoid unless their boards make it a long-term corporate priority.

    One model found in our military services begins in structuring a leadership position of "executive officer" or XO, a principal assistant to designated leaders having command responsibilities. XOs are growth positions to enhance individuals' abilities.

    W. L. Creech, a Commander of the Air Force Tactical Air Command from 1978 to 1984, and the author of The Five Pillars of TQM, is noted as an example of one such senior leader by Walter Boyne in the March 2005 issue of Air Force Magazine. Creech is described as selecting a cadre of top young officers to compete for positions and recognition. Those '70s and '80s top young officers went on to compose a number of the Air Force's recent and current General Officers. Boyne's short article makes clear how this senior military executive personally interacted with individuals to pass knowledge, model values, and set perspectives for future corporate leaders.

    • Francine McKenna
    • President, McKenna Partners LLC

    Being able to develop and preserve corporate knowledge for the next generation presumes two things about corporate life today:

    That plenty of corporate executives can be "deep."

    That it pays to be "smart" in today's corporation.

    Companies and all of their stakeholders are struggling these days with new trends in corporate governance and accountability that highlight the fact that, in some cases, the only corporate strategy that exists is "How can I get my share while I'm here?" Not too deep.

    A personally competitive, egoistic, self-serving, short-term focused, C-level executive doesn't spend much time worrying about leaving legacies like more and better knowledgeware for the next generation. Oddly enough, it is in the private, family-owned companies where this type of nurturing and development of a shared sense of past learnings and future possibilities probably still exists. Only private, family-owned companies can afford to be deep since they don't answer to as many inside and outside who are clamoring for instant gratification.

    And does it pay to be "smart" in today's corporation? Is success, individually and as a corporate organization, based on who is the smartest and which company has the most and smartest employees? I think not. More often corporate life is an exercise in risk management and managing to the lowest common denominator, staying out of trouble, appealing to the analysts and investors by telling them what they want to hear, and then rolling that forward like a Ponzi scheme until they run out of stories or "spin" and everything collapses.

    Unfortunately, "deep smarts" and the development of collective business wisdom in organizations will continue to be primarily an academic discussion until corporations get back to the basics, including solid process and controls over their operations, such as they can manage under the new "higher"—but what I consider to be minimum—standards of corporate governance.

    • Dr. Hemjit
    • General Manager - HRD, Health Prime Services

    If organizations are concentrating or focused on evaluating performance and meeting numbers, they could do the same with a business management model or an architecture that helps develop and nurture such tacit knowledge. The challenge would be to institutionalize it and make it meet the tests of time.

    If one looks at large corporations that have always been on a growth path, we see such tacit knowledge or deep smart effects. These may be disguised as cultural elements that promote growth. At the individual level, how it gets promoted and carried forward would be a phenomenon to be woven into the performance management processes and value bearing aspects that govern the corporation.

    • Anonymous

    Experienced subject matter retirees are a critical and important resource and should be brought back as knowledge coaches as part of the workforce training plan. During a time when leaders are busy with decision making, the retirees can focus on mentoring by providing information to employees where there are gaps of knowledge within the organization. Since they are no longer responsible for day to day administration and operation, they can focus on training new recruits. "Deep smarts" is one of the solutions for successful succession planning.