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62
Getting It
Right
o
the Second
Time
even so, the overwhelming majority of attempts to replicate excellence fail. A slew of studies has confirmed this
uncomfortable fact One found that only 12% of senior
executives are happy with how their organizations share
knowledge intemally. Another found that companies
invariably have more trouble than they anticipate transferring capabilities between units.' Anecdotal evidence
suggests that chief knowledge officers and chief information officers-the senior executives charged with
exploiting knowledge assets-are also failing to get the
JANUARY 2002
by Gabriel Szulanski
and Sidney Winter
63
Documents suffer from similar shortcomings. Information can be incomplete, fragmented, distorted in subtle
ways, and insufficiently attuned to the nuances and interdependencies of complex processes. In addition, when
many documents are involved, the information is frequently contradictory. Individual sources contain unique
perspectives that reflect differing jobs, responsibilities,
and assumptions.
Placing too much trust in experts and documents is the
first big mistake organizations can make when trying to
replicate best practices. The second can occur when a manager actually starts to set up the new process: He tums into
a cowboy. He forgets that he's trying to replicate something
and immediately starts trying to improve upon it. These
"improvements" can take many forms. The manager might
cherry-pick parts of a process: The folks in our Singapore
plant do a terrific job controlling mask placement, for example, but the U.S. factories have radically improved stepper alignment, so why not combine these improvements
to have the best of both worlds? Or maybe he tinkers with
the process: He came from a doughnut franchise, perhaps,
and he's pretty sure that bagels can sell faster if customers
wait for service in several lines rather than just one. Or he
might try to customize the process prematurely; manGabriel Szulanski is an assistant professor of management
agers can only rarely predict correctly which aspects of
at the Wharton School of the University of Pennsylvania in
Philadelphia. Sidney Winter is the Deloitte ond Touche Pro- retail operations will need to be adjusted in new localesbut they usually go right ahead and try anyway.
fessor of Management at the Wharton School.
64
A LITTLE KNOWLEDGE
Is A DANGEROUS T H I N G
Behavioral researchers studying
decision making have documented a
general tendency for human beings
to be both overoptimistic (expecting
things to turn out better than they
actually do, on average) and overconfident (overestimating the quality
of theirown knowledge and skills).
If you ask students how well they'll
do on an exam.for example, most
guess that their own performance
will be above average. Researchers
obtain similar results when they
ask about the likelihood that people
will contract a disease, earn high
salaries in the future, and so forth.
65
already is. This approach allows you to copy quite complex organizations: Close copying of pieces that fit together will produce pieces-and ultimately subsystemsthat can be fit together with minimal troubleshooting.
Bane One (now Bank One) is a good example of the approach we recommend. During the 1980s and early 1990s,
the bank became extraordinarily good at converting acquired banks and their branches over to its own systems.
(Indeed, it was this capability that drove its unprecedented success in this period.) To operate within the Bane
One family, branches and back offices needed common
operating procedures. One tool the bank used to disseminate operating knowledge was traditional documentation, such as procedural guidelines and flowcharts that
gave certain employees instructions for handling commercial loans, installment loans, money orders, and food
stamps. Similarly, it provided other employees with instructions about how to open new savings accounts, make
loans, and sell stocks and treasury notes. These codified
procedures supported and complemented the in-depth
training given to personnel in the acquired banks and remained in place until the staff could comfortably operate
the new systems on their own. Trainers were experienced
in the actual use of the systems in other bank branches.
COPYING
STARBUCKS
As he tells the story in his autobiography/ Starbucks chairnnan
Howard Schultz founded II Ciornale,
the store that eventually morphed
into Starbucks, because he wanted
to recreate the Italian espresso-bar
experience, Schultz was paranoid
about any detail that would undermine the authenticity of the experience. Only Italian opera could play
over the loudspeakers. The servers
had to wear bow ties. There were no
chairs-justa stand-up bar. Schultz
vowed that he would never offer
nonfat milk; the mere mention of it
was tantamount to treason. Menus
were sprinkled with Italian words.
The decor was as Italian as he could
make it. In short, Schultz transplanted all the details he deemed
essential to the Italian coffee-bar
experience.
66
Thus, Bane One extensively used both people and documents to transfer knowledge.
But it did much more. It also selected a sister bank to
provide staff in the new bank or branch with a model for
the postconversion operating environment. Typically, a
sister bank had recently converted to a similar set of products and systems and served similar types of customers.
The new staff could visit the sister bank to see how it
operated. Having a living template helped the new bank
make conversion-related decisions with more confidence.
There were still plenty of judgment calls about how to realign operating units, for example, despite the many operating procedures provided. A sister bank that had already made these calls could point the acquired bank's
managers in the right direction. The sister bank relationship also reduced the likelihood that the new bank would
repeat avoidable errors. If the sister bank's employees had
resisted the shift from in-house to centralized processing,
for example, the acquired bank's managers could use that
information to anticipate the problem and circumvent it
through superior internal communication.
In addition. Bane One developed a different sort of
template in the form of a "model" bank located close to its
headquarters. The model was a functioning laboratory
BARRIERS TO SUCCESS
to innovate, they modify, they adapt - maybe they even invent a whole process. It is impossible to do both simultaneously to the extent that most people seem to imagine,
particularly in the context of a single project.
Leveraging knowledge means using what others have
already leamed, with effort and sometimes with pain,
through experience and mistakes. When managers leverage knowledge, they stand on the shoulders of giants. The
poor track record of knowledge reuse-and the importance that replication plays in most companies' bottom
lines-suggests that effective copying is not a trivial
achievement but rather a challenging, admirable accomphshment. In suggesting that managers approach institutional knowledge with humility and respect, we're hoping
that they acknowledge the careful creation done by their
predecessors and that they be realistic about their own
efforts. Indeed, managing to get up on the shoulders of
giants appears to be an achievement all by itself.
^
1. For knowledge sharing, see R. Ruggles,"The State of the Notion: Knowledge
Management in Practice," California Management Review, 1998. Regarding
transfer capabilities, see C, S. Calbraith, "Transferring Core Manufacturing
Tbchnologies in High-Technology Firms"Catifortiia Management Review. 1990.
2. Our discussion of the Copy Exactly! process draws on C. J. McDonald, "The
Evolution of Intel's Copy Exactly! Technology Transfer Method," Intel Technology journal, 4th quarter (1998).
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