As an appropriate analogy, the Second Law of Thermodynamics provides us powerful management guidance. The Second Law teaches that there is a mysterious balance between the energy and chaos in the universe and that when it is applied to business, it provides a wonderful Yin and Yang type clarity as to why things work as they do in business.
If you increase energy, you decrease entropy or chaos. And vice versa. It is the conservation of energy in business. We have observed a number of successful CEOs who have used this concept successfully. Jack Welch is the most obvious with his early Work Out Program (a type of lean manufacturing approach that looked at wastes in a business and put Tiger Teams to work eliminating them).
When the energy ran out of the Work Out Program, he had TQM (Total Quality Management) and followed that with a series of other initiatives every 3 to 4 years. It took that long for the energy of an initiative to dissipate and the Chaos to return and demand a new energy initiative. He managed energy as an initiative-based driver. To quote him, “…the ability to energize is the ingredient (of a leader) that counts.”[1]
Herb Kelleher of Southwest Airlines used initiatives as well but with a different form of energy input. He made working at Southwest fun and he had what we call, “The Wing Ding.” They were small initiatives that encouraged employees to make the customer’s experience at Southwest Airlines lots of fun. And it showed in the profit results.
In another market, Steve Jobs took the chaos of the hand held music player market to launch a revolutionary new product called the iPod. It did two things, it simplified the interface of the user to the player and it changed the way media was delivered. But in both cases, as a result of the energy input created by the iPod, market chaos was addressed and huge profits were extracted for Apple.
This energy model of business gave us a range of insights into why various approaches to organizations worked better than others. But it also gave rise to the central thesis of this book that emerged from our attempts to apply this model to businesses. It worked but flaws were observed. For instance, the continued requirement of the CEO to search for a new initiative to keep the energy up was one major issue. Each initiative required tremendous energy expenditure on the part of the CEO and most CEOs tired of this responsibility.
But as we identified the problem, the solution emerged and it is the subject of this book.
This solution is a management approach, a new paradigm, that we call the “Tribal Knowledge Paradigm.” It plays off our consulting experience over the last 25 years that there is a simple way to extract huge value from the chaos in today’s organizations and markets. We believe that we can do this by showing CEOs and managers how to amplify innovation and improve “Know How” and this can be done while realigning the informal structure of Tribal Knowledge with the formal structures of strategy, organization and process.
And that is what this book, the Tribal Knowledge Paradigm, is about.
[1] Slater, Robert Jack Welch and the GE Way: Management Insights and Leadership Secrets of the Legendary CEO, McGraw Hill Professional P. 263
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