Episode 169 – Knowledge Management – A Key Discipline of Top-performing Teams

Episode #169
Original Air Date: 01.16.2023

38 Minutes

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Our Guest This Episode: Lawrence Prusak

Are you effectively harnessing the experience and wisdom within your team or organization? In this episode, Lawrence Prusak defines knowledge as he explains how we can do our projects better by tapping into, and managing, project knowledge. He explains that creating a successful project team requires two key elements: what you know how to do, and the relationships you have with your customers. Join us to learn more about managing project knowledge, knowledge sharing, and nurturing knowledge within an organization.

Larry says projects run on knowledge as he stresses the importance of face to face conversations within an organization, especially with senior leaders. He talks about overcoming the bias to seeking knowledge outside one’s organization, getting people in the mindset of sharing information, building trust, and developing a knowledge-oriented team culture.

Larry Prusak has been studying knowledge and learning for the past 30 years. He has been a consultant in these areas for Mercer, a co-founder for Ernst and Young's Center for Business value, the founder and director of the IBM Institute for Knowledge Management, and co-founder of the Babson College Working Knowledge research program. He has been a senior consultant for NASA, McKinsey, the World Bank, Fujitsus and Fuji Xerox as well as teaching in over 40 universities including Columbia University's program on information and knowledge. Recently he co-authored The Smart Mission: NASA’s Lessons for Managing Knowledge, People, and Projects.

Earn more PDUs with our online course: 17 TOP REASONS WHY PROJECTS FAIL AND WHAT YOU CAN DO TO AVOID FAILURE (6 PDUs)

Favorite Quotes from Our Talk:

"There’s a lot of ways to instill trust. Trust your children. Trust your community ... It really pays off. I mean, it’s not so much being altruistic. It pays off. Things work better when you trust each other. Speaking as a social scientist, it lowers the transaction costs. You don’t have to always be looking over your shoulder or sniffing out things. It lowers the cost. Oh, yeah, I trust him. He’ll do what he said, or she’ll do what she said."

- Larry Prusak

"Any organization is really composed of knowledge and relationships. That’s about it.” Knowledge and relationships. ... those are the two key things, what you know how to do and the relationships you have with your customers."

- Larry Prusak

Share With Others

The podcast by project managers for project managers. Knowledge Management is a key practice for top-performing teams. We can improve our projects by tapping into, and managing, project knowledge. Join us to learn more about managing project knowledge, knowledge sharing, and nurturing knowledge within an organization.

Table of Contents

01:56 … A Definition of Knowledge
02:59 … Difference between Knowledge and Wisdom
04:53 … Tacit Knowledge – “Knowhow” and “Know What”
05:43 … The Purpose of Managing Knowledge
06:20 … Managing Project Knowledge
08:10 … Overcoming Resistance to Knowledge Bias
09:52 … Projects Run on Knowledge
11:03 … Measuring Business Value
12:27 … Drink Tea
14:59 … Face-to-Face Communication
17:09 … Nurturing Knowledge in an Organization
19:27 … Kevin and Kyle
21:08 … Rewarding Knowledge Sharing
22:55 … Building Organizational Trust
25:04 … Developing Knowledge-Oriented Team Culture
27:11 … Recognizing the Value of Knowledge
29:06 … Building Successful Knowledge Projects
32:42 … Effectively Harnessing Experience
36:22 … Contact Larry
36:57 … Closing

LARRY PRUSAK: There’s a lot of ways to instill trust.  Trust your children.  Trust your community and things like that.  It really pays off.  I mean, it’s not so much being altruistic.  It pays off.  Things work better when you trust each other.  Speaking as a social scientist, it lowers the transaction costs.  You don’t have to always be looking over your shoulder or sniffing out things.  It lowers the cost.  Oh, yeah, I trust him.  He’ll do what he said, or she’ll do what she said.

WENDY GROUNDS:  Welcome to Manage This, the podcast by project managers for project managers.  I’m Wendy Grounds, and here in the studio with me is Bill Yates. So we want to take a moment to say thank you to our listeners who reach out to us and leave comments on our website or on social media.  We love hearing from you, and we always appreciate your positive ratings and reviews on whichever podcast listening app you use.

Today we’re talking about a topic we’ve not addressed before, and we’re very excited to dig into it.  Our guest is Laurence Prusak, and Larry has been studying knowledge and learning for the past 30 years.  He has been a consultant in these areas for Mercer and a co-founder for Ernst & Young Center for Business Value.  He’s the founder and director of the IBM Institute for Knowledge Management and co-founder of the Babson College Working Knowledge Research Program.  He’s been a senior consultant for NASA, as well as teaching in over 40 universities.  He has also recently taught at Columbia University’s program on information and knowledge, and he has co-authored 11 books.

BILL YATES:  Wendy, we got this recommendation from Stephen Townsend to reach out to Larry and talk with him.  One of the books that Larry recently worked on is called “The Smart Mission:  NASA’s Lessons for Managing Knowledge, People, and Projects.”  So as we get into this topic, I think project managers will appreciate the depth of Larry’s knowledge on knowledge management.

WENDY GROUNDS:  Hi, Larry.  Welcome to Manage This.  Thank you so much for being our guest today.

LARRY PRUSAK:  You’re welcome.

A Definition of Knowledge

 WENDY GROUNDS:  So we’re going to be talking knowledge management, which is a new topic for us on our podcast.  And we’re very excited that we have you with us.  Before we begin, could you give us your definition of knowledge?

LARRY PRUSAK:  It’s what a knowledgeable person knows.  Think about, if you go to a dentist, a dentist knows how to fix your teeth.  If he wasn’t knowledgeable, you wouldn’t be going to him.  We’re talking about working knowledge, the knowledge that allows people to do things.  There’s other sorts of knowledge.  There’s religious knowledge, aesthetic knowledge, all sorts of things.  But we’re talking about the knowledge that allows you to do something, and do it well.  Information is not knowledge.  Knowledge isn’t data.  It’s the skill, the basis of a skilled activity.

BILL YATES:  One of the writings that you did years ago hit on this point about information.  And I love this quote.  You say, “Information about customers becomes knowledge when decision-makers determine how to take advantage of the information.”  So it’s all about that application.

LARRY PRUSAK:  Let me give you a little story.  You don’t mind if I tell a short story.

WENDY GROUNDS:  Oh, we love stories.

Difference between Knowledge and Wisdom

LARRY PRUSAK:  Years ago I worked for a very big consulting firm that loved to get their names in the newspaper.  I won’t say who they are.  And I got a call from a Wall Street Journal reporter saying, gee, we’re hearing a lot about knowledge, and people say you know a little about it.  So could you define the difference between data, information, and knowledge, and wisdom?

Well, I was caught off-guard.  I was at my desk.  But somehow a stroke of inspiration hit me, and I told them, let’s say you’re preparing a meal for someone you really like, and really want to get it right.  If you look at a recipe book, the letters in the recipe are data – A, B, C, D – or the numbers.  That’s data.  Little bits of this and that.  When data is put together in a meaningful way, it becomes information.  So a recipe is information.  It tells you how to make something.  It’s two-dimensional.  You can’t talk back to the recipe.  It’s static.  It doesn’t move.  It stays that way.  We have a whole bunch of cookbooks here.  They don’t move.

Knowledge is knowing how to cook, which is experiential.  You don’t know how to cook until you really cook, and cook for a while.  During this recent COVID epidemic I told my wife, “I’ll take care of some of the cooking.”  And I realized I am not a cook.  I had a mother, I had two wives, so I didn’t have to cook.  But eventually I saw that the more you cook, the more you gain a little knowledge, and you know how to cook.  And so if you cook a lot, as my wife does and many people do, you gain knowledge of cooking.  That’s different than information.  Wisdom is marrying a good cook.

BILL YATES:  That’s true.  If our listeners don’t take anything else from this, that is a key point of wisdom, yes.

LARRY PRUSAK:  Printed it in a journal, I got all sorts of letters, people accusing me of being sexist.  I said, “I didn’t say what gender.  I don’t care who you marry.  But if you have some wisdom, and you’re going to live with someone, find someone who can cook well.”

Tacit Knowledge – “Knowhow” and “Know What” 

WENDY GROUNDS:  And that’s what you mean by “tacit knowledge,” the experience-based.

LARRY PRUSAK:  Yeah.  It’s not always tacit.  I know my friend Jiro Nonaka used that a lot, and it became very, very popular.  All knowledge is tacit.  Someone once asked me to write an essay on what I learned growing up in Brooklyn, New York.  And I could never say enough, I mean, there’s so many – the smells, the sounds, the problems, dah dah dah.  All knowledge is tacit.  Some of it becomes explicit.  But a better way of looking at those terms are “knowhow” and “know what.”  Know what, for example, if someone’s talking about France, you would know that Paris is the capital of France.  But knowhow, how to get around in France, how to act, how to speak, that’s knowhow.  Firms pay a lot of money for knowhow, but they don’t always know how to manage it.

The Purpose of Managing Knowledge

WENDY GROUNDS:  That leads to the next question.  What is the purpose of managing knowledge?

LARRY PRUSAK:  Well, it’s the most valuable thing you have in an organization.  I mean, around here, some of the schools are a little short on cash.  You know, if they’d raise the taxes for the schools.  And there’s a bumper sticker that says, “Well, if you don’t like knowledge, try ignorance.”

David Teece, who’s a professor at Berkeley, who I learned quite a bit from, he said:  “Any organization is really composed of knowledge and relationships.  That’s about it.”  Knowledge and relationships.  There’s many other things we all can name, but those are the two key things, what you know how to do and the relationships you have with your customers.

Managing Project Knowledge

BILL YATES:  You know, it’s interesting, Larry, as I was thinking about our listeners or project managers, many of them are PMP certified.  They’ve studied and been exposed to the PMBOK Guide from PMI.  And I remember going from the 5th to the 6th Edition of the PMBOK Guide, there was an additional process.  There are 49 processes that define some of the work that project managers do.  And one of those 49 in the 6th Edition is called “Manage Project Knowledge.”  It’s the first time it showed up.  And it just made sense, you know, it’s like, oh, well, this should have been a part of what we were doing before.  Now we’ve finally spelled it out.

And Manage Project Knowledge is to tap into and leverage the knowledge of the performing organization so that I do my project better.  Then I also add to that knowledge management, that bank of knowledge, by the times that I fall and skin my knees with my customer; and then I learn from that, and I share that with my organization.

LARRY PRUSAK:  It’s also gaining knowledge outside the organization.  I mean, I was a consultant at NASA for 20 years.  Finally, after I was there 15, they decided to look at knowledge outside of NASA because no one, no organization can ever know enough these days.  The world is awash with knowledge.  You can never know enough.  I don’t care who you are. 

I did some work for one of our government intelligence agencies.  They, too, never looked outside Virginia, and they’ve completely changed.  They’ve totally changed that way, sharing knowledge with where it’s appropriate.  I worked at Harvard for a number of years.  They thought, if they didn’t know it, it wasn’t knowledge.  I think they still may think that way.  But look where the knowledge is.  Go where it’s appropriate.  But you’re right.  Basically you’re right.  I don’t know why it took PMI or any organization so long to know this.  But it has. 

Overcoming Resistance to Knowledge Bias

BILL YATES:  You know, it’s interesting, too – and Larry, I want to see what advice you have related to this.  Even within organizations that have project managers like our listeners, they can come across like a Harvard or like a NASA, you know, for some time, where it’s like, no, no, no, we know how to do these types of projects, or we’re experts on this product, or we know this customer better than anyone else.  So then for the project manager to go outside the organization to try a different approach, try a different tool or to tap into some of the knowledge, they meet resistance.  So what advice do you have to those project managers who want to seek knowledge outside the organization?  What advice do you offer to them to help overcome that bias?

LARRY PRUSAK:  If you don’t do it, you’re going to fail.  There’s just so much knowledge.  I mean, it really – I can give all sorts of examples.  You just have to do it.  There’s too much knowledge.  Every year, for example, there’s, well, I forgot the exact number.  But millions of technical papers are produced every year because knowledge got democratized throughout the globe.  I’m old enough to remember when most technical knowledge, most useful knowledge, came from the U.S., Western Europe, Japan maybe, and that was about it.  It’s now everywhere.  So there is important papers, important research being done all over.  It makes the world infinitely more competitive. 

Joe Stiglitz, who’s a Nobel Prize winner in economics, teaches at Columbia, he said, “The only source of competitive advantage in the 21st Century is finding and using new ideas.”  And you can’t depend just on your organization.  I don’t care, you know, NASA has very smart people.  Many organizations do.  But you can never know enough.

Projects Run on Knowledge

BILL YATES:  We want to talk about the book you co-authored, “The Smart Mission.”  There are so many interesting angles to that.  According to the book, “human skills and expertise make projects successful”; and one of the statements that I love, “projects run on knowledge”.  Projects run on knowledge.  Explain that.

LARRY PRUSAK:  Well, you get a design for a project, or senior management sends it down, and the first thing you really should think, what do we know, before we proceed?  Where is the knowledge we need to do this well?  Maybe we don’t have this. Maybe we have that.  What do we know?  Where is the knowledge we have?  Who has it?  Do we have to go outside?  Do we have it inside?  Sort of like doing an inventory of the knowledge.  Can we do this well?

Now, of course you’ll run into bumps.  But basically it’s the most important thing you could do.  Everything runs on knowledge.  Not only projects, but whole organizations.  It’s just that the word, it sort of scared people when we first started talking about knowledge.  People thought, oh, you’re going to talk about library knowledge, or you have to know the quantum mechanics, things like that.  But it’s a real thing.  I mean, it’s what people know how to do.  There wouldn’t be a man on the moon if there wasn’t knowledge.

Measuring Business Value

WENDY GROUNDS:  Do you have examples of how effective knowledge utilization links with a measurable business value?

LARRY PRUSAK:  That’s a good question, yeah.  There are two ways of doing that.  And that is a good question.  One is tell stories about the project.  Write cases.  Cases are just big stories.  Tell stories.  We did this project this way.  And try to get the story out.  That’s certainly what NASA did and the Gates Foundation did, Google does.  Some firms I’m not supposed to mention, so I won’t, but large firms.  Get the story out.  You used this knowledge.  You borrowed this from this company.  And you read a lot about this.  And get the story out that you have to use it to be effective.

The other way knowledge gets packaged, it gets packaged in narratives, and it gets packaged in analytics.  Most people, because they go to business school or have engineering degrees, prefer the analytics.  I, who took a Ph.D. in the History of Ideas, have no math skills, found that narratives are more valuable in that you can create context with a narrative.  Not everything has to be exact.  You can talk about the context.  But also stories stick.  They stick in your head.  I remember stories I’ve been told as a little boy, many years ago.  So those are the two ways.  And get the message out.  That’s the way to do that.  Say we did this, and we did that, and slowly people will catch on, that’s the way to proceed.

Drink Tea

WENDY GROUNDS:  One thing with Steve when he introduced us, he said that we have to ask you about “drink tea.”  What does he mean?

LARRY PRUSAK:  He loves that story.  Professor Jiro Nonaka is sort of the godfather of knowledge management.  He wrote the first very serious book about it and got all the credit.  He’s still alive, still active.  He’s 87.  And he’s very well known in Japan.  He’s sort of the equivalent to what Peter Drucker was in the United States, very well-known guru.  And he gets called on by companies occasionally to help them.  And I don’t think he even charges them.  He’s quite patriotic.

But years ago he got a call from the managing director of the Canon Company.  They make printers and so forth.  And they were having a tough spell.  Things weren’t going that well in terms of sales and morale.  So they called him in.  And they very, very politely, if you know Japan, very politely said, “We’d like you to help us.  Can you spend some time with us and give us some ideas of what we might be doing?”  And he said yes. 

And he spent a week there, and he talked to people.  He observed people.  And he came back a week later and met with the managing director.  And, you know, in Japan you don’t directly go to the question or answer.  So they’re chatting, and finally the director can no longer restrain himself, and he says, “Do you have some advice for us?”  And Nonaka said, “Drink more tea.”

Well, telling the Japanese to drink more tea would be like telling the sun to be hot.  I mean, it’s really not necessary.  But what he meant, of course he explained it, was all the senior people, they come to their offices in big headquarters in Tokyo, and they just went right to their office and went to work.  They never spoke to one another.  Very rarely, only in specific meetings that the director calls, or board meetings.  But they were too busy.  They’ve got to be focused.  Have them every day come in a little earlier, serve some good green tea and maybe some crackers, and talk to one another every day.

Well, the managing director said that’ll be done.  Sent out a memorandum.  He had his conference room set up.  And they did it.  Once they were told to do it, they did it.  It worked.  Drink more tea.  They started talking to one another.  What’s going on in their division?  Marketing.  Research.  Operations.  Sales.  I mean, you could imagine, it’s a big company.  I’ve tried that with people.  I’ve said, “Do your senior people talk to one another?”  Well, not really, you know.  And conversations is a big chunk of knowledge, people talking to one another.

Face-to-Face Communication

BILL YATES:  This is so interesting to me.  I’m just jotting down some notes.  This runs really close, very parallel with some reading I’m doing.  There’s a book called “The Advantage” by Patrick Lencioni.

LARRY PRUSAK:  Oh, I’ve heard of that book.  Yeah, I never read it, but I know what it is, yeah.

BILL YATES:  Yeah.  And he talks about the importance of narrative and of communicating from the top to the bottom of an organization.  And he said, “What’s most effective is not the video from the CEO.  It’s not the newsletter from the CEO.  It’s that CEO meeting with his direct reports or her direct reports and giving them that information in the most effective narrative that they can.”  You know, here’s what’s going on.  Here’s what’s keeping me up at night.  This is what we’re going to do about it.  Now go tell your direct reports.  And working with this type of face-to-face communication down every level, all the way to those that are taking those marching orders and meeting with the customers or producing product.  So it was interesting…

LARRY PRUSAK:  Absolutely right.  It’s absolutely true.

BILL YATES:  Yeah, it’s not – and there’s a part of me that goes, oh, well, there have to be more effective ways to do it.  But no.  There’s the narrative.  There is that translating knowledge from one person to another through narrative and through those conversations that’s so important.

LARRY PRUSAK:  You’re absolutely right about that.  I’ll give you an example which probably people won’t like necessarily.  I worked for IBM for nine years.  And I was in a building that was owned by the Lotus Software Company.  Some of you remember Lotus.  And when IBM bought Lotus, they all expected the head of IBM, Lou Gerstner, to come and talk to them, to visit.  Presence.  He never showed up.  Never, he was too busy.  It’s a company’s he’s paid $100 million for.

And because of that, and I was there, I can assert to this, people lost interest in the firm.  Their morale dropped.  And after a while, maybe three, four years, Lotus just became the name of a box, Lotus Software, rather than a very progressive, interesting software development firm.  I can give a lot of examples of that.  Showing up really matters.  Being there.  A lot of CEOs, their brains, their ego gets so expanded, sort of like a king almost, “Well, I’m not going to talk to the peasants.”  Terrible error.  Terrible, terrible error.

Nurturing Knowledge in an Organization

WENDY GROUNDS:  How can knowledge be nurtured in an organization?

LARRY PRUSAK:  Well, that’s a good question.  I think that’s one we sort of know the answer to.  One, promote people who use knowledge well.  Who gets promoted or hired is one of the strongest signals any organization gives for what they value.  So if you promote a jerk, an egotist, I don’t know, someone with low morality, everyone picks up that message.  But if you promote or hire people who share knowledge, who talk about knowledge, two, you can put in place incentives, not necessarily monetary ones.  But when you get reviewed, say, what have you learned this year?  Who did you tell it to?

I’m not an admirer of Jack Welch, but every year when he met with his senior people, and this is a huge firm, General Electric, he asked them, what new knowledge did you develop?  Who did you tell this to?  And it worked.  It worked for a while.  So, I mean, you also can, when you hire people, ask them what they’re interested in, what they read, do they go to conferences.  How do they keep up in their field?  I used to ask people, I said, “How do you know what’s going on?  I mean, do you read just The Wall Street Journal?  Do you read other magazines?  Do you read books and so forth?”  The word will get out that it’s valued if you do that.  And it really nurtures it.

You also can put aside a little bit of your budget, let people go to conferences.  Encourage them to go to conferences.  Not so much to hear people like me speak, but to network.  You meet other people from other firms.  Give people a budget to go out and talk to other people.  That’s one of the reasons – there’s a very interesting book called “Regional Advantage” about why Silicon Valley overcame where I live, Route 128 in Boston.  We had all the schools.  We had Harvard and MIT.  They had Stanford, which is a great school.  But one of the reasons they overcame it is the weather.  It’s so nice in Silicon Valley, people go out after work, have a drink.  They sit outside and talk.  That ain’t true here, folks.  Maybe for three months.

BILL YATES:  Hey, you could go bowling, you know.  You could bowl or drink a beer someplace.

LARRY PRUSAK:  Yeah, exactly.  But people don’t – it really mattered.  Now, I don’t mean being spies or collecting illicit information, but just developing your network.  This woman who’s a professor at Berkeley, it’s an interesting book, “Regional Advantage.”

Kevin and Kyle

BILL YATES: Let’s take a break from this conversation, jump over to Kevin and Kyle, and see what they’re up to.

KEVIN RONEY: Not surprisingly, the project manager is almost always a major factor for success or failure on a project. Sometimes our ambition clouds our judgement. We can take on too much work instead of delegating tasks to the project team members. Or, we want to avoid conflict, so we don’t speak up when we disagree with our sponsor or client.

KYLE CROWE: You’re right, there are many reasons why projects fail. It could be weak soft skills in the project team and leadership, a poor sponsor relationship, or unplanned delays. A project manager who wants to be successful should be applying good project management practices throughout the process.

KEVIN RONEY: Elizabeth Harrin mentions in her book Managing Multiple Projects that research shows these are the top 7 reasons projects fail:

  1. Poor planning
  2. Changing project requirements
  3. Poor communication and stakeholder relationships
  4. Lack of effective leadership
  5. Instability of the project team
  6. Poor risk management
    And 7. Poor project control

KYLE CROWE: OK, so then if we flip that into what it takes to be a successful project manager, we would get the following:

  1. Planning
  2. Requirements Management
  3. Communication and Stakeholder Engagement
  4. Leadership
  5. Team Management
  6. Risk Management
    And 7. Project Control and Governance

We actually have training at Velociteach to address each one of these 7 skills.

KEVIN RONEY: Yeah, for example, Neal Whitten has a course titled: 17 TOP REASONS WHY PROJECTS FAIL AND WHAT YOU CAN DO TO AVOID FAILURE. Neal dives right into the causes and offers excellent advice! Take a look at the Velociteach website for more info.

BILL YATES: Kevin and Kyle, thanks for that information.  Now, let’s go back to our podcast conversation with Larry.

Rewarding Knowledge Sharing

BILL YATES:  Larry, I want to go back and highlight something you said.  It makes so much sense to me, and I think project managers should hear it, which is promote or show more value to those who are sharing information.  I think it’s…

LARRY PRUSAK:  Absolutely.

BILL YATES:  Some people treat knowledge or experience as, hey, I earned this on my own.  I’ve paid the price for it.  Now it’s my secret knowledge.  This is my secret sauce.  And that we have to overcome that, especially as project leaders, to have people get in that mindset of sharing this information, making the whole team better, making the organization better by finding out those things that make us more effective in sharing it.  So drawing light to that and praising it and rewarding it where we can is very important.

LARRY PRUSAK:  Yes.  I’ll say something nice about IBM, since I said something nasty.  When Gerstner took over, he stopped individual bonuses.  I think it was one third of your bonus was your activity, but one third was your group’s activity, your team’s activity.  And one third was your division’s activity.  That goes a long way.  It’s a signal.  It isn’t so much the money, it’s a signal saying this is a collaborative endeavor.  We work together.

I’d say, you know, I know a number of firms, a very big recruiting firm that fired a person that had tremendous book.  He knew everyone.  He’d helped find the CEOs of some of the biggest firms in the United States.  But he wouldn’t share.  He was a nice enough man.  He was friendly.  But he wouldn’t share.  And they fired him.  That was a big story.  I mean, this guy was really well known.  And the guy who fired him said that.  He said, “We can’t let people like that create the values that we live by.  We live by collaborative values.”  So, yeah, don’t put up with it.  I mean, that’s just the wrong way to be in an organization, as it is in a family or a community.  You just don’t want those people.

Building Organizational Trust

BILL YATES:  That’s good.  This leads right into the next question we want to talk with you about, too, which is trust, how to build trust in an organization.

LARRY PRUSAK:  Instill trustworthiness in others.  One of the things, the most powerful thing you could say after “I love you” would be “I trust you.”  Again, I worked for quite a while for Ernst & Young, which is a fine firm.  And I had quite a few people working for me, and we were supposed to review their travel expense account every time they took a trip.  Well, you know, I had, like 20 people.  They all were traveling.  I said, “Why are you paying me this much money if I’m just going to do what a newly graduated accountant could do?  This is a real waste of my time.”  Oh, no, you have to do it.

And I took a chance.  I called them all in.  There were like 22 people.  And I said, “I’m never going to read your expense accounts.  I’ve told my secretary just approve them.  I trust you all.  If you want to break my trust, if you think that’s worth doing, be my guest.  You want to stay at Marriott rather than the cheap hotels, go ahead.  See if it’s worth it.”  No one ever broke my trust.  You just say “I trust you.  I don’t want to waste my time doing this crap.”

BILL YATES:  Yeah.  I think as project leaders we have the opportunity to build trust in small ways with our team members, too.  And sometimes it’s sharing the good jobs.  Who wants to present this good news to this sponsor?  Who wants to tell the customer we’re going to be a week early?  You know, I was about to do it, and I just thought, hey, this is an opportunity to share the spotlight with somebody else.  Or who wants to just lead the next meeting that we have with the customer where we’re presenting the latest feature that we’ve got built into our product.  To me, as a leader of a project, that’s a sign of trust, that I trust my team to represent us, to speak well before the customer, to show things in their best light.

LARRY PRUSAK:  That’s a very good set of examples you used.  I really like that.  That really – you’re absolutely right.  There’s a lot of ways to instill trust.  Trust your children.  Trust your community and things like that.  It really pays off.  I mean, it’s not so much being altruistic.  It pays off.  Things work better when you trust each other.  Speaking as a social scientist, it lowers the transaction costs.  You don’t have to always be looking over your shoulder or sniffing out things.  It lowers the cost.  Oh, yeah, I trust him.  He’ll do what he said, or she’ll do what she said.

Developing Knowledge-Oriented Team Culture

WENDY GROUNDS:  And so this all leads into your culture, are project managers trying to develop a team culture, if they have trust, if they have that knowledge that they can nurture, as well, within their team cultures.  So how can they have a knowledge-oriented culture within their teams?

LARRY PRUSAK:  Yeah, that’s a great question. So I’m doing some work now with the Asian Development Bank, and we’re trying to figure out how to teach some of those countries to be knowledge-intensive, to value knowledge.  It’s a very, to put it mildly, a very complex and difficult subject.  But one way it to talk it up.  Talk about knowledge.  Have the senior people talk about it, say this is really important.  Set up knowledge institutions.  Let people go to universities and take classes.  In the same way you would with children, you teach them, this is really valuable, and we’re going to put our money and our energy behind it.

The culture of a firm, there are ways of changing it.  The firms that do best with trust are those that have a mission.  Everyone I met at NASA believed in the mission of NASA.  I never met someone who didn’t.  They weren’t cynical.  They weren’t skeptical.  And they loved NASA.  They loved what NASA was doing, and they loved their mission.  So the culture was of course we share knowledge.  We work our tails off, so to speak.  Pharmaceutical firms are like that.  I did quite a bit of consulting with Novartis, their oncology unit.  And people just, we’re out to cure cancer.  That’s what we live for.  So of course they trust each other; you know?  There are many organizations that do that.

But those that just say we’re here to make money, I’m not against making money necessarily.  But again, I’m from New York.  I had friends who worked in a lot of the Wall Street firms.  But there was no trust at all.  They make money, you know, I can’t argue.  This is not the place to argue about that.  But they don’t trust each other.  They’re out for themselves because their bonuses are enormous, and they get it.  But it sure is different than the pharma firms, the intelligence agencies, the entire military, for that matter, in the United States, at least.

So they feel they have a mission, too.  And you might not agree with them, but once you have that, it encourages a culture of trust, a culture of collaboration.

Recognizing the Value of Knowledge

BILL YATES:  I have a question for you for – I think for some of our listeners, they may be a bit cynical when we start to talk about knowledge management because at their organization it may be an “us versus them,” where there’s like a clear wall between the practitioners and those who are actually maintaining the knowledge of the organization.  Corporately, I could see how those walls could go up where, you know, now we’ve got this wealth of information, but is it really knowledge?  Is it valuable?  Is it really in touch with our customer?  Or is it something practical that the team can use?  So what advice do you have to make sure that that wall either gets torn down or never goes up?

LARRY PRUSAK:  These are really good questions.  You know, if I could answer all of them, I wouldn’t have to work anymore.  Well, one thing is to recognize the value of knowledge, the economic value and the business value of knowledge, which is a hard thing to do.  Knowledge is intangible.  I mean, I could tell you how much money I have.  I could tell you, oh, how many books I’ve read, how many books I own.  But I can’t really show you what I know unless I do something and say, well, I know how to do this.  So it’s really important to respect all the people who do the work, respect the knowledge they have.  They may not always have MBAs from Harvard or something like that, but put a lot of respect into that.

But there’s a lot of status-seeking in organizations, and people think, well, I have this degree.  I’m senior to you.  And that’s just awful stuff.  One way is to have profit-sharing, which I’m surprised isn’t done more in the United States.  It is in other countries.  Have everyone shares in the money you’re making.  And so by doing that, you’re saying, well, we’re all valuable to the organization.  But a lot of this really is the responsibility, frankly, of the CEOs and the managing directors.  Frankly, it’s not taught in the business schools very much.  And by not teaching that, people go to business school.  They go, good, I now know how to run a business.  They miss out on some of the most important things that we’re talking about.

Building Successful Knowledge Projects

WENDY GROUNDS:  Larry do you have any ideas of why some global companies are able to build successful knowledge projects, while others fail at it?

LARRY PRUSAK:  Well, one thing, they don’t understand what knowledge is.  You know, one of the problems is that many executives, even today, though less so, think information is knowledge, and it all could be managed with technology.  And so now we have this gigantic commercial push on data – smart data, giant data, good data – and AI.  Neither of those things are knowledge.  Knowledge implies judgment.  It implies judgment.  You go to the dentist, he looks at your teeth.  I just went yesterday, so it’s on my mind.  He makes a judgment.  You need this; you need this.  It’s part of knowledge.  You can’t have knowledge without judgment.

AI can do that if you program it to recognize certain things.  But the program is knowledge that’s going into the technology.  It’s not the machine.  And data, it needs to be interpreted.  It’s stuff that needs to be interpreted.  Again, I’m not against any of these things.  I think they have their place.  But knowledge is more important than any of them.  Wisdom’s even more important than knowledge.  Certainly knowledge is important.  It lets you act.  It’s experiential.  You learn by your experiences.  And if your experiences prove not to be true, you move on. That doesn’t work, let me try this.

There are global firms that are very much interested in knowledge, especially – this is a very difficult subject because it offends people sometimes.  Some parts of the world people are much more respectful of knowledge and learning.  Let me assure you.  For example, Korea.  In Korea, the second most valued profession – second – is teachers.  You know what it is in the United States?  Thirty-one.  I mean, my wife was a teacher.  I have a son who’s a teacher.  I’ve done a lot of teaching.  But it’s 31.  What do you think that says, I mean, about understanding the value of learning and knowledge?

Finland, a small, cold country, teaching is considered the highest thing you could do.  They have great competition to become teachers.  Estonia.  Israel.  Small countries have tremendous regard for teaching, and they’re all doing well.  Korea, I think I recently read, has overtaken England in GDP per capita, something no one on Earth would have predicted in the ‘50s or ‘60s.  And there’s no natural resources in Korea.  Nothing there but Koreans.  And yet they work very hard, and they truly respect knowledge.

But there are countries where knowledge isn’t well regarded They’re nowhere near being knowledge intensive the way small countries in Europe are.  Or in Asia.

Let me put it this way, the center of knowledge production when I was a little boy was in the middle of the Atlantic Ocean.  So if you look at all the patents, the technical articles, the research, it was sort of between the U.S. and Europe.  Ever since, it’s been moving East.  When I was in college, it was over Europe.  It’s now over India in terms of production of useful knowledge.  What do you think that means for the global economy?  We live in an age where ideas and knowledge bring in the wealth.  Again, when I was a boy, all the big firms made things, boom, boom, boom.  Which is fine.

But now look at Amazon, look at Google.  They’re just idea places.  They have an idea, they implement it, and they become trillionaires.  And those ideas come from knowledge.  You don’t have ideas without knowledge.  It’s a very interesting subject.  And more and more people are writing about this.  And it’s not political.  I’m not talking about politics.  You have to think about these things. 

Effectively Harnessing Experience

BILL YATES:  Larry, what advice do you have to managers to harness the experience and wisdom within their organizations more effectively?

LARRY PRUSAK:  Well, they should know what knowledge is.  Sometimes I talk to organizations, they don’t even know what the word means.  Two, talk to people.  See what they know.  And not just their résumés in HR.  What do you know?  What have you learned?  Get to know them.  Especially project leaders, or team leaders, too.  Get to know them.  And then use what’s appropriate.  Exploit it.  They want to be exploited.  People love using what they know and showing what they know.  All people do, from full professors to the people who take out the trash.  People like doing that.

Talk to them.  Get to know them, it’s worth doing.  Take them out to lunch.  Say who are you?  What do you know?  What’s been your experience?  It doesn’t happen that often, not as much as you think it should.  You know, NASA does a very clever thing.  This is going back to a question you asked earlier.  I meant to say this.  They decided to inventory what critical knowledge they had.  Not just knowledge, I mean, that would be ridiculous.

They have 14 centers.  They have Houston, D.C., Florida and so forth.  What critical knowledge do they have that they have to really maintain and protect?  Did like a chart of it, and so it was really valuable.  I’d encourage all organizations to do that.  Critical knowledge thinking.  It’s not even hard to do it, frankly.  You just talk to all the senior people, say what would happen if you didn’t have this knowledge, or you didn’t keep it up?  So it’s not that hard to answer them.

WENDY GROUNDS:  I think it’s important when you’re onboarding.

BILL YATES:  Yeah.

WENDY GROUNDS:  You know, find out what they know and what they’re bringing, not just what it says on their piece of paper.

LARRY PRUSAK:  Exactly.  But unfortunately, and I don’t mean to, again, offend anyone, but generally human resource people aren’t into the subject.  I’ve given maybe 300 talks in my career.  Very rarely do I get asked by HR groups, much more by IT and strategy and general management. But I don’t know why, and I don’t want to get into it.  But you’re absolutely right.  The résumé, it doesn’t really say that much.

BILL YATES:  To me, this is an area that project managers need to not be intimidated by.  And they need to understand…

LARRY PRUSAK:  Oh, yeah.

BILL YATES:  …you’ve given great practical advice about going outside the organization.  Fortunately, I think greater than 50% of companies are open to it.  You know, you brought out great examples of companies that are like, no no no no, we’ve got this figured out.  You just use our methods, don’t tweak them, don’t make any changes.  We’ve created this.

LARRY PRUSAK:  We used to call them the “best and the brightest” organizations.  Really did.  And there’s a lot of them in the U.S.  I mean, I worked for quite a few of them.  They were like that.  No more.  That’s really provocative.

BILL YATES:  No, that’s gone, yeah.

LARRY PRUSAK:  It’s gone.

BILL YATES:  And it’s so funny, too, because you think, they’re the ones trying to hire the brightest.  So they’re bringing the brightest people in, and then saying, “Conform.  Turn off that part of your brain, that creative looking for a better solution part of your brain.  Just do what we said.  We know you’re talented and will be able to follow our path.”

LARRY PRUSAK:  Yeah, I know, that’s exactly right.  This will all change, I think, with the hyper competition of the global economy.  I think a lot of this will change.  I certainly agree with that. 

BILL YATES: So I was just thinking of the ‘50s and Japan, and the impact that Deming had, and their openness to it.  You know, they embraced it.

LARRY PRUSAK:  They loved it.  They loved it.  And he was an outcast here.

BILL YATES:  Yeah.  And you had the CEOs attending his training there, and then saying, okay, next level down, you go next week.  Next level down, you go next week.

LARRY PRUSAK:  You know, one of the hallmarks of wisdom – I used to study wisdom, I gave talks on it – is epistemic humility.   Epistemic humility.  Well, I know some things, but there’s many more things I don’t know than I do know.  And so putting aside what you know, and like you said, CEOs going to hear Deming, who was an engineer, I think that really is a hallmark of wisdom.

Contact Larry

WENDY GROUNDS:  If our listeners want to reach out to you, or if they have any questions, or find out more about your books, where is the best place that they can go to?

LARRY PRUSAK:  You could send me an email.  I don’t mind.  I’m happy to answer it.

WENDY GROUNDS:  Thank you.  I’ll put a link in the transcript, and they can find it there.  (Laurence Prusak: larryprusak@gmail.com)

BILL YATES:  This has been so helpful.  I really appreciate the conversation, Larry.  And thank you for all the wealth of knowledge that you have in your head.  And you’ve shared it with us, and I’m deeply respectful and appreciative for the time you’ve given us.

LARRY PRUSAK:  Well, thank you very much.  I enjoyed talking to the two of you.  I really did.  You asked some very good questions.  It was a very pleasant experience.

Closing

WENDY GROUNDS:  That’s it for us here on Manage This.  Thank you so much for joining us today.  We hope that this conversation has been helpful to you.  If you like what you hear, please leave us a comment or a rating on whichever podcast listening app you use.

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