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TitleThe Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action
File Size1.2 MB
Total Pages248
Table of Contents
1 Knowing “What” to Do Is Not Enough
2 When Talk Substitutes for Action
3 When Memory Is a Substitute for Thinking
4 When Fear Prevents Acting on Knowledge
5 When Measurement Obstructs Good Judgment
6 When Internal Competition Turns Friends into Enemies
7 Firms That Surmount the Knowing-Doing Gap
8 Turning Knowledge into Action
Appendix: The Knowing-Doing Survey
About the Authors
Document Text Contents
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Copyright 2000 President and Fellows of Harvard College

All rights reserved

The paper used in this publication meets the requirements of the American
National Standard for Permanence of Paper for Publications and Documents in
Libraries and Archives Z39.48-1992.

First eBook Edition: May 1999

ISBN: 978-1-5785-1124-2

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division’s prospects even worse.8
Some of Hewlett-Packard’s other current management practices, promoted

by its measurement system, have also had negative effects. These practices
include using a lot of outsourcing, including contracting out manufacturing and
software programming, using temporary workers, and not recruiting for talent far
enough in advance to ensure the company is able to attract the best people. We
should be clear that these practices are, in fact, inconsistent with basic elements
of the firm’s culture and values. The company explicitly talks about its tradition
of not using contract and temporary help. For instance, during a half-day seminar
on the company, its culture, and its founders, one summer intern “learned about
HP’s historic avoidance of using temporary workers (outside contractors).” The
same intern heard a similar account from long-time employees: The company
had typically avoided hiring temporary employees in areas central to its
business. There was a business case, not just cultural values, for this policy:

They [Hewlett and Packard] firmly believed that if a company
provided a great work environment, trusted its employees, and gave
employees the authority to make decisions, then the company’s
employees would value this commitment and develop loyalty to the
company resulting in higher morale and more productivity than
could be accomplished by other companies.9

Recently, however, the company has outsourced more and more of its
manufacturing activities and has come to rely more on temporary employees and
contract programmers. At one point, in the early 1990s, the company was
featured on a 60 Minutes television program for its use of illegal aliens furnished
by a so-called body shop. Hewlett-Packard has been investigated by the U.S.
Immigration and Naturalization Service and the Labor Department because of its
use of contract workers from India.

What’s wrong with outsourcing manufacturing and using temporary help and
contract labor (who typically earn much less and do not receive benefits) in
order to make budget numbers? In the first place, “outsourcing important
electronic components” means that “HP no longer has a manufacturing feedback
mechanism in-house from which it can gain information about the quality of its
hardware designing capabilities in terms of manufacturability, quality, defects
and costs.”10 Outsourcing manufacturing can in the end inhibit the ability to

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learn about product design because of the separation of design from
manufacturing across organizational boundaries. Perhaps even more important,
as a case study concluded, this practice sends some important symbolic

Another cost of increasing the use of outsourcing… is that it sends
a subtle message to division managers throughout the company that
costs, revenues, and efficiency metrics are more important than
preserving employment opportunities within the company. It also
means that short term planning becomes more important than long
term planning…. Deciding to outsource… because of short run
inadequacies in comparison with outside vendors… necessarily
implies that these inadequacies will never be… addressed
internally. In adopting a short term business view, this type of
mentality lends itself to hiring temporary workers to fill short term
demand fluctuations…. Temporary workers become more
important when division managers begin to focus more on meeting
short term financial and production goals than on long term
planning on how to utilize permanent employees…. The focus
becomes more tactical and less strategic.11

The focus on making the budget numbers not only produces behavior that is
inimical to developing long-term capabilities and contrary to the history and
culture of the company, but also some behavior that is almost unethical. For
instance, the case study also found:

There is a lot of counterproductive budgetary gaming behavior that
occurs to make the numbers seem better than they otherwise would.
An example… was one manager “parking” funds with an outside
vendor during one quarter to be spent on projects in a future
quarter. The purpose of doing this was to even out the costs from
quarter to quarter, but what it amounted to was prepaying an
outside vendor three to four months ahead of time…. Managers
will [also] use temporary workers indefinitely, rotating new people
in every so often, rather than hiring a permanent employee and
blowing the head count budget.12

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About the Authors

Jeffrey Pfeffer is the Thomas D. Dee Professor of Organizational Behavior in
the Graduate School of Business, Stanford University, where he has taught since
1979. He received his B.S. and M.S. from Carnegie-Mellon University and his
Ph.D. in business from Stanford.

Dr. Pfeffer has served on the faculties at the University of Illinois, the
University of California at Berkeley, and as a

visiting professor at the Harvard Business School. He has taught executive
seminars in 22 countries throughout the world and

was Director of Executive Education at Stanford from 1994 to 1996. He
serves on the board of directors of Portola Packaging,

Resumix, and SonoSite, as well as on numerous editorial boards of scholarly
journals. He is the author of The Human Equation, New Directions for
Organization Theory, Competitive Advantage through People, Managing with
Power, Organizations and Organization Theory, Power in Organizations, and
Organizational Design, and co-author of The External Control of Organizations,
as well as more than 100 articles and book chapters.

Robert I. Sutton is Professor of Organizational Behavior in the Stanford
Engineering School, where he is Co-Director of the Center for Work,
Technology, and Organization and Research Director of the Stanford
Technology Ventures Program. He received his Ph.D. in organizational

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from The University of Michigan and has served on the Stanford faculty

since 1983. Dr. Sutton has also taught at U.C. Berkeley’s Haas Business School
and has been a Fellow at the Center for Advanced Study in the Behavioral
Sciences. He has given many

executive seminars, consulted to numerous corporations, and currently directs
the Management of Innovation executive program

for the Stanford Alumni Association. He has received honors including the
award for the best paper published in the , the
Eugene L. Grant Award for Excellence in Teaching, and the McCullough
Faculty Scholar Chair from the Stanford Engineering School. He has served as
an editor and editorial board member of numerous scholarly publications and
currently serves as Co-Editor of . He has
published more than 60 articles and chapters in scholarly and applied

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