Firms that Surmount the Knowing-Doing Gap

The chapter on bridging the knowing-doing gap in a corporation in order to solve the problems within it by sufficiently utilizing the resources at hand to solve problems covered three companies; British Petroleum (BP), Barclays Global Investors and the New Zealand Post. Most companies have the expertise to solve the problems at hand, but due to lack of effective utilization, they succumb to these problems. This chapter not only reviews instances of such costly inconveniences in the three case studies, but also explains ways in which a company can go around solving them.

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The Barclay Petroleum Company suffered a financial loss of $811 million as a first time in its then eight decades of operation. The management and market structure at the time were the underlying cause of this tragedy. The singularity with which the various units in BP carried out their duties made it hard to realize the quality and capability of the human and physical assets that the company had in its various sectors. The company was marred with a rigid (bureaucratic) management structure albeit with liberal and highly adaptive staff. Robert Horton’s tenure as the chief executive officer in BP from 1990 to 1992 worsened the disintegration within the company. His non-collusive means of managing the corporation stunted the optimal performance of the staff and reduced the commitment to achieving the set objectives out of fear. This invoked personnel to work to avoid punishment and blame rather than improve on their stations. The takeover by David Simon and John Browne after Horton saw to the increased efforts in limiting the knowing-doing gap. The management extensively ramified the connections between the various units in the company by the use of peers assists, peer groups, federal organizations (especially the Virtual Teamwork Program) and personnel transfers. Undoubtedly, this led to the later realization of a $4.62 billion profit in 1997, five years after the company’s record financial loss.

The Barclays Global Investment (BGI) had significant challenges after its purchase by the UK-based Barclays Bank, the increase sizeable increase in its personnel to consist of different cultured staff members and the global expansion of operations. All these led to the need to modify strategies to maintain the success that the Wells Fargo Nikko Company (now BGI) had before the changes took place. The reverse takeover of the Barclays Bank by BGI led to the assimilation of the new merger into the cultures of BGI that included an action-oriented staff. Considerable downsizing occurred to expunge the company of the staff that could not adapt to the culture that BGI came with as the management of BGI took over a key share of the senior management. Added to this, the numerous transfers of the personnel around their worldwide stations and the use of the same criteria of evaluation of all stations created a sense of equality yin significance in the success of each branch. The strive to be the best and achieve optimal results within the company secured the profits of the company in a never-ending appreciation. The massive communication, and thus bridging of the knowing-doing gap, led to simultaneous improvement of the company all around the world.

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The New Zealand Post was a government owned corporation with massive losses of $38 million in 1986 and only 80% delivery of mail to customers. Together with the civil service mentality of the over-staffed corporations made it unprofitable. The takeover of the company to become a state-owned company came with the massive change of operations that earned the company prestigious management awards as soon as 1991. The trimming of the unnecessary staff and the review of the pricing of the mail services led to this increase in productivity. Horizontal mergers by the post like acquiring its own transport system decreased the risk of eventualities that might delay delivery. The “clear floor” policy ensured the about 97% punctual delivery of mail. The acquisition of talented staff and formulation of a reward system based on results added to the increased efficiency within the company.