Habits that lead
Accepting and exploiting opportunities thru' knowledge sharing could be an interesting idea to move forward in business.
Chaparral Steel: Habits that lead to organizational learning
Under the leadership of its CEO, Gordon Forward, Chaparral Steel has emerged as one of the most innovative and successful firms in an industry recognized for innovation and success. Asked what explains the firm’s success, Forward simply replies, ‘we are a learning organization’. The organization has built it s learning ways on four habits, each reflecting different activities, values, and support systems.
The first habit is spreading ownership for problem solving organization wide, a habit based on the assumption that all employees have the potential to contribute to the success of the enterprise, or they would not be there. This attitude may best be summarized in the philosophy of ‘adultery’ as practiced by Forward- ‘we treat everyone like an adult.’ Adultery is explained by a foreman as follows-‘whoever comes up with an idea on how to fix something, from the millwright or myself right on up to the top, does it right then.’ The emphasis is on discovering what works and then standardizing the newly discovered best practices. As the same foreman explains, ‘if it works, is the de facto standard. If it improves performance, everyone will imitate it.’ The second habit involves actively seeking out and acting on knowledge generated within the firm. For example, Chaparral Steel makes much of the equipment that other steel companies would buy, based on the reasoning that this gives them insights into how their plants can best work. The company has also made a tremendously high investment in the development of its employees. Its 3 ½ year program, in which an apprentice progresses to the level of a senior operator, requires successfully completing 7,280 hours of one the job training and formal schooling; much of the latter takes place during 4 hours a week of unpaid time. There is impressive data showing that these unusual practices pay off; the two foundries, designed for annual volumes of 250,000 and 500,000 tons, in fact produce more that 60,000 tons and 1million tons, respectively.
The third habit is an eagerness to tap external expertise. Chaparral Steel builds alliances with firms from around the world with expertise that complements its in-house skills. While many organizations resist outside innovations ‘not invented here’, Chaparral Steel concern is that innovations are ‘not reinvented here.’ Each year dozens of employees from across the organizational hierarchy travel to visit customers, suppliers, and even competitors who might be able to teach Chaparral Steel some better way of doing things.
The final habit is one of constantly challenging the status quo. As one observer of the company summarized it, ‘Chaparral Steel employees are skilled experimenters.’ Forward describes innumerable large and small experiments of the ‘cut and try’ variety. Often these experiments are not sophisticated, just effective. For instance, Chaparral Steel became the firs mini mill capable of shaping molten steel in the near net shape required for large I-beams. The early proto types for some of the equipment needed for such casting were made from plywood that was continuously soaked with water to keep it from being consumed by the molten steel just long enough for the crews to prove the potential of the design concept.
Perhaps the most important managerial value supporting such experimentation is the firm’s tolerance for taking risks and making mistakes. A former mill superintendent championed the installation of a $1.5 million saw for cutting finished beams that after months of effort, still could not be made to work effectively. Shortly after the superintendent made the decision to get rid of the saw, he was promoted to Vice President of operations.