The Knowledge Factory

How gathering dispersing the routine, nuts-and-bolts information of daily operations is transforming a business.

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How gathering and dispersing the routine, nuts-and-bolts information of daily operations is transforming a business

By the mid-1980s Joe and Henry Sloss, the twin brothers who had built up the family business, were getting on in years and were thinking about retirement. Joe's son Bob, the only member of the next generation on the payroll, was ready to take over.

Ready. OK, that might be an understatement. More like champing at the bit. Pounding at the door. Because Robert Sloss, then in his thirties, had discovered not just a job but a mission.

The company he was inheriting was a small metal-spring manufacturer, successful in its day but exactly the kind of old-line, low-tech business likely to be eaten alive by aggressive and innovative Far Eastern competitors. Young Bob -- an alumnus of Stanford's summertime executive-education program and a fan of Tom Peters -- set out to search for excellence right in his own backyard. American industry, he decided, could be revived, its loyal employees rewarded and reinspired. The Japanese and Taiwanese and Singaporeans could be repulsed. Spearheading the attack would be the Sloss family business, Connor Spring.

Once in charge, Sloss made all the right moves. He bought state-of-the-art machinery. He decentralized the company, ceding day-to-day authority to the managers of its four plants. He set up an employee stock ownership plan and instituted a quarterly cash bonus based on each plant's profits. He plunged into statistical process control and the other accoutrements of modern quality assurance. And he made sure -- through stylish videos, glossy brochures, slick sales presentations -- that customers heard about the all-new, world-class Connor.

The blitz almost worked. Connor's shipments rose from $12.4 million in 1985 to $16.4 million in 1989. The company landed new jobs from big customers such as Aerojet; it became a certified vendor to the likes of Hew-lett-Packard and Xerox. Japanese transplants searching for U.S. suppliers began sniffing around Connor. Employees seemed more content and more committed. What else could Sloss want? Really, just one little thing. He would have been happier if the company were making decent money.

He knew that Connor's losses in 1989, the first year in at least two decades the company actually wound up in the red, could be chalked up to the closing of a plant in Phoenix and the transfer of many employees to Connor's Dallas facility. But he also knew the financial problems ran deep and that they weren't being solved by all his fancy footwork. The Dallas operation, established in 1984, hadn't yet seen a profitable year. The flagship plant in Los Angeles, Connor's biggest, was barely squeaking by. Only the little shops in Portland, Ore., and San Jose, Calif., were solidly in the black, and at best they pulled the company a few percentage points above break-even. Something had to be done.

It was then that Sloss, almost unwittingly, found himself presiding over a change that would leave Connor Spring looking remarkably different, not only from its most recent incarnation but from most other companies in the United States. The change didn't involve yet another hotshot management philosophy, only a new tool for making the company run better. Or so it seemed at the time; today, midway through the process, the tool seems to be transforming Connor's whole culture.

The tool -- the driving force behind this ongoing metamorphosis -- is information.

Now, the astute use of information is one hot topic among management gurus these days. Gather more data about your customers! Communicate more with your employees! Analyze those critical financial indicators! Such injunctions never hurt. But they may not help much either, because they address maybe 10% of a business's information flow.

The other 90%, the part that never shows up in market-research studies or employee newsletters or monthly P&Ls, is the mundane, nuts-and-bolts information that permeates a company every minute of every day, determining how managers allocate resources and how employees spend their time. Why Customer X is complaining. Which jobs absolutely, positively have to be done by Friday. How much money we stand to make this month on the National Widgets account, why Bill in sales has been spending so much time in Chicago, what's causing the bottleneck in shipping. Small companies' chief executives typically know or learn the answers to those and a hundred similar questions; that's why they feel -- and frequently are -- indispensable to smooth operations and why they intuitively understand bigger-picture issues such as cost ratios or market trends. Most CEOs, however, never think about sharing what they know with any but a few top managers.

But ask yourself -- suppose all employees in the company had easy access to everyday knowledge of this sort? And suppose they could not only receive but exchange information, adding what they know to the pool and thereby enabling everyone to work just a little more intelligently? As Harvard Business School professor Shoshana Zuboff argues in her book In the Age of the Smart Machine, modern computer and communications systems allow knowledge that once resided "in people's heads, in face-to-face conversations, in metal file drawers, and in widely dispersed pieces of paper" to be disseminated throughout an organization, moving upward and sideways as well as downward. People with access to all that information work differently -- work smarter -- because they suddenly know a whole lot more about what they and everyone else in the business are doing.

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