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The Smartest Little Company in America

To pinpoint elusive business trends among eclectic, nonquantitative sources of data, CEO Duncan Highsmith depends on a powerful knowledge-management tool--his librarian.
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THE PROJECT
Life, the Universe, and Everything, an ambitious attempt to alert the management of Highsmith Inc. to trends that could affect the company's fortunes

THE PLAYERS
CEO Duncan Highsmith and his chief librarian, Lisa Guedea CarreÑo

THE PROCESS
The two scan newspapers, magazines, books, Web sites, ads, and TV and radio programs. They meet weekly to share their impressions and pinpoint trends

THE PAYOFF
The CEO believes that if people at Highsmith have access to the right information, they can help the company anticipate and take advantage of changes

Highsmith Inc. uses a knowledge-management tool of extraordinary power to give employees all the information they need. Its name is Lisa Guedea CarreÑo. She's the librarian

DATA SMOG

Once a week, Duncan Highsmith closets himself for two hours in a small room adjacent to his office and tries to wrap his brain around the world. Seated at a large wooden table, the president and CEO of Highsmith Inc. sifts through stacks of articles on subjects ranging from juvenile crime to semiotics to the anatomy of dragonflies. In this eclectic mix he is searching for nascent trends, provocative contradictions, and most important, connections that could eventually reshape his business. Joining Highsmith in these sessions--which he considers paramount to his company's future success-is a single trusted business associate.

She is his librarian.

Highsmith's pursuit--dubbed Life, the Universe, and Everything in an acknowledged crib from Douglas Adams, author of The Hitchhiker's Guide to the Galaxy--springs from the CEO's conviction that you can't take a narrow approach to the future. "We tend to behave as though the future will be like the present, only bigger and faster," says Highsmith, whose $55-million business is the country's leading mailorder supplier of equipment such as book displays, audio-video tools, and educational software for schools and libraries. That misguided faith in stasis, Highsmith believes, gives company builders an excuse to ignore everything but the goings-on in their own organizations, poking their heads up only when some external event presents an imminent threat or promise. At the same time, it prevents them from anticipating that threat or promise far enough in advance to do anything meaningful about it.

The shortsightedness of being shortsighted was brought home to Highsmith in the early 1990s, when his company's sales growth slipped partly as the result of precipitous declines in school funding. It was something the CEO believed he would have foreseen if he'd tracked the talk of a tax revolt that had been incipient as far back as the 1970s. His reaction to the unwanted surprise was to lift his eyes from internally generated spreadsheets and sales reports and to begin following his own instincts in identifying information--regardless of its nature, origin, or obvious relevance--that he thinks "could become a compelling factor in the future of the business beyond a one- to three-year horizon." In 1996 he created Life, the Universe, and Everything as a way to impose some structure on that horizon gazing.

Of course, tracking the universe is too big a job for one person; it takes at least two, Highsmith figured. What he wanted was a partner who would be as adept at making sense of nonquantitative information as an accountant is at numbers, someone who'd have sufficient imagination to accept why he might be interested in a New York Times article about dragonflies (they have four wings that move independently of one another, an image that Highsmith says helped him think in new ways about business-unit autonomy) and who was familiar with every limb and digit of the company.

He found her in the corporate library. At the time, Lisa Guedea CarreÑo had been at Highsmith for five years, acting as the company's external-information sherpa and, increasingly, as a sounding board and informal consultant. She knew her way around information: where to find it, what to do with it, how to make it behave. And for a stickler who is reluctant to use a quotation in company material without including a photostat from its original source (no, Bartlett's Familiar Quotations isn't good enough), Guedea CarreÑo had demonstrated a surprising willingness to embrace serendipity. "Over the years I'd noticed that when Lisa would send me the answer to a question, occasionally she'd send something else--maybe tangential, but interesting--along with it," says Highsmith. "I would encourage that, and sometimes we would pursue the tangent further than the original question. It became clear to me that Lisa had the kinds of skills and insights that would make this project possible."

Not that it makes sense for Guedea CarreÑo to be the only one involved. Life, the Universe, and Everything is significant for the information it gathers, but Highsmith also intends it as a teaching tool that will ultimately prod everyone in the company to see and understand the kinds of big-picture connections CEOs generally make in isolation. Toward that end, he's beginning to broaden participation in the project, asking other staff members to pass along scraps of intriguing information and using his discussions with Guedea CarreÑo as the basis for presentations at executive meetings.

"I think it's starting to create a demand on the part of executives to spend time in the long-term development of the business rather than on routine operations," says Highsmith. "A big part of my job is to make myself unnecessary, and I hope this will help me do that."

Technology and librarians are the yin and yang of information management. Yet while technology directors increasingly see their names up in lights on the executive marquee, corporate librarians--where they exist at all--remain supporting players. Why? It may be that we blame technology for our information surfeit and, consequently, expect technology to fix it. Or that the Internet makes the very idea of a librarian seem quaint. In the Highsmith library, an elegant card catalog with some Japanese irises emblazoned across the front stands empty, its contents having long ago moved on-line. It has become an artifact, not a tool--which may be how the world has come to view librarians.

But the kudzulike spread of information--information that's readily accessible yet often inaccurate, confusing, and more than slightly irrelevant --has actually increased the need for librarians. "Every manager with a budget is a target of innumerable vendors spreading an appealing (if deceiving) gospel: that every man and woman is a knowledge worker, and that all one needs to access the knowledge of the world is a computer and modem," wrote James Matarazzo, dean of the Graduate School of Library and Information Science at Simmons College, in a 1995 study titled "The Value of Corporate Libraries." "No profession knows as well as the librarian's the shallowness of this position: it leaves the whole issue of information expertise and quality out of the equation."

Some smart organizations are beginning to draw the distinction between accessibility and value, handing control over much of their external information flow to librarians who act as filters, consultants, analysts, early-warning systems, and royal data tasters. Not surprisingly, most of these influential librarians are found in large companies. At software publisher Adobe Systems, based in San Jose, Calif., librarian Linda Veenker and her four-person staff work out on the floor, where they can be closer to the employees they serve. "The library is one of those rare functions at Adobe that everyone has the same positive feeling about," says Bruce Chizen, Adobe's executive vice-president for worldwide products and marketing.

Adobe is a $912-million business, but companies with shallower pockets sometimes turn to the talented amateurs who are already in their ranks. Matarazzo calls those people "shadow librarians." At the Sawtooth Group, a $150-million advertising, branding, and public-relations firm in Woodbridge, N.J., the shadow is Tom Magnus, a partner and vice-president who is the director of account planning. When employees have a question--How many men make decisions in supermarkets? How are consumers' tastes in spices changing?--they bring it to Magnus, who scans the Web, browses in bookstores and libraries, and even rings up authors in pursuit of answers. "I'm the only person in my function who knows all the clients and the agency departments and the company's strategic direction," he says. "So when I do my search, I have all that floating in my head."

Indeed, small-company librarians may provide even more value than their large-company counterparts. After all, they know most people's needs because they know most people. At Highsmith, because contact between the library staff and employees is frequent, the librarians--Guedea CarreÑo has a staff of two--don't waste time researching, say, Internet marketing for a technology staffer who they know gives a hoot only about electronic transactions. It's far more effective than the arrangement at Guedea CarreÑo's previous employer, a large law firm where "a secretary would relay a request from an associate who got the request from the partner working on the case," says Guedea CarreÑo. "By the time I got it, it was impossible to know how much was lost in translation. It was like that old game of telephone, where 'The truth is elusive' eventually became 'The tooth ate Lucy."

But on Highsmith's organizational chart, which is prominently displayed outside the lunchroom, the library sits on the same line as marketing, human resources, accounting and finance, business-systems development, and--perhaps most sweetly--information systems. Each year the company budgets $185,000 for the library, a figure that covers Guedea CarreÑo's compensation as well as that of her staff, printed and electronic information sources, and library-support software, in addition to things like copyright-license agreements and travel expenses incurred when staff members attend conferences and seminars. The CEO even designed corporate headquarters so that the library sits dead center. It is the Rome all roads lead to.

Presiding at that crossroads is Guedea CarreÑo. The librarian sits in a small, bright office, surrounded by stacks of things: things she's reading, things she's putting aside for people, things that make her think. Immediately outside her office is the library itself, which includes more than 2,500 books, thousands of magazines (the library receives more than 700 subscriptions), and a PC for accessing CD-ROMs and certain databases. Beyond that is the rest of the company, and beyond that, the rest of the world.

Guedea CarreÑo and her crew are responsible for all of it.

Based in Fort Atkinson, Wis., Highsmith is a hive of cogitation surrounded by rural serenity: cornfields, tobacco-drying sheds, cornfields, a stand of maples just beginning to blush, cornfields. A walking trail entwines the low-slung brick building, and by 9 a.m. workers--alone and in pairs--have begun their perambulations, striding across the wooden bridge, past the gazebo, and out into a field where wildflowers seeded by the company grow. The trail is just one element of a much-lauded wellness program that rewards the pursuit of health with reduced insurance premiums.

Besides enjoying flat stomachs, Highsmith employees partake in a flat organization in which self-directed teams, a continuous-learning program, flextime, and other popular management theories are made manifest. Such progessiveness seems a tad incongruous, given the company's geographic isolation and humble origins: Highsmith began life as, among other things, a seller of agricultural implements and publisher of a farm magazine. Early on, the company operated from a family farm. "We had an English receptionist, which was the vogue after World War II, and when a customer would call from New York she would go outside and turn on this powerful light above the building," recalls Hugh Highsmith, who is the company's founder and who--at 84--is still the acting chairman. "We'd see it from the fields and come in to take the call."

The company's current culture evolved under Hugh's middle son, Duncan Highsmith, a fine-arts-student-turned-radical-press-publisher- turned-Japanese-sculptor's-apprentice-turned- architecture-student who vowed never to work for his father's company and who became its CEO and president in 1987. Highsmith's interest in librarians as more than just a market for his company's products emerged early in the decade, when he was the executive vice-president and chief operating officer of the then $16-million company. The company had engaged some consultants in projects involving warehouse expansion, software development, and catalog design, but the results weren't satisfactory. Highsmith concluded that "we had sought out consultants not because they had skills we didn't have but because they had access to information we didn't have. And I hypothesized that if we could get access to that information, we could make those decisions and recommendations ourselves and do it more to our satisfaction."

At the same time, Highsmith was trying to build an organization rich in human potential in an area poor in actual humans. "We have a very limited labor market, so I wanted to make the most of the people we had by helping them become decision makers, by providing them with information and the context to make good decisions," he says. The idea was to create an environment in which warehouse workers, for example, could resolve issues as small as what kind of packing material to use by reading news articles about environmentally sound alternatives, and as large as how their duties should be structured in a flat organization by reading case studies in business books.

Much of the information his employees would need, Highsmith believed, was the nonquantitative, nonformatted, nonobvious stuff floating around outside the company's walls and, consequently, outside the reach of its data-processing systems. So in 1988 he hired a professional librarian who would report directly to him--his only direct report aside from the vice-presidents. (The librarian has reported to the executive vice-president since Highsmith gave up some administrative duties in 1992.)

Although she resembles China Beach star Dana Delany, it would be difficult to mistake Guedea CarreÑo for anything but a librarian. She avoids using the word Listserv in conversation because it is trademarked. Articles passed on by her often arrive accompanied by a quote pulled from the text. When she describes a recent indexing project--Guedea CarreÑo creates indexes for all the company's catalogs--her words come a little more quickly, and her eyes grow brighter. (For more on indexes and other secret loves of librarians, see the "Think Like a Librarian" boxes below.)

Which is all to the good, since some of what Guedea CarreÑo does is, in fact, routine library stuff. She spends 15% of her time finding answers to questions. Most of them are straightforward. ("What is the status of the Manufacturers Life Insurance class-action suit?") Some of them are baroque. ("Why does authenticity matter?") The latter question, not surprisingly, came from Highsmith, whose intellectual curiosity is reflected in the subjects--epistemology and the interaction between people and computers, among others--that Guedea CarreÑo tracks for him independently of Life, the Universe, and Everything. "It took me five years to admit to him that I read People on the plane," says Guedea CarreÑo. "I was afraid he'd think I was incredibly shallow."

The subjects (there are 68 currently) that Guedea CarreÑo and her colleagues track for other employees are more prosaic than some of Highsmith's interests, ranging from the effect of wellness initiatives on health-care costs, to best practices for trade-show exhibits, to competitive activity. The librarians typically scan 100 or more publications a month, plus Web sites, electronic mailing lists, and other sources; they then pass along to employees only those articles, excerpts of articles, or annotated tables of contents that are likely to interest them. Altogether, Highsmith managers say that about 80% of the external information they read is chosen for them by Guedea CarreÑo and her staff, a practice that dramatically reduces the amount of paper accumulating on people's desks and ensures that what does accumulate there is relevant.

Guedea CarreÑo gets it right so often because she has mastered "customization"--the big bright promise of the Web. But Web sites require frequent visits and the inputting of personal data to "learn" customers' preferences; Guedea CarreÑo accomplishes the same thing by chatting people up. She starts from general topics defined by individual staff members and then acts like an exquisitely nuanced version of My Yahoo!, culling material appropriate not only to their interests but also to their information-consumption habits. "She knows from conversations we've had that I'm a very touchy-feely person and that I prefer working with people to numbers," says Patty Sehnert, team coordinator for customer service. As a result, when Guedea CarreÑo chooses articles for Sehnert, she avoids anything reeking of process.

Guedea CarreÑo also customizes how she delivers material. For John Kiley, director of marketing, she often provides a verbal summary. "You can hand John this beautifully presented and annotated outline with tabs and everything, and he will call you and say, 'Well, what's the answer?' or 'Could you come up here and tell me about it?" says Guedea CarreÑo. "It's good to have the documented stuff, but he needs to talk it out." Other employees prefer bullet points or charts or, on occasion, the full text of everything.

"I think it depends on their learning styles--whether they are visual, aural, or textual--as well as on the particular type of information being delivered," says Guedea CarreÑo.

Her familiarity with her coworkers extends to the workings of the entire company--an understanding that arises from her close collaboration with Highsmith and other executives and from her regular attendance at (and participation in) upper-management meetings. "She works with finance and human resources, so she knows the financial ratios and what kind of turnover we have--she's got a global understanding of the company," says Kiley.

That global understanding comes in handy when the librarians take on large, formal research projects for individual managers. The projects demand real bloodhound work, followed by an almost academic synthesis and, occasionally, personal recommendations for courses of action. Guedea CarreÑo generally kicks off the process with an in-depth interview--sometimes as long as 45 minutes--in which she and the project's initiator "negotiate" its scope and time frame and clarify its goals. "People frame their requests in terms that they think you want to hear or in terms that they think are the proper terms," says Guedea CarreÑo. "All it does is obscure what they're really after." For example, a project on "succession planning" for vice-president of human resources Bill Herman turned out to be about hiring people who can grow into key positions, not about who would be Highsmith's next CEO.

Not all projects need such elaborate preparation. A few years ago, Kiley asked Guedea CarreÑo and assistant corporate librarian Genevieve Mecherly to look into nursing homes as a potential new market for some of Highsmith's more than 37,000 products. With very little discussion, the librarians went forth and brought back information about market size, major players, public and private ownership, geographic distribution, products purchased, vendors used, and demographics of the customer population--"the whole nine yards," marvels Kiley. "Lisa just thinks like a marketer," he says, explaining why he didn't have to spell out all his questions up front. And the material came with a bonus: the librarians' insights into what it all meant. (The demographics looked promising, they concluded.) "It's not just providing a torrent of materials, it's also her interpretation of it," says Kiley of Guedea CarreÑo. "I take her opinions into account a lot."

The librarians' highest-level research reports are what Guedea CarreÑo describes as "packages of tailored, digested, annotated, and possibly analyzed information that is compiled and reworked from any number of sources." For one such project--a report for Herman on evaluating and selecting employment tests--Guedea CarreÑo and Mecherly boiled down more than 20 sources into four pages of concrete steps, including questions to ask (How many people was the test tested on before it was finalized?) and things to avoid (tests that have not been cross-validated). For Herman, such service represents the difference between wandering into a supermarket with unmarked aisles and having a fully assembled meal delivered to his door, complete with a list of ingredients and a menu of additional courses should he want more. "If I didn't have a library to go to, I wouldn't even know where to start," he says.

Much of Guedea CarreÑo's job requires her to find answers. Life, the Universe, and Everything demands that she raise questions. It was not a role she ever expected to play. "Duncan and I were having these parallel thoughts, although we didn't know it at the time," says Guedea CarreÑo, describing the birth of the project. "He was thinking, 'You know, there are bigger things going on out there, not just in our industry but in the world, that are going to have an effect on us. How can we think more strategically when our horizon is just a couple of years?' And I was coming across things on eurolinguistic programming, on memes in society, on how the Internet is changing distribution channels--things that I felt uncomfortable sending to anybody in the company because I knew they had business that was much more immediate and pressing. But I thought, 'Someone should be aware of this."

The someone she selected was Highsmith, whose motto--"It doesn't have to be right. It has to be provocative"--is a kind of mantra in some parts of the company. "I was thinking, 'He's going to think I'm a loony," says Guedea CarreÑo. Instead, Highsmith broached the idea for Life, the Universe, and Everything. "It scared the dickens out of me," Guedea CarreÑo recalls.

Today Guedea CarreÑo spends about 20% of her time scanning newspapers, magazines, on-line databases, and Web sites for Life, the Universe, and Everything, and her antennae are always up for interesting tidbits gleaned from television, radio, advertising, or casual conversation. She finds it hard to explain exactly why she deems any individual piece of information important. But she has a few guiding principles: she pays close attention, for example, to juxtapositions of different areas of study--Mozart and brain development, or wisdom as capital--because they may reveal illuminating patterns or relationships that may in turn form the basis for new products or services. "This is probably a by-product of working with Duncan," she says. "He has an eye for where the edges of one concept start to overlap and intersect with seemingly unrelated concepts."

After scanning comes synthesis. Every week, Guedea CarreÑo and Highsmith sit down for two hours and sort through their respective piles of "scraps," sharing impressions and rooting out hidden connections and the tenuous beginnings of trends. They then write statements about the significance of the most promising items, and Guedea CarreÑo enters them--together with brief abstracts and excerpts of the actual articles--in a database created for the project.

That database is divided into eight broad categories and 77 subcategories developed by Highsmith and Guedea CarreÑo over the past three years. Many of the subject headings are just what you'd expect from a school- and library-supply company: Early Learning, Adult Education, Public Libraries, Information Architecture and Design. Others-- Anthropology, Global Environment, Humor, Metaphors--reflect a more eclectic sensibility. But potential connections to the business are always present, if not always obvious. For example, Highsmith and Guedea CarreÑo track junk science because the CEO wants to understand how--through repetition and media attention--theories with no scientific basis become accepted fact. That understanding, in turn, could make the company more skeptical as new, if less than fully baked, approaches to education and reading instruction emerge. And that, in turn, could affect how the company deals with the demand for material supporting those approaches. "Understanding the dialogue in your marketplace--whether it's good science or not--can help create strategic choices for a business," explains Highsmith. "A business might decide to give people what they want, or it might decide it could gain a competitive advantage by offering alternatives to current trends or fads and educating its customers about them. In any case, if you don't understand what's going on, you don't have as many choices."

Will the future of Highsmith Inc. be guided by this confluence of scanning, serendipity, and synthesis? Perhaps. But Duncan Highsmith's overarching goal is actually more immediate: he wants all the employees in the company to shed their tactical blinders and begin thinking strategically--about customers, about the industry, and about forces for which the words big picture seem inadequate. "Life, the Universe, and Everything is in many ways in its infancy," says Highsmith. "The concrete benefits still have more to do with my role than with the rest of the organization. But thinking about what's next is becoming part of the routine work of the organization."

Even if Highsmith succeeds in transforming his employees into astute analysts of external information, the company will still need its cadre of powerful librarians. More than ever. "The thing about information is that it never stops coming, and it's always coming in new ways and new formats," says Guedea CarreÑo. "It's impossible to keep on top of it and still get the phones answered, the orders picked and packed, and the catalogs designed. We're here to help people integrate information into their jobs as seamlessly as possible. That way, they can keep doing their jobs."

Leigh Buchanan is a senior editor at Inc.


Think like a librarian

The Web: Getting untangled
Lisa Guedea CarreÑo admits that she couldn't do her job without the Internet. But that doesn't mean that the corporate librarian at Highsmith Inc. believes cyberspace lives up to its hype as a source of information. "It's a pretty unpredictable, unsophisticated tool," she says.

To counteract that, Guedea CarreÑo has devised a list of road rules for evaluating Web sites. Among the questions she suggests users ask themselves: What's the purpose of the site you're looking at? Who is the author, owner, or sponsor? Are the links on the site relevant, reliable, and current? If there are biases, are they acknowledged? What is the scope of the information? Can you tell when it was last updated? If the answers aren't satisfactory, Guedea CarreÑo suggests seeking verification elsewhere.

Pay attention to typos, she also advises, because such errors point to a lack of quality control. "These seem like small things," says Guedea CarreÑo, "but they all add up to whether the information as a whole is reliable."


Books: Rules of thumbing
At Highsmith, assistant corporate librarian Genevieve Mecherly culls through books like an apple picker, separating the good from the wormy. Armed only with a title, Mecherly says, she can rapidly decide whether a publication deserves a home on Highsmith's shelves. She rattles off her judgments: " Data Mining Solutions: Methods and Tools for Solving Real-World Problems. Yes. A thing that says real-world or tools will get my attention because, hopefully, it's practical. The Prentice Hall Directory of Online Education Resources. No. Any directory of on-line sources is out of date once it's printed. The Power of Nice: How to Negotiate So Everyone Wins--Especially You! No. Anything with an exclamation point has one strike against it--a little too 'pop,' too cute."

Some of Mecherly's rules of thumbing: The word encyclopedia in the title is a good sign, and words like directory, dictionary, and--best of all-- concise dictionary are also good indicators of a book's worth. Books with applications for both employees and customers, such as Tomorrow's Office: Creating Effective and Humane Interiors, elicit huzzahs. (Highsmith's product line includes office furniture.) On the other hand, words like all and key are suspicious. ("Whose idea of key?" asks Mecherly.) As for inspiring, "it can sometimes mean 'not practical," she says.


Indexes: Funds of information
"I have this thing about indexes," admits librarian Lisa Guedea CarreÑo. "If a book is well indexed, then that tells me something about the quality of its publishing. If it doesn't have an index, then I start thinking, 'OK, who slapped this together?"

The index is generally Guedea CarreÑo's first stop in a business book because it allows her to target her reading with pinpoint precision. (Why read--or even browse--the whole thing when the relevant subject crops up only on pages 62 through 67?) Scanning the table of contents is another way to tell if a book is organized logically. And the bibliography--who's there, who's not--tips her off about credibility. "Basically, I like metadata--information about information," she says. "It means that something has been thought through and framed and analyzed."

Last updated: Jan 1, 1999

LEIGH BUCHANAN | Staff Writer | Editor at Large, Inc. Magazine

Leigh Buchanan is an editor-at-large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture.




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