How to Deal with Globalization and Knowledge Loss

Post Series: Barry

Barry Boyle – Skillpad CEO
Originally Published on the NG Pharma website

The two great pressures presently being imposed on the top management of most Western industries, including the pharmaceutical sector, are globalization and the loss of intellectual capital.

About one year ago I read a very interesting book by David W DeLong entitled Lost Knowledge about the impending crisis if the practical knowledge that ‘baby boomers’ have acquired over a lifetime of working in an “era of unprecedented technological and scientific advances” is lost to their present employers in the next three to five years.

My original intention was to write an article about the difficulties to be expected when the baby boom generation retire and take with them lots of critical practical knowledge, leaving their employer in a ‘knowledge deficit’ that will cause loss of production, revenue and profit – not to mention a serious reduction in shareholder value.

This is frightening enough in itself, but what if another problem is looming that will cause this “knowledge deficit” to be amplified considerably?

Recently I read a just-published, eye-opening book by Barry C Lynn called End of the Line, which examines the present rush to embrace globalization and its concomitant need/desire to outsource more and more production. The book is tremendously interesting throughout, but one phrase struck me as profoundly alarming: “This means that all firms end up knowing less and less about their own operations.”

One way to ensure that firms avoid knowing “less and less about their operations” is to capture, protect and control the dissemination of the painstakingly acquired practical knowledge that is inherent in all successful manufacturing firms and currently resides in the heads of their senior employees.

These two pressures should be addressed immediately as a major project with direct leadership from top management. My contention is that there is absolutely no time to lose, and fortunately, there is a modern technology that provides a perfect tool for achieving knowledge capture and control, namely e-learning. But more about this later; first, let’s look at a scenario that is most likely taking place in boardrooms right now. I see top management, the CEO, chairman and board members – and perhaps shareholders too – confronting two crucial issues in both the near and long term.

Lost knowledge
Our older employees are baby boomers and they are about to retire en masse but, before they retire, we should do something to retain the practical knowledge that they possess that has come from years of making our products. Our shareholders will ask if their firm is about to experience a drop in production due to loss of the knowledge that they paid a fortune to develop in the last 30 years. This loss of knowledge could happen on our watch, so we must get an initiative underway to address this issue or our firm’s future will be seriously compromised.

The problem above is worrying enough, but another pressure is also being placed on us and our management teams – the pressure to move production to less expensive places and embrace globalization. There are huge savings to be had from globalization and the fact is that we will have to build a plant in some country like China or will have to find an outsource manufacturer who can do the production for us at the lowest cost. This move is unavoidable – shareholders are pushing for it to increase profits and convert many of our operating costs from fixed to variable. Moreover, some of our competitors are already moving ahead on this.

The question
So, if we are going global and outsourcing at the same time, can we keep control of the critical manufacturing knowledge that we will have to a) save as baby boomers retire and b) impart to the workers in our China plant or to our outsource company who will most likely also be in China? Not to mention the danger of giving away the ‘why’ with our R&D secrets instead of just the ‘how’ which the employees in the low-cost manufacturer will need in order to produce our products.

The answer to the above dilemma is to find a way to retain the practical knowledge in a manner that will allow:

  • Capture of the knowledge now while the baby boomer is still in the employ of the firm.
  • Future transfer to others when the person who now has the knowledge is gone.
  • Ease of knowledge transfer due to being in an engaging format.
  • Ease of dissemination anywhere in the world.
  • Transfer of only the ‘how-knowledge’ for the manufacturing locations.
  • Control who gets the ‘why-knowledge’, which is the result of years of costly R&D.
  • Localization into any language.
  • Easy access for operators, management and others on a 24/7 basis.
  • The above describes the state-of-the-art technology that we now call e-learning, a technology that has completed the initial ‘dotcom hysteria’ phase, and has now settled down to a controlled growth to become a major knowledge-transfer technique and is becoming the way most learning will be done in the future.

Barry Boyle

Since Barry’s arrival in late 2004 he has been consolidating the company’s traditional business of leasing its library of compliance e-Lessons to Pharmaceutical manufacturing companies and, in late 2006, adding a new business based on his background namely, the use of e-learning to improve productivity in industrial manufacturing in 3 crucial areas:
Reduce time to market – new plant construction.
Continuous Productivity Improvement Program – ongoing operations.
Saving “baby boomer” knowledge for future operations.

This new business will show industrial manufacturing companies and their consultants/contractors how to apply e-learning as a tool to do “old” things better namely, Project Management and Plant Operations Maintenance.

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